Tca/91/2013 Of Gowri Ashram v. Director Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MRS.JUSTICE R.BANUMATHI THE HON'BLE MR.JUSTICE K.RAVICHANDRABAABU Gowri Ashram256-259, Thiruvottiyur High Road,(Old No.85, North Mada street)Thiruvottiyur, Chennai-19..... Appellant /Appellant Director of Income-Tax (Exemptions),Aaykar Bhawan,Annex III Floor,121, Mahatma Gandhi Road,Chennai-600 034..... Respondent/Respondent Prayer: Tax Case Appeal is filed under Section 260A of theIncome Tax Act, 1961 against the Order dated 09.10.2012 made inI.T.A.No.1504/Mds/2012 on the file of Income Tax Appellate Tribunal'D' Bench, Chennai on the file of the Director of Income Tax(Exemptions) Ayakar Bhawan, Annexue III floor No.121, M.G.Road,Nungambakkam, Chennai 600 034, DIT (E) No.2 (707)11-12. dated 27/6/12 JUDGMENT BeingaggrievedbytheorderofTribunalinI.T.A.No.1504/Mds/2012 dated 09.10.2012, the assessee has filed thisappeal raising the following question of law:-“Whether on the facts and in the circumstances of thecase the Income Tax Appellate Tribunal is right in law incoming to the conclusion that the Appellant Society is not https://hcservices.ecourts.gov.in/hcservices/ entitled for Registration under Section 12AA of the IncomeTax Act? 2. The assessee – Gowri Ashram, Tiruvottiyur, Chennai is asociety, registered under Tamil Nadu Societies Registration Act,1975. The assessee society is governed by a Scheme Award framed bythe District Court, Tiruvallur. The assessee Trust filed anapplication for registration under Section 12AA of the Act. In thesaid proceedings, the Director of Income-tax (Exemptions) noticedfrom the assessee's income and expenditure account that it hadoffered income under the head “rental income” from the shops let outas well as it got certain collections from the Kalyana Mandapam ownedby it. Before the DIT (Exemptions), the assessee claimed that themain object of the Society is to provide accommodation and facilitiesto poor and needy “for the performance of functions and ceremoniesand for temporary sheltering”. Rejecting the contentions of theassessee, DIT(Exemptions) held that the assessee Trust is maintainingKalyana Mandapam, which is definitely a commercial venture. DIT(Exemptions) also held that the receipt of rental income from theKalyana Mandapam and from 21 shops, which are situated in the groundfloor of the Kalyana Mandapam has been confirmed by the assessee andthat all the income and expenditure are relatable to the maintenanceof Kalyana Mandapam and shops and that the shops and activities arenot in conformity with the definition of “charitable objects” underSection 2(15) and rejected the application filed for registrationunder Section 12AA. 3. Being aggrieved by the rejection of the application, theassessee preferred appeal before the Appellate Tribunal. Referring tothe objects in the Scheme Award, Tribunal held that the assesseeSociety has to provide accommodation and facilities for performanceof marriages and all other auspicious functions of members of aparticular community, viz., Telugu Beri Vysia Community, primarilyand also for performance of similar functions by a religious groupand that the objects of the Society do not come under the purview ofSection 2(15) of the Act and dismissed the appeal of assessee. 3. Being aggrieved by the rejection of the application, theassessee preferred appeal before the Appellate Tribunal. Referring tothe objects in the Scheme Award, Tribunal held that the assesseeSociety has to provide accommodation and facilities for performanceof marriages and all other auspicious functions of members of aparticular community, viz., Telugu Beri Vysia Community, primarilyand also for performance of similar functions by a religious groupand that the objects of the Society do not come under the purview ofSection 2(15) of the Act and dismissed the appeal of assessee. 4. The learned counsel for the assessee society submitted thatthe Tribunal erred in holding that the activity carried on by theassessee is not towards charitable purpose and in coming to the saidconclusion, Tribunal erroneously noted the Article set out in theScheme award relating to the running of the choultry alone anderroneously arrived at the conclusion that the objects are targetedtowards a particular community alone. According to the assesseesociety, the bye-laws of the society make it apparent that theobjects are more diverse without restrictions and specifically dealwith relief to the poor. The learned counsel further submitted thatthe Tribunal erred in coming to the conclusion that the objects ofthe assessee do not include any relief to the poor and there is no activity carried on by the appellant in the said direction and theevidence produced by the assessee showing that the assessee isactively engaged in charitable activities was not taken note of bythe Tribunal. The Tribunal erred in rejecting the claim forregistration under Section 12AA of the Act on a totally differentground from that adopted by the Commissioner of Income-tax. 5. Learned counsel for the revenue took us through Clause 18 ofthe Scheme award and submitted that the objects of the assesseesociety is to provide accommodation and facility for performance ofmarriage functions of the members of a particular community andsimilar auspicious functions by other Hindus and the said activitycannot be said to be “charitable purpose” within the meaning ofSection 2(15) of the Act and the Tribunal rightly dismissed theAppeal. 6. The assessee society “Gowri Ashram” is governed by SchemeDecree framed by District Court, Tiruvallur in Scheme O.S.No.2 of1958. By a reading of the Scheme Award, it is seen that theadministration of the choultry is known as “Gowri Ashram” and in theScheme award wherever the word “CHOULTRY”, occurs in the Scheme shallmean and include the choultry known as “Gowri Ashram”. The same isevident from Clauses 1 and 2(1) of the Scheme Award, which reads asunder: “1. The Administration of the Choultry known as “GOWRIASHRAM” more particularly described in the Schedule to theplaint and its assets shall be administered in accordancewith the provisions of this Scheme. 2. (1) The Word “CHOULTRY” wherever it occurs in thisScheme shall mean and include the choultry known as “GOWRIASHRAM” in the Village of Thiruvottiyur, ChenglepatDistrict, together with its compound, appurtenant buildingsand structure and all endowments attached thereto.” 