IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 29..08..2007 Coram The Honourable Mr.Justice K.RAVIRAJA PANDIAN and The Honourable Mrs.Justice CHITRA VENKATARAMAN T.C.(R)Nos.107 and 108 of 2004 TCMP.Nos.54 and 55 of 2004 St.Joseph's Estate ...Petitioner in both the cases -vs- The State of Tamilnadu rep. By the Special Commissioner and Commissioner of Agricultural Incometax Ezhilagam, Chepauk Chennai 600 005 ...Respondents in
both the cases
Civil Revision Applications under Section 54(1) of the Tamil Nadu Agricultural Income Tax Act, 1955 to revise the order of the Tamilnadu Agricultural Incometax Appellate Tribunal, Chennai dated 2.5.2003 passed in SMRP. Nos.15 and 7 of 2002 respectively.
For Petitioner : Mr.P.J.Rishikesh for
Mr.Subbaraya Aiyar
For Respondents : Mr.Haja Nazuruddin,
Special Government Pleader
COMMON ORDER
(The order of the Court was delivered by CHITRA VENKATARAMAN,J)
The above Tax Case Revisions are filed against the order of the Tamilnadu Agricultural Income Tax Appellate Tribunal, Chennai. The assessment years relating to 2000-01 and 1999-2000.
2. The assessee claimed exemption under Section 4(b) of the Agricultural Income Tax Act. By order dated 31.7.2000 in respect of assessment year 2000-01, the Assessing Authority noted that the assessee is registered as a Charitable Institution under the provisions of Section 12A(a) of the Central Income Tax Act 1961. On the inspection conducted on 28.7.2000, the Assessing Authority pointed out that the petitioner herein runs the society for Educational and Charitable purposes for all persons irrespective of religion, race, caste, community or social status. It is also stated that a large portion of the society’s income is spent on the training of young priests all over India. In the circumstances, the Assessing Authority granted the exemption.
3. On the proceedings initiated under Section 34 of the Tamilnadu Agricultural Income Tax Act, 1955, a show cause notice was issued to revise assessment order by cancelling the relief granted under Section 4(b) of the Tamilnadu Agricultural Income tax Act on the ground that no trust deed had been produced by the assessee to verify the following items:
(1) declaration of trust which is binding on the settler
(2) setting apart definite property and the settlar depriving himself of the ownership thereof; and
(3) a statement of the objects for which the property is thereafter to be held, i.e. the beneficiaries has also not been produced by the institutions.
4. The petitioner filed his reply stating that the institution was registered under the provisions of the Indian Income Tax Act and that the Indian Trusts Act is not applicable to the case herein. As to the non production of trust deed, the petitioner referred to Clause 4 of the Rules and Regulations which deals with property and income and submitted that the property and the income of the petitioner were applied solely towards the promotion of the object of the society. Consequently, the assessee prayed for dropping of the proceedings.
5. By order dated 2.5.2003, the Special Commissioner and Commissioner of Agricultural Income Tax, Chennai referred a decision of this court in the case in TC(R) No.140/1994 dated 9.1.1998, reported in 247 ITR 521 (STATE OF TAMIL NADU v. EZUMESWARAR MUDAYAR TEMPLE), and held that the assessee had only agricultural income and there was no composite income. In the circumstances, exemption granted under the Income Tax Act could not be of relevance for considering the plea of exemption under the Tamil Nadu Agricultural Income Tax Act. The Commissioner also pointed out that trust deed had not been produced.
6. Learned counsel appearing for the petitioner submitted that on production of copy of the certificate issued by the Income Tax officer, Ooty, the assessee was exempted from the tax under Section 11 of the Income Tax Act for the assessment year 2001-02. The learned counsel also pointed out that the certificate issued under Section 12A(a) of the Income Tax was only to substantiate his status as a Trust entitling for exemption as an Educational Institution. Hence, going by the acceptance of the status of the assessee as a Trust eligible for exemption, the same ratio deserved to be accepted for the purpose of granting relief under the Tamil Nau Aagricultural Income Tax Act.
7. Learned counsel appearing for the Revenue however pointed out that considering the reasoning given by this Court in para 20 of the decision reported in 247 ITR 521 (STATE OF TAMIL NADU VS EXHUMESWARAMDAYAR TEMPLE) , in the absence of production of trust deed, the Commissioner had rightly passed an order.
