Madras High Court
M/S. Toiling Masses Welfare Trust vs Deputy Commissioner Of Income Tax on 22 September, 2021
T.C.A.No.760 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 22.09.2021
CORAM
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Mr.Justice SATHI KUMAR SUKUMARA KURUP
T.C.A. No. 760 of 2016
M/s. Toiling Masses Welfare Trust
No.27, Vaidya Raman Street
T.Nagar, Chennai – 600 017
Represented by its Trustee
Mr.G.Ramakrishnan ...Appellant
Vs.
Deputy Commissioner of Income Tax
(Exemptions) IV
No112, Uttamar Gandhi Salai
Chennai – 600 034. ...
Respondent
Appeal filed under Section 260-A of the Income Tax Act, 1961, praying
to allow the above Writ Appeal by setting aside the order dated 06.11.2015
passed in I.T.A. No. 1597/Mds/2014 of the Income Tax Appellate Tribunal
Chennai 'A' Bench.
For Appellant : Mr. J.Balachander
assisted by Ms. S.Indumathi
For Respondent : Mr. A.N.R.Jaya Prathap
Senior Standing Counsel
******
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T.C.A.No.760 of 2016
JUDGME NT
(Delivered by T.S.Sivagnanam, J.)
This appeal filed by the assessee under Section 260-A of the Income Tax
Act, 1961('the Act' for short) is directed against the order dated 06.11.2015 in
I.T.A. No. 1597/Mds/2014 on the file of the Income Tax Appellate Tribunal
('ITAT' for short), Chennai for the assessment year 2010-11.
2. The assessee has raised the following questions of law for consideration:-
“1. Whether on the facts and circumstances of the case the
Hon'ble Income Tax Appellate Tribunal was right in law in
denying the exemption under section 11 to 13 of the Act by
placing a very narrow interpretation to the term charitable
activity with respect to amount applied towards the objectives
of the Trust.
2. Whether on the facts and circumstances of the case the
Hon'ble Income Tax Appellate Tribunal was right in law in
concluding that the printing of News papers to educate the
Toiling Masses being its objects is not a Charitable activity in
nature.
3. Whether on the facts and circumstances of the case the
Hon'ble Income Tax Appellate Tribunal was right in law in
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T.C.A.No.760 of 2016
omitting to allow Depreciation on fixed assets as per the
Judgments of the Punjab and Harayana High Court in the
case of CIT Vs. Market Committee pipli reported in (330) ITR
16 (P&H) and CIT Vs. Tiny Tots Education Society reported
in (330) ITR 21 (P&H).”
3. We have heard Mr. J.Balachander, Learned counsel for the appellant-
assessee and A.N.R.Jaya Prathap, Learned Senior Standing Counsel appearing
for the respondent-Revenue.
4. The assessee is a charitable trust constituted by a deed of declaration of
trust dated 28.02.1986 and registered under Section 12-A of the Act by order
dated 05.06.1986. The appellant-assessee filed its return of income for the
assessment year under consideration 2010-11 for the total income of nil and
claiming the exemption under Sections 11 to 13 of the Act. The assessment was
completed under Section 143(3) of the Act and an order to the said effect was
passed on 19.02.2013. The Assessing Officer, while assessing the total income,
disallowed the sum claimed by the assessee for publication of the newspaper
'Theekkathir' on the ground that it is not for charitable purpose and also
observed that disallowed the claim of depreciation on the assets of the assessee
stating that it is not eligible for deduction. Aggrieved by the same, the assessee
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T.C.A.No.760 of 2016
preferred an appeal before the Commissioner of Income Tax (Appeals) VII,
Chennai ('CIT(A)'). The appeals were allowed by order dated 28.02.2014. The
Department being aggrieved by such order preferred an appeal before the
Income Tax Appellate Tribunal, “A” Bench ('the Tribunal') and the Tribunal has
allowed the department's appeal and the assessee being aggrieved by such order
is before us by way of this appeal by raising the above mentioned substantial
questions of law.
