The Madras High Court held that M/s Thanthi Trust is eligible for exemption under Section 12A of the Income Tax Act, 1961.
The assessee, M/s Thanthi Trust is a public charitable Trust, filed an application for registration under Section 12A(a) of the Act before the CIT(A), which granted registration to the assessee Trust under the provision.
The proceedings were initiated by the Director of Income Tax (Exemptions) under Section 12A(a)(iii) of the Act, after noting that the assessee Trust was granted registration by the CIT(A) under Section 12A(a), by order. The DIT(E) examined the records and noted the objects and activities of the assessee Trust.
It was stated in the records that the assessee does not run any school or colleges, though such purposes have been formulated as the main objects of the Trust, the Trust engages itself in the business of publishing the Tamil news business commitments ‘Dina Thanthi’ and also job works for printing are undertaken as business commitments.
The surplus of the income from the business after defraying all the expenses is utilized for donation to another Trust, ‘Aditanar Educational Trust’ only.
The issue raised in this case was whether the Tribunal was right in law in holding that the appellant trust is not eligible for exemption under Section 12A of the Income Tax Act, 1961 without considering the merits of the case in a proper manner.
The division judge bench of Justice T.S. Sivangnam and Justice V. Bhawani Subbaroyan noted that The Tribunal lost sight of the distinction between a claim for registration under Section 12AA and a claim for exemption under Section 11 of the Act.
The Tribunal’s justification would amount to judicial indiscipline for not following the decision of the Hon’ble Supreme Court and this Court in the assessee’s own case, the court added.
The court observed that the DIT(E) failed to adhere to the instructions issued by the CBDT which is binding on the DIT(E). As observed earlier, the recent pandemic has taught very many lessons and one of which is that, mode and method of education cannot be in any manner restricted, but should be given the widest meaning that is possible.
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