Both The Appeals v. Jito Chennai Chapterr,1

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 13.12.2011 Coram The Honourable Mr.Justice P.JYOTHIMANIandThe Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case Appeal Nos.337 & 338 of 2011and M.P.No.1 of 2011 The Director of Income Tax,(Exemptions),Chennai. .. Appellant in both the appeals / Respondent vs. JITO CHENNAI CHAPTERR,1-7, VCI Estate,Erukanchery High Road,Vysarpadi, Chennai-39 .. Respondent in both the appeals / Appellant The above tax case appeals are preferred under Section 260-A ofthe Income Tax Act, 1961, against the common order dated 8.2.2011passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai,inI.T.A.Nos.1468 and 1469/Mds/2010 against the order of the Director ofIncome Tax (Exemptions) Nungambakkam, Chennai-600 034 dated28.05.2010 and made in DIT(E) No.2(838)/09-10. For Appellant : Mr.T.Ravikumar For Respondent : Mr.A.Thiagarajan,Sr.counsel for Mr.S.Rameshkumar JUDGMENT (Judgment of the Court was made by P.JYOTHIMANI.J.) The Revenue has preferred these tax case appeals as against thecommon order dated 8.2.2011 passed by the Income Tax AppellateTribunal 'A' Bench, Chennai, in I.T.A.Nos.1468 and 1469/Mds/2010, https://hcservices.ecourts.gov.in/hcservices/ suggesting the following substantial questions of law: "Whether on the facts and circumstances of the case,the Tribunal was right in directing to grant registrationunder Section 12AA and approval under Section 80G of theAct?" 2. A reference to the order of the Director of Income Tax(Exemptions) shows that the application filed by the assessee underSection 12AA of the Income Tax Act for registration of the Society,has been rejected at the threshold holding that in the object clauseof the deed, particularly, in clause 3(a) and 3(f), there is aprovision for domestic and overseas markets and also settlement ofdisputes by arbitration and therefore, the Director of Income Tax(Exemptions) has come to a conclusion that the object is notcharitable in accordance with Section 2(15) of the Act and iscommercial in nature. 3. The Tribunal has considered the same and found that theobject cannot be said to be not charitable. When a contention wasraised before the Tribunal that the contents of Section 12AA aredifferent, the Tribunal, in our view, has correctly held that it isonly a procedural difference. 4. A reference to Section 12AA of the Act would show that at theinitial stage, there is an obligation on the part of the authority tofind out and give his opinion about the genuineness of the activityof the Society/Trust. Inasmuch as the order of the Director ofIncome Tax (Exemptions) has not spoken anything about the genuinenessof the Society, the rejection of the application, in our view, is notin accordance with law. 5. Section 2(15) of the Act, which has been referred to by theauthority below, explains about the charitable purpose and the samehas not been properly construed by the Director of Income Tax(Exemptions). 6. We have gone through the object clauses, namely, 3(a) and 3(f), referred to by the Director of Income Tax(Exemptions), which areas follows: "3(a). To be and act and serve as an Association ofPersons who adopt Tenets of Truth, Non violence andCompassion towards all living beings as a way of life toserve the Society, our Nation and the World wherein Truthand Justice pervade all walks of life – social, commercialand personal and wherein people of different cultures livein peace and harmony with one another and by bringing themtogether with a view to increase gainful employment of allthrough expansion of production of goods and services for https://hcservices.ecourts.gov.in/hcservices/ domestics and overseas markets thereby raising livingstandard of society at large. 6. We have gone through the object clauses, namely, 3(a) and 3(f), referred to by the Director of Income Tax(Exemptions), which areas follows: "3(a). To be and act and serve as an Association ofPersons who adopt Tenets of Truth, Non violence andCompassion towards all living beings as a way of life toserve the Society, our Nation and the World wherein Truthand Justice pervade all walks of life – social, commercialand personal and wherein people of different cultures livein peace and harmony with one another and by bringing themtogether with a view to increase gainful employment of allthrough expansion of production of goods and services for https://hcservices.ecourts.gov.in/hcservices/ domestics and overseas markets thereby raising livingstandard of society at large. (f) To provide for arbitration in respect of settlementof disputes arising in the course of trade, services,vacations, industry or other business matters of thecommunity and to secure the services of experts if foundnecessary or desirable." 7. We have also gone through the other clauses of the deed andit is very clear that the object of the Society is to propagate Non-violence and Tenets of Truth and to encourage universal spiritualuplifment as preached by the Tirthankar Bhagwants. What is statedabout the settlement of dispute is only incidental thereto and cannotbe stated to be commercial in nature. 8. In such view of the matter, no question of law much lesssubstantial question of law would arise for consideration.Accordingly, the tax case appeals stand dismissed. Connectedmiscellaneous petition is closed. However, there is no order as tocosts. Sd/ Assistant Registrar /True Copy/ msk Sub Assistant Registrar To 1.The Assistant Registrar,Income Tax Appellate Tribunal, Madras Bench "A" Rajaji Bhavan, III Floor, Besant Nagar, Chennai-90. 2.The Director of Income Tax (Exemptions)Nungambakkam, Chennai- 600 034. Two Ccs to Mr.S.Ramesh Kumar, Advocate Sr.75903 Two Ccs to Mr.T.Ravikumar, Sr.S.C. For IT Sr.76295 NG(CO)DRL : 03/01/2012 Tax Case Appeals 337 & 338 of 2011