High Court Of Madras
Commissioner Of Gift Tax vs. Sakthi Charities
Section GT 45(e)
Asst. Year 1985-86
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) No. 1599 of 2005
20th February, 2006
Counsel Appeared :
J. Naresh Kumar, for the Appellant
JUDGMENT
P.D. Dinakaran, J. :
This appeal is directed against the order of the Tribunal dt. 8th April, 2005, made in ITA No. 4/Mad/1998 for the asst. yr. 1985-86 raising the following substantial question of law : “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that, the assessee-trust was exempt under the provisions of s. 45(e) of the GT Act, even though the Civil Court has no power to make amendments or alter the objects of the trust deed under s. 92 of the CPC ?”
2. The brief facts of the case are as follows : The original gift-tax assessment made on the assessee for the asst. yr. 1985-86 exempting the gift of Rs. 89,615 made by the assessee-trust under s. 45(e) of the GT Act (hereinafter referred to as “the Act”) was set aside by the CGT under s. 24(2) of the Act by an order dt. 6th Feb., 1992, with a direction to compute the taxable gift accordingly. The trust was denied exemption under s. 11 of the IT Act for various years taking notice of certain offending clauses in the trust deed dt. 25th June, 1968, which necessitated the assessee-trust to move the Civil Court under s. 92 of the CPC where the trust got a declaratory decree dt. 29th April, 1981, whereunder the said offending clauses were got deleted w.e.f. 25th June, 1968. But still the Revenue did not grant exemption.
3. Concededly, when the matter came up for consideration before this Court for the asst. yr. 197677, this Court also denied exemption on the ground that the Civil Court could not make a deletion of the offending clauses of the gift deed dt. 25th June, 1968, with retrospective effect, as a result, the AO did not allow exemption under s. 45(e) of the Act for the asst. yr. 1985-86 by his assessment order 28th Feb., 1994.
4. Aggrieved by the said order of the AO refusing to grant exemption under s. 45(e) of the Act for the asst. yr. 1985-86, the assessee preferred an appeal before the CGT(A) by relying on a decision in the case of CIT vs. Kamla Town Trust (1996) 130 CTR (SC) 112 : (1996) 217 ITR 699 (SC). But the CGT(A) dismissed the appeal holding that the amendment had only prospective effect and not retrospective effect. Hence, the assessee filed further appeal before the Tribunal. Before the Tribunal also, the assessee referred to the decision of the apex Court in the case of CIT vs. Kamla Town Trust (supra). The Tribunal, following its own order in ITA Nos. 3838 and 3839/Mad/1989, in the assessee’s own case, allowed the appeal. Hence the present appeal by the Revenue.
5. In this regard, it is apt to refer to the decision of the apex Court in the case of CIT vs. Kamla Town Trust (supra), whereunder the apex Court has held that since the decree was passed by the Civil Court permitting rectification of the trust deed, the same would have only prospective operation and would not affect the assessment year in question of the charitable trust and the income of the trust was not entitled to exemption under ss. 11 and 12 of the IT Act for the assessment years prior to the date of the decree.
6. In the instant case, the date of the decree is 29th April, 1981. It is not in dispute that the Tribunal, while passing the order under the IT Act with regard to the asst. yrs. 1982-83, 1983-84 and 1984-85, followed the ratio laid down by the apex Court in the case of CIT vs. Kamla Town Trust (supra) and held that the assessee is entitled to claim exemption on the basis of the declaratory decree of the District Judge, Coimbatore, from the date of the decree.
7. A reference was sought to be made to this Court, but the Tribunal refused to refer the matter and by an independent order dt. Nil March, 1999, concluded the issue holding that the assessee is entitled to the exemption under s. 11 of the IT Act with effect from the date of the decree of the Civil Court as per the ratio laid down by the apex Court in the case of CIT vs. Kamla Town Trust (supra), but not for the assessment years prior to the date of the Civil Court decree.
8. It is, therefore, clear that the assessment under the IT Act for the asst. yrs. 1982-83, 1983-84 and 1984-85 stands concluded, as referred to above, and hence the Tribunal is right in applying the ratio laid down in the case of CIT vs. Kamla Town Trust (supra) for the assessment under the GT Act for the asst. yr. 1985-86 in consequence of the assessment made under the IT Act.
9. Hence, we have no reason to interfere with the order of the Tribunal and accordingly, the appeal stands dismissed.
[Citation : 284 ITR 401]
