(Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) 1. This Tax Appeal by the Revenue is preferred to challenge the order dated 17.06.2011 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench `C' in Income Tax Appeal No.1489 of 2010. The following two questions are raised by the appellant proposing them as substantial questions of law:-
“(1) Whether the Appellate Tribunal is right in law and on facts in holding that the assessee trust is entitled for exemption u/s.11 of the I.T. Act?
“(2) Whether the Appellate Tribunal is right in law and on facts in holding that the activities of the assessee trust is not attracted by the provisions of section 13(1)(a) and 13(1)(b) of the I.T. Act, 1961?”
2. We have heard learned advocate Mrs. Mauna Bhatt for the appellant.
We have gone through the relevant material and considered the impugned order of the Tribunal.
3. The issue relates to the claim of exemption by the assessee under Section 11 of the Income Tax Act, 1961 (`the Act' for sake of brevity). The assessee is a Jain Derasar Trust registered under the Bombay Public Trust Act, 1950. Its return of income filed for the assessment year 2007-08 was selected for scrutiny and a notice was issued to it asking to show cause as to why its claim for exemption of Rs.12,53,31,138/- should not be disallowed. According to the Assessment Officer, the claim was disallowable in view of the provisions of Section 13(1)(a) and 13(1)(b) of the Act as the assessing officer viewed the activities of the Trust to be confined to a particular Jain sect.
3.1. In response to show cause notice the assessee submitted reply stating that it is a public trust registered since 1953 and its activities were of a public charitable nature. It was submitted that the Income Tax authorities were allowed benefit under Section 11 of the Act upto assessment year 2003-04, and it was for the first time that the same was denied by holding an opinion that the activities of the assessee were limited to the service of the Jain Murti Pujak and its disciples and accordingly it was liable to be treated as a private religious trust. As against the claim of the assessee for deduction of Rs.12,53,31,138/- the Assessing Officer disallowed Rs.1,89,78,382/- adding the same to the income of the assessee.
3.2. The appeal preferred by the assessee was initially dismissed by the C.I.T.(A). The assessee filed a rectification application under section 154 of the Act on the ground that in the previous years the exemption under section 11 was not only allowed, but was also confirmed by the Tribunal. The earlier orders of the Tribunal in respect of assessment year 2004-05 and 2005-06 were produced in the rectification proceedings.
4. The CIT(A) allowed the rectification application in which he relied on the observations of the Income Tax Appellate Tribunal recorded in its order related to previous assessment year. Those observations are reproduced herein below:-
“In the present case at hand, the learned CIT(A) in his order vide paragraph 7.6 pertaining to the Assessment Year 2004-05 has observed that in the assessee's case apart from the religious activities i.e. propagation of Jain Philosophy and Ideology, the trust is also engaged in spreading religious and dharmik knowledge and providing amenities and facilities to the Pilgrims and renovation of Jain Temples all over India. The activities of the trust show that it is also engaged in carrying out objects of general public utility which are charitable in nature. The learned DR could not controvert the above observation of the learned CIT(A). This being so, we find that the decision of the Hon'ble Supreme Court in the case of Hon'ble Supreme Court relied on by the learned AR of the assessee. In the case of CIT v. Chandra Charitable Trust [(2007) 294 ITR 86(SC) is squarely applicable, as rightly contended by the learned AR of the assessee. Therefore, we do not find any infirmity in the impugned order of the learned CIT(A). We confirm the same and dismiss the appeals of the Revenue.”
5. In Chandra Charitable Trust [294 ITR 86 (SC)] relied on by the Tribunal, the Supreme Court has observed as under:-
“If Jainism is accepted to be a religion and from the covenants of the trust- deed it can be spelt out that not only to propagate Jainism or help and assist maintenance of the temple, sadhus, sadhvis, shraviks and shravaks, yet other goals are set in the trust deed, then the trust would become a charitable trust, so also a religious trust or it can be addressed as a charitable religious trust, and, if that be so, section 13(1)(b) would not be applicable.”
6. What emerges from the above scenario is that in the past assessment year, the assessee was treated as public charitable trust. Its activities were considered to be not of a private religious trust and consequentially the exemption under section 11 of the Act was made available to it. In respect of the assessment year 2007-08 under consideration, the facts remained the same and there was no factor or circumstance shown to dislodge the character of the assess as public charitable trust which was accepted by the authorities themselves in the past years. There was no reason therefore to deny the assessee the benefit of exemption by invoking the provisions of Section 13(1)(a) and 13(1)(b) of the Act.
6.1 In Radhasoami Satsang v. CIT (SC) [193 ITR 321 (SC)] the Supreme Court observed that the principle of res judicata does not apply to income tax proceedings. However, it was further observed:
"...where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and partis have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed ina subsequent year."
7. In the above view of the matter, the order of the Tribunal was proper.
No error was found so as to warrant interference. In the facts and circumstances, no substantial question of law arises for consideration. The present Tax Appeal is accordingly dismissed.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.)
(SN DEVU PPS)