Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.02.2020 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case (Appeal) No.404 of 2012 Commissioner of Income Tax Chennai Appellant Vs. M/s.Bhagawan Mahavir Digambara Jain Management Trust, No.23 Perumal Koil Street, Chennai-600 015. Respondent Tax Case filed under Section 260A of Income Tax Act against order dated 29.03.2012 passed in ITA No.727/Mds/2011 by Income Tax Appellate Tribunal 'D' Bench, Chennai. For Appellant : Mr.J.Narayaswamy, Senior Standing Counsel For Respondent : Mr.Venkat Narayanan for M/s.Subbaraya Iyer Padmanabhan Page 1 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 JUDGMENT (Judgment of Court was delivered by DR.VINEET KOTHARI,J) This appeal has been filed by Revenue under Section 260A of Act aggrieved by order of learned Income Tax Appellate Tribunal 'D' Bench, Chennai, whereby learned Tribunal allowed appeal filed by Assessee, Charitable Trust viz., Bhagawan Mahavir Digambara Jain Management Trust, Chennai and held that Assessee was entitled to registration as Charitable Trust under Section 12AA of Act read with Section 80G of Act. relevant portion of order passed by learned Tribunal is quoted below for ready reference. 4. It is to be seen that Section 11 of Act provides for exemption not only for charitable institutions, but also for religious institutions. DIT (E) is therefore not justified in rejecting applications of assessee trust for registration under Section 12AA and grant of approval under Section 80G. We, therefore set aside impugned order of DIT(E) and direct DIT(E) to grant registration under Section 12AA of Act. We also direct DIT(E) to grant approval under Section 80G subject to provisions of Section 80G(5B) of Act. Page 2 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 2. present appeal was admitted by Coordinate Bench of this Court on 10.12.2012 on following substantial questions of law. 1) Whether on facts and in circumstances of case, Tribunal was right in holding that assessee is entitled for registration u/s 12AA? 2) Whether on facts and in circumstances of case, Tribunal was right in holding that assessee is entitled for approval u/s 80G? 3. Learned counsel at Bar on both sides submit fairly that issue involved in this case is no longer res integra and has been decided by Coordinate Bench of this Court in case of Director of Income Tax (Exemptions) -Vs- Seervi Samaj Tambaram Trust , following Supreme Court decision in case of Commissioner of Income Tax -Vs- Upper Ganges Sugar Mills Ltd., reported in 227 ITR 578 and another case decided by Honourable Supreme Court in State of Kerala -Vs- MP.Shantiverma Jain reported in (1998) 231 ITR 787 (SC), in which Honourable Supreme Court has held that Income Tax Act, 1961 does not make any distinction with regard to objectives of Charitable and Religious purposes Page 3 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 and Trusts having both these objectives can also be registered under Section 11 or 12AA of Act. relevant portion of judgment rendered by Madras High Court is quoted below for ready reference. 5. Learned standing counsel appearing for Revenue reiterated submissions made before Tribunal and contended that registration under Section 12AA of Income Tax Act cannot be granted to trust having both charitable and religious objects on application under Section 11(1)(a) of Income Tax Act. 6. very issue raised by Revenue has been dealt with by Division Bench of this Court in case of CIT Vs. Arulmighu Sri Kamatchi Amman Trust reported in (2012) 206 Taxmann 69. In said case, respondent / assessee sought for registration under Section 12AA of Income Tax Act on ground that object of Trust was religious. Commissioner of Income Tax rejected application on ground that Trust was spending money in receipts towards religious and administrative purposes and activities claimed to be carried on by said Trust were admixture of both religious and charitable. said Trust filed appeal before Income Tax Appellate Tribunal. Following decision in case of CIT Vs. Upper Ganges Sugar Mills Ltd., reported in 227 ITR 578 and in case of State of Kerala Vs.MP.Shantiverma Jain reported in (1998) 231 ITR 787 (SC), Tribunal allowed appeal. Challenging same, Revenue filed appeal before this Court contending that Page 4 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 Tribunal failed to appreciate activities claimed to be carried on by said assessee, which was admixture of both religious and charitable in nature. Therefore, Tribunal ought not to have interfered with order of Commissioner of Income Tax. Division Bench of this Court, after taking into consideration provision under Section 11(1)(a) of Income Tax Act, which states that subject to provisions of Sections 60 to 63, income derived from property held under trust wholly for charitable or religious purposes, to extent of which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to extent to which income as accumulated or set apart is not in excess of fiteen per cent of income from such property shall not be included in total income of previous year of person in receipt of income. Thus, Division Bench held from reading of above, it is clear that income derived from property held under trust wholly for charitable and religious purpose, shall not be included in total income of Trust. Therefore, said provision would be applicable to both Trusts established with object of charitable as well as religious purposes. Therefore, Section 12AA of Income Tax Act does not make any difference between Trusts created with object of charitable and religious purposes and, even if Trust is not created with both objects, law does not make any disqualification for Trust to make application for registration. Therefore, Tribunal has correctly applied provision of law and allowed appeal. Page 5 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 Page 6 of 7 http://www.judis.nic.in Order in TC No.404 of 2012 (C.I.T., -Vs- Sri Bhagawan Mahavir Digambar Jain Mgt. Trust ) dt 13.02.2020 DR.VINEET KOTHARI, J. AND R.SURESH KUMAR, J. KST 4. In view of aforesaid settled legal position, we are of clear opinion that learned Tribunal was justified in allowing appeal filed by Assessee and upholding registration of Trust under Section 12AA read with Section 80G of Act. appeal filed by Revenue is devoid of any merits and is liable to be dismissed and is accordingly dismissed. questions of law are answered against Revenue and in favour of Assessee. No costs. (V.K.,J.) (R.S.K.,J.) 13.02.2020 Index :Yes/No Internet : Yes/No KST To Income Tax Appellate Tribunal 'D' Bench, Chennai T.C.A.No.404 of 2012 Page 7 of 7 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Bhagawan Mahavir Digambara Jain Management Trust