Ita/59/2016 Of Sri. Adi Sankara Kanakadhara Smrithi Trust v. The Commissioner Of Income Tax I

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 6TH DAY OF AUGUST 2018 / 15TH SRAVANA, 1940 ITA.No. 59 of 2016 ------------------ AGAINST THE ORDER/JUDGMENT IN ITA 230/COCH/2014 of I.T.A.TRIBUNAL,COCHIN BENCHDATED 12-12-2014 APPELLANT(S) ------------ SRI ADI SANKARA KANAKADHARA SMRITHI TRUST, PUNNORKODE, PAZHAMTHOTTAM P.O., ERNAKULAM DISTRICT - 683 565 REPRESENTED BY ITS CHAIRMAN, K.S.BALASUBRAMANIAN. BY ADVS.SRI.DINESH MATHEW J.MURICKEN SRI.P.T.GOVINDAN SRI.K.A.ABHILASH RESPONDENT(S): ------------- THE COMMISSIONER OF INCOME TAX - I, C R BUILDING, IS PRESS ROAD, KOCHI - 682 018. R BY SRI.K.M.V.PANDALAI, SC INCOME TAX DEPARTMENT R BY SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06-08-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX APPELLANT(S)' ANNEXURES:----------------------- ANNEXURE A: COPY OF DEED OF TRUST NO.164/IV/2011 IN RESPECT OF SRI ADI SANKARAKANAKADHARA SMRITHI TRUST DATED 02.11.2011KANAKADHARA SMRITHI TRUST DATED 02.11.2011 ANNEXURE BCOPY OF DEED OF TRUST NO.133/IV/2001 IN RESPECT OF SRI ADI SANKARAKANAKADHARA SMRITHI TRUST DATED 10.10.2001.KANAKADHARA SMRITHI TRUST DATED 10.10.2001. ANNEXURE CCOPY OF AGREEMENT TO TRANSFER BETWEEN SRI ADI SANKARA KANAKADHARASMARAKA TRUST AND SRI ADI SANKARA KANAKADHARA SMRITHI TRUST DATED04.11.2011.SMARAKA TRUST AND SRI ADI SANKARA KANAKADHARA SMRITHI TRUST DATED04.11.2011. ANNEXURE DCOPY OF ORDER OF COMMISSIONER OF INCOME TAX-I, KOCHI DATED 31.08.2012.31.08.2012. ANNEXURE ECOPY OF ORDER OF COMMISSIONER OF INCOME TAX-I, KOCHI DATED26.02.2013.26.02.2013. ANNEXURE FCOPY OF ORDER OF I.T.APPELLATE TRIBUNAL IN ITA 230/COCH/2014DATED 12.12.2014.DATED 12.12.2014. RESPONDENT(S)' ANNEXURES: ------------------------ NIL /TRUE COPY/ PA TO JUDGE K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA No.59 of 2016 ------------------------------------------- Dated this the 6[th] day of August, 2018 J U D G M E N T Ashok Menon, J. Sri Adisankara Kanakadhara Smrithi Trust, anassessee under the Income Tax Act, 1961 ('Act', forshort) is before us aggrieved by the rejection of itsregistration under Section 12AA of the Act. 2.From the pleadings, it is seen that theappellant charitable trust was registered vide TrustDeed dated 2.11.2011 at Annexure-A. There was anotherTrust by name Adisankara Kanakadhara Smaraka Trustregistered on 10.10.2001, a predecessor to the presentTrust, constituted per trust deed at Annexure-B withthe objects of constructing memorial for the firstinvocation of Kanakadhara Sthothram by JagadguruAdisankara for advancement of philosophy of Advaithamby establishing schools and colleges impartingknowledge irrespective of caste and religion, miniacademy forming a platform of universal brotherhoodwithout distinction of race, creed, sex, caste or ITA 59/16 colour, for encouraging study of comparative religionand science, among other objectives. 2.From the pleadings, it is seen that theappellant charitable trust was registered vide TrustDeed dated 2.11.2011 at Annexure-A. There was anotherTrust by name Adisankara Kanakadhara Smaraka Trustregistered on 10.10.2001, a predecessor to the presentTrust, constituted per trust deed at Annexure-B withthe objects of constructing memorial for the firstinvocation of Kanakadhara Sthothram by JagadguruAdisankara for advancement of philosophy of Advaithamby establishing schools and colleges impartingknowledge irrespective of caste and religion, miniacademy forming a platform of universal brotherhoodwithout distinction of race, creed, sex, caste or ITA 59/16 colour, for encouraging study of comparative religionand science, among other objectives. 3.Since no progress was made in achieving theobjectives of the earlier trust, the persons who hadmade substantial contributions for purchase of land tothe former trust, formed yet another trust, which isthe present appellant. The objectives of the presentTrust are to construct and administer a fittingmonument for the first invocation of KanakadharaSthothram by Jagadguru Adisankara spontaneously utteredwhen deeply touched with the abject poverty of abrahmin lady, who had nothing to give as alms to thebrilliant lad Sankara; to create, maintain andadminister institutions to promote and propagateuniversal brotherhood philosophy and teachings ofAdisankara, establishment of meditation and yogacentres, libraries and other charitable institutionssuch as children’s home, senior citizen’s home, healthcentres etc; to conduct lectures, seminars,conferences and other activities; to print and publishbooks and publications, to protect and promote ecologyand nature within the adjoining premises among other ITA 59/16 objectives, but has no other objectives relating tobusiness, trade or profit. 