INCOME TAX OFFICER Vs. TRUSTEE AMMACHIVEEDU MOOHURTI TEMPLE TRUST
LAWS(IT)-1989-11-3
INCOME TAX APPELLATE TRIBUNAL
Decided on November 23,1989

Appellant
VERSUS
Respondents

JUDGEMENT

G. Santhanam, Accountant Member - (1.)THE revenue is in appeal while the assessee has filed the Cross Objection.
(2.)The trust was initially founded by the members of a Nair family claiming royal lineage. The Deity installed is known as 'Durga Bhagavathy' and the temple is about 600 years' old. Though it was originally a private religious trust, the Deity is worshipped by Hindus, Muslims and Christians and thus open to all castes or religions. The temple is considered to be a most important temple by the fishermen living in Quilon coastal area. Thus, the temple is dedicated for public worship. The administration and management of the temple and its properties are now governed by a Scheme pursuant to the orders of the Kerala High Court sometime in 1957 and as revised by the Kerala High Court by its judgment dated 1-7-1968 in SA Nos.767 and 827 of 1964. The Scheme 1979 permitted for running charitable institutions in the name of the Deity. It provided for the management and maintenance of the templeand the institutions attached to it. It also provided for day-to day maintenance of accounts and also filing of an audited report and set out the powers, duties and responsibilities of the manager or deputy manager appointed under the Scheme. Thus, the temple and the institutions attached to it have over the years acquired the characteristics of public religious and charitable purpose.
The registration under Section 12A(a) of the trust was granted by the learned Commissioner of Income-tax. The trust has been filing the audlted receipts and payments account and the auditors' certificate year after year along with the returns of income and the statements were accepted till the asst. year 1980-81. For some years up to 1980-81, ex pane assessments were made under Section 144 treating the trust as a taxable entity but then under Section 146, assessments were re-opened and closed as "N.A". For the first time in the previous year ending 31-12-1980 relevant to the assessment year 1981-82, the ITO declined to grant exemption to the trust for the reason that the provisions of Section 12A(b) were not satisfied. The ITO proceeded to take the gross income of the assessee, disallowed certain expenses and the amount advanced to the hospital and arrived at a taxable gross income of Rs. 3,24,530 from which he gave a deduction of Rs. 3,000 towards bank interest under Section 80L and finally brought to tax a sum of Rs. 3,21,530. He also initiated penalty proceedings under Sections 271(1)(a) and 273(1)(b) of the IT Act. The assessee was aggrieved.

(3.)THE first appellate authority went into the history of the temple and also dealt with the Scheme as set out by the Court. He also analysed the requirements of Form No. 10B wherein it was stipulated that the accounts of the trust should be audited by a Chartered Accountant and a certificate issued that the balance-sheet is in agreement with the books of accounts and the Chartered Accountant should in the annexure to Form 10B set out the income of the previous year and its application for charitable purposes and the amount set apart and various indicators whether the application or use of income had been for the benefit of persons mentioned in Section 13 and whether the investment of the funds were on specified assets. As against this background, the learned CIT(A) came to the conclusion that the accounts were audited by a duly qualified Chartered Accountant and the statements set out in receipts and payment accounts were duly certified by him and the only deficiency as far as he could see is the absence of a balance sheet and the annexure to Form 10B. However, he came to the conclusion that the information required to be given in Annexure 10B can be gleaned by theassessee's books themselves and that the absence of a balance-sheet cannot be held against the assessee. In fact, the assessee does not prepare a balance-sheet as it has no idea of the extent or size of its temple assets and no itemisation of the different assets has been made by it and that a petition has been made in the Court seeking permission to have this done. In this view of the matter, he held that a major portion of the requirements of Section 12A(b) was satisfied by the assessee and to view it with this disfavour and not grant the benefit extended to it under Section 11 will, in his view, be a negation of the benefits to which the assessee is entitled. THEn he distinguished the charging Section from the machinery Section as scholarly brought out by Justice Shri S. Ranganathan of the Apex Court at page 57 of the book "Iyengar on Income Tax", 7th Edition and held that Section l2A(b) is only a machinery section and not a charging section and the purpose of that section is to ascertain the amount of taxable income from the report furnished. THE trust has also filed a report which is for the same purpose but in a different form. Simply because the report is in a form not commonly used or not prescribed, one cannot deny the assessee the benefit of the provision. Further, he went into the accounts of the trust and found that the amounts had in fact been utilised for the purpose of trust and that there was no warrant for taxing the income of the trust. THE revenue is aggrieved.


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