8. A perusal of the order of the Commissioner shows that exemption was granted for the Assessment Years 1999-2000 and 2000-2001 on production of certificate issued by the Income Tax Officer under Section 11 of the Income Tax Act. Admittedly, no trust deed was produced before the Commissioner except for the certificate issued by the Income Tax Officer, Ooty, as regards the grant of exemption under the Income Tax Act upto 2001-2002. The assessee did not poduce the certificate under Section 12A(a) of the Income Tax Act, 1961.
9. It may be noted that the Commissioner initiated suo motu proceedings on the ground that the trust deed had not been produced before the authorities concerned for the purpose of verifying the status of the institution as an Charitable Institution. In the circumstances, the Commissioner passed an order negativing the claim of the assesee on the ground that the exemption granted under the Income Tax Act, per se, does not enure to the benefit to the assesee entitling for an exemption under the Tamil Nadu Agricultural Income Tax Act.
10. As far as the exemption under the provisions of the charge under the Tamil Nadu Agricultural Income Tax is concerned, Sec. 4(b) is the relevant section. The same reads as follows:
Section 4: Total agricultural Income:- Subject
to the provisions of this Act, the total agricultural
income of any previouos year of any person comprises all agricultural income derived from land situated within the State which is received by him or which accrues to him within or without the State, but does not include-
(a)….
(b) any agricultural income derived from property held under trust, wholly or partly for charitable or religious purposes, to the same extent to which income derived from property under trust wholly or partly for charitable or religious purposes, is not included in the total income for purposes of the Income Tax Act, 1961 (Central Act XLIII of 1961)”.
11. This provision came up for consideration in the decision reported in 247 ITR 521 (STATE OF TAMIL NADU VS EXHUMESWARAMUDAYAR TEMPLE). While considering the scope of this Section, this Court held that for the purpose of exemption under the Agricultural Income Tax Act, a religious or a charitable institution receiving income from agricultural lands need not get registered under the provisions of the Central Income Tax Act. It is only trusts having income from non-agricultural sourses need to get them registered under the relevant provisions of the Income Tax Act. Interpreting the phrase: to the same extent to which the income derived from the property held under trust wholly or partly for charitable or religious purposes is not included in the total income for the purposes of the Income Tax Acat,19961″, occurring inthe said clause it was pointed out that “no meaning can be ascribed except as to how under the Income Tax Act, the income derived from non-agricultural property held by a charitable and religious trust is taxable and to the same extent, the agricultural income would be taxable under the said clause of the Act. If any other meaning is given to the said phraseology, it would lead to absured results. In the process of interpretation of the phraseology as extracted above, we have to accredit wisdom and knowledge to the Legislature in enacting such a clause to the relevant provisions of the Income Tax Act and the provisions of the Constitution we have earlier referred to; and that perhaps was the reason they have introduced Clause (b) of Section 4 to the tax “agricultural income” from property held under trust for religious orcharitable purposes in the same manner, as had been enacted in the Income Tax Act, as relatable to non-agricultural income from property held under trust for religious and charitable purposes for the purpose of income tax. Certain consequences are to flow from what has been stated above. There is so need for a religious or charitable trust, receiving income on agriculture from the lands held by him, to get the trust registered under the relevant provisions of the Income Tax Act for claiming a little bit of exemption of tax, as had been granted in Clause (b) of Section 4 of the Act.
12. In the context of the said decision, the claim of the assesee for exemption must rest on the proof that the assessee adduces as to its status as a charitable institution. As already seen, since admittedly the petitioner had not produced the trust treed before the revisional authority, the matter merits to be remitted back to the revisional authority concerned to verify the trust deed to consider the claim for exemption. The petitioner herein shall produce the trust deed before the revisional authority who shall pass orders thereupon in accordance with law.
12. T.C.No.108 of 2004 relates to the assessment year 1999-2000, wherein the facts are also similar. The order passed by the Commissioner is common and in identical set of circumstances.
13. Considering the above facts and circumstances, the above cases are disposed of by setting aside the orders passed by the Tamilnadu Agricultural Income tax Appellate Tribunal, Chennai. The matters are remitted back to the the Tamilnadu Agricultural Income tax Appellate Tribunal, Chennai to consider the trust deed and pass orders on merits. Consequently, connected TCMP are closed. No costs.
(K.R.P.,J) (C.V.,J) 29.08.2007 Index : Yes Internet : Yes bg K.RAVIRAJA PANDIAN,J. and CHITRA VENKATARAMAN,J. T.C.(R)Nos.107 and 108 of 2004 29..08..2007