St.joseph's Estatethorappally Postgudalur, The Nilgiris v. The State Of Tamilnadurep. By The Special Commissioner Andcommissioner Of Agricultural Incometaxezhilagam, Chepaukchennai 600 005

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 29..08..2007 Coram The Honourable Mr.Justice K.RAVIRAJA PANDIAN andThe Honourable Mrs.Justice CHITRA VENKATARAMAN T.C.(R)Nos.107 and 108 of 2004TCMP.Nos.54 and 55 of 2004 St.Joseph's EstateThorappally PostGudalur, The Nilgiris ...Petitioner in both the cases -vs- The State of Tamilnadurep. By the Special Commissioner andCommissioner of Agricultural IncometaxEzhilagam, ChepaukChennai 600 005 ...Respondents in both the cases Civil Revision Applications under Section 54(1) of the TamilNadu Agricultural Income Tax Act, 1955 to revise the order of the*Special Commissioner and Commissioner of Agricultural Income Tax,Chennai dated 2.5.2003 passed in SMRP. Nos.15 and 7 of 2002respectively. Against the order of the Special Commission and Commissioner ofAgricultural Income Tax Chepauk, Chennai-5 SMRP.No.7 & 15/2002 dated2.5.2003 Assessment order and year GIR.No.70S/99-2000 dated 31.8.99GIR.No.70S/2000-01 dated 31.7.2000. Against the order of the Deputy Collector/AGRL Income Tax officerGudalur GIR.No.70(S) 2000-01/GDR, dated 31.7.2000 Assessment year2000-2001 in TC(R)No.107/2004. Against the order of the Special Commissioner and Commissioner ofAgricultural Income Tax chepauk, Chennai-5 SMRP.No.7&15/2002 dated2.5.2003 Assessment year GIR.No.70S/99 2000-dated 31.8.99GIR.No.70S/2000-01 dated 31.7.2000. Against the order of the Deputy Collector/AGRL Income Tax officerGdalur GIR.No.70(S)99-2000/GDR dated 31.8.99 Assesment year-1999-2000 in TC(R)No.108/2004. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.P.J.Rishikesh for Mr.Subbaraya Aiyar For Respondents : Mr.Haja Nazuruddin, Special Government Pleader COMMON ORDER (The order of the Court was delivered by CHITRA VENKATARAMAN,J) The above Tax Case Revisions are filed against the order ofthe *Special Commissioner and Commissioner of Agricultural IncomeTax, Chennai. The assessment years relating to 2000-01 and 1999-2000. 2. The assessee claimed exemption under Section 4(b) of theAgricultural Income Tax Act. By order dated 31.7.2000 in respect ofassessment year 2000-01, the Assessing Authority noted that theassessee is registered as a Charitable Institution under theprovisions of Section 12A(a) of the Central Income Tax Act 1961. Onthe inspection conducted on 28.7.2000, the Assessing Authoritypointed out that the petitioner herein runs the society forEducational and Charitable purposes for all persons irrespective ofreligion, race, caste, community or social status. It is also statedthat a large portion of the society's income is spent on thetraining of young priests all over India. In the circumstances, theAssessing Authority granted the exemption. 3. On the proceedings initiated under Section 34 of theTamilnadu Agricultural Income Tax Act, 1955, a show cause notice wasissued to revise assessment order by cancelling the relief grantedunder Section 4(b) of the Tamilnadu Agricultural Income tax Act onthe ground that no trust deed had been produced by the assessee toverify the following items: (1) declaration of trust which is binding on the settler (2) setting apart definite property and the settlardepriving himself of the ownership thereof; and(3) a statement of the objects for which the property isthereafter to be held, i.e. the beneficiaries has also not beenproduced by the institutions. 3. On the proceedings initiated under Section 34 of theTamilnadu Agricultural Income Tax Act, 1955, a show cause notice wasissued to revise assessment order by cancelling the relief grantedunder Section 4(b) of the Tamilnadu Agricultural Income tax Act onthe ground that no trust deed had been produced by the assessee toverify the following items: (1) declaration of trust which is binding on the settler (2) setting apart definite property and the settlardepriving himself of the ownership thereof; and(3) a statement of the objects for which the property isthereafter to be held, i.e. the beneficiaries has also not beenproduced by the institutions. 