The Director Of Income Tax [Exemptions], Chennai v. Founder Ramachandra Iyer Trust

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.01.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) Nos.526 and 527 of 2011 The Director of Income Tax [Exemptions], Chennai. ... Appellantin both the Appeals -vs- Founder Ramachandra Iyer Trust,No.5, Main Road,Dr.Subbaraya Nagger, Kodambakkam,Chennai-600 024. ... Respondentin both the Appeals APPEALS under Section 260A of the Income-tax Act, 1961against the common order dated 10.05.2011, made inI.T.A.Nos.2143 and 2144/Mds/2010, on the file of the Income-taxAppellate Tribunal, Chennai Bench 'D' against the proceedings ofthe Director of Income Tax (Exemptions), Chennai DIT(E)No.2(1270)/09-10, dated 30.09.2010 For Appellant:Mr.J.Narayanaswamy,(In both the Appeals)Senior Panel Counsel These appeals, by the Revenue filed under Section 260A ofthe Income-tax Act, 1961 (hereinafter referred to as “the Act”),are directed against the common order of the Income-taxAppellate Tribunal, Chennai Bench 'D' (for brevity “the https://hcservices.ecourts.gov.in/hcservices/ Tribunal”), in I.T.A.Nos.2143 and 2144/Mds/2010, dated10.05.2011. 2.The above appeals were admitted, on 12.12.2011, on thefollowing substantial questions of law:-“(i) Whether on the facts and circumstances ofthe case, the tribunal was right in deciding theobject of the Trust are charitable on naturecontrary to the mandatory provisions stipulatedunder Section 12AA of the Act? (ii) Whether on the facts and circumstances ofthe case, the Tribunal was right in deciding toconsider afresh for the approval under Section 80Gwithout considering explanation 3 read withSec.80G of the Act?” 3.Heard Mr.J.Narayanaswamy, learned Senior Panel Counsel forthe appellant; and M/s.Pushya Sitaraman, learned Senior Counsel,assisted by M/s.J.Sree Vidya, learned counsel for the respondent. 4.The assessee applied for registration under Section 12AAof the Act, vide applications dated 15.03.2010 filed in Form 10Aand Form 10G. The assessee constituted a Trust under a Deed ofTrust dated 05.03.2010, and requested for registration underSection 12AA and also for grant of approval under Section 80G ofthe Act. The applications were rejected by the respondent onthe ground that the assessee has not undertaken any activity onits own towards implementation of the objects of the trust.Further, in respect of the application for grant of approvalunder Section 80G of the Act, the respondent held that in termsof Section 80G, even if any one of the activities of a trust iswholly or substantially wholly of a religious nature, then thetrust would not come in the scope of Section 80G. The assesseefiled appeals before the Tribunal, which were allowed by theimpugned order. The correctness of the same is questionedbefore us by the Revenue. 5.The first substantial question of law alone survives forconsideration, since pursuant to the observations made by theTribunal in the impugned order, the respondent has consideredthe application filed by the assessee for grant of approvalunder Section 80G of the Act and has granted the same, videorder dated 13.06.2012. Therefore, there is no necessity todecide the second substantial question of law. This leaves uswith one substantial question of law to be decided, viz., thefirst substantial question of law. 6.The Tribunal, while considering the correctness of theorder passed by the respondent dated 30.09.2011, pointed out https://hcservices.ecourts.gov.in/hcservices/ that the objects of the trust are definitely charitable innature. To support such a finding, the activities done by thetrust were noted by the Tribunal in paragraph 6 of its order. 7.We find the reasons assigned by the Tribunal to be legallyvalid and perfect. As pointed out by us earlier, the respondentrejected the applications on the ground that the assessee hadnot commenced any activity. 6.The Tribunal, while considering the correctness of theorder passed by the respondent dated 30.09.2011, pointed out https://hcservices.ecourts.gov.in/hcservices/ that the objects of the trust are definitely charitable innature. To support such a finding, the activities done by thetrust were noted by the Tribunal in paragraph 6 of its order. 7.We find the reasons assigned by the Tribunal to be legallyvalid and perfect. As pointed out by us earlier, the respondentrejected the applications on the ground that the assessee hadnot commenced any activity. 8.To be noted that the assessee constituted a trust on05.03.2010 and made applications on 15.03.2010. Therefore, insuch circumstances, it has to be seen as to whether therespondent was justified in rejecting the applications on theground that no activities of the trust have been shown, thoughten days had lapsed after the formation of the trust. 9.Identical issue was considered by the Division Bench ofthis Court in the case of Director of Income Tax Exemptions vs.Seervi Samaj Tambaram Trust, (2014) 362 ITR 0199 (Mad) wherein,it was held that where the genuineness of the objects of thetrust was not doubted, registration under Section 12AA of theAct cannot be refused on the ground that the trust has not yetstarted its activities. (i) Further, in the case of Director of Income TaxExemptions vs. Sri Arunachala Smaranamrutam Trust [T.C.(A)No.403 of 2013: dated 05.01.2015], a Division Bench of thisCourt held that refusing the registration on the threshold, whenthe genuineness of the objects of the trust was neverquestioned, was held to be bad in law. (ii) Similar view was taken by the Division Bench of thisCourt in the case of CIT vs. Desperate for Him Ministries [T.C.(A) No.319 of 2012: dated 05.01.2015]. 10.Thus, for the above reasons, we find that the orderpassed by the Tribunal to be just and proper, and legallycorrect. 11.In the result, these tax case appeals are dismissed andthe first substantial question of law is answered against theRevenue. No costs. abr Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar To 1. The Income-tax Appellate Tribunal, Chennai Bench 'D'. 2. The Director of Income Tax(Exemptions), Nungambakkam,Chennai. +1cc to Mrs.R.Sreevidya , Advocate, S.R.No.6239+1cc to Mr.J.Naryanaswamy , Advocate, S.R.No.5366T.C.(A) Nos.526and 527 of 2011RK(CO)KAK(25/02/2019)