COMMISSIONER OF INCOME TAX Vs. NAGARATHU VAISIYARGAL SANGAM

JUDGEMENT

(1.) THE assessee is a society registered under the Societies Registration Act, on March 20, 1959, created before April 1, 1962, that is, even before the commencement of the Income-tax Act, 1961. THE bye-laws of the society are registered with the Registrar. THE objects of the society are to provide financial assistance to deserving students for educational purposes, medical relief, pension to widows, incurring funeral expenses and providing financial help for the poor for conducting marriages of their dependants without distinction of caste, creed or community. For the assessment year 1982-83, the assessee filed its return disclosing its status as that of association of persons, declaring an excess of expenditure over income to the extent of Rs. 3,260. THE assessee claimed exemption under Sections 11 to 13 of the Income-tax Act, 1961. THE Income-tax Officer found that the assessee made certain payments to its office bearers, who were interested persons and so the provisions of Section 13(1)(c)(ii) are applicable. THE assessee filed an appeal before the Commissioner of Income-tax. THE assessee claimed that all the payments made were approved by the resolution passed by the board of directors and the executive committee and all the payments related to charity and the assessee incurred various expenditure for religious ceremonies and so, the assessee is entitled for exemption that was accepted by the Commissioner. THE Commissioner of Income-tax was of the view that the assessee did not apply its income for non-charitable and non-religious purposes and the expenditure incurred by the assessee in the premises of various temples are all incidental to its objectives, which include performance of marriages and performance of other religious rites. THE Commissioner of Income-tax had found that such acts of charity necessarily involve acts of religious ceremonies and as expenses were incurred in the temples in furtherance of the objects of the society for charitable purposes in order to render assistance to the poor people and accordingly granted exemption to the expenses incurred. THE Tribunal confirmed the view of the Commissioner of Income-tax thus dismissing the appeal preferred by the Department. So, at the instance of the Revenue, this reference has been made.

(2.) THE questions under reference are :

(3.) IN the instant case, the trust being created before April 1, 1962, and the trust did not contain any mandatory provisions with regard to these payments and the mandate itself being made after April 1, 1962, any amount of passing of any resolution after April 1, 1962, will not come to the rescue of the assessee by applying the principles laid down in the decision of CIT v. Rattan Trust . Following the principles laid down by the apex court in CIT v. Rattan Trust [1997] 227 ITR 556 we hold that the INcome-tax Officer was correct in invoking the provisions of Section 13(1)(c) of the INcome-tax Act, 1961, in regard to the payment of Rs. 10,001 to Sri Thatha Chettiar, president of the society, and other payments and advances to interested persons as the same falls under the provisions of Section 13(1)(c) of the INcome-tax Act, 1961, and denying the exemption to the assessee under Section 11 of the INcome-tax Act. So the Tribunal was not justified in holding that the assessee is entitled to exemption under Section 11 of the INcome-tax Act and the INcome-tax Officer was not correct in invoking Section 13(1)(c) of the INcome-tax Act.