Sri Adi Sankara Kanakadhara Smrithi Trust v. Commissioner of Income Tax - I

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **& THE HONOURABLE MR. JUSTICE ASHOK MENON** **MONDAY, THE 6TH DAY OF AUGUST 2018 / 15TH SRAVANA, 1940** **ITA.No. 59 of 2016** **------------------** **AGAINST THE ORDER/JUDGMENT IN ITA 230/COCH/2014 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 12-12-2014** ## **APPELLANT(S)** ## **------------** **SRI ADI SANKARA KANAKADHARA SMRITHI TRUST, PUNNORKODE, PAZHAMTHOTTAM P.O., ERNAKULAM DISTRICT - 683 565 REPRESENTED BY ITS CHAIRMAN, K.S.BALASUBRAMANIAN.** **BY ADVS.SRI.DINESH MATHEW J.MURICKEN** **SRI.P.T.GOVINDAN SRI.K.A.ABHILASH** ## **RESPONDENT(S):** **-------------** **THE COMMISSIONER OF INCOME TAX - I, C R BUILDING, IS PRESS ROAD, KOCHI - 682 018.** **R BY SRI.K.M.V.PANDALAI, SC INCOME TAX DEPARTMENT** **R BY SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT** **THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06-08-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **ITA.No. 59 of 2016** **------------------** ## **APPENDIX** ## **APPELLANT(S)' ANNEXURES:** ## **-----------------------** - **ANNEXURE A: COPY OF DEED OF TRUST NO.164/IV/2011 IN RESPECT OF SRI ADI SANKARA KANAKADHARA SMRITHI TRUST DATED 02.11.2011** **ANNEXURE B COPY OF DEED OF TRUST NO.133/IV/2001 IN RESPECT OF SRI ADI SANKARA KANAKADHARA SMRITHI TRUST DATED 10.10.2001.** **ANNEXURE C COPY OF AGREEMENT TO TRANSFER BETWEEN SRI ADI SANKARA KANAKADHARA SMARAKA TRUST AND SRI ADI SANKARA KANAKADHARA SMRITHI TRUST DATED 04.11.2011.** **ANNEXURE D COPY OF ORDER OF COMMISSIONER OF INCOME TAX-I, KOCHI DATED 31.08.2012.** **ANNEXURE E COPY OF ORDER OF COMMISSIONER OF INCOME TAX-I, KOCHI DATED 26.02.2013.** **ANNEXURE F COPY OF ORDER OF I.T.APPELLATE TRIBUNAL IN ITA 230/COCH/2014 DATED 12.12.2014.** ## **RESPONDENT(S)' ANNEXURES:** ## **------------------------** ## **NIL** ## **/TRUE COPY/** **PA TO JUDGE** _**dkr**_ K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------ITA No.59 of 2016 ------------------------------------------Dated this the 6[th] day of August, 2018 ## J U D G M E N T Ashok Menon, J. Sri Adisankara Kanakadhara Smrithi Trust, an assessee under the Income Tax Act, 1961 ('Act', for short) is before us aggrieved by the rejection of its registration under Section 12AA of the Act. 2. From the pleadings, it is seen that the appellant charitable trust was registered vide Trust Deed dated 2.11.2011 at Annexure-A. There was another Trust by name Adisankara Kanakadhara Smaraka Trust registered on 10.10.2001, a predecessor to the present Trust, constituted per trust deed at Annexure-B with the objects of constructing memorial for the first invocation of Kanakadhara Sthothram by Jagadguru Adisankara for advancement of philosophy of Advaitham by establishing schools and colleges imparting knowledge irrespective of caste and religion, mini academy forming a platform of universal brotherhood without distinction of race, creed, sex, caste or ITA 59/16 -2- colour, for encouraging study of comparative religion and science, among other objectives. 3. Since no progress was made in achieving the objectives of the earlier trust, the persons who had made substantial contributions for purchase of land to the former trust, formed yet another trust, which is the present appellant. The objectives of the present Trust are to construct and administer a fitting monument for the first invocation of Kanakadhara Sthothram by Jagadguru Adisankara spontaneously uttered when deeply touched with the abject poverty of a brahmin lady, who had nothing to give as alms to the brilliant lad Sankara; to create, maintain and administer institutions to promote and propagate universal brotherhood philosophy and teachings of Adisankara, establishment of meditation and yoga centres, libraries and other charitable institutions such as children’s home, senior citizen’s home, health centres etc; to conduct lectures, seminars, conferences and other activities; to print and publish books and publications, to protect and promote ecology and nature within the adjoining premises among other ITA 59/16 -3- objectives, but has no other objectives relating to business, trade or profit. 4. A glance at history indicates that 'Kanakadhara Sthothram' is a hymn and is called ‘Kanakadhara’ because when lad Sankara went to the house of a poor brahmin lady for alms, all that she had was a gooseberry, which she gave him, and lad Sankara, moved on seeing the abject poverty of the lady is said to have recited 21 Hymns praising Goddess Lakshmi. The Goddess was so pleased that she appeared and on being persuaded by Sankara, showered the brahmin lady’s house with gooseberries made of pure Gold. 5. The appellant Trust applied for grant of registration of the Trust under Section 12AA of the Act vide application dated 15.2.2012, which was rejected by the Commissioner of Income Tax vide Annexure-D. An application for rectification of the order filed by the appellant Trust was also dismissed vide Annexure-E order. Thereafter, the appeal filed before the Income Tax Appellate Tribunal, Cochin, which met with the same fate vide Annexure-F and the appellant is before us in ITA 59/16 -4- appeal. The following questions of law are framed in the appeal memorandum: “(i) Whether in the facts and circumstances of the case, the Commissioner of Income Tax was right in refusing registration to the Appellant Trust under Section 12AA of the Act? (ii) Whether the Appellate Tribunal was right in law, overlooking the Objects of the Trust as evidenced