HOSANNA MINISTRIES,CHENNAI vs. ITO, TIRUNELVELI

This is an appeal filed by the assessee directed against an order dated 16.08.2010 of ld. Commissioner of Income Tax-I, Madurai, denying registration sought by it u/s.12AA of the Income Tax Act, 1961 (in short ‘’the Act’’).

The appeal was filed with a delay of 1902 days. This Tribunal had earlier through its order dated 12.04.2016 declined to condone the delay and dismissed the appeal. Assessee had thereupon moved the Hon’ble Jurisdictional High Court. Their lordships in T.C (Appeal) No.3 of 2017 through judgment dated 07.03.2017 held as under :-

Therefore, even that reason given by the Tribunal for its conclusion in the order impugned cannot stand in the legal scrutiny. Therefore in our view, both the reasons cited in the impugned order of the Tribunal are liable to be interfered with and accordingly, the impugned Judgment is set aside.

In the result, we allow the appeal remitting the matter to the Tribunal for taking decision on merits on the issue raised by the assessee. There shall be no order as to costs’’.

Ld. CIT had denied registration sought by the assessee observing that activities carried out by the assessee were religious in nature and not genuine. As per the ld. CIT, assessee had received donation aggregating to �21,29,036/- from one Shri. Selvarajan and Dharmaraj Selvi which was included in the corpus funds, when there was no written consent or permission for earmarking their contribution towards corpus. Ld. CIT also observed that assessee was constructing a building in Dharmapuri and contract was entrusted to M/s. J.P.

Now before, the ld. Authorised Representative, strongly challenging the order the ld. CIT, submitted that the reasons cited by the ld. CIT for denying the registration were either wrong or not relevant. According to him, the question whether donations given to the trust were towards corpus or there was any misuse of funds by awarding contract to M/s. J.P. Builders were matters to be considered at the time of assessment and not at the time of adjudication of an application for registration u/s.12AA of the Act. Further, as per the ld. Authorised Representative, object clause cited by the ld. CIT did not in any way disentitle the assessee from seeking a registration u/s.12AA of the Act. As for absence of certification from various Government departments for running an orphanage, was concerned, submission of the ld. Authorised Representative was that assessee had obtained such certificate of registration from Directorate of Social Welfare on 15.12.2010. This as per the ld. Authorised Representative established genuineness of orphanage run by the assessee. Ld. Authorised Representative also placed on record copies of renewal of registration issued on 27.03.2014 and provisional registration issued by Directorate of Social Defence on 25.05.2016.

Per contra, ld. Departmental Representative strongly supported the order of the ld. Commissioner of Income Tax.

We have considered the rival contentions and perused the orders of the authorities below. A reading of the observation of Hon’ble Jurisdictional High Court reproduced by us at para 2 above, clearly indicate that their lordships were satisfied with regard to the genuineness of the assessee running the orphanage. Their lordships also took note of a certificate dated 14.12.2016 of Directorate of Social Defence, Government of Tamil Nadu substantiating its contention that it was running an orphanage. That apart, one of the object clause cited by the ld. CIT, for holding that the assessee was a religious trust, in our opinion cannot be interpreted so. Propagation by lawful means teachings as per Holy Bible will not ipso facto convert a charitable trust to a religious one, when it was predominantly carrying on a charitable activity. Certificates issue by the Directorate of Social Welfare and Directorate of Social Defence clearly show that assessee was running a charitable institution in the nature of orphanage at Dharmapuri. As for observation of the ld. CIT that assessee had not obtained the consent of the donors for treating certain donations as corpus and had awarded a contract to M/s. J.P.

In the result, the appeal of the assessee stands allowed.