Commissioner Of Income Taxchennai v. M/S.sri Bhagawan Mahavir Digambarajain Management Trust

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case (Appeal) No.404 of 2012 Commissioner of Income TaxChennai...Appellant/Respondent Vs. M/s.Sri Bhagawan Mahavir DigambaraJain Management Trust, No.23Perumal Koil Street, Chennai-600 015....Respondent /Appellant----- Tax Case filed under Section 260A of the Income Tax Act1961 against the order dated 29.03.2012 passed in ITANo.727/Mds/2011 by the Income Tax Appellate Tribunal 'D'Bench, Chennai.Against the order of the Director of Income Tax(Exemptions) Chennai, dated 30/11/2010 in DIT(E) No. 2(117/10-11. For Appellant : Mr.J.Narayaswamy, Senior Standing Counsel For Respondent : Mr.Venkat Narayanan for M/s.Subbaraya Iyer Padmanabhan (Judgment of the Court was delivered by DR.VINEET KOTHARI,J) This appeal has been filed by the Revenue under Section260A of the Act aggrieved by the order of the learned IncomeTax Appellate Tribunal 'D' Bench, Chennai, whereby the learnedTribunal allowed the appeal filed by the Assessee, aCharitable Trust viz., Bhagawan Mahavir Digambara JainManagement Trust, Chennai and held that the Assessee was https://hcservices.ecourts.gov.in/hcservices/ entitled to registration as Charitable Trust under Section12AA of the Act read with Section 80G of the Act. Therelevant portion of the order passed by the learned Tribunalis quoted below for ready reference. “4. It is to be seen that Section 11 of the Actprovides for exemption not only for the charitableinstitutions, but also for religious institutions.The DIT (E) is therefore not justified in rejectingthe applications of the assessee trust forregistration under Section 12AA and grant ofapproval under Section 80G. We, therefore set asidethe impugned order of the DIT(E) and direct the DIT(E) to grant registration under Section 12AA of theAct. We also direct the DIT(E) to grant approvalunder Section 80G subject to the provisions ofSection 80G(5B) of the Act.” 2. The present appeal was admitted by the CoordinateBench of this Court on 10.12.2012 on the following substantialquestions of law. “1) Whether on the facts and in the circumstances ofthe case, the Tribunal was right in holding that theassessee is entitled for registration u/s 12AA?2) Whether on the facts and in the circumstances ofthe case, the Tribunal was right in holding that theassessee is entitled for approval u/s 80G?” 3. Learned counsel at Bar on both sides submit fairlythat the issue involved in this case is no longer res integraand has been decided by the Coordinate Bench of this Court inthe case of “Director of Income Tax (Exemptions) -Vs- SeerviSamaj Tambaram Trust”, following the Supreme Court decision inthe case of “Commissioner of Income Tax -Vs- Upper GangesSugar Mills Ltd., reported in 227 ITR 578 and another casedecided by the Honourable Supreme Court in “State of Kerala-Vs- MP.Shantiverma Jain” reported in (1998) 231 ITR 787 (SC),in which the Honourable Supreme Court has held that the IncomeTax Act, 1961 does not make any distinction with regard to theobjectives of the Charitable and Religious purposes and theTrusts having both these objectives can also be registeredunder Section 11 or 12AA of the Act. The relevant portion ofthe judgment rendered by the Madras High Court is quoted belowfor ready reference. “5. Learned standing counsel appearing for theRevenue reiterated the submissions made before theTribunal and contended that the registration underSection 12AA of the Income Tax Act cannot be granted to a trust having both charitable and religiousobjects on an application under Section 11(1)(a) ofthe Income Tax Act. “5. Learned standing counsel appearing for theRevenue reiterated the submissions made before theTribunal and contended that the registration underSection 12AA of the Income Tax Act cannot be granted to a trust having both charitable and religiousobjects on an application under Section 11(1)(a) ofthe Income Tax Act. 6. The very issue raised by the Revenue has beendealt with by a Division Bench of this Court in thecase of CIT Vs. Arulmighu Sri Kamatchi Amman