M/S THE IMPROVEMENT TRUST MALERKOTLA PUNJAB vs. COMMISSIONER OF INCOME TAX LUDHIANA AND ANR

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ITA/236/2015HC Punjab & HaryanaPHHC01109870201516 March 2017Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court set aside the impugned orders passed by the Tribunal in both appeals. The matter was remanded back to the Tribunal to decide the same afresh. The Tribunal was directed to consider the submissions made by the learned counsel for the parties and afford an opportunity of hearing to the parties in accordance with law. The High Court explicitly stated that its observations were not to be taken as an expression of opinion on the merits of the controversy. The Court emphasized that sincere efforts should be made to decide the matter expeditiously. The appeals were disposed of as a result of this remand. The specific findings on the substantial questions of law were not made by the High Court as the matter was remitted for fresh adjudication.

What were the facts?

The assessee, M/s The Improvement Trust Malerkotla, a trust, was granted registration under Section 12A of the Income Tax Act, 1961, on January 16, 2009. This registration was withdrawn by the Commissioner of Income Tax (CIT) on February 12, 2013, on the grounds that the trust was not charitable in nature within the meaning of the Proviso to Section 2(15) of the Act. The assessee appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal by an order dated March 27, 2014. The assessee then filed appeals before the High Court of Punjab and Haryana. The appeals were filed for assessment year 2009-10. The High Court noted that delay in filing was condoned and that two appeals, ITA No. 236 of 2015 and ITA No. 47 of 2016, involved identical issues.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the respondent (CIT) could cancel the registration granted to the trust without satisfying any conditions under Section 12AA(3) of the Act. 2. Whether the respondent could cancel the registration without a specific finding that the trust's activities were not genuine. 3. Whether, after granting registration under Section 12A, the Assessing Officer could question the objects as non-charitable, and if not, whether the ITAT was justified in holding that the trust's activities did not qualify for exemption. 4. Whether the impugned orders were legally sustainable, given the apparent contradiction where the CIT's reliance on case laws for granting registration under Section 12A was contrasted with the ITAT's reliance on a judgment (PUDA Vs. CIT) also relating to the grant of registration under Section 12A for deciding exemption under Sections 11 and 12. 5. Whether the impugned orders were legally sustainable. Assessee's Contentions: The assessee argued that the Tribunal relied on its own decision in Improvement Trust Bathinda Vs. CIT, against which an appeal was filed in the High Court. The High Court had previously remanded a similar matter to the Tribunal for adjudication on the nature of activities of the trust in relation to Section 2(15) of the Act. Revenue's Contentions: No specific contentions for the revenue were recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 12AA(3),Section 2(15),Section 12A,Section 11,Section 12

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 16.03.2017

M/s The Improvement Trust Malerkotla

……Appellant

Vs.

Commissioner of Income Tax, Ludhiana II and another

…..Respondent

CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL

HON’BLE MR. JUSTICE RAMENDRA JAIN

Present: Mr. Rohit Sud, Advocate for the appellant.

Mr. Denesh Goyal, Senior Standing Counsel

for the respondent.

Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos. 236 of 2015 and 47 of 2016 as learned counsel for the parties are agreed that the issue involved in both the appeals is identical. However, the facts are being extracted from ITA No. 236 of 2015. 2. After hearing learned counsel for the parties, the delay in filing/refilling both the appeals is condoned.

3.

The following substantial questions of law have been claimed by the appellant-assessee in ITA No. 236 of 2015 filed under Section Gurbax Singh 2017.03.24 11:10 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 27.03.2014, Annexure A.3, passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (in short, “the Tribunal”) in ITA No. 380/CHD/2013, for the assessment year 2009-10:- “(i)Whether in the facts and in the circumstances of the present case, the respondent could have cancelled the registration already granted to the trust when no condition under Section 12AA (3) of the Act had been satisfied? (ii) Whether in the facts and in the circumstances of the present case, the respondent could have cancelled the registration without recording any specific finding that the activities of the trust of institution are not genuine?” (iii) Whether in the facts and in the circumstances of the present case, after the grant of registration under Section 12A of the Act can the Assessing Officer go into the objects and hold them to be non-charitable. If not whether the learned Tribunal was justified to hold that the activities done by the appellant trust do not qualify for exemption?” (iv) Whether in the facts and in the circumstances of the contradictory? (v) Whether in the facts and circumstances of the case, the action of the authorities below, the impugned orders Annexure A2 and A3 are legally sustainable in the eyes of law?

4.

A few facts relevant for the decision of the controversy involved as narrated in ITA No. 236 of 2015 may be noticed. The appellant-assessee is a trust situated at Malerkota in the State of Punjab. It was granted registration under Section 12A of the Act, vide order dated 16.01.2009, Annexure A.

1.

The said registration was withdrawn vide order dated 12.02.2013, Annexure A.2 on the ground that the assessee trust was not charitable in nature within the meaning of Proviso to Section 2(15) of the Act. Aggrieved by the said order, the appellant-assessee filed an appeal before the Tribunal. Vide order dated 27.03.2014, Annexure A.3, the Tribunal dismissed the appeal. Hence, the instant appeals by the appellant-assessee.

5.

We have heard learned counsel for the parties.

6.

Learned counsel for the appellant-assessee submitted that the Bathinda ITA No. 366/(Asr)/2012 dated 18.12.2012. It was against the para of the order reads thus:- “After hearing learned counsel for the parties, in our opinion, the matter requires to be remitted to the Tribunal to adjudicate the issue regarding the nature of activities of the appellant trust whether they are in the nature of charitable within the meaning of Section 2(15) of the Act in respect of assessment years in question or not, keeping in view the arguments raised by the learned counsel for the appellant- assessee and to pass fresh orders relating to assessment proceedings thereafter in accordance with law.”

7.

In view of the above, the impugned orders passed by the Tribunal in both the appeals are set aside and the matter is remanded to the Tribunal to decide the same afresh in the light of the submissions made by the learned counsel for the parties, after affording an opportunity of hearing to the parties in accordance with law. Needless to say, anything observed hereinbefore shall not be taken to be an expression of opinion on the merits of the controversy. Sincere efforts shall be made to decide the matter expeditiously. As a result, both the appeals stand disposed of.

(Ajay Kumar Mittal)

Judge

March 16, 2017

(Ramendra Jain)

‘gs’

Judge Whether speaking/reasoned

Yes/No

Whether reportable

Yes/No

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