4. The petitioner filed his reply stating that theinstitution was registered under the provisions of the Indian IncomeTax Act and that the Indian Trusts Act is not applicable to the caseherein. As to the non production of trust deed, the petitionerreferred to Clause 4 of the Rules and Regulations which deals withproperty and income and submitted that the property and the incomeof the petitioner were applied solely towards the promotion of theobject of the society. Consequently, the assessee prayed forhttps://hcservices.ecourts.gov.in/hcservices/dropping of the proceedings. 5. By order dated 2.5.2003, the Special Commissioner andCommissioner of Agricultural Income Tax, Chennai referred a decisionof this court in the case in TC(R) No.140/1994 dated 9.1.1998,reported in 247 ITR 521 (STATE OF TAMIL NADU v. EZUMESWARAR MUDAYARTEMPLE), and held that the assessee had only agricultural income andthere was no composite income. In the circumstances, exemptiongranted under the Income Tax Act could not be of relevance forconsidering the plea of exemption under the Tamil Nadu AgriculturalIncome Tax Act. The Commissioner also pointed out that trust deedhad not been produced. 6. Learned counsel appearing for the petitioner submittedthat on production of copy of the certificate issued by the IncomeTax officer, Ooty, the assessee was exempted from the tax underSection 11 of the Income Tax Act for the assessment year 2001-02.The learned counsel also pointed out that the certificate issuedunder Section 12A(a) of the Income Tax was only to substantiate hisstatus as a Trust entitling for exemption as an EducationalInstitution. Hence, going by the acceptance of the status of theassessee as a Trust eligible for exemption, the same ratio deservedto be accepted for the purpose of granting relief under the TamilNau Aagricultural Income Tax Act. 7. Learned counsel appearing for the Revenue however pointedout that considering the reasoning given by this Court in para 20 ofthe decision reported in 247 ITR 521 (STATE OF TAMIL NADU VSEXHUMESWARAMDAYAR TEMPLE) , in the absence of production of trustdeed, the Commissioner had rightly passed an order. 8. A perusal of the order of the Commissioner shows thatexemption was granted for the Assessment Years 1999-2000 and 2000-2001 on production of certificate issued by the Income Tax Officerunder Section 11 of the Income Tax Act. Admittedly, no trust deedwas produced before the Commissioner except for the certificateissued by the Income Tax Officer, Ooty, as regards the grant ofexemption under the Income Tax Act upto 2001-2002. The assessee didnot poduce the certificate under Section 12A(a) of the Income TaxAct, 1961. 9. It may be noted that the Commissioner initiated suo motuproceedings on the ground that the trust deed had not been producedbefore the authorities concerned for the purpose of verifying thestatus of the institution as an Charitable Institution. In thecircumstances, the Commissioner passed an order negativing the claimof the assesee on the ground that the exemption granted under theIncome Tax Act, per se, does not enure to the benefit to the asseseeentitling for an exemption under the Tamil Nadu Agricultural IncomeTax Act. https://hcservices.ecourts.gov.in/hcservices/ 9. It may be noted that the Commissioner initiated suo motuproceedings on the ground that the trust deed had not been producedbefore the authorities concerned for the purpose of verifying thestatus of the institution as an Charitable Institution. In thecircumstances, the Commissioner passed an order negativing the claimof the assesee on the ground that the exemption granted under theIncome Tax Act, per se, does not enure to the benefit to the asseseeentitling for an exemption under the Tamil Nadu Agricultural IncomeTax Act. https://hcservices.ecourts.gov.in/hcservices/ 10. As far as the exemption under the provisions of thecharge under the Tamil Nadu Agricultural Income Tax is concerned,Sec. 4(b) is the relevant section. The same reads as follows: Section 4: Total agricultural Income:- Subjectto the provisions of this Act, the total agriculturalincome of any previouos year of any personcomprises all agricultural income derived fromland situated within the State which isreceived by him or which accrues to him withinor without the State, but does not include-(a).... (b) any agricultural income derivedfrom property held under trust, wholly orpartly for charitable or religious purposes,to the same extent to which income derivedfrom property under trust wholly or partly forcharitable or religious purposes, is notincluded in the total income for purposes ofthe Income Tax Act, 1961 (Central Act XLIII of1961)". 