Madras High Court
Commissioner Of Income Tax vs M/S.Veda Vikas Educational on 19 February, 2021
Tax Case Appeal No.229 of 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 19.02.2021
CORAM
THE HON'BLE MR. JUSTICE M. DURAISWAMY
AND
THE HON'BLE MRS. JUSTICE T.V. THAMILSELVI
Tax Case Appeal No.229 of 2011
Commissioner of Income Tax,
Salem. ... Appellant
Vs.
M/s.Veda Vikas Educational
& Charitable Trust,
36-IB, N.H.7 Salem, Santhiyur,
Salem – 636 203. ... Respondent
Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961
against the order of the Income Tax Appellate Tribunal, Chennai “C” Bench,
dated 12.11.2010 passed in I.T.A.No.1609/Mds/2009.
For Appellant : Mr.J.Narayanaswamy
Senior Standing Counsel
For Respondent : No appearance
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Tax Case Appeal No.229 of 2011
JUDGMENT
(Delivered by M. DURAISWAMY, J.)
The above appeal has been filed by the Revenue challenging the order
passed in I.T.A.No.1609/Mds/2009 on the file of the Income Tax Appellate
Tribunal, Chennai Bench “C”.
2.The Trust was created by Trust Deed, dated 24.05.2001, by 30 persons
in the name of “M/s.Shanmuga Venkateshwara Educational Trust”. According
to the appellant, one of the Trustees was a minor aged about 14 years on the
date of execution of the Trust Deed. The main object of the Trust was for the
cause of promotion of education culture and ethics irrespective of religion, caste
and races among the public. Further, it has been recited in the document that
the Trust was to take all efforts for the betterment of the society by festinating
organisation to provide better education, Arts, and Culture which are common
good for promotion of Society. The respondent Trust filed an application in
Form-10A for registration under Section 12-AA of the Income Tax Act, 1961
(“the Act” for brevity) on 24.02.2009. The Commissioner of Income Tax found
that all the 30 persons have signed the Trust Deed and out of the 30 persons, 13
were stated to be Executive Committee members. By a supplementary deed, the
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Tax Case Appeal No.229 of 2011
object clause was diluted by a new object clause to the effect that the object was
to be achieved by establishing agricultural farm and proceeds to be utilised for
the purpose of achieving the objects of the Trust.
3.The Revenue contended that these amendments in the supplementary
deed are against the object mentioned in the original Trust Deed. The
Commissioner of Income Tax, taking into consideration the case of both sides,
refused to register the Trust under Section 12AA of the Act. While rejecting the
application, the Commissioner of Income Tax observed that a minor has been
inducted as a Trustee under the Trust Deed and he was also allowed to cast his
vote independently. Further, the Commissioner of Income Tax observed that
the main object of the Trust was diluted in the supplementary deed, and
therefore, the same is violative of Section 12AA of the Act.
4.Challenging the order passed by the Commissioner of Income Tax, the
respondent filed an appeal before the Income Tax Appellate Tribunal and the
Tribunal, by order dated 12.11.2010, allowed the appeal and directed the
Commissioner of Income Tax to allow registration of the Trust under Section
12AA of the Act. Aggrieved over the same, the Revenue has filed the above
appeal. The above appeal was admitted on the following substantial questions
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Tax Case Appeal No.229 of 2011
of law :
"1.Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in directing the
Commissioner of Income Tax to grant registration under Section
12AA of the Income Tax Act, 1961?
2.Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in directing the
Commissioner of Income Tax to grant registration under Section
12AA when the assessee had failed to furnish the details called
for by him in the course of the registration proceedings, which
were necessary to satisfy himself about the genuineness of the
activities of the Trust?
3.Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in directing the
Commissioner of Income Tax to grant registration under Section
12AA when the conditions laid down in Section 12AA of the Act
regarding satisfaction of the Commissioner of Income Tax with
regard to the charitable nature of the objects and the genuineness
of the activities carried out by the Trust were not fulfilled?"
5.On a perusal of the order passed by the Tribunal, it is clear that the
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Tax Case Appeal No.229 of 2011
Tribunal has not gone into the issues that were decided by the Commissioner of
Income Tax. While reversing the order passed by the Commissioner of Income
Tax, the Tribunal should have considered the findings given by the
Commissioner of Income Tax in detail. However, the Tribunal, in Para No.4,
observed that the substitution or change of Trustees subsequent to the Trust
Deed would not effect the original object unless the object itself is changed by
the subsequent supplementary deed. When the Commissioner of Income Tax
had given findings with regard to the induction of a minor as a Trustee and that
the main object of the Trust would be lost by the subsequent supplementary
deed, the Tribunal should have considered those aspects and given findings
with regard to the same. Since the Tribunal has not considered those issues, we
are of the considered view that the order passed by the Tribunal should be set
aside and the matter be remitted back to the Tribunal for fresh consideration.
6.Accordingly, the order passed by the Income Tax Appellate Tribunal in
I.T.A.No.1609/Mds/2009, dated 12.11.2010, is set aside and the matter is
remitted back to the Tribunal for fresh consideration. The Tribunal is directed
to decide the matter afresh, specifically with regard to the findings that were
given by the Commissioner of Income Tax in his order, dated 12.08.2009, and
also give a finding whether the respondent had complied with the provisions of
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Tax Case Appeal No.229 of 2011
Section 12AA of the Act. The appeal shall be decided afresh after giving
opportunity of hearing to both sides.
With these observations, this Tax Case Appeal is allowed.
[M.D., J.] [T.V.T.S., J.]
19.02.2021
Index : Yes / No
Internet : Yes
mkn
To
1.The Income Tax Appellate Tribunal,
Chennai “C” Bench
2.The Commissioner of Income Tax,
Salem.
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Tax Case Appeal No.229 of 2011
M. DURAISWAMY, J.
and
T.V. THAMILSELVI, J.
mkn
Tax Case Appeal No.229 of 2011
19.02.2021
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