5. From the order passed by the Commissioner of Income Tax (Appeals)-
VII, Chennai, we find that the authority had examined the nature and purpose
for which the Trust was created and the publication of the newspaper was to
educate the toiling masses and having arrived at such a factual conclusion held
the denial of exemption under section 11 of the Act was not correct. The CIT(A)
has also noted as to how the substantial number of people in the country lives in
rural areas and about 40% of the population is below the poverty line and the
appellant-trust is to educate those daily wage earners in urban areas and
industrial workers about the various aspects, which they are bound to know and
held that the activity of publishing the newspaper can be covered under
''advancement of any other object of general public utility''. While testing the
correctness of the order passed by the CIT(A), the Tribunal had relied upon the
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T.C.A.No.760 of 2016
decision of the Cochin Bench of this Tribunal in Al-Madeena
Charitable Trust -vs- ACIT reported in (76) ITD 214 and came to the
conclusion that the assessee had not carrying on any charitable activity and
therefore, exemption cannot be granted under section 11 of the Act.
6. We find that the Tribunal has not rendered any finding on the correctness
of the decision of the CIT(A), which examined the factual aspects as to purpose
behind which the newspaper was printed and published. Therefore, merely by
applying the decision in Al-Madeena Charitable Trust(cited supra), the order
passed by the CITA could not have been reversed.
7. That apart, we also find that no detailed factual examination was required
to have been done, with regard to the depreciation on the assets, which was
considered by the CIT(A) and certain reasons have been referred to by the
CIT(A) to grant relief to the assessee. In fact, the CIT(A) had referred to three
decisions and observed that since there are conflicting decisions of the various
High Courts, one which is favourable to the assesee should be given effect to
and allowed the claim for deduction.
8. However, the Tribunal has reversed the finding of the CIT(A) that the
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T.C.A.No.760 of 2016
claim of depreciation cannot be a double deduction over and above the full value
of the assets and with that observation, the Revenue's appeal was allowed.
There is no finding rendered by the Tribunal as regards the views expressed by
the CIT(A). Before us the assessee would contend that in terms of the decision
of the Hon'ble Supreme Court in CIT Vs. Vegetable Products Ltd. reported in
88 ITR 192 (SC) that the view expressed by the High Court in favour of the
assessee should be preferred to the views expressed as against the assessee and
this aspect has not been considered by the Tribunal.
9. Further, Learned Counsel for the assessee placed reliance on the decision
of the Punjab & Haryana High Court in CIT -vs- Market Committee Pipli
reported in 330 ITR 16 (P&H) and CIT -vs- Tiny Tots Education Society
reported in 330 ITR 21 (P&H), wherein, it has been held that depreciation
allowance on fixed assets of charitable trusts are not double deduction as
claimed by the department.
10. Thus, in the light of what we have observed above, we are of the view
that the Tribunal should reconsider the case of the appellant-assessee by taking
note of all the facts and legal position that may be placed before the Tribunal by
and on behalf of the assessee.
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T.C.A.No.760 of 2016
11. The Learned Counsel for the appellant submitted that in sofar as the third
substantial question of law is concerned, the decisions of this Court in Director
of Income Tax (Exemptions) -vs- Medical Trust of the Seventh Day
Adventists is fully in favour of the appellant-assessee and the question has been
answered in favour of the appellant-assessee. This issue also can be raised
before the Tribunal.
For the above reasons, the Tax Case Appeal is allowed and the order
passed by the Tribunal was set aside and the matter is remanded before the
Tribunal for fresh consideration on all issues, after hearing the appellant-
assessee. Consequently, the substantial questions of law are left open. No costs.
[T.S.S., J.] [S.S.K., J.]
22.09.2021
Maya/Sp
Index: Yes/ No
Speaking Order : Yes/ No
To
Deputy Commissioner of Income Tax
(Exemptions) IV
No112, Uttamar Gandhi Salai
http://www.judis.nic.in
T.C.A.No.760 of 2016
Chennai – 600 034.
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T.C.A.No.760 of 2016
T.S.Sivagnanam, J.
and
Sathi Kumar Sukumara Kurup, J.
(Maya)
T.C.A. No. 760 of 2016
Dated : 22.09.2021
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