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Before: Shri V. Durga Rao & Shri G. Manjunatha
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Exemptions), Chennai dated 29.12.2017 passed under section 12AA of the Income Tax Act, 1961 [“Act” in short]. The grounds raised by the assessee are as under: A. That the order of the learned CIT(E) is erroneous in law and is against the principles of natural justice. B. The learned CIT(E) erred in not considering the grounds of appeal, written submissions and the decisions in proper perspective. C. The learned CIT (E) committed grave errors in not taking into consideration that the Appellant is nothing but an Association of persons in the eye of law and the appellant Trust is formed simply formalizing the century old practice that is being carried out by the members of the Appellant through their representatives and the entire income for the trust is collected by way of temple tax imposed by the periathanakarars of the community only from the members of the Trust, no profit is shared among the members and the Trust is only a convenient entity formed to carry out the objects and it does not receive any contributions from any one and thus satisfy all the ingredients required to apply doctrine of mutuality as held by the Hon'ble Supreme Court in Chelmsford Club, (2000) 3 SCC 214 and the learned CIT even failed to refer the judgment relied upon by the Appellant before passing the impugned judgment which is perverse. D. That the finding of the learned CIT(E) in paragraph 2 (as well as in paragraph 4) of the impugned order that “the sources for the income of the Appellant Trust is from the lease amount derived from the lands donated to the temples” is factually incorrect and has been rendered without any basis, either factual or legal, and hence the said finding is perverse. E. That the finding of the learned CIT(E) in paragraph 4 of the impugned order that the Trust is private religious trust is perverse and without any basis but arrived at without any application of mind and without ascertaining that the Appellant is de facto Association and registered under the Trust Act nature of which is religious and charitable one and hence the said finding is perverse. F. That the finding of the learned CIT(E) in paragraph 4 of the impugned order that the Sec.2(31) of the IT Act 1961 stipulates that every juridical person is a taxable entity is contrary to the plain meaning of the said provision and has been rendered without any legal basis and hence the said finding is perverse. G That the finding of the learned CIT(E) in paragraph 4 of the impugned order that the contributions received from the Kudipattukararkal also fall within the ambit of voluntary contributions u/s 2(24) of the Act is contrary to the very recitals of Trust Deed and hence it is perverse. H. That the finding of the learned CIT(E) in paragraph 4 of the impugned order that the concept of membership comes only in the case of Associations registered under the Societies Act is without any legal basis and hence the said finding is perverse. I. That the finding of the learned CIT(E) in paragraph 4 of the impugned order that the principle of mutuality is not applicable to the appellant trust is perverse as none of the submissions made by the appellant before the learned CIT and the judgments relied upon, and produced before the learned CIT, by the Appellant in support of the same, viz.,(i) M/s Chelmsford Club Commissioner Of Income-Tax, Delhi, (2000) 3 SCC 214 and (ii) Orders dated 13.10.2016 passed in .T.A.No.6361/Del/2015 for A.Y.2010-11 by the Income Tax Appellate Tribunal, New Delhi in the matter of Swarn Jayanti Rail Nagar Flat Owners’ Association Vs. JCIT, Range-1, NOIDA and hence the said finding is perverse.
