2019 (9) TMI 1012 - HC - Income Tax

Grant the registration u/s 12AA - whether activities of the trust is not entirely charitable for public at large? - HELD THAT - As not disputed that the said questions of law have been answered against the Revenue by this court in the case of Commissioner of Income Tax Vs. D.P.R. Charitable Trust 2011 (8) TMI 1136 - MADHYA PRADESH HIGH COURT . It is informed that though the Revenue has filed an S.L.P. 2012 (8) TMI 1165 - SC ORDER before the Supreme Court, there is no interim order or stay of the order passed by this court by the Supreme Court and the matter is pending before the Supreme Court. In such circumstances, ithe present appeal is dismissed in terms of the order passed by this court in the case of D.P.R. Charitable Trust (supra) with liberty to the appellant to approach the Supreme Court.

Issues Involved:
1. Appeal against the order of the Income Tax Appellate Tribunal regarding the grant of registration under section 12AA to a trust.
2. Consideration of whether the trust's activities are entirely charitable or for profit-making purposes.
3. Examination of the trust's accumulation of liquid funds and increasing fixed deposits for earning interest income.
4. Assessment of the trust's compliance with the requirement of auditing books of accounts.
5. Possibility of introducing additional grounds during the hearing.

Analysis:
1. The appellant challenged the ITAT's decision to restore the issue to the 1d. CIT(E) for granting registration under section 12AA to the trust. The court noted that the questions raised were previously addressed in the case of Commissioner of Income Tax Vs. D.P.R. Charitable Trust, where the court ruled against the Revenue. Despite the Revenue's appeal to the Supreme Court, no interim order or stay was issued. Consequently, the court dismissed the present appeal, citing the precedent set by the D.P.R. Charitable Trust case and granting the appellant liberty to approach the Supreme Court.

2. The ITAT's failure to consider the 1d. CIT(E)'s findings regarding the trust's objectives being profit-motivated rather than charitable was a key contention. However, the court relied on the precedent established in the D.P.R. Charitable Trust case to dismiss the appeal, highlighting that the issues raised were already addressed in the previous judgment.

3. Another crucial issue was the trust's accumulation of liquid funds and increasing fixed deposits to generate interest income, suggesting profit-making motives rather than charitable objectives. Despite this concern, the court's decision to dismiss the appeal was based on the existing legal precedent and lack of intervention by the Supreme Court in the previous ruling.

4. The appellant also raised the issue of the trust's non-compliance with auditing requirements for its books of accounts as mandated by Rule 17A(1)(e) and section 12A of the Act. However, the court's decision to dismiss the appeal was primarily guided by the established legal position in the D.P.R. Charitable Trust case, indicating that the issues raised had already been addressed in prior judgments.

5. The provision for introducing additional grounds during the hearing was mentioned, although no specific additional grounds were highlighted in the judgment. The court's decision to dismiss the appeal was primarily based on the applicability of the precedent set by the D.P.R. Charitable Trust case, emphasizing consistency in legal interpretation and outcomes.

← Previous Next →