Tca/32/2011 Of The Director Of Income Tax v. M/S.sri Krishna Trust

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.11.2018 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) No.32 of 2011 The Director of Income-tax Exemption,Chennai. ... Appellant/Respondent-vs- M/s.Sri.Krishna Trust,32, Servai Munisamy Mudali Street,Velapadi, Vellore - 632 001. ... Respondent/Appellant Tax Case (Appeal) filed under Section 260-A of the IncomeTax Act, 1961 against the order of the Income Tax AppellateTribunalBench'C', Chennai, dated18.08.2010, inI.T.A.No.815/Mds/2010 for the assessment year 2010-11, againstthe order passed by the Director of Income Tax (Exemptions),Chennai 600 034 order dated 26/02/2010 made in DIT(E)No.2(487)/09-10. For Appellant :Mr.D.Prabhu Mukund ArunkumarStanding CounselJUDGMENT This appeal, filed by the Revenue under Section 260A of theIncome-tax Act, 1961 (hereinafter referred to as "the Act"), isdirected against the order passed by the Income Tax AppellateTribunalBench'C',Chennai, dated18.08.2010, inI.T.A.No.815/Mds/2010 for the assessment year 2010-11. 2.The appeal has been admitted by order dated 22.02.2011,on the following substantial question of law:-“Whether on the facts and circumstances ofthe case, the Tribunal was right on deciding thatthe Assessee should be deemed to have been grantedthe Registration u/s.12AA without considering thematerial facts of the case? https://hcservices.ecourts.gov.in/hcservices/ 3.Heard Mr.Prabhu Mukund Arunkumar, learned Standing Counselfor the appellant revenue. Though the respondent/assessee hasbeen served and their name is printed in the cause list, noneappears for the respondent. 4.The short issue falls for consideration in the instantcase is whether the respondent assessee would be deemed to havebeen granted registration under Section 12AA of the Act on theground that the assessee's application for registration underthe said provision was not accepted or refused before the expiryof six months from the end of the month in which the applicationis received in terms of Section 12AA(2) of the Act. 5.On a plain reading of Sub-section (2) of Section 12AA ofthe Act, we find that there is no such deeming provision. TheTribunal erred in including the words in the statute whichcannot be done. Therefore, this is sufficient to interfere withthe impugned order. That apart, the Tribunal came to theconclusion that no order has been passed by the Director ofIncome Tax (Exemptions) on the application filed by the assesseedated 21.08.2009. We do not agree with the finding of theTribunal in this regard since the Director of Income Tax(Exemptions) has rejected the application. It may be true thatthe authority has used the word "lodged". However, the saidword should be read in isolation. The said word is contained inparagraph 5 of the order. However, the reasons for not beingconvinced to grant registration is contained in paragraph 4 ,which reads as follows: "4.Shri V.S.Ravindran attended the hearing on29.01.2010 along with Shri S.Ramalingam, CA and theyfiled reply. It was examined. In the reply, it isstated that "manufacture of naturopathy medicine isto be given only to the patients coming fortreatment to the clinic. It is not meant for saleto the general public". Hence, it is clear that themedicines will be sold to the patients coming fortreatment to the clinic. Manufacturing and sellingmedicines are not charitable activities and it fallswithin the amended provisions of section 2(15) ofthe Income Tax. Likewise publishing books audio andvisual materials relating to yoga also cannot beconsidered as charitable." "4.Shri V.S.Ravindran attended the hearing on29.01.2010 along with Shri S.Ramalingam, CA and theyfiled reply. It was examined. In the reply, it isstated that "manufacture of naturopathy medicine isto be given only to the patients coming fortreatment to the clinic. It is not meant for saleto the general public". Hence, it is clear that themedicines will be sold to the patients coming fortreatment to the clinic. Manufacturing and sellingmedicines are not charitable activities and it fallswithin the amended provisions of section 2(15) ofthe Income Tax. Likewise publishing books audio andvisual materials relating to yoga also cannot beconsidered as charitable." 6.A reading of paragraph 5 along with the reasons assignedin paragraph 4 and the last sentence in the order which rejectsthe application for grant of exemption under Section 80G willclearly show that the request made by the respondent assesseefor registration has been rejected and the reasons have beenrecorded for such rejection. Therefore, in our considered view, https://hcservices.ecourts.gov.in/hcservices/ the order passed by the Tribunal is utterly perverse andunsustainable in the eye of law. 7.For the above reasons, the appeal filed by the revenue isallowed and the order passed by the Tribunal is set aside andconsequently, the substantial question of law is answered infavour of the revenue. No costs. Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant RegistrarcseTo1.The Income Tax Appellate Tribunal Bench 'C', Chennai.2.The Director of Income Tax (Exemptions) Chennai 600 034.T.C.(A) No.32 of 2011sr[co]srg 18/12/2018