Https://Hcservices.ecourts.gov.in/Hcservices v. Indomer Ananthi Chandramohan Charitable Trust,Chennai Dated 05.01.2015, Made In Tax Case Appeal

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 22.02.2021 CoramThe Hon'ble Mr. Justice M.DURAISWAMYandThe Hon'ble Ms. Justice T.V.THAMILSELVI T.C.A.Nos.401 and 402 of 2011 The Commissioner of Income Tax I,Madurai...Appellant inboth appealsVs Karaikudi ILM Educational Trust,29, Piranmalai Rawther III Street,Karaikudi – 630 001...Respondent inboth appeals Appeals preferred under Section 260-A of The Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, C Bench, Chennai, dated 03.11.2010 passed inI.T.A.Nos.1383/Mds/2010 and 1384/Mds/2010 against the order ofthe Commissioner of Income Tax I, Madurai dated 08.12.2009 andmade in C.No. 464/42/2009-10. COMMON JUDGMENT (Judgment of the Court was delivered by M.DURAISWAMY, J.) Challenging the order passed in I.T.A.Nos.1383/Mds/2010 and1384/Mds/2010 dated 03.11.2010 on the file of the Income TaxAppellate Tribunal, C Bench, Chennai, the Revenue has filed thepresent appeals. 2.The assessee Trust was created by a Trust Deed dated09.02.2009. The object of the Trust, as per the Trust deed, isto establish/promote/set up/provide/maintain/assist/running ofschools, Islamic educational centres, Arabic and Islamicreligious classes, Quran and Hadis coaching classes,institutions for orphanages/widow homes to promote and to set uphospitals, dispensaries etc., According to the Revenue, the https://hcservices.ecourts.gov.in/hcservices/ Trust did not produce any report with regard to the activitiesin support of their contentions. The assessee Trust filed anapplication for registration under Section 12 AA and approvalunder Section 80G(5) of the Income Tax Act, 1961 on 09.06.2009.Though several opportunities were given by the Commissioner ofIncome Tax (hereinafter referred to as 'CIT') to the assesseeTrust, the assessee failed to establish the contention beforethe CIT. Hence the CIT, by order dated 08.12.2009, rejected theregistration filed under Section 12 AA and approval underSection 80G(5) of the Income Tax Act, 1961 for the reason thatthe Trust is not genuine and they are not engaged in anycharitable activities. Aggrieved over the order passed by theCIT, the assessee filed appeals before the Income Tax AppellateTribunal and the Appellate Tribunal, by order dated 03.11.2010,directed the CIT to register the assessee Trust under Section12AA of the Income Tax Act, 1961 finding that the Trust wasconstituted only on 09.02.2009 and the CIT had rejected theregistration and approval at the threshold. Challenging theorder passed by the Income Tax Appellate Tribunal, theDepartment has filed the above appeals. 3.At the time of admission of the above appeals, thefollowing substantial questions of law arose for consideration:T.C.A.No.401 of 2011: 1.Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in law in setting aside the order of theCommissioner of Income Tax and direct the Commissionerof Income Tax to grant registration under Section 12AAof the Income Tax Act to the assessee valid in law? 2.Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in law in directing the Commissioner of IncomeTax to grant registration under Section 12AA of theAct, even though without considering the amendment ofthe Act with effect from 01.04.1997 whereby Section12AA was introduced making it mandatory for theCommissioner to conduct necessary enquiry in thisregard and to grant registration only if he satisfiedabout the genuineness of the Trust? T.C.A.No.402 of 2011:Whether on the facts and in the circumstances ofthe case, the Income Tax Appellate Tribunal was rightin law in directing the Commissioner of Income Tax togrant approval of Section 80G(5) of the Income Tax Actto the assessee Trust, even though it is found thatthe Trust is not genuine one and is not engaged in anycharitable activity? T.C.A.No.402 of 2011:Whether on the facts and in the circumstances ofthe case, the Income Tax Appellate Tribunal was rightin law in directing the Commissioner of Income Tax togrant approval of Section 80G(5) of the Income Tax Actto the assessee Trust, even though it is found thatthe Trust is not genuine one and is not engaged in anycharitable activity? 4.It is not in dispute that the Trust was constituted on09.02.2009 whereas they sought for registration and approval on09.06.2009 under Section 12AA and 80G(5) of the Income Tax Actrespectively. The CIT, while rejecting the registration andapproval, found that it was too early to give a finding withregard to the genuineness of the objects of the Trust for thereason that the activities were not commenced on the date ofapplication. In an unreported judgment in Commissioner of IncomeTax, Chennai Vs. Indomer Ananthi Chandramohan Charitable Trust,Chennai dated 05.01.2015, made in Tax Case Appeal No.303 of2012, the Hon'ble Division Bench of this Court held as follows: ".......................................................... ..................... 