Tca/957/2010 Of Commissioner Of Income Tax v. M/S Vasavi Manikandan Hospital

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 24.02.2020 CORAM : The Hon'ble Dr.JUSTICE VINEET KOTHARIANDThe Hon'ble Mr.JUSTICE R.SURESH KUMAR T.C. (A) No.957 of 2010 Commissioner of Income TaxSalem. .. Appellant/Respondent-vs- M/s.Vasavi Manikandan Hospital Trust,No.48, Iyappa Hospital,Andal Street, Shevapet,Salem 636 002... Respondent/AppellantPrayer:Appeal filed under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Chennai'B'Bench,dated09.04.2010passedinI.T.A.No.1902/Mds/2009 and against the order of the Commissionerof Income Tax, Salem-7, dt.13.10.2009, made in C.No.9755(90)/SLM/2002-2003.For Appellant:Mr.J.NarayanasamySr. Stdg. CounselFor Respondent:Mr.M.P.Senthilkumarfor Mr.G.Baskar* * * * * O R D E R(Order of the Court was made by Dr.Vineet Kothari, J.) This appeal has been filed by the Revenue aggrieved by theorder of the Income Tax Appellate Tribunal dated 09.04.2010,whereby the learned Tribunal directed the Commissioner of IncomeTax to grant registration to the respondent Assessee, M/s.VasaviManikandan Hospital Trust, under Section 12A of the Income Tax Act. 2.LearnedCounselfortheAppellant/Revenue,Mr.J.Narayanasamy, urged that in the present case, the AssesseeTrust had simply not appeared before the learned Commissioner ofIncome Tax, who was considering it's application under Section12A of the Income Tax Act, 1961, and after the remand by thelearned Tribunal, the Commissioner of Income Tax had asked forseven informations/documents to be furnished by theRespondent/Assessee Trust. But, the Respondent/ Assessee Trustsimply did not appear thereafter before the Commissioner ofIncome Tax and therefore, it's application was dismissed forwant of prosecution. 3.However, the Respondent Assessee Trust preferred anappeal before the learned Tribunal and the learned Tribunal,without those compliances being made by the Assessee Trustbefore the Commissioner of Income Tax, recorded its independentopinions that either some of the compliances stood made by theAssessee and some other requirements were not even necessary forconsidering the application, under Section 12AA of the Act andtherefore, treating the compliances as sufficient, the learnedTribunal directed the Commissioner of Income Tax to accordregistration to the Respondent Assessee Trust under Section 12Aof the Act. The relevant findings of the learned Tribunal asrecorded in paragraphs 7 and 8 of the impugned order are quotedbelow for ready reference. “7.As regards the first query of the Commissionerof Income Tax is concerned, the assessee has dulyproduced the records showing the registration andcertificate for conducting various diagnostic tests.The assessee hospital is also registered with theGovernment of Tamil Nadu under Pre-conception and Pre-natal Diagnostic Techniques as per certificate dated14.7.2006 placed at p.38 of the Paper Book. We furthernote that the assessee hospital is also a bonafideMember of the Nursing Homes & Hospitals Board ofAssociation, Tamil Nadu vide membership certificatedated 3.9.2009 placed at p.40 of the Paper Book.Therefore, there was no further requirement of anyapproval and permission for running a hospital. Sincethe assessee has filed details of bank accounts, then,the second query of the Commissioner of Income Tax isalso satisfied. As regards the meaning of ' FounderTrustee' in the Trust Deed is concerned, it has itsnatural meaning and no other meaning is required to begiven to the said term. When the Trust Deed is signed by the founder trustees and later on some othertrustees are inducted, then there is a cleardifference between the two. It is not the case of theRevenue that the decisions are not taken by themajority and the trust is controlled by only oneperson. At the time of registration, until and unlesssomething is apparent to show the irregularity andmismanagement, the existence and genuineness of thetrust cannot be doubted. Since the Trust Deed issigned only by original founder members, therefore,there is no requirement of signing of the Trust Deedby all the trustees who were inducted later on. Asregards the activity of the trust, the assessee hasclearly mentioned the activities of the assessee inits letter dated 26.12.2008 as well as furnished thedetails of hospital activities and fee charged alongwith the said letter dated 26.12.2008. 