TaxTMI 
TaxTMI 
2022 (7) TMI 436
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 the four appeals and the issue is identical. Hence, will take the facts and grounds raised for assessment year 2009-10 in ITA No.1532/Chny/2015. The relevant grounds raised by assessee read as under:- (1) The order of the Commissioner of Income Tax Appeals 17 is against the provisions of law and contrary to the facts and circumstances of the Case. (2) The Commissioner of Income tax Appeals 17 erred in following the order of the Assessing Officer and is not correct in interpreting Section 2(15) of the Income Tax Act as applicable to the facts and circumstances of the appellant case. (3) The Commissioner of Income tax Appeals 17 has erred in not following the circulars, clarification issued by the Government and also did not appreciate that the appellant is eligible for exemption based on the decision of the Supreme Court in appellant's own case reported in 137/735 and 247/7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 ventilate opinion upon all matters of public interest through the said newspaper; and c)To maintain the said newspaper and its press in an efficient condition devoting the surplus income of the said newspaper and its press after defraying all expenses, in improving and enlarging the said newspaper and its services and placing the same on a footing of permanency. 3.1 M/s. Thanthi Trust was granted registration u/s 12A(a) of the I.T. Act vide order of the CIT, Central-II, Madras in C.No.1802/1/89-90/Cent-II dated 30.06.1989. Subsequently after serving a show cause notice dated 25.10.2011 on the assessee trust and after adhering to and fulfilling the principles of natural justice, the DIT(E), Chennai, passed an order dated 08.12.2011 u/s 12AA(3) of the Act cancelling the registration granted to the assessee trust u/s 12A(a) of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 said that the assessee Trust is existing for the purpose of education or advancement or any other general public utility. The DIT(E) framed the question for consideration, whether the assessee Trust is engaged in educational activity or whether it is only doing business. It was held that the object of the Trust alone does not make the Trust eligible for exemption; the activities are important in considering whether the Trust is eligible for exemption. 3.2 The Hon'ble High Court framed the following question:- Whether the Tribunal was right in law in holding that the appellant trust is not eligible for exemption under Section 12A of the Income Tax Act, 1961 without considering the merits of the case in a proper manner? and the Hon'ble High Court granted registration and the relevant final finding by Hon'ble High C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icable 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 assessee is wholly without jurisdiction and the assessee cannot be vexed repeatedly on the same issue and reason for invoking the power under sub-Section (3) of Section 12AA is wholly unsustainable, without any basis and suffers from perversity writ large on the face of the order. Unfortunately, the Tribunal misdirected itself by addressing a wrong question without taking note of the earlier decisions rendered in the assessee's own case. The DIT(E) has not recorded his satisfaction that the activities of the assessee Trust are not genuine, nor he has made any observation that the assessee had carried out activities which are not covered in the Trust Deed or in the judgment and decree in C.S.No.90 of 1961. The decisions relied on by the Revenue, in fact, would go to assist the case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cally 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 to application. But donation and 'application' are two different words having different meanings. The meaning intended to be attributed to the word 'application' by the statute in legal perlance is "the action of putting something into operation". Whereas 'donation' is something which 'someone gives to other organization or charity.' Under section 11, the Income-tax Act intends to give tax exemption to the income of the trust for charitable or religious purposes to the extent of its application to such purposes in India. According to the I.T. Act the 'income' should be 'applied' and not given away to others. By 'application' the income is put into utility operation of the charitable purposes in India. By putting the income i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 publishing newspaper and printing the appellant caused the incidence of the six so called charitable objects which are only kept in nominal existence on paper as a ritual for covering itself with the veil of charitable character. Hence the argument of the appellant that it is running the business of publishing the newspaper 'Dina Thanthi' and job work of printing as incidental to the attainment of charitable objectives cannot be accepted for the reasons discussed above. 4.9 As the appellant trust is not eligible to claim exemption u/s 11 and 12 or 10(23C) of the Act, obviously its case needs to be considered for deduction of donations u/s 80G of the Act in computing the total income. In this case the entire donation was given to M/s. Aditanar Ed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Court that the ITO doubted the said entries and called upon the assessee to produce the accounts of the College and that the assessee failed to produce the same. With these observations, the appeal filed by the Revenue was dismissed. Thus, in the light of the above decisions in the assessee's own case, it will be too late in the day for the Revenue to now contend that the activities of the assessee are not charitable purposes. The attempt of the Revenue is to rake up a settled issue with an attempt to reopen the entire matter under the guise of introduction of the provision of Section 2(15), which defines 'charitable purpose'. Such attempt is wholly unsustainable and impermissible under law. The Revenue is estopped both on law as wel....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 The ld.counsel for the assessee further referred to paras 58 to 63, which reads as under:' 58. The above referred decisions will be squarely applicable to the case of the assessee. In fact, the DIT(E) accepts this position with regard to the finality of the judgment and decree in C.S.No.90 of 1961. In paragraph 7(b) of its order dated 08.12.2011, the DIT(E) accepts the objects as per the Supplementary Deed as ratified in C.S.No.90 of 1961. If such be the admitted factual position, then the Revenue cannot dispute the fact that the amounts, which were earned by the assessee Trust, have to be necessarily spent for a charitable purpose as per the mandate under the Supplementary Deed as confirmed in C.S.No.90 of 1961 an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red 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 referred to and pointed out in Radhasoami Satsang (supra), there must be a point of finality in all legal proceedings and stale issues should not be reactivated beyond a particular stage and this would apply to quasi-judicial matters as well income tax assessment being quasi-judicial, the theory of finality is equally applicable. To say the least, the assessee cannot be harassed. This principle has to be necessarily transposed to the facts of the instant case on account of the various decisions of the Hon'ble Supreme Court in the assessee's own case, viz., 137 ITR 735, 239 ITR 503 and others wherein, the Hon'ble Supreme Court and this Court had considered the objects as spelt out in the Deed of Trust, as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing 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 the view that the DIT(E) failed to record his satisfaction as required to be done under sub-Section (3) of Section 12AA. The satisfaction should be on the activities of the Trust and finding should be rendered as to how such activities are not genuine. The activities of the assessee Trust have not been disputed, nor there is any allegation of non genuine activities. Therefore, by referring to the amendment to the proviso to Section 2(15) and referring to the meaning of the word 'education' as spelt out in certain decisions, cannot be construed to be a satisfaction, which is contemplated under sub-Section (3) of Section 12AA. Finally, the Hon'ble High Court has considered th....