Commissioner Of Income Taxsalem v. M/S.hare Krishna Movement, Dharmapuriradhae Krishna Brindavanam

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.11.2014 Coram THE HONOURABLE MR.JUSTICE R.SUDHAKARANDTHE HONOURABLE MR.JUSTICE R.KARUPPIAH Tax Case (Appeal) No.688 of 2014 Commissioner of Income TaxSalem. Vs. ...Appellant M/s.Hare Krishna Movement, DharmapuriRadhae Krishna Brindavanam,No.1-367, Hoggenakal Road,Attukaranpatti Village,Dharmapuri - 636 809. ...Respondent APPEAL under Section 260A of the Income Tax Act against theorder dated 04.02.2014 made in I.T.A.No.2056/Mds/2013 on the fileof the Income Tax Appellate Tribunal 'B' Bench, Chennai against theorder of the Commissioner of Income Tax, Salem, in C.No.9755 (105)/2012-2013/CIT/SLM dated 30.09.2013. For Appellant : Mr.J.Narayanasamy Standing counsel for Income Tax J U D G M E N T (Delivered by R.SUDHAKAR,J.) This Tax Case (Appeal) is filed by the Revenue as against theorder of the Income Tax Appellate Tribunal raising the followingsubstantial question of law: "Whether on the facts and in the circumstances ofthe case, the Tribunal was right in holding that theassessee is entitled for registration under Section12AA?" 2. The respondent - trust, which was formed by a trust deedexecuted on 18.01.2010, filed an application under Section 10A ofhttps://hcservices.ecourts.gov.in/hcservices/the Income Tax Act for registration under Section 12AA of the Income Tax Act on 11.03.2013. The application for registration wasprocessed on the basis of the materials enclosed. On intimation bythe Department by letter dated 01.04.2013, the applicant - trustfiled a letter dated 25.6.2013 furnishing certain details. One ofthe details contained in the response is that the trust received aland as gift from donors, the property donated was registered infavour of the trust on 04.02.2010 and that is recorded in the booksof accounts for the year ending 31.3.2010. It appears that theproperty has been actually handed over to the trust on 26.5.2011.On the subsequent hearing dates, the applicant - trust filedanother letter dated 22.9.2013 filed on 25.9.2013 enclosing certaindetails of the property gifted to the trust along with the relevantparticulars including income and expenditure statement, balancesheet etc. 3. The Original Authority was of the view that though thegift deed was registered on 04.02.2010, the property was handedover to the corpus of the trust only on 26.5.2011 and the trust hasnot shown any diligence in taking over the property. Havingbrought the asset in the books of accounts of the trust for theyear ending 31.3.2010 itself and taking over of the assetsubsequently on 26.5.2011 would show that the accounts and theactivities of the trust were not at all clear. The further groundis that the trust had not shown any material evidence to show thatthey are carrying on charitable activity. On this premise and onthe basis of the report of the Inspector, who stated that exceptconducting pooja to the Presiding deity and distributing Prasadamto the devotees, no charitable activity has been effectively taken.Hence, the application was rejected. As against the said order ofrejection, the assessee filed an appeal before the Income TaxAppellate Tribunal, which allowed the appeal directing the OriginalAuthority to grant registration. Aggrieved by the same, theRevenue has filed the present Tax Case (Appeal). 4. Heard Mr.J.Narayanasamy, learned standing counsel appearingfor the Revenue and perused the materials placed before this Court. 4. Heard Mr.J.Narayanasamy, learned standing counsel appearingfor the Revenue and perused the materials placed before this Court. 5. We find that the reasons given by the Original Authority todecline registration is trivial and does not sub-serve the cause ofa charitable trust, which seeks registration under Section 12AA ofthe Income Tax Act. There is no doubt that the Trust gotregistered the property, which was gifted to it, on 04.02.2010itself. On execution of the registered deed, they had primarilyrecorded in their books of accounts as on 31.3.2010. Hence, nofault could be attributed to the trust, when the donor does notphysically handed over the possession of the property. A doneecannot insist the donor as to how his donation should be made. TheTrust is started with an avowed object of conducting religious aswell as charitable activities. It is in the nascent stage as wecould see from the date of formation and seeking registration underSection 12AA. Therefore, the Department was not correct in cominghttps://hcservices.ecourts.gov.in/hcservices/to the conclusion that the genuineness of the trust is in doubt. Primarily the reason as we could see from the order of the originalauthority is not on account of the nature of the activity of thetrust, but on a ground that the property donated was registered on04.2.2010, but taken over physical possession only on 26.5.2011.We find that such a reasoning is totally misconceived. As we havealready observed, the donee cannot make conditions or call upon thedonor that he should deliver possession immediately. What has beengiven as gift by a registered document has been entered into thebooks of accounts promptly. The delay in handing over possessioncannot be attributed to the fault of the trust and as a consequencethe interference drawn by the Original Authority that there is anerror in maintaining the accounts appears to be hyper-technical.The Tribunal was correct in rectifying the error and allowing theappeal. It is not as if that the Original Authority did not havepower to check the activities of the trust, as Section 12AA of theIncome Tax Act provides for appropriate action to be taken, if theobjects of the trust and its activities are not in consonance withthe provisions of law. That stage has not yet come and therefore,the Department is at error in declining to grant registration. 6. In the light of the above, we see no error in the order ofthe Tribunal. We find no question of law much less any substantialquestion of law arises for consideration in this appeal.Accordingly, the order of the Tribunal stands confirmed and thisTax Case (Appeal) stands dismissed. No costs. sl Sd/-Assistant Registrar(J)//True Copy//Sub Assistant Registrar To1. The Income Tax Appellate Tribunal 'B' Bench, Chennai. 2. The Commissioner of Income Tax, Salem. 1 CC to M/s. J.Narayanasamy, Advocate SR.No. 52968 SSK (CO)PSI (13.11.2014) https://hcservices.ecourts.gov.in/hcservices/