LIFERAY FOUNDATION,COIMBATORE vs. CIT (EXEMPTIONS), CHENNAI

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ITA 885/CHNY/2018Status: DisposedITAT Chennai24 April 20185 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 assessee is entitled to registration under Section 12AA. The Tribunal noted that the amendment to Clause 3(j) was made through a General Body Meeting and not through court proceedings, as stipulated by Clause 11 of the Trust Deed, making the amendment invalid for the purpose of adjudication. However, the Tribunal found that even the unamended Clause 3(j) did not violate Section 11(1)(a). It stated that the clause allowed awarding scholarships or stipends in India, and even if a student chose to study abroad, it did not mean the Trust's objects were being executed outside the country. Additionally, Clause 15(c) of the Trust Deed explicitly barred any activity of the Trust from being carried out outside India. Therefore, there was no violation of Section 11(1)(a). The CIT(E) was directed to grant registration under Section 12AA. The Tribunal also noted that any violations concerning Sections 11 to 13 would be open for examination during regular assessment.

What were the facts?

The assessee, Liferay Foundation, filed an appeal against the order of the Commissioner of Income Tax (Exemptions), Chennai, refusing registration under Section 12AA of the Income Tax Act, 1961. The assessee is a Trust established by a Trust Deed dated May 22, 2017. The application for registration under Section 12AA was filed on August 24, 2017. The CIT(E) denied registration based on the interpretation of Clause 3(j) of the Trust Deed, which was considered to allow activities outside India, thus violating Section 11(1)(a). The assessee subsequently amended Clause 3(j) to clarify that scholarships are awarded in India, even if studies are abroad, and also pointed to Clause 15(c) which explicitly states that all objects are to be carried out only within India.

What were the issues?

1. Whether the objects of the Trust, as per the unamended Clause 3(j) of the Trust Deed, violate the provisions of Section 11(1)(a) of the Income Tax Act, 1961, thereby disentitling the assessee from registration under Section 12AA? Assessee's contentions: The assessee argued that Clause 15(c) of the Trust Deed clearly states that all objects shall be carried out only within India. Furthermore, even the unamended Clause 3(j) provided for awarding scholarships or stipends in India to students to enable them to continue their studies either in India or abroad, which does not imply the execution of objects outside India. The amended Clause 3(j) further clarified this position. Revenue's contentions: The Revenue contended that the objects of the Trust, as reflected in Clause 3(j), provided for carrying out activities outside India, which is in violation of Section 11(1)(a) of the Act, and therefore, registration was rightly denied.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 11(1)(a),Section 11,Section 13

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN

For Appellant: CA Mr.K. Jayaganesh, JCIT
Hearing: 24.04.2018Pronounced: 24.04.2018

: Mr.S.Ramachandran, CA अपीलाथ' क* ओर से/ Appellant by : ()यथ' क* ओर से /Respondent by Mr.K. Jayaganesh, JCIT : सुनवाई क* तार"ख/Date of Hearing 24.04.2018 घोषणा क* तार"ख / : 24.04.2018 Date of Pronouncement आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER:

1.

the Order of Commissioner of Income Tax (Exemptions), Chennai, in File No.CIT(E) 2(1094)/2017-18 dated 27.02.2018 against the refusal grant Registration u/s.12AA of the Act.

2.

Shri K. Jayaganesh, JCIT, represented on behalf of the Revenue and Shri S.Ramachandran, CA, represented on behalf of the assessee. :- 2 -:

3.

It was submitted by the Ld.AR that the assessee is a Trust set up by a Trust Deed dated 22.05.2017, registered with the Sub-

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