J. That the finding of the learned CIT(E) in paragraph 5 of the impugned order that the Trust is purely a private Trust is contrary to facts and has been rendered without taking into consideration of the facts and recitals of the Trust that the Trust is to maintain totally 7 temples out of which only one Temple, namely Arulmigu Aathi karumariamman Temple alone is the kula theivam of the members of the Appellant and all other temples are common temples open to all public but the learned CIT rendered a finding contrary to the said fact and hence the said finding is perverse. K. That the finding of the learned CIT(E) in paragraph 6 of the impugned order that the Trust is not eligible for registration because of sec.13(1)(a) of the Act is perverse as the Trust does not hold any property as held by the learned CIT. L. That the finding of the learned CIT(E) in paragraph 7 and 8 of the impugned order relying upon the decision of the Hon'ble Supreme Court in Kerala Vs. M.P.Shanti Verma Jain (1998) 231 ITR 787 that the Sec.13(1)(a) of the Act is applicable to this case is patently erroneous as the said judgment is not at all applicable to the present case and the learned CIT has arrived at the said finding without giving any opportunity to appellant to point out the inapplicability of the judgment for the case on hand is against the basic principles of natural justice and hence the finding is perverse. It is pertinent to note that the said decisions were in respect of the Trusts whose objects do not have any element of charitable purposes but herein the Trust is having object to maintain 6 public temples open to all community and to carry out also public charitable acts permissible under the Act and hence the Trust is religious and charitable one as held by the ITAT Pune, in their Orders dated 31.03.2015 passed by the ITAT Pune No.1352/PN/2014, Para 10 and 12, in the matter of Diocese of Pune (CNI), Vs. The Commissioner of Income Tax- 1, Pune and these aspects and this judgment specifically relied upon by the appellant has not been even considered and looked into by the learned CIT and hence the said finding is perverse. M. That the finding of the learned CIT(E) in paragraph 9 of the impugned order that the Kovil tax imposed by the Trust on its members who as pious family hereditary obligation are duty bound to pay is voluntary contribution defined u/s 2(24) is without any legal basis and goes contrary to the very meaning of voluntary contributions and hence the finding is perverse. N. That the finding of the learned CIT(E) in paragraph 10 and 11 of the impugned order that the reference made in the Trust deed as to the names of the certain castes, namely, parayar and pallar would per se make the Trust ineligible to get registration u/s 12AA of the Act is perverse and reliance of the provisions of Sec.4(iii) of the Untouchability Offences Act’1955 and provision u/s 3(1)(s) of SC and ST (prevention of Atrocities) Act, 1989 to arrive at the said finding by the learned CIT is perverse and the learned CIT has acted beyond the power and authority conferred under the IT Act and hence the impugned order is result of non-bona fide exercise of power by the learned CIT and hence the said finding is liable to be set aside.
O. That the entire impugned order passed by the learned CIT is vitiated by non- adhering to the basic principles of administration of justice; total non- application of mind, abuse of powers conferred on the learned CIT and due non- bona fide exercise of powers and hence impugned order is liable to be set aside. P That the learned CIT failed to appreciate that the members of the Trust are, for centuries, carrying out the activities sought to be carried out though the Trust as a custom on oral Trust through their village representatives without any formal procedure and the members want to carry out the same hereinafter following a proper procedure with proper accountability in a transparent manner and the learned CIT thwarted this fair and honest attempt of them due to his non-application of mind and unnecessarily drawing caste disputes in the impugned order without any legal necessity and hence the impugned order is result of non-bona fide adjudication of the Application of the Appellant by the learned CIT and hence the impugned order is liable to be set aside. Q. That the appellant crave leave of this Hon'ble Tribunal to raise additional grounds during the arguments in the interest of justice. Therefore, for the reasons stated above and other grounds that may be raised during the course of arguments, the Appellant prays that this Hon'ble Tribunal may be pleased to set aside the impugned order dated 29.12.2017 passed by the Commissioner of Income Tax (Exemptions), Chennai u/s 12AA of the Income Tax Act, 1961 and pass such other order or orders as this Hon'ble Tribunal may deem fit and proper on the facts and circumstances of the case and thus render justice.”
Brief facts of the case are that the assessee trust, namely M/s. Arulmigu Aathi Karumapuram Sellandiamman Kudipaattukararkal Seva Trust, constituted by a trust deed dated 01.02.2017 has filed an application in Form 10A for registration under section 12AA of the Act on 20.06.2017. The objects of the assessee trust are reproduced as under: “3 OBJECTIVES OF THE TRUST: (a) To maintain, manage and carry out all rituals to the “ARULMIGHU AATHI KARUMAPURAM SELLANDIAMMAN DEITY and other deities situated in Karumapuram village as per customary practice. (b) To maintain, protect, manage and develop the “ARULMIGHU AATHI KARUMAPURAM SELLANDIAMMAN TEMPLE and other temples situated
in Karumapurarn village in all aspects in accordance with customary practice. (c) To take all possible legal action to ensure the inam lands of the said temples are fully utilized for the purpose for which they were donated and get pattas for the said inam lands in the names of respective deities and to take appropriate and all possible measures to protect the said lands from encroached upon by any private persons as well as to protect exclusive right over their Kula Theivam temple and management rights over the said other temples. (d) To do all acts to improve and develop the Temple with all infrastructure facilities in the temple as well as for the common betterment of kudipattukkaararkal in General. (e) To update the list of kudipaattukararkal regularly by including the legal heirs of the Kudippaattukararkal. (f) To do any other charitable act or acts in consonance or incidental to the objects of the Trust with the approval of the 2/3rd majority decision.” After examining the above objects in the trust deed, the ld. CIT(E) issued a show cause notice dated 12.12.2017 to the assessee trust mentioning therein that the trust exists solely for a particular sect of the Hindu religion and therefore why it should not be treated as private religious trust. It was also mentioned in the said show cause notice that certain clauses in the trust deed are on caste lines which are opposed to the public policy of the Government and the explanation was sought on or before 21.12.2017. After considering the submissions of the assessee trust as well as objects of the trust, the ld. CIT(E) was of the opinion that as per the provisions of section 11 of the Act, the beneficiaries of the trust must be public at large and accordingly, private religious trusts are not entitled for exemption of income. Thus, the ld. CIT(E) rejected the application filed for grant of registration under section 12AA of the Act.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee, in his written submissions, stated that the assessee trust has been established by members of the Poruleentha Kula Vellala Gounder is a sub sect of Vellala Gounder community, whose members mostly resided in and around Karumapuram exclusively for them as a charity measure.