4.A glance at history indicates that 'Kanakadhara Sthothram' is a hymn and is called‘Kanakadhara’ because when lad Sankara went to thehouse of a poor brahmin lady for alms, all that she hadwas a gooseberry, which she gave him, and lad Sankara,moved on seeing the abject poverty of the lady is saidto have recited 21 Hymns praising Goddess Lakshmi. TheGoddess was so pleased that she appeared and on beingpersuaded by Sankara, showered the brahmin lady’s housewith gooseberries made of pure Gold. 5.The appellant Trust applied for grant ofregistration of the Trust under Section 12AA of the Actvide application dated 15.2.2012, which was rejected bythe Commissioner of Income Tax vide Annexure-D. Anapplication for rectification of the order filed by theappellant Trust was also dismissed vide Annexure-Eorder. Thereafter, the appeal filed before the IncomeTax Appellate Tribunal, Cochin, which met with the samefate vide Annexure-F and the appellant is before us in ITA 59/16 appeal. The following questions of law are framed inthe appeal memorandum: “(i) Whether in the facts and circumstances ofthe case, the Commissioner of Income Tax wasright in refusing registration to theAppellant Trust under Section 12AA of the Act?(ii) Whether the Appellate Tribunal was rightin law, overlooking the Objects of the Trustas evidenced by the Trust Deed and deciding asto whether the Trust was entitled toregistration or not?(iii)Whether the authorities below wereright in law in holding that the appellantTrust was not engaged in charitable activitieswhen it was engaged in constructing andadministering a fitting monument for the firstinvocation of Kanakadhara Sthothram byJagadguru Sri Adisankara which is of historicinterest attracting Section 2(15) of theIncome Tax Act? “(i) Whether in the facts and circumstances ofthe case, the Commissioner of Income Tax wasright in refusing registration to theAppellant Trust under Section 12AA of the Act?(ii) Whether the Appellate Tribunal was rightin law, overlooking the Objects of the Trustas evidenced by the Trust Deed and deciding asto whether the Trust was entitled toregistration or not?(iii)Whether the authorities below wereright in law in holding that the appellantTrust was not engaged in charitable activitieswhen it was engaged in constructing andadministering a fitting monument for the firstinvocation of Kanakadhara Sthothram byJagadguru Sri Adisankara which is of historicinterest attracting Section 2(15) of theIncome Tax Act? (iv) Whether the object of the Trust would comewithin the purview of advancement of any otherobject of general public utility as enshrinedin Section 2(15) of the Act?(v)Whether the authorities below were rightin law in holding that the objectives of theTrust were charitable activity when itsobjectives include: to create, maintain andadminister institutions to promote andpropagate universal brotherhood philosophy andteachings of Adi Sankara, meditation and yogacentres, libraries and other charitableinstitutions such as Children’s Home, SeniorCitizens Home, Health Centres etc., to conductlecturers, seminars, conferences and suchother activities, to print and publish booksand publications, to protect and promoteecology and nature’, attracting Section 2(15)of the Income Tax Act?(vi) Whether in the light of the decision ofthe Hon’ble High Court of Madras, theauthorities did not commit an error of law when they did not apply the dictum laid downby the Madras High Court in DIRECTOR OF INCOMETAX EXEMPTIONS V. Ms.SEERVI SAMAJ THAMBARAMTRUST?” 6.The learned counsel for the appellant argues that objectives of the Trust would clearly indicate thecharitable purposes for which it was formed. Theauthorities went wrong in not allowing the applicationfor registration. For the purpose of registration of acharitable trust under Section 12AA, it is essentialfor the Trust to be a charitable institution, andSection 2(15) of the Act defines ‘charitable purpose’as thus: “Charitable purpose” includes relief of thepoor, education, yoga, medical relief,preservationofenvironment(includingwatersheds, forests and wildlife) andpreservation of monuments or places or objectsof artistic or historic interest, and theadvancement of any other object