TMI Blog2022 (7) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 And 2720/CHNY/2017 - - - Dated:- 8-7-2022 - Shri Mahavir Singh, Vice President And Shri Manoj Kumar Aggarwal, Accountant Member For the Appellant : Shri V. S. Jayakumar, Advocate For the Respondent : Shri Guru Bashyam, CIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: These four appeals by the assessee are arising out of the orders passed by the Commissioner of Income Tax (Appeals)-17, Chennai in ITA No.348/11-12, 14 1232/13-14, order dated 09.03.2015 ITA No.39/2015-16, order dated 14.09.2017. The assessments were framed by the JCIT(OSD)(Exemptions) II / DDIT(Exemptions)-II(i/c)/JDIT(Exemptions)/ACIT(Exemptions), for the assessment years 2009-10, 2010-11, 2011-12 2012-13 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the Act ) vide orders dated 21.12.2011, 05.03.2013, 14.02.2014 18.03.2015 respectively. 2. The only issue in these four appeals of assessee is as regards to the orders of CIT(A) confirming the action of AO denying the benefit of exemption u/s.11 of the Act by invoking the proviso to section 2(15) of the Act, as applicable w.r.e.f. 01.04.2009 as amended by the Finance Act, 2010. The facts and circumstances are identical in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction and void therefore liable to be set aside. 3. Brief facts are that the instrument of declaration of trust was made on 01.03.1954 between Shri S.B. Adityan (Founder) of the First Part and Shri S.T. Adityan and Shri B.R. Adityan of the Second Part. Shri S.B. Adityan started a daily newspaper known as Dina Thanthi or Daily Thanthi in 1942. As per the instrument of trust dated 01.03.1954, the founder created a trust called Thanthi Trust having the following properties described in the schedule settled upon it. 1. The newspaper known as Dina Thathi or Daily Thanthi at present being published as a daily newspaper in Tamil language together with the goodwill thereof, the head office of the said newspaper being presently situated at No.60, Kutcherry Road, Mylapore, Madras, as a going concern, with all its assets and liabilities. 2. All the printing machinery, printing types, furniture and accessories of the newspaper known as Dina Thanthi or Daily Thanthi above named. The purposes for which the trust was created are a)To establish the Dina Thanthi or Daily Thanthi as an organ of educated public opinion for the tamil reading public. b)To disseminate news and to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DIT(E) after analysis of the gross receipts of the Trust and the surplus of income from business and the donation to the Aditanar Educational Trust for four assessment years, i.e., from 2006-07 to 2009-10, held that the only charitable activity done by the assessee is the donation to the other Trust year after year. The DIT(E) noted that the other Trust is running educational institution, it apparently may be covered by the object namely helping to run school or college or other educational institution for teaching arts and science as provided in the second object of the assessee Trust. The DIT(E) held that the assessee has not carried any other objects as provided in the Deed of Trust or Supplementary Deed. After referring to the definition of -charitable purpose- as defined in Section 2(15) of the Act, it was held that the activity of the assessee Trust may not be covered as relief to the poor, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. It was held that the activity of the assessee has to be examined as to whether it can be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration granted under Section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard. 7.2. The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under provisions of Section 12A as it is not specifically mentioned in Section 12AA. 7.3. Therefore, Section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under Section 12A as it stood before amendment by Finance (No.2) Act, 1996. 7.4. Applicability - This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for assessment year 2011- 12 and subsequent assessment years. 89. Circular No.1 of 2011 will clearly show that the amendment brought out in Section 12AA is applicable with effect from 1st June, 2010, i.e., from the assessment year 2011-12 and subsequent years. Therefore, the retrospective cancellation of the registration of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.12A(a) of the Act, vide order dated 08.12.2011. The AO and the CIT(A), in all the four assessment years, stated that the applicability of proviso to section 2(15) of the Act noted that the assessee is not pursuing the object of education by running its own education institutions and even it is not existing wholly for charitable purposes as it did not engage itself directly in any charitable activity for relief of the poor or education or medical relief or in the advancement of any other object of general public utility without involving the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business without a cess or fee or any other consideration. The CIT(A) by identically worded orders denied the claim of exemption u/s.11 12 or section 10(23C) of the Act by observing in para 4.7, 4.8 4.9 as under:- 4.7 The appellant has been giving away every year crores of Rupees to Aditanar Educational Institutions as donation and calling the same as application of income within the meaning of sec. 11(1) of the I.T. Act, 1961. According to the appellant 'donation' is equivalent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and printing business. The original trust deed dated 01.03.1954 which enshrines the principal and dominating objects of the appellant does not indicate therein any kind of charitable purpose. Hence the appellant was prevented from instituting any claim for exemption u/s 11 and 12 of the Act. The situation