3.1 The ld. Counsel further submitted that as a charity measure, the assessee trust was helping to other temples namely, Vinayagar temple, Mariamman temple, Athanoor Amman, Periaamman, Perumal temple and Easwaran temple as common temples for all other people residing in those areas. All other six temples are public temple common to all people irrespective of caste or creed.
3.2 It was further submitted that though, the assessee trust was exclusively established for a particular caste, the assessee trust was doing some charity to other temples and therefore, 12AA registration can be granted.
3.3 He further submitted that the entire activity of the trust has been carried out by receiving contributions from its own members and incur expenditure and there is no profit motive involved, thereby covered under the Doctrine of Mutuality and therefore, registration under section 12AA of the Act shall be granted.
3.4 The ld. Counsel has also submitted that the receipt of the trust does not come within the purview of the income under section 2(24) of the Act. Once the assessee trust comes under the Doctrine of Mutuality, if registration under section 12AA of the Act is not granted, it would amount to violation of Article 14 and Article 19(c) of the Constitution of India.
3.5 It was further submission that the assessee trust cannot be treated as private religious trust for the simple reason that it is providing services to other six temples, which is public religious purposes and therefore 12AA registration has to be granted on the basis of services done by the assessee to other public temples.
3.6 It was also submitted that it is not a policy of the Government either Central or State that a particular caste should not form a Trust/ Association and carry out charitable activities. The ld. Counsel has relied on the following decisions: i. M/s. Chelmsford Club v. CIT (2000) 3 SCC 214 ii. Swarn Jayanti Rail Nagar Flat Owners’ Association v. JCIT in for AY 2010-11. iii. Pune Benches of ITAT in ITA No. 1352/PN/2014 dated 31.03.2015 4. On the other hand, by filing report of field enquiry made by the Inspector of the Department as well as reply received from the Assistant Commissioner, Hindu Religious & Charitable Endowments Department, Namakkal, the ld. DR has submitted that the assessee trust has no connection with other temples doing any charity for the reason that all other temples are under the control of the Hindu Religious & Charitable Endowments Department, Tamilnadu and strongly supported the order passed by the ld. CIT(E).
We have heard both the sides, perused the materials available on record and gone through the order of the ld. CIT(E) including paper book filed by the assessee. In order to get registration under section 12AA of the Act, the assessee trust has to establish that it is a public religious trust. In this case, the assessee trust namely, Arulmigu Aathi Karumapuram Sellandiamman Kudipaattukarakal Seva Trust existed for the purpose of Poruleentha Kula Vellala Gounder, which is a sub sect of Vellala Gounder community, established exclusively for them. Therefore, once the assessee trust is established for the purpose of particular sub- caste, it is only for the benefit of that sub-caste and thus, it is a private religious trust and registration under section 12AA of the Act cannot be granted.
With regard to the argument of the ld. Counsel for the assessee that the assessee was doing service to six other temples namely, Vinayagar temple, Mariamman temple, Athanoor Amman, Periaamman, Perumal temple and Easwaran temple, the ld. CIT(E) deputed Inspector to make field enquiry and the field enquiry made by the Inspector of the Income Tax Department as well as reply received from the Assistant Commissioner, Hindu Religious & Charitable Endowments Department, Namakkal, reveals the following factual matrix: Sub: Assessee appeal before ITAT against denial of Registration u/s 12AA - Ms. Arulmigu Athi Karumapuram Sellandiamman Trust – Enquiry Report - Submission of - Reg. Ref:
1. 1. E-mail received from the Principal CIT (DR), ITAT 'C’ Bench, Chennai and assessee appeal before ITAT in against denial of Registration u/s. 12AA by the CIT (Exemptions), Chennai.
