HOSANNA MINISTRIES,CHENNAI vs. ITO, TIRUNELVELI

PDF · subscribers
ITA 2351/CHNY/2015Status: DisposedITAT Chennai11 May 20186 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT's reasons for denying registration, such as the nature of donations and awarding contracts, were matters for assessment and not for registration. The Tribunal found the assessee's activities, particularly running an orphanage, to be genuine and charitable.

What were the facts?

The assessee sought registration under Section 12AA of the Income Tax Act, which was denied by the CIT. The assessee's appeal was initially dismissed due to delay, but the High Court intervened and remitted the matter back to the Tribunal for a decision on merits.

What were the issues?

Whether the CIT was justified in denying registration under Section 12AA based on the nature of donations and contracts, and whether the assessee's activities were genuinely charitable.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]

आदेश / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

1.

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’’).

ITA No. 2351/Chny/2015 :- 2 -:

2.

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 :-

‘’25. In view of these reasons, the order impugned of the Tribunal rejecting the appeal of the assessee mainly on the ground of delay, is liable to be interfered with. In addition, we also feel that the further reason given by the Tribunal for arriving at such a conclusion that the assessee was not engaging in activities in accordance with the objects specified in the trust deed also is not supported by materials as we are satisfied that the assessee has been functioning after proper registration with the authorities concerned under the Juvenile Act and a recent certification issued dated 14.12.2016 of the authorities concerned as referred to above would be valid for next five years. Therefore, the genuineness or otherwise of the functioning of the assessee cannot be easily doubted, in view of the certification issued by the Directorate of Social Defence, Government of Tamil Nadu as stated supra.

26.

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.

27.

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’’.

Accordingly the appeal is taken up for a decision on merits.

ITA No. 2351/Chny/2015 :- 3 -:

3.

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.

Builders through one Shri. Jerryn Raj who was the Managing Trustee of the assessee. Further, as per the ld. CIT, trust was actively doing religious activities with one of the its object as under:-

‘’To build places for the worship of God and to conduct regular meetings and to teach and progagate by all lawful means the teachings of the Lord Jesus Christ based upon the Holy Bible’’.

Again as per the ld. CIT, though the trust was running an orphanage at Dharmapurai, there was no permission or approval from the competent authorities like certificate of recognition from Board of Control, Orphanages & Other Charitable Homes (Supervision and Control) Act, 1960, Chennai or a fitness institution certificate from the child welfare committee.

ITA No. 2351/Chny/2015 :- 4 -:

4.

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.

5.

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

ITA No. 2351/Chny/2015 :- 5 -:

6.

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.

Builders through its managing trustee, these are all matters to be considered at the time of assessment and not at the time of adjudicating an application for registration u/s.12AA of the Act.

Assessee having proved its genuineness and also the charitable nature

ITA No. 2351/Chny/2015 :- 6 -: of its activity ought not have been denied the registration sought by it. Order of the ld. CIT is set aside. Ld. CIT is directed to grant the registration sought by the assessee u/s.12AA of the Act.

7.

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

Order pronounced on Friday, the 11th day of May, 2018, at Chennai.

More judgments on Section 12AA

All 4,243 judgments and leading authorities on Section 12AA →

Recent GST High Court judgments

Search GST case law →