Director Of Income Tax Exemptionschennai v. M/S.shri Shanthi Vallab Tvhlumbini Jain Sanghflat

In the High Court of Judicature at Madras Dated: 05.01.2015 The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE R.KARUPPIAH Director of Income Tax ExemptionsChennai..... Appellant Vs. M/s.Shri Shanthi Vallab TVHLumbini Jain SanghFlat No.3063, 3rd Block, 6th Floor,127A Bricklin Road, Purasawalkam Road,Chennai - 600 007..... Respondent APPEAL under Section 260A of the Income Tax Act against theorder dated 22.2.2013 made in I.T.A.No.2143/Mds/2012 on the file ofthe Income Tax Appellate Tribunal 'C' Bench, Chennai. against the order of the Director of Income Tax (Exemption)Chennai dated 31.10.2012 made in DIT (E) No.2(42)/12-13. For Appellant : Mr.J.Narayanasamy Standing counsel for Income TaxFor Respondent: No appearance 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 Income Tax Appellate Tribunal was right inholding that DITE had not brought on record any materialto hold that the trust is not genuine and therebydirected the DITE to grant registration of trust underSection 12AA when no activities were started by thetrust?" 2. The issue involved in the present case is whether the truston its inception would be disentitled to the benefit ofregistration under Section 12AA of the Income Tax Act on the groundthat it does not yet commenced its activity. https://hcservices.ecourts.gov.in/hcservices/ 3. Learned counsel appearing for the Revenue fairly submitsthat the issue involved in this appeal is covered by a decision ofthis Court in T.C.(A)No.579 of 2013 dated 27.01.2014, wherein thisCourt, following the decision of this Court reported in (2012) 206Taxman 69 (CIT V. Arulmighu Sri Kamatchi Amman Trust), dismissedthe appeal filed by the Revenue holding that the Revenue would notbe justified in refusing the grant of registration at thethreshold. For better clarity, the relevant portion of thedecision of this Court reads as follows: https://hcservices.ecourts.gov.in/hcservices/ 3. Learned counsel appearing for the Revenue fairly submitsthat the issue involved in this appeal is covered by a decision ofthis Court in T.C.(A)No.579 of 2013 dated 27.01.2014, wherein thisCourt, following the decision of this Court reported in (2012) 206Taxman 69 (CIT V. Arulmighu Sri Kamatchi Amman Trust), dismissedthe appeal filed by the Revenue holding that the Revenue would notbe justified in refusing the grant of registration at thethreshold. For better clarity, the relevant portion of thedecision of this Court reads as follows: "9. In the present case also, the Revenue onlyquestions the trust not having commenced its activity forthe grant of registration. The provision under Section12AA of the Income Tax Act does not stipulate such acondition for grant of registration. On the other hand,Section 12AA (1) contemplates satisfaction of theCommissioner about the objects of the Trust and thegenuineness of the activities and make such enquiry asmay be necessary for the purpose of grant ofregistration. In so considering the application, theCommissioner has to give an opportunity to the assesseeas provided for under proviso to sub-section (1) ofSection 12AA. Under sub-section (3) of Section 12AA, theCommissioner is given power to cancel the registration,if he satisfies that the objects of such trust are notgenuine or not being carried on in accordance with theobjects of the trust. When such an authority is vestedwith the Commissioner to cancel the registration in theevent of the trust not being carried on in accordancewith the objects of the trust, we do not find any groundto say that merely on the date of the application, theassessee trust had not commenced its activities, hence,registration could not be granted. It is not denied bythe assessee that on the date of the application underSection 12AA, it was yet to commence its operation. Butnevertheless the genuineness of the objects of the trustwere not questioned by the Commissioner. Considering thefact that the continuance of registration is further asubject matter of scrutiny by the Commissioner ascontemplated under Section 12AA(3) of the Income Tax Act,we do not think that the Revenue would be justified inrefusing the registration at the threshold. The Tribunalhad followed the decision of the Gujarat High Court inthe case of CIT V. Kutchi Dasa Oswal Moto Pariwar AmbamaTrust reported in 29 Taxman 228. We respectfully agreewith the decision of the Gujarat High Court." 4. The above-said view was followed by this Court, in whichone of us was a party (R.Sudhakar,J) in T.C.(A)No.261 of 2014 dated22.8.2014. https://hcservices.ecourts.gov.in/hcservices/ 5. Accordingly, following the decision of this Court in T.C.(A)No.579 of 2013 dated 27.01.2014, this Tax Case (Appeal) standsdismissed. The question of law is answered against the Revenue. Nocosts. Sd/- Asst.Registrar (AD I) /true copy/ Sub Asst. RegistrarslTo1. The Income Tax Appellate Tribunal 'C' Bench, Chennai2. The Director of Income Tax Exemptions, Chennai.1 cc to Mr.R. Sivaraman, Advocate, Sr. 1861 cc to M./s.J. Narayanasamy, Advocate, Sr. 102Tax Case (Appeal) No.505 of 2013GP (CO)kk 30/1