THE DIRECTOR OF INCOME TAX vs. SRI JAIN EDUCATIONAL SOCIAL CULTURAL

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ITA/791/2009HC KarnatakaKAHC01080576200920 February 2013Bench: D.V.SHYLENDRA KUMAR,B.SREENIVASE GOWDA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that registration under Section 12A is the first stage, focusing on the genuineness of the institution. The subsequent conduct and functioning are examined under Sections 11 and 12, and cannot be used to deny initial registration.

What were the facts?

The Revenue appealed against an ITAT order that allowed registration under Section 12A to a charitable trust. The Revenue argued that the trust deed permitted religious and commercial activities, and its genuineness could not be verified.

What were the issues?

Whether the Tribunal erred in granting Section 12A registration when the trust deed allowed for religious and commercial activities, and genuineness was questionable. The court also considered the distinction between the initial registration stage and subsequent assessment of functioning.

Which sections of the Income-tax Act were involved?

Section 12A,Section 11,Section 12,Section 80G,Section 260-A

AI-generated summary — verify with the full judgment below

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1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 20th DAY OF FEBRUARY, 2013 P R E S E N T THE HON’BLE MR.JUSTICE D V SHYLENDRA KUMAR AND THE HON’BLE MR.JUSTICE B SREENIVASE GOWDA ITA No.791 OF 2009

BETWEEN:

1.

THE DIRECTOR OF INCOME-TAX,

EXEMPTIONS,

C.R. BUILDING, QUEENS ROAD,

BANGALORE.

2.

THE DIRECTOR OF INCOME-TAX,

EXEMPTIONS,

C.R. BUILDING, QUEENS ROAD,

BANGALORE.

…APPELLANTS

(BY SRI. K.V. ARAVIND, ADV.)

AND:

SRI. JAIN EDUCATIONAL SOCIAL CULTURAL WELFARE CHARITABLE TRUST, NO.179/899, INDIRANAGAR, BANGARPET – KGF MAIN ROAD, BANGARPET – 563 114. ... RESPONDENT

(RESPONDENT –SERVED)

2 THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 10-07-2009 PASSED IN ITA NO.175/BNG/2009, PRAYING TO SET ASIDE THE SAID ORDER OF THE TRIBUNAL ETC.,

THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, SHYLENDRA KUMAR, J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal is by the Revenue under Section 260-A of the Income Tax Act, 1961 directed against the order dated 10.07.2009 passed in ITA No. 175/BNG/2009 by the Income Tax Appellate Tribunal, Bangalore Bench ‘A’ allowing the appeal of the Assessee.

2.

In this appeal the appellants have raised the following substantial question of law for our examination: Whether the Tribunal was correct in holding that registration under Section 12 A of the Act should be granted to the assessee as the Director had an option to withdraw the same if the assessee did not carry on charitable activity as held by this Hon’ble Court in 285 ITR 327 without noticing the clauses as pointed out by the Director in the trust deed permitted religious and commercial activity and the genuineness could not be verify which was not taken into consideration and recorded a perverse findings?

3 3. Notice had been issued to the respondent Assessee. The assessee was served, but not represented.

4.

Sri K.V. Aravind, learned Counsel appearing for the appellants submits that the like question had come up before this Court in the case of another educational society namely M/s Venkatesha Education Society in ITA No. 182/2011.

5.

This Court had taken the view that while registration is the first stage in terms of Section 12-A of the Act and at this stage it is only the genuineness of the institution that is the criteria and further conduct of registration and manner of functioning of the institution is a matter for examination in terms of Sections 11 and 12 of the Act and that cannot be worked in the appeal to deny registration and recognition for the purpose of Section 80 G of the Act.

4 6. It is also held that the benefit of recognition under Section80 G (5) available to the Assessee is only consequential and depending on the Assessee’s registration under Section 12-A or not.

7.

In the light of the submission made by Sri K.V. Aravind, learned Counsel for the appellant, we dismiss this appeal also following the view taken by this Court in the case of the Director of Income Tax vs M/s Venkatesha Education Society.

8.

The question of law is answered in the affirmative. 9. The appeal is dismissed.

Sd/- JUDGE

Sd/- JUDGE

Vb*

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