T.C.(A). No.957 of 2010 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 24.02.2020 CORAM : Hon'ble Dr. JUSTICE VINEET KOTHARI AND Hon'ble Mr. JUSTICE R. SURESH KUMAR T.C.(A) No.957 of 2010 Commissioner of Income Tax Salem. Appellant -vs- M/s. Vasavi Manikandan Hospital Trust, No.48, Iyappa Hospital, Andal Street, Shevapet, Salem 636002. Respondent Appeal filed under Section 260A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, Chennai 'B' Bench, dated 09.04.2019 passed in I.T.A.No.1902/Mds/2009. For Appellant : Mr.J.Narayanasamy Sr. Stdg. Counsel For Respondent : Mr. M. P. Senthilkumar for Mr. G. Baskar Page 1 of 8 http://www.judis.nic.in T.C.(A). No.957 of 2010 ORDER (Order of Court was made by Dr.Vineet Kothari, J.) This appeal has been filed by Revenue aggrieved by order of Income Tax Appellate Tribunal dated 09.04.2010, whereby learned Tribunal directed Commissioner of Income Tax to grant registration to respondent Assessee, M/s.Vasavi Manikandan Hospital Trust, under Section 12A of Income Tax Act. 2.Learned Counsel for Appellant/Revenue, Mr.J.Narayanasamy, urged that in present case, Assessee Trust had simply not appeared before learned Commissioner of Income Tax, who was considering it's application under Section 12A of Income Tax Act, 1961, and after remand by learned Tribunal, Commissioner of Income Tax had asked for seven informations/documents to be furnished by Respondent/Assessee Trust. But, Respondent/ Assessee Trust simply did not appear thereafter before Commissioner of Income Tax and therefore, it's application was dismissed for want of prosecution. Page 2 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 3.However, Respondent Assessee Trust preferred appeal before learned Tribunal and learned Tribunal, without those compliances being made by Assessee Trust before Commissioner of Income Tax, recorded its independent opinions that either some of compliances stood made by Assessee and some other requirements were not even necessary for considering application, under Section 12AA of Act and therefore, treating compliances as sufficient, learned Tribunal directed Commissioner of Income Tax to accord registration to Respondent Assessee Trust under Section 12A of Act. relevant findings of learned Tribunal as recorded in paragraphs 7 and 8 of impugned order are quoted below for ready reference. 7.As regards first query of Commissioner of Income Tax is concerned, assessee has duly produced records showing registration and certificate for conducting various diagnostic tests. assessee hospital is also registered with Government of Tamil Nadu under Pre-conception and Pre-natal Diagnostic Techniques as per certificate dated 14.7.2006 placed at p.38 of Paper Book. We further note that assessee hospital is also bonafide Member of Nursing Homes & Hospitals Board of Association, Tamil Nadu vide membership certificate dated 3.9.2009 placed at p.40 of Paper Book. Therefore, there was Page 3 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 no further requirement of any approval and permission for running hospital. Since assessee has filed details of bank accounts, then, second query of Commissioner of Income Tax is also satisfied. As regards meaning of ' Founder Trustee' in Trust Deed is concerned, it has its natural meaning and no other meaning is required to be given to said term. When Trust Deed is signed by founder trustees and later on some other trustees are inducted, then there is clear difference between two. It is not case of Revenue that decisions are not taken by majority and trust is controlled by only one person. At time of registration, until and unless something is apparent to show irregularity and mismanagement, existence and genuineness of trust cannot be doubted. Since Trust Deed is signed only by original founder members, therefore, there is no requirement of signing of Trust Deed by all trustees who were inducted later on. As regards activity of trust, assessee has clearly mentioned activities of assessee in its letter dated 26.12.2008 as well as furnished details of hospital activities and fee charged along with said letter dated 26.12.2008. 8.Once requisite details have been field by assessee, then, in absence of any finding or any material to show that object of assessee trust are not charitable, then there is no reason to deny registration. It is not case of Revenue that funds or income of trust were utilised for any other purpose than object of trust. Therefore, merely because trust hospital is charging some fee from patients, it cannot Page 4 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 be said that activity is not charitable, particularly, when said income earned by assessee is not due to exorbitant fee charged from patients or same was utilised for purposes other than object of trust. Commissioner of Income Tax (Appeals) has not given any finding on existence and genuineness of trust. Moreover, at time of registration u/s 12A, Commissioner of Income Tax is not supposed to conduct investigation when objects of trust are found charitable in nature. registration cannot be denied on grounds, which are not relevant at stage of grant of registration, and which can be relevant only at stage of assessment of income of assessee and grant of exemption. Accordingly, we direct Commissioner of Income Tax to grant registration to assessee u/s 12A of Income Tax Act from date on which application for registration was filed. 4.Learned counsel for Appellant/Revenue has also relied on judgment of Supreme Court in case of Commissioner of Income-tax (Exemptions) vs. Jagannath Gupta Family Trust (2019) 102 taxmann.com 34 (SC). 5.Mr.M.P.Senthil Kumar, learned counsel for Respondent/Assessee Trust, however, submitted that registration in pursuance of order of learned Tribunal passed in 2010 has Page 5 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 already been granted to Respondent/Assessee Trust and no action has been taken by Revenue Department to cancel that registration. He has also submitted that informations as desired by Commissioner of Income Tax were furnished before learned Tribunal. 6.We have heard learned counsels and we are of opinion that learned Tribunal, in these circumstances, ought to have remanded case back to learned Commissioner of Income Tax, so that requisite informations/documents furnished by Assessee Trust could be examined and verified by learned Commissioner of Income Tax, who was to consider said application on merits. However, fact remains that Trust stands registered for last ten years in pursuance of impugned order of learned Income Tax Appellate Tribunal. It was also open for Revenue Authorities to take steps for cancellation of registration, if there was any material against Assessee Trust or they have violated conditions of registration or provisions of Act in any manner. That course is even now open to Revenue Authorities. We do not find any useful purpose to be served by now remanding case back to learned Commissioner of Income Tax Page 6 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 to consider said application under Section 12A of Act afresh at this stage, as said registration already stands granted about ten years back and therefore, we dispose of present appeal filed by Revenue only by making observation that if any breach or violation on part of Respondent/Assessee Trust is found, they will be free to proceed against Assessee/Trust in accordance with law. Appeal is, accordingly, disposed of. There shall be no order as to costs. (V.K., J.) (R.S.K., J.) 24.02.2020 Index : Yes/No sra To 1.The Commissioner of Income-Tax, Salem. 2.The Assistant Registrar, Income Tax Appellate Tribunal, 'B' Bench, Chennai. Page 7 of 8 http://www.judis.nic.in T.C.(A) .No.957 of 2010 Dr.Vineet Kothari, J. and R.Suresh Kumar, J. (sra) T.C.(A) No.957 of 2010 24.02.2020 Page 8 of 8 http://www.judis.nic.in Commissioner of Income-tax, Salem v. Vasavi Manikandan Hospital Trust