by the Trust Deed and deciding as to whether the Trust was entitled to registration or not? (iii) Whether the authorities below were right in law in holding that the appellant Trust was not engaged in charitable activities when it was engaged in constructing and administering a fitting monument for the first invocation of Kanakadhara Sthothram by Jagadguru Sri Adisankara which is of historic interest attracting Section 2(15) of the Income Tax Act? (iv) Whether the object of the Trust would come within the purview of advancement of any other object of general public utility as enshrined in Section 2(15) of the Act? (v) Whether the authorities below were right in law in holding that the objectives of the Trust were charitable activity when its objectives include: to create, maintain and administer institutions to promote and propagate universal brotherhood philosophy and teachings of Adi Sankara, meditation and yoga centres, libraries and other charitable institutions such as Children’s Home, Senior Citizens Home, Health Centres etc., to conduct lecturers, seminars, conferences and such other activities, to print and publish books and publications, to protect and promote ecology and nature’, attracting Section 2(15) of the Income Tax Act? (vi) Whether in the light of the decision of the Hon’ble High Court of Madras, the authorities did not commit an error of law ITA 59/16 -5- when they did not apply the dictum laid down by the Madras High Court in DIRECTOR OF INCOME TAX EXEMPTIONS V. Ms.SEERVI SAMAJ THAMBARAM TRUST?” 6. The learned counsel for the appellant argues that objectives of the Trust would clearly indicate the charitable purposes for which it was formed. The authorities went wrong in not allowing the application for registration. For the purpose of registration of a charitable trust under Section 12AA, it is essential for the Trust to be a charitable institution, and Section 2(15) of the Act defines ‘charitable purpose’ as thus: “Charitable purpose” includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general ITA 59/16 -6- public utility, and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year.” 7. The learned counsel for the appellant relies on the decision of the Madras High Court in (2014) 362 ITR 199 (Madras) [Director of Income Tax Exemptions v. M/s.Seervi Samaj Tambaram Trust] , wherein it was held that the Revenue and CIT(A) were not justified in rejecting the application as admixture of both religious and charitable objects does not make any disqualification for trust to make an application for registration and it is also held that an application cannot be rejected merely on the ground that on the date of application, the assessee Trust had not commenced its activities, when the genuineness of the objects of the Trust is not questioned by the Company. The fact that it has not yet commenced its operations alone may not be sufficient to reject the application for registration. The Madras High Court had relied upon a decision of the Gujarat High Court in [ 2013] 29 ITA 59/16 -7- Taxmann 228 [Commissioner of Income Tax-I v. Kutchi Dasa Oswal Moto Pariwar Ambama Trust]. 8. Going back to the objectives of the appellant Trust, there does not appear to be any 'charitable purpose' coming within the meaning of Section 2(15) revealed from the objectives of the Trust. To construct and administer a fitting monument at a place where Adisankara uttered 'Kanakadhara Sthothram',is the primary objective of the trust, and is evident from the name of the trust. Constructing a monument at a place where something of importance had taken place, is definitely not a charitable purpose. It is not a trust constituted for the preservation of a monument of historical importance, already in existence. Conducting yoga centres, meditation centres, lecturers, seminars, conferences etc; by itself, also will not come within the meaning of charitable purpose when the primary object is not charitable in nature. The predominant object of such activity must be to subserve the charitable purpose. The latter should not masquerade under the guise of the former. The purpose of the trust, must be essentially charitable in nature and it ITA 59/16 -8- must not be a cover for carrying on an activity which has nothing to do with charity. In the decision in M/s.Seervi Samaj Tambaram Trust (supra) , it was held that section 12AA(1) contemplates satisfaction of the Commissioner about the objects of the trust and the genuineness of the activities and make such enquiries as may be necessary for the purpose of grant of registration. The Commissioner is given power to cancel the registration, if he is satisfied that the objects of such trust are not genuine or are not being carried out in accordance with the objects of such trust. Hence, the fact that the trust has not commenced its activities, by itself is no reason to reject registration at the threshold. The above cited decision has no application to the case in hand. To get registration of the Trust under the provisions of Section 12AA of the Act, the Trust must primarily be constituted for charitable purpose, which does not appear to be so in the case of the appellant trust. We find no reason to disagree with the findings of the authorities as well as the Tribunal in rejecting the application of the appellant, calling for ITA 59/16 -9- interference with those orders. We answer the questions of law in favour of the revenue and against the assessee. The Income Tax Appeal is, hence, dismissed. No order as to costs. Sd/K.VINOD CHANDRAN JUDGE Sd/ASHOK MENON JUDGE jg