continued till a supplementary deed of trust was introduced in 28.06.1961 which accommodated. Without prejudicing the original, principal and dominating purposes of the deed of trust dated 01.03.1854 - six objects of charitable purposes to abate the purportedly staged court case by S.T. Adityan and others against the founder of the appellant trust Shri S.B. Adityan. So it is apparent from the aforesaid facts that the six charitable objects though not ever accomplished, came into existence only as incidental to the main business of the appellant and not vice-versa as stated by the appellant. It is an undisputable and undeniable fact that the appellant cannot at any cost afford to jeopardize its main and primary business of publishing newspaper Dina Thanthi and printing job work. Hence with the intention of securing perpetual and profitable existence to its primary business of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, to direct the Department to consider the assessee s claim for exemption under Section 11, independent of Circular No.372, dated 08.12.1983. It was held that inasmuch as the business carried on by the assessee is itself held under Trust for public charitable purposes and the business is carried on only for the purposes of carrying on the charitable objects as found by the Hon ble Division Bench in 137 ITR 735 (Madras), the provisions of sub Section (4A) of Section 11 cannot have any application. The appeal filed by the Revenue against the decision in 137 ITR 735 (Madras), in the case of CIT vs. Thanthi Trust [(1999) 239 ITR 0502] was considered by the Hon ble Supreme Court wherein, it was held that the Aditanar College was run, not by the assessee Trust, but by another registered charitable society and in such circumstances, the High Court was right in its conclusion which it had arrived at holding that no part of the Revenue s case, at any point of time that the credit entries made in the assessee s books of account were not genuine or true or that they were mere make-believe or bogus. Further, it was observed that it was also not brought to the notice of the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely under Section 10(22) provided the educational institution concerned does not insist for the purpose of profit , yet it seems that educational effects of a newspaper or publishing business are only indirect, problematical and quite incidental so that, without imposing any condition or qualification upon the nature of information to disseminate or material to be published, the mere publication of news or views cannot be set to serve a purely or even predominantly education purposes in its ordinary usual sense. Hon ble Mr.Justice H.R.Khanna in paragraph 41 of the judgment has held that what education connotes in clause (15) of Section 2 is the process of training and developing the knowledge, skill, mind and character of student by normal schooling. It is submitted that there is no separate view recorded by Hon ble Mr.Justice A.C.Gupta, who was the third Hon ble Judge in the Three Judge Bench. Therefore, it is submitted that one of the Hon ble Judges of the Three Judge Bench has given a wider meaning to the word education occurring in clause (15) of Section 2 whereas, the other Hon ble Judge has given a narrower meaning to the word education to mean normal schooling. 5.1 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... si-judicial controversies as it must in other spheres of human activity and that assessments are certainly quasi-judicial and these observations equally apply. The Hon ble Supreme Court held that strictly speaking res judicata does not apply to income tax proceedings, each assessment year being a unit, what is decided in one year may not apply in the following year where a fundamental aspect permeating through different assessment years has been found as a fact one way or other and parties have allowed the position to be sustained, it would not be appropriate to allow the position to be changed in a subsequent year. 60. In Surat City Gymkhana (supra) the question was whether the appeals filed were covered by an earlier decision of the same High Court, which has not been challenged by the Revenue and has attained finality, therefore, the appeal is not maintainable before the Hon ble Supreme Court. The Hon ble Supreme Court held that the decision of the High Court having not been challenged by the Revenue and attained finality, the assessee was entitled to registration under Section 12A of the Act. 61. The above mentioned two decisions explain the rule of consistency. As referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment to proviso to section 2(15) of the Act viz-a-viz the facts of the present case and held in paras 71 72 that the assessee s activities are not to be held as non-genuine because of the amendment. The Hon ble High court discussed in paras 71 72 as under:- 71. In the case on hand, there is no allegation that the assessee Trust has not carried on its activities in accordance with the objects of the Trust as set out in the Deed of Trust and the Supplementary Deed. The Revenue has accepted the said fact and also acceded to the finality of the judgment and decree in C.S.No.90 of 1961. The DIT(E) seeks to bring the assessee-s case in the first limb of sub-Section (3) by stating that the activities of the Trust are not genuine. 72. We find that except for stating that the activities are not genuine because of the amendment to the proviso to Section 2(15), there is no other allegation, with regard to the genuineness of the Trust. We have referred to the decisions to show that the amendment to Section 2(15) cannot make activity of a trust not genuine, which was hither to genuine while enjoying the registration under Section 12AA prior to the amendment. Therefore, we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