2.Learned counsel appearing for the Revenuefairly submits that the issue involved in this appealis covered by a decision of this Court in T.C.(A)No.579 of 2013 dated 27.01.2014 wherein this Courtfollowing the decision of this Court reported in(2012) 206 Taxman 69 (CIT Vs. Arulmighu Sri KamatchiAmman Trust) dismissed the appeal filed by the Revenueholding that the Revenue would not be justified inrefusing the grant of registration at the threshold.For better clarity, the relevant portion of thedecision of this Court reads as follows:“9.In the present case also, the Revenueonly questions the Trust not having commencedits activity for the grant of registration.The provision under Section 12AA of the IncomeTax Act does not stipulate such a conditionfor grant of registration. On the other hand,Section 12AA (1) contemplates satisfaction ofthe Commissioner about the objects of theTrust and the genuineness of the activitiesand make such enquiry as may be necessary forthe purpose of grant of registration. In soconsidering the application, the Commissionerhas to give an opportunity to the assessee asprovided for under proviso to sub-section (1)of Section 12AA. Under sub-section (3) ofSection 12AA, the Commissioner is given powerto cancel the registration, if he satisfiesthat the objects of such Trust are not genuineor not being carried on in accordance with theobjects of the Trust. When such an authorityis vested with the Commissioner to cancel theregistration in the event of the Trust notbeing carried on in accordance with theobjects of the Trust, we do not find anyground to say that merely on the date of theapplication, the assessee Trust had not commenced its activities, hence, registrationcould not be granted. it is not denied by theassessee that on the date of the applicationunder Section 12AA, it was yet to commence itsoperation. But nevertheless the genuineness ofthe objects of the Trust were not questionedby the Commissioner. Considering the fact thatthe continuance of registration is further asubject matter of scrutiny by the Commissioneras contemplated under Section 12AA(3) of theIncome Tax Act we do not think that theRevenue would be justified in refusing theregistration at the threshold. The Tribunalhad followed the decision of the Gujarat HighCourt in the case of CIT Vs. Kutchi Dasa OswalMoto Pariwar Ambama Trust reported in 29Taxman 228. We respectfully agree with thedecision of the Gujarat High Court." 3.The abovesaid view was followed by this Court,in which one of us was a party (R.Sudhakar, J.) inT.C.(A) No.261 of 2014 dated 22.08.2014.4.Accordingly, following the decision of thisCourt in T.C.(A) No.579 of 2013 dated 27.01.2014,this Tax Case (Appeal) stands dismissed. The questionof law is answered against the Revenue. No costs." 3.The abovesaid view was followed by this Court,in which one of us was a party (R.Sudhakar, J.) inT.C.(A) No.261 of 2014 dated 22.08.2014.4.Accordingly, following the decision of thisCourt in T.C.(A) No.579 of 2013 dated 27.01.2014,this Tax Case (Appeal) stands dismissed. The questionof law is answered against the Revenue. No costs." 5.On a reading of the above judgment, it is clear that whenthe genuineness of the objects of the Trust were not questionedby the CIT and when the Trust was yet to commence its operationand when a subject matter of scrutiny by the CIT as contemplatedunder section 12 AA(3) of the Income Tax Act, the Revenue wouldnot be justified in refusing the registration at the threshold.The said ratio was laid down in a judgment reported in (2012)206 Taxman 69 (CIT Vs. Arulmighu Sri Kamatchi Amman Trust).Following the ratio laid down in the judgment, the Hon'bleDivision Bench of this Court directed the CIT to register theTrust. The ratio laid down by the Hon'ble Division Bench of thisCourt squarely applies to the facts of the present case. We donot find any error or irregularity in the order passed by theIncome Tax Appellate Tribunal. In such view of the matter, theappeal in T.C.A.No.401 of 2011 is liable to be dismissed. 6.The issue involved in T.C.A.No.402 of 2011 pertains toapproval under Section 80G(5) of the Income Tax Act. The ratiolaid down by the Hon'ble Division Bench in T.C.A.No.303 of 2012(cited supra) also applies to the case of the assessee. TheIncome Tax Appellate Tribunal, after taking into considerationall these aspects, rightly directed the CIT to register the https://hcservices.ecourts.gov.in/hcservices/ documents under Section 12AA of the Income Tax Act and alsogranted approval. Hence this appeal is also liable to bedismissed. 7.In view of the above, both the Tax Case Appeals standdismissed. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarmmiTo1.The Income Tax Appellate Tribunal, C Bench, Chennai.2.The Commissioner of Income Tax I, No.2, V.P.Rathinasamy Nadar Road, Bibikulam, Madurai 625 002.T.C.A.Nos.401 and 402 of 2011SV(CO)GN(16/03/2021) T.C.A.Nos.401 and 402