2. This office letter issued to the Assistant Commissioner, Hindu .Religious & Charitable Endowments Department, Namakkal, dated 25.02.2019. Kindly refer to the above. In order to verify the above details, a field enquiry was made by this office Inspector on 25.02.2109 and also a letter dated 25.02.2019 was issued to the Assistant Commissioner, Hindu Religious & Charitable Endowments Department, Namakkal. As per the field enquiry, it is ascertain that the referred five temples are belongs to “Kulatheivam Kovil” for one community and all the pooja expenses are met out by the community peoples only. The information received from the Assistant Commissioner, Hindu Religious & Charitable Endowments Department, Namakkal, it is informed that, the referred five temples are coming under the control of the Hindu Religious & Charitable Endowments Department, Tamilnadu and there is no connection between these temples and M/s. Arulmigu Athi Karumapuram Sellandiamnlan Trust and also there is no connection with the above referred trust and the Hindu Religious & Charitable Endowments Department, Tamilnadu. Further, it is also informed that there is no schemes and subsidies given by the Hindu Religious & Charitable Endowments Department, Tamilnadu. Copy of the letter in reference no. 754/2019/AI/dated 25.02.2019 received from the Assistant Commissioner, Hindu Religious & Charitable Endowments, Namakkal is enclosed for your reference.
We have perused the above report. From the above report, it is very clear that six temples are under the control of the Hindu Religious & Charitable Endowments Department, Tamil Nadu and it is fully maintained by the Government of Tamil Nadu. Therefore, the argument of the ld. Counsel for the assessee that the assessee trust was doing services to other six temples and is open to public at large cannot be accepted. Therefore, registration under section 12AA of the Act cannot be granted to the assessee trust.
Moreover, in this case, the assessee trust has been established exclusively to serve to a particular sub sect of Vellala Gounder community. Therefore, no registration under section 12AA of the Act can be granted.
Further, we find that the assessee trust does not come under the purview of charitable trust or under the purview of public religious trust. It is only a private religious trust. Therefore, registration under section 12AA of the Act cannot be granted to the assessee trust.
It was the argument of the ld. Counsel for the assessee that the activities of the Trust are to receive contribution from the members and not from any outsider and the expenditure is only to manage and protect their temple. So far as this argument is concerned, if the assessee is running on the basis of mutuality, it can carry its activities and nobody will object. However, no 12AA registration can be granted to the assessee trust, being a private religious trust.
So far as another argument of the ld. Counsel that the receipts of the trust do not come within the definition of income under section 2(24) of the Act is concerned, the assessee cannot decide himself that the receipt of the assessee cannot come within the purview of the Income Tax Act. The income has to be determined depending upon the receipt, what are the expenditure incurred, what is the source of income and it has to be decided after considering entire details. It cannot be pre- determined by the assessee that the receipts derived by the assessee cannot be an income within the meaning of section 2(24) of the Act.
So far as violation of Article 14 and Article 19(c) of the Constitution of India is concerned, we find that Article 14 as well as Article 19(c) has no application to the facts of the present case. In this case, whether the assessee is entitled for grant of registration under section 12AA of the Income Tax Act or not has to be determined as per the conditions stipulated under the Income Tax Act. The above mentioned two Articles nowhere correlated to grant of registration under section 12AA of the Income Tax Act. Therefore, the argument of the ld. Counsel is rejected.
Another argument of the ld. Counsel that neither the State Government nor the Central prohibit forming a trust or association and it is not the policy of either of the Government. It is open to the assessee to form a trust or association. However, if the assessee wanted grant of registration under section 12AA of the Act, the assessee has to satisfy certain conditions stipulated under the Income Tax Act. In this case, the assessee has failed to satisfy the conditions as required under section 12AA of the Act for grant registration as a public religious trust for the reason that the assessee trust existed only for the benefit of a particular sub sect and not general public at large.
We have gone through the case law relied on by the ld. Counsel for the assessee in his written submissions and find that the case law have no application to the facts of the present case. Under the above facts and circumstances of the case, we find no infirmity in the order passed by the ld. CIT(E). Thus, the grounds raised by the assessee are rejected.
In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 10th May, 2023 at Chennai.