of generalpublic utility: Provided that the advancement of any otherobject of general public utility shall not be acharitable purpose, if it involves the carryingon of any activity in the nature of trade,commerce or business, or any activity ofrendering any service in relation to any trade,commerce or business, for a cess or fee or anyother consideration, irrespective of the natureof use or application, or retention, of theincome from such activity, unless-(i)such activity is undertaken in thecourse of actual carrying out of suchadvancement of any other object of general ITA 59/16 public utility, and(ii) the aggregate receipts from suchactivity or activities during the previousyear, do not exceed twenty per cent of thetotal receipts, of the trust orinstitution undertaking such activity oractivities, of that previous year.” 7.The learned counsel for the appellant relies ITA 59/16 public utility, and(ii) the aggregate receipts from suchactivity or activities during the previousyear, do not exceed twenty per cent of thetotal receipts, of the trust orinstitution undertaking such activity oractivities, of that previous year.” 7.The learned counsel for the appellant relies on the decision of the Madras High Court in (2014) 362ITR 199 (Madras)[Director of Income Tax Exemptions v.M/s.Seervi Samaj Tambaram Trust], wherein it was heldthat the Revenue and CIT(A) were not justified inrejecting the application as admixture of bothreligious and charitable objects does not make anydisqualification for trust to make an application forregistration and it is also held that an applicationcannot be rejected merely on the ground that on thedate of application, the assessee Trust had notcommenced its activities, when the genuineness of theobjects of the Trust is not questioned by the Company.The fact that it has not yet commenced its operationsalone may not be sufficient to reject the applicationfor registration. The Madras High Court had reliedupon a decision of the Gujarat High Court in [2013] 29 ITA 59/16 Taxmann 228 [Commissioner of Income Tax-I v. KutchiDasa Oswal Moto Pariwar Ambama Trust]. 8.Going back to the objectives of the appellantTrust, there does not appear to be any 'charitablepurpose' coming within the meaning of Section 2(15)revealed from the objectives of the Trust. Toconstruct and administer a fitting monument at a placewhere Adisankara uttered 'Kanakadhara Sthothram',is theprimary objective of the trust, and is evident from thename of the trust. Constructing a monument at a placewhere something of importance had taken place, isdefinitely not a charitable purpose. It is not a trustconstituted for the preservation of a monument ofhistorical importance, already in existence. Conductingyoga centres, meditation centres, lecturers, seminars,conferences etc; by itself, also will not come withinthe meaning of charitable purpose when the primaryobject is not charitable in nature. The predominantobject of such activity must be to subserve thecharitable purpose. The latter should not masqueradeunder the guise of the former. The purpose of thetrust, must be essentially charitable in nature and it ITA 59/16 must not be a cover for carrying on an activity whichhas nothing to do with charity. In the decision inM/s.Seervi Samaj Tambaram Trust(supra), it was heldthat section 12AA(1) contemplates satisfaction of theCommissioner about the objects of the trust and thegenuineness of the activities and make such enquiriesas may be necessary for the purpose of grant ofregistration. The Commissioner is given power to cancelthe registration, if he is satisfied that the objectsof such trust are not genuine or are not being carriedout in accordance with the objects of such trust.Hence, the fact that the trust has not commenced itsactivities, by itself is no reason to rejectregistration at the threshold. The above cited decisionhas no application to the case in hand. To get registration of the Trust under theprovisions of Section 12AA of the Act, the Trust mustprimarily be constituted for charitable purpose, whichdoes not appear to be so in the case of the appellanttrust. We find no reason to disagree with the findingsof the authorities as well as the Tribunal in rejectingthe application of the appellant, calling for ITA 59/16 -9- interference with those orders. We answer thequestions of law in favour of the revenue and againstthe assessee. The Income Tax Appeal is, hence,dismissed. No order as to costs. Sd/- K.VINOD CHANDRAN JUDGE jg Sd/- ASHOK MENON JUDGE