8.Once the requisite details have been field bythe assessee, then, in the absence of any finding orany material to show that the object of the assesseetrust are not charitable, then there is no reason todeny the registration. It is not the case of theRevenue that the funds or income of the trust wereutilised for any other purpose than the object of thetrust. Therefore, merely because the trust hospitalis charging some fee from the patients, it cannot besaid that the activity is not charitable,particularly, when the said income earned by theassessee is not due to an exorbitant fee charged fromthe patients or the same was utilised for purposesother than the object of the trust. The Commissionerof Income Tax (Appeals) has not given any finding onthe existence and genuineness of the trust. Moreover,at the time of registration u/s 12A, the Commissionerof Income Tax is not supposed to conduct aninvestigation when the objects of the trust are foundcharitable in nature. The registration cannot bedenied on grounds, which are not relevant at the stageof grant of registration, and which can be relevantonly at the stage of assessment of income of theassessee and grant of exemption. Accordingly, wedirect the Commissioner of Income Tax to grant theregistration to the assessee u/s 12A of the Income TaxAct from the date on which the application forregistration was filed.” 4.Learned counsel for the Appellant/Revenue has also reliedon the judgment of the Supreme Court in the case of Commissioner 3 of Income-tax (Exemptions) vs. Jagannath Gupta Family Trust(2019) 102 taxmann.com 34 (SC). 5.Mr.M.P.Senthil Kumar, learned counsel for theRespondent/Assessee Trust, however, submitted that theregistration in pursuance of the order of the learned Tribunalpassed in 2010 has already been granted to theRespondent/Assessee Trust and no action has been taken by theRevenue Department to cancel that registration. He has alsosubmitted that the informations as desired by the Commissionerof Income Tax were furnished before the learned Tribunal. 4.Learned counsel for the Appellant/Revenue has also reliedon the judgment of the Supreme Court in the case of Commissioner 3 of Income-tax (Exemptions) vs. Jagannath Gupta Family Trust(2019) 102 taxmann.com 34 (SC). 5.Mr.M.P.Senthil Kumar, learned counsel for theRespondent/Assessee Trust, however, submitted that theregistration in pursuance of the order of the learned Tribunalpassed in 2010 has already been granted to theRespondent/Assessee Trust and no action has been taken by theRevenue Department to cancel that registration. He has alsosubmitted that the informations as desired by the Commissionerof Income Tax were furnished before the learned Tribunal. 6.We have heard the learned counsels and we are of theopinion that the learned Tribunal, in these circumstances, oughtto have remanded the case back to the learned Commissioner ofIncome Tax, so that the requisite informations/documentsfurnished by the Assessee Trust could be examined and verifiedby the learned Commissioner of Income Tax, who was to considerthe said application on merits. However, the fact remains thatthe Trust stands registered for the last ten years in pursuanceof the impugned order of the learned Income Tax AppellateTribunal. It was also open for the Revenue Authorities to takesteps for cancellation of the registration, if there was anymaterial against the Assessee Trust or they have violated theconditions of registration or the provisions of the Act in anymanner. That course is even now open to the RevenueAuthorities. We do not find any useful purpose to be served bynow remanding the case back to the learned Commissioner ofIncome Tax to consider the said application under Section 12A ofthe Act afresh at this stage, as the said registration alreadystands granted about ten years back and therefore, we dispose ofthe present appeal filed by the Revenue only by making anobservation that if any breach or violation on the part of theRespondent/Assessee Trust is found, they will be free to proceedagainst the Assessee/Trust in accordance with law. The Appeal is, accordingly, disposed of. There shall be noorder as to costs. 4 To 1.The Commissioner of Income-Tax, Salem. Salem. 2.The Assistant Registrar, Income Tax Appellate Tribunal, 'B' Bench, Chennai. Income Tax Appellate Tribunal, 'B' Bench, Chennai. 3.The Assistant Commissioner ofIncome Tax,Income Tax, Circle III. Salem. +1cc to Mr.G.Baskar, Advocate SR.15901+1cc to Mr.J.Narayanswamy, Advocate SR.16878+1cc to Mr.J.Narayanswamy, Advocate SR.16878 MR(CO)CB(19/03/2020) T.C. (A) No.957 of 2010 5