COMMISSIONER OF INCOME TAX vs. ALL INDIA ARYA VYSYA SAMAJAM

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TCA/132/2018HC Madras10 June 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. The Revenue submitted that the appeals were not being pursued due to low tax effect, in accordance with Circular No. 3 of 2018. Consequently, the High Court dismissed the appeals on the ground of low tax effect. The substantial questions of law were left open, and the Revenue was granted liberty to seek restoration if the tax effect was found to be above the threshold or fell under exceptional clauses of the Circular. No costs were awarded.

What were the facts?

The Revenue filed these appeals under Section 260A of the Income Tax Act, 1961, against the common order of the Income Tax Appellate Tribunal (ITAT) dated September 7, 2016. The appeals pertain to assessment years 2009-10 to 2011-12 and challenge the ITAT's decision regarding the assessee's eligibility for exemption under Section 12 of the Act on corpus donations. The assessee is M/s. The All India Arya Vysya Samajam. The appeals were admitted by the High Court, and substantial questions of law were framed. However, the Revenue later sought to withdraw the appeals.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is eligible to enjoy the benefit of exemption under Section 12 of the Income Tax Act towards the receipt of Corpus Donation, even though the Tribunal held the activities of the assessee as non-charitable as per the amended provisos to Section 2(15) of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is eligible to enjoy the benefit of exemption under Section 12 of the Income Tax Act towards the receipt of Corpus Donation, in contravention to the provisions of Section 13(8) inserted with effect from April 1, 2009? Revenue's Contention: The Revenue argued that the assessee's activities were non-charitable as per the amended Section 2(15) and that exemption under Section 12 should not be granted for corpus donations, especially in light of Section 13(8). Assessee's Contention: The assessee contended that they are eligible for exemption under Section 12 on corpus donations.

Which sections of the Income-tax Act were involved?

Section 260A,Section 12,Section 2(15),Section 13(8)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 10.06.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.132 to 134 of 2018 and C.M.P.Nos.1772 and 1773 of 2018 Commissioner of Income Tax, Chennai. ... Appellant in all Appeals -vs- M/s.The All India Arya Vysya Samajam, 230, NSC Bose Road, Sowcarpet, Chennai-600 079. PAN : AAATT6166C ... Respondent in all Appeals Appeals under Section 260A of the Income Tax Act, 1961 against the order dated 07.09.2016 made in I.T.A.Nos.1623 to 1625/Mds/2014 on the file of the Income Tax Appellate Tribunal 'B' Bench, Chennai for the assessment years 2009-10 to 2011-12 respectively. For Appellant : Mr.J.Narayanaswamy, (In all appeals) Senior Standing Counsel For Respondent : Mr.M.P.Senthil Kumar (In all Appeals) ****** http://www.judis.nic.in 2 COMMON JUDGMENT (Judgement of the Court was delivered by T.S.Sivagnanam, J.) These appeals, by the appellant/Revenue filed under Section 260A of the Income-tax Act, 1961, are directed against the common order of the Income-tax Appellate Tribunal 'B' Bench, Chennai in I.T.A.Nos.1623 to 1625/Mds/2014 dated, 07.09.2016 for the assessment years 2009-10 to 2011-12. 2.The above appeals have been filed raising the following substantial questions of law:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is eligible to enjoy the benefit of exemption u/s 12 of the I.T.Act towards the receipt of Corpus Donation though the Hon'ble ITAT held the activities of the assessee as non-charitable as per the amended provisos to Section 2(15) of the I.T.Act? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in holding that the assessee is eligible to enjoy the benefit of exemption u/s 12 of the I.T.Act towards the receipt of Corpus Donation, in contravention to http://www.judis.nic.in 3 provisions of section 13(8) inserted w.e.f 1.4.2009?” 3.Heard Mr.J.Narayanaswamy, learned Senior Standing Counsel for the appellant/Revenue; and Mr.M.P.Senthil Kumar, learned counsel for the respondent/assessee. 4.The learned Senior Standing Counsel for the Revenue submits that the appeals are not being pursued by the Revenue on account of low tax effect in the light of the Circular No.3 of 2018, dated 11.07.2018. 5.Thus, by applying the above Circular, these tax case appeals stand dismissed on the ground of low tax effect and the substantial questions of law, framed for consideration, are left open. The Revenue is at liberty to seek for restoration of appeals if at a later point of time, it is found that the tax effect is above the threshold limit or to fall under the exceptional clauses mentioned in the Circular. No costs. (T.S.S., J.) (V.B.S., J.) 10.06.2019 abr T.S.Sivagnanam, J. and http://www.judis.nic.in 4 V.Bhavani Subbaroyan, J. (abr) To 1.The Joint Commissioner of Income-tax (OSD), (Exemptions)-II, Chennai. 2.The Commissioner of Income-tax (Appeals)-VII, Chennai-600 034. 3.The Income Tax Appellate Tribunal 'B' Bench, Chennai. T.C.A.Nos.132 to 134 of 2018

10.06.2019 http://www.judis.nic.in

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