Commissioner Of Income Tax Coimbatore v. Mani Guruswamy Seva Trust

In the High Court of Judicature at Madras Dated: 26.08.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE G.M.AKBAR ALI Tax Case (Appeal) No.499 of 2014 Commissioner of Income TaxCoimbatore. .... Appellant/ RespondentVs. Mani Guruswamy Seva TrustC/o Sri.T.N.Seetharaman, Advocate,#384 (Old No.196), Lloyds Road,Chennai – 600 086. .... Respondent/ Appellant APPEAL under Section 260A of the Income Tax Act against theorder dated 24.6.2013 made in I.T.A.No.368/Mds/2013 against the orderof the Commissioner of Income Tax I, Coimbatore 63-A Race CourseRoad, Coimbatore dated 28.12.2012 made in C.No.127/(356) /CIT-ICBE/2012-13 on the file of the Income Tax Appellate Tribunal,Madras 'B' Bench. For Appellant : Mr.T.R.Senthil Kumar Standing counsel for Income Tax J U D G M E N T For Respondent : Mr.R.Kumar (Delivered by G.M.AKBAR ALI,J.) This Tax Case (Appeal) is filed by the Revenue as against theorder of the Income Tax Appellate Tribunal raising the followingsubstantial questions of law:“1. Whether on the facts and circumstances of thecase, the Tribunal was justified in granting registrationunder Section 12A, without considering the fact that theTrust had not commenced any activity even though it was inexistence for one year? 2. Whether on the facts and circumstances of thecase, the Tribunal was right in following the ratio laiddown by the Karnataka High Court in the caseof MeenakshiAmma Endowment Trust (2011) 50 DTR (Kar.) 243? https://hcservices.ecourts.gov.in/hcservices/ 2. The assessee is a charitable trust constituted under Deed ofTrust dated 07.10.2011. The objects of the trust are to promoteeducation, provide medical relief to the poor etc. The assessee hadmade an application for registration of Trust under Section 12 of theIncome Tax Act before the Commissioner of Income Tax. TheCommissioner of Income Tax rejected the said application for grant ofregistration on the ground that the trust is yet to commence itsactivities and it could not be recognized as charitable trust only onthe basis of the stated objects. The Commissioner also held that thetrust had not shown sufficient money to carry out all/and any of itslofty objects, so ostensibly stated in the trust deed. As againstthe order of the Commissioner of Income Tax, the assessee preferredan appeal before the Tribunal. 3. The Tribunal, by order dated 24.6.2013, following thedecision of the Karnataka High Court in the case of Meenakshi AmmaEndowment Trust reported in (2011) 50 DTR (Kar.) 243, allowed theappeal filed by the assessee. Aggrieved by the said order of theTribunal, the Revenue has filed the present Tax Case (Appeal). 4. Mr.R.Kumar, learned counsel takes notice for therespondent/assessee. Both the learned standing counsel appearing forthe Revenue and the learned counsel appearing for the assessee fairlysubmits that the issue involved in this appeal is covered by adecision of this Court in T.C.(A)No.975 of 2013 dated 05.08.2014,wherein this Court, after considering the provisions under Section12AA(3) of the Income Tax Act and the definition of 'charitablepurpose' under Section 2(15) of the Income Tax Act held as follows:“ 10. From a reading of the above provisions, it isclear that the authority has got power to subsequentlysatisfy itself about the activities of such trust orinstitutions as to whether it is genuine or not and whetherthe trust is being conducted in accordance with theobjects of the trust and the authority has got the power topass an order cancelling the registration of the trust orthe institution. We find that the above provisions enablesthe authority to monitor the activities of the charitabletrust and if it finds that its activities are not in thebest interest of the trust and to subserve the interest ofthe trust, then it is open to the authority to cancel theregistration of the trust or the institution.” 5. In the present case also, the Commissioner of Income Tax hadrejected the registration of the Trust at the threshold. The reasonsgiven by the Original Authority are not in consonance with theprovisions of the Income Tax Act. When there is an ample power underthe law to rectify the error by cancelling the registration of thetrust if there is any breach of the objects of the Trust, theTribunal is right in setting aside the order of the Commissioner ofIncome Tax. 6. Accordingly, following the above-said order of this Court inT.C.(A)No.975 of 2013 dated 05.08.2014, this Tax Case (Appeal) standsdismissed. No costs. Sd/- Asst.Registrar (CO) /true copy/ Sub Asst. RegistrarslTo1. The Assistant Registrar Income Tax Appellate Tribunal, Madras 'B' Bench.III Floor, Rajaji Bhavan, Besant Nagar, Madras-902. The Commissioner of Income Tax I,63 A Race Course Road, Coimbatore3. The Commissioner of Income Tax,Coimbatore1 cc to Mr.T.N. Seetharaman, Advocate, SR. 399111 cc to Mr.T.R. Senthilkumar, Advocate, SR. 39683T.C.(A) No.499 of 2014UG (CO)kk 10/9