Trustreported in (2012) 206 Taxmann 69. In the said case,the respondent / assessee sought for registrationunder Section 12AA of the Income Tax Act on theground that the object of the Trust was religious.The Commissioner of Income Tax rejected theapplication on the ground that the Trust wasspending money in receipts towards religious andadministrative purposes and the activities claimedto be carried on by the said Trust were an admixtureof both religious and charitable. The said Trustfiled an appeal before the Income Tax AppellateTribunal. Following the decision in the case of CITVs. Upper Ganges Sugar Mills Ltd., reported in 227ITR 578 and in the case of State of KeralaVs.MP.Shantiverma Jain reported in (1998) 231 ITR787 (SC), the Tribunal allowed the appeal.Challenging the same, the Revenue filed an appealbefore this Court contending that the Tribunalfailed to appreciate the activities claimed to becarried on by the said assessee, which was anadmixture of both religious and charitable innature. Therefore, the Tribunal ought not to haveinterfered with the order of the Commissioner ofIncome Tax. The Division Bench of this Court, aftertaking into consideration the provision underSection 11(1)(a) of the Income Tax Act, which statesthat subject to the provisions of Sections 60 to 63,the income derived from property held under trustwholly for charitable or religious purposes, to theextent of which such income is applied to suchpurposes in India; and, where any such income isaccumulated or set apart for application to suchpurposes in India, to the extent to which the incomeas accumulated or set apart is not in excess offiteen per cent of the income from such propertyshall not be included in the total income of theprevious year of the person in receipt of theincome. Thus, the Division Bench held “from areading of the above, it is clear that the incomederived from the property held under trust whollyfor charitable and religious purpose, shall not beincluded in the total income of the Trust.Therefore, the said provision would be applicable to both the Trusts established with the object ofcharitable as well as religious purposes.Therefore, Section 12AA of the Income Tax Act doesnot make any difference between the Trusts createdwith the object of charitable and religious purposesand, even if the Trust is not created with both theobjects, law does not make any disqualification forthe Trust to make an application for registration.Therefore, the Tribunal has correctly applied theprovision of law and allowed the appeal.” 4. In view of the aforesaid settled legal position, weare of the clear opinion that the learned Tribunal wasjustified in allowing the appeal filed by the Assessee andupholding the registration of the Trust under Section 12AAread with Section 80G of the Act. The appeal filed by theRevenue is devoid of any merits and is liable to be dismissedand is accordingly dismissed. The questions of law areanswered against the Revenue and in favour of the Assessee.No costs. //True Copy// Assistant Registrar (CS-VI) Sub Assistant Registrar KST To 1.Income Tax Appellate Tribunal 'D' Bench, Chennai. 2.The Director of Income Tax, (Exemptions), Chennai. (Exemptions), Chennai. +1cc to Mr.Subbaraya Aiyar Padmanaban, Advocate, S.R.No.12149+1cc to Mr.J.Narayanaswamy, Advocate, S.R.No. 73220 4. In view of the aforesaid settled legal position, weare of the clear opinion that the learned Tribunal wasjustified in allowing the appeal filed by the Assessee andupholding the registration of the Trust under Section 12AAread with Section 80G of the Act. The appeal filed by theRevenue is devoid of any merits and is liable to be dismissedand is accordingly dismissed. The questions of law areanswered against the Revenue and in favour of the Assessee.No costs. //True Copy// Assistant Registrar (CS-VI) Sub Assistant Registrar KST To 1.Income Tax Appellate Tribunal 'D' Bench, Chennai. 2.The Director of Income Tax, (Exemptions), Chennai. (Exemptions), Chennai. +1cc to Mr.Subbaraya Aiyar Padmanaban, Advocate, S.R.No.12149+1cc to Mr.J.Narayanaswamy, Advocate, S.R.No. 73220 KK(CO)GN(13/03/2020)