11. This provision came up for consideration in thedecision reported in 247 ITR 521 (STATE OF TAMIL NADU VSEXHUMESWARAMUDAYAR TEMPLE). While considering the scope of thisSection, this Court held that for the purpose of exemption under theAgricultural Income Tax Act, a religious or a charitable institutionreceiving income from agricultural lands need not get registeredunder the provisions of the Central Income Tax Act. It is onlythose trusts having income from non-agricultural sourses need to getthem registered under the relevant provisions of the Income TaxAct. Interpreting the phrase: to the same extent to which theincome derived from the property held under trust wholly or partlyfor charitable or religious purposes is not included in the totalincome for the purposes of the Income Tax Acat,19961", occurringinthe said clause it was pointed out that "no meaning can beascribed except as to how under the Income Tax Act, the incomederived from non-agricultural property held by a charitable andreligious trust is taxable and to the same extent, the agriculturalincome would be taxable under the said clause of the Act. If anyother meaning is given to the said phraseology, it would lead toabsured results. In the process of interpretation of thephraseology as extracted above, we have to accredit wisdom andknowledge to the Legislature in enacting such a clause to therelevant provisions of the Income Tax Act and the provisions of theConstitution we have earlier referred to; and that perhaps was thereason they have introduced Clause (b) of Section 4 to the tax"agricultural income" from property held under trust for religiousorcharitable purposes in the same manner, as had been enacted in theIncome Tax Act, as relatable to non-agricultural income fromhttps://hcservices.ecourts.gov.in/hcservices/property held under trust for religious and charitable purposes for the purpose of income tax. Certain consequences are to flow fromwhat has been stated above. There is so need for a religious orcharitable trust, receiving income on agriculture from the landsheld by him, to get the trust registered under the relevantprovisions of the Income Tax Act for claiming a little bit ofexemption of tax, as had been granted in Clause (b) of Section 4 ofthe Act." the purpose of income tax. Certain consequences are to flow fromwhat has been stated above. There is so need for a religious orcharitable trust, receiving income on agriculture from the landsheld by him, to get the trust registered under the relevantprovisions of the Income Tax Act for claiming a little bit ofexemption of tax, as had been granted in Clause (b) of Section 4 ofthe Act." 12. In the context of the said decision, the claim of theassesee for exemption must rest on the proof that the assesseeadduces as to its status as a charitable institution. As alreadyseen, since admittedly the petitioner had not produced the trusttreed before the revisional authority, the matter merits to beremitted back to the revisional authority concerned to verify thetrust deed to consider the claim for exemption. The petitionerherein shall produce the trust deed before the revisional authoritywho shall pass orders thereupon in accordance with law. 13. T.C.No.108 of 2004 relates to the assessment year 1999-2000, wherein the facts are also similar. The order passed by theCommissioner is common and in identical set of circumstances. *14. Considering the above facts and circumstances, theabove cases are disposed of by setting aside the orders passed bythe Special Commissioner, Tamilnadu Agricultural Income Tax,Chennai. The matters are remitted back to the Special Commissionerand Commissioner of Agricultural Income Tax, Chennai to considerthe trust deed and pass orders on merits. Consequently, connectedTCMP are closed. No costs. bgSd/- Asst.Registrar Dated: 11.10.2007 * Corrected order to issued. Sd/Assistant RegistrarDated: 30.11.2007 /true copy/ Sub Asst.Registrar To, 1. The Special Commissioner and | Commissioner of Agriculture Income Tax,| Ezhilagama, Chepauk, Chennai-5.| To be substituted|2. The Deputy Collector,| Income Tax Officer,|to the order Guddalore.||already3. The Section Officer,|VR Section,|despatched onHigh Court, Madras.||22.10.2007+1 cc to Special Government Pleader Sr.No.54271.||+1 cc to Mr.P.J.Rishikesh, Advocate Sr.No.53910.|AKR(CO)dcp/12.10kk 30/11T.C.(R)Nos.107 and 108 of 2004