7. The administration of the Choultry “Gowri Ashram” is governedby the Scheme Award. The objects of the assessee society and use ofthe choultry is provided in Clause 18, which reads as under:-“The object and use of the Choultry is to provideaccommodation and facilities for the performance ofmarriages and all other auspicious functions of themembers of “The Telugu Beri Vysia Community” primarily andalso for the performance of similar auspicious functionsby other Hindus.” By reading of Clause 18, it is clear that the assessee societyhas to provide accommodation and facilities for the purpose ofmarriages and other auspicious functions of the members of Telugu https://hcservices.ecourts.gov.in/hcservices/ 7. The administration of the Choultry “Gowri Ashram” is governedby the Scheme Award. The objects of the assessee society and use ofthe choultry is provided in Clause 18, which reads as under:-“The object and use of the Choultry is to provideaccommodation and facilities for the performance ofmarriages and all other auspicious functions of themembers of “The Telugu Beri Vysia Community” primarily andalso for the performance of similar auspicious functionsby other Hindus.” By reading of Clause 18, it is clear that the assessee societyhas to provide accommodation and facilities for the purpose ofmarriages and other auspicious functions of the members of Telugu https://hcservices.ecourts.gov.in/hcservices/ Beri Community particularly and also for the performance of similarauspicious functions by a religious group. 8. Section 2(15) of the Income-tax reads as under: “"charitable purpose"includes relief of the poor,education, medical relief, preservation of environment(including watersheds, forests and wildlife) andpreservation of monuments or places or objects of artisticor historic interest, and the advancement of any otherobject of general public utility: Provided that the advancement of any other object ofgeneral public utility shall not be a charitable purpose,if it involves the carrying on of any activity in thenature of trade, commerce or business, or any activity ofrendering any service in relation to any trade, commerce orbusiness, for a cess or fee or any other consideration,irrespective of the nature of use or application, orretention, of the income from such activity. Providedfurther that the first proviso shall not apply if theaggregate value of the receipts from the activitiesreferred to therein is [twenty-five lakh rupees] or less inthe previous year;” 9. Both Commissioner of Income-tax as well as the Tribunalrecorded a concurrent finding that the objects and activities of theassessee society to provide accommodation and facilities for purposeof marriages and other auspicious functions of a particular communityis not covered by the definition of “charitable purpose” within themeaning of Section 2(15) of the Income-tax Act. 10. The contention of the appellant is that the Tribunalerroneously noted Clause 18 in the Scheme Award, which relates to therunning of the Choultry alone and erroneously reached the conclusionthat the objects are targeted towards a particular choultry alone.There is no merit in the contention of the appellant that Clause 18of the Scheme award relates only to use of the choultry. As pointedout earlier, in paragraph No.6, as per clause 1 and 2(1) of theScheme award, the word “choultry”,wherever it occurs in the Schemeshall mean and include the choultry known as “Gowri Ashram”.i.e.,Choultry and assessee “Gowri Ashram” are one and the same andtherefore it cannot be said that the Tribunal erred in referring toClause 18 in the Scheme award. 11. Clause 18 of the Scheme Award contains the objects of the https://hcservices.ecourts.gov.in/hcservices/ 11. Clause 18 of the Scheme Award contains the objects of the https://hcservices.ecourts.gov.in/hcservices/ assessee society with which it was formed. Resolutions are said tohave been passed in November 2008 explaining the objects of theassessee society and the same was incorporated in Memorandum ofAssociation of M/s.Gowri Ashram while renewing the registration ofthe Society. In the said Memorandum of Association, the objects ofthe Assessee society is stated as “to provide accommodation andfacilities to the poor and needy for the purpose of functions andceremonies and for temporary shelter and to undertake Annadanam topublic and other forms of poor feeding; to work for the developmentof any games or sports activities; to help poor students for theireducation based on merits by way of scholarships,etc., to undertakeand provide medical care to the poor and the needy. The said objectsand activities of the society by way of minutes of the Board ofSocieties in the year 2008 appears to be expansion of the objects andactivities of the assessee. Being governed by the Scheme Award, theexpansion of objects and activities has to be approved by the Court,which framed the Scheme Award. In fact, the assessee has moved anInterlocutory Application in the Court of Principal District Judge atTiruvallur in Scheme O.S.No.2 of 1958 to permit the Assessee - ”GowriAshram” to expand the new objects pertaining to distribution ofscholarships, celebration of other festivals, conducting sports andcultural activities, helping poor and destitute people from theweaker sections of the community/society and to help the needypeople. The said Interlocutory Application filed before the DistrictCourt, Tiruvallur is stated to be pending. Unless expanded objects ofthe assessee are approved and incorporated in the Scheme Award, theassessee cannot claim to be the Trust with charitable purpose. Sincethe object of the assessee society is only to benefit a particularcommunity, primarily, Telugu Beri Vysia community and for performanceof similar functions by other Hindus, the Tribunal rightly dismissedthe appeal and we do not find any substantial question involved inthis appeal. 12. In the result, the appeal is dismissed. However, it is opento the assessee society to renew its application as and when itsexpanded objects of the Society are approved by the competent Court. Sd/Asst. Registrar /True Copy/ Sub Asst.Registrar bbr/usk To1.The Income-tax Appellate Tribunal,'D' Bench, Chennai2.The Director of Income Tax (Exemptions),Chennai. +1CC to M/S.DR. ANITHA SUMANTH, SR No.25137 dated 29/4/13+1CC to M/S.J.NARAYANASAMY, SR No.25212 dated 29/4/13 Judgment inT.C.(A) No.91 of 2013 AD (CO)JV / 29.05.2013