Ita/34/2017 Of The Commissioner Of Income Tax (Excemptions) Kochi v. M/S Mata Amrithanandamayi Math

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU TUESDAY, THE 22ND DAY OF AUGUST 2017/31ST SRAVANA, 1939 ITA.No. 34 of 2017 () ---------------------- AGAINST THE ORDER/JUDGMENT IN ITA 185/COCH/2016 of I.T.A.TRIBUNAL,COCHINBENCH DATED 27-09-2016 APPELLANT(S)/APPELLANT/RESPONDENT/REVENUE: ----------------------------------------------------------- THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) KOCHI, SAN JUAN TOWERS, 2ND FLOOR, OLD RAILWAY STATION ROAD, KOCHI-682 018. BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT(S)/RESPONDENT/APPELLANT/ASSESSEE: -------------------------------------------------------------- M/S MATA AMRITHANANDAMAYI MATH, AMRITAPURI, KARUNAGAPILLY, KOLLAM R1 BY ADV. SRI.K.SRIKUMAR (SR.) R1 BY ADV. SRI.K.MANOJ CHANDRAN R1 BY ADV. SRI.P.R.AJITHKUMAR THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 22-08-2017, ALONG WITH ITA NOS. 41, 42 & 50 OF 2017,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 22-08-2017, ALONG WITH ITA NOS. 41, 42 & 50 OF 2017,THE COURT APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A:TRUE COPY OF THE ASSESSMENT ORDER DATED 31.03.2015. ANNEXURE B:TRUE COPY OF THE APPELLATE ORDER DATED 02.02.2016PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS),THIRUVANANTHAPURAM.PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS),THIRUVANANTHAPURAM. ANNEXURE C:COPY OF THE COMMON ORDER PASSED BY THE INCOME TAXAPPELLATE TRIBUNAL ON 27.09.2016. APPELLATE TRIBUNAL ON 27.09.2016. RESPONDENTS' ANNEXURES: ANNEXURE R1:TRUE COPY OF THE LETTER DATED 10.07.2012.ANNEXURE R2:TRUE COPY OF THE ORDER DATED 16.02.2016. ANNEXURE R3:TRUE COPY OF THE LETTER DATED 21.01.2015.ANNEXURE R2:TRUE COPY OF THE ORDER DATED 16.02.2016. ANNEXURE R3:TRUE COPY OF THE LETTER DATED 21.01.2015. //TRUE COPY// rv P.A. TO JUDGE. ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ. ------------------------------------------- I.T.A. Nos.34, 41, 42 & 50 of 2017 ------------------------------------------ Dated this the 22[nd] day of August, 2017. JUDGMENT Antony Dominic,J. In these appeals filed by the Revenue concerning theassessment years 2007-2008, 2008-2009, 2009-2010 and 2012-2013, the common questions of law framed for the consideration ofthis Court are the following: 1. Whether the ITAT has erred on facts and law in treatingthe interest on corpus funds received by the assessee ascorpus donations u/s 11(1)(d) of the IT Act, to beexempt from Income Tax while section 11(1)(d) coversdonations with specific direction that they shall formpart of corpus and not interest thereon since it willresult in exemption to interest in perpetuity defeatingthe legislative intent?the interest on corpus funds received by the assessee ascorpus donations u/s 11(1)(d) of the IT Act, to beexempt from Income Tax while section 11(1)(d) coversdonations with specific direction that they shall formpart of corpus and not interest thereon since it willresult in exemption to interest in perpetuity defeatingthe legislative intent? 2. Whether voluntary contributions received by a trust withspecific direction that they shall form part of the corpusincludes interest accruing/credited on deposits fromabove donations?specific direction that they shall form part of the corpusincludes interest accruing/credited on deposits fromabove donations? 2. We heard the learned Standing Counsel appearing for the Revenue and the learned Senior Counsel appearing for the assessee. 2. Whether voluntary contributions received by a trust withspecific direction that they shall form part of the corpusincludes interest accruing/credited on deposits fromabove donations?specific direction that they shall form part of the corpusincludes interest accruing/credited on deposits fromabove donations? 2. We heard the learned Standing Counsel appearing for the Revenue and the learned Senior Counsel appearing for the assessee. 3. The facts that are relevant to be noted are that the assessee,a charitable institution, entitled to exemption under Section 11 ofthe Income Tax Act. Such exemption is subject to the conditionsprescribed therein. During the assessment years in question, it wasfound that on the voluntary contributions that were received by theassessee, interest was earned and the income earned on thecontributions were added by the assessee to its corpus, acting uponthe instructions in that behalf issued by the donors themselves.Rejecting the claim of the assessee for exemption under Section 11(1)(d) of the Act, the interest earned was brought to tax. That wasmodified in appeal and the appellate order was confirmed by theTribunal. It is in this background, the Revenue has come up inappeal. 4. While the learned counsel for the Revenue contended thatinterest earned being the income of the assessee is liable to be taxed,the learned Senior Counsel appearing for the assessee contended to the contrary. 5. Having considered the submissions made, we are of theview that the question that is framed has to be answered in the lightof Section 11(1)(d) of the Act. A reading of Section 11 shows thatsubject to the provisions of Sections 62 and 63, the incomesenumerated therein shall not be included in the total income of theprevious year of the person in receipt of the income. The person inreceipt of the income, insofar as these cases are concerned, is therespondent assessee. One of the income that is enumerated inclause (d) of sub-Section (1) of the Section is the income in theform of voluntary contributions made with a specific direction thatthey shall form part of the corpus of the trust or institution. Thefact that the donors had instructed that the interest earned shall beadded to the corpus of the trust is undisputed. If that be so, theinterest earned on the contributions already made by the donorswould also partake the character of income in the form ofvoluntary contributions made with a specific direction that they I.T.A. No. 34/2017 & batch shall form part of the corpus of the trust. If that be so, conclusion is irresistible that the Tribunal has rightly held that the interestearned would qualify for exemption under Section 11(1)(d) of theIncome Tax Act. We do not find any question of law arising in these cases forthe consideration of this Court. The appeals fail and are accordingly dismissed. ANTONY DOMINIC, JUDGE. DAMA SESHADRI NAIDU, JUDGE. Rv