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2006 DIGILAW 325 (GAU)

Durgadutt Lohia Foundation v. State of Assam

2006-04-04

I.A.ANSARI

body2006
JUDGMENT I.A. Ansari, J. 1. I have heard Dr. B.P. Todi, learned Senior counsel, appearing on behalf of the Petitioner, and Mr. R. Dubey, learned Counsel, appearing on behalf of the Respondents. 2. The material facts, which are not in dispute, may, in brief, be set out as follows: The Petitioner, namely, Durgadutt Lohia Foundation (hereinafter referred to as the 'Petitioner trust'), is a trust established, in the year 1994, by virtue of a trust deed, dated 11.8.1994. The Petitioner trust is registered under the Societies Registration Act, the object of the trust being, inter alia, development of education and educational institutions by providing aids and grants, scholarships, etc., promoting arts, culture, sports, research work, financial assistance for scientific and other research works, medical aid and relief to suffering people, relief to the poor people, aid for socio-economic upliftment of communities and villages and other objects of general charity and social welfare including donations to other trusts and charitable institutions. Pursuant to an application made, in terms of Rule 2(4) of the Assam Agricultural Income Tax Rules, 1939, (in short, 'the said Rules'), by the Petitioner trust seeking grant of exemption certificate, to the effect that the donations made to the Petitioner trust shall stand exempted from levy of tax under the said Rules, Respondent No. 2, namely, Commissioner of Taxes, Assam, issued, on 24.1.1996, an exemption certificate. In course of time, the Petitioner trust made requisite application seeking renewal of its exemption certificate for the year ending on 31.3.1999, 31.3.2000 and 31.3.2001. As no response was received from the Respondents with regard to the application for renewal made by the Petitioner trust, the Petitioner trust issued several reminders. However, on 16.11.2001, Respondent No. 3, namely, Agricultural Income Tax Officer, Guwahati, issued a letter, addressed to the Petitioner trust, directing the Petitioner trust to submit certain particulars mentioned in the letter, dated 16.11.2001, aforementioned and also asking for explanation with regard to the queries raised therein. The Petitioner trust accordingly submitted, on 13.12.2000, its reply to the letter, dated 16.11.2001, aforementioned. Having received the explanations, so offered, and the particulars, so furnished, by the Petitioner, trust, Respondent No. 1 maintained complete silence and repeated reminders issued by the Petitioner trust, in this regard, yielded no result. The Petitioner trust accordingly submitted, on 13.12.2000, its reply to the letter, dated 16.11.2001, aforementioned. Having received the explanations, so offered, and the particulars, so furnished, by the Petitioner, trust, Respondent No. 1 maintained complete silence and repeated reminders issued by the Petitioner trust, in this regard, yielded no result. The Petitioner trust, eventually, issued a letter, on 9.2.2002, addressed to the Respondent No. 2, namely, Commissioner of Taxes, Assam, bringing to his notice, inter alia, that on account of non-renewal of the requisite exemption certificate, the Petitioner trust has not been able to carry out its activities. Thereafter, as late as on 30.1.2003, Respondent No. 3, namely, Agricultural Income Tax Officer, Assam, issued a letter informing the Petitioner trust to the effect that apart from the donations made by the Petitioner trust to the chief Minister's Relief Fund, the other activities carried out by the Petitioner trust were not found to be charitable in nature and, hence, the question of extending the validity of the exemption certificate granted, on 24.1.96, in favour of the Petitioner trust did not arise at all. Aggrieved by this letter, dated 30.1.2003, and the refusal to renew the exemption certificate, the Petitioner trust has come to this Court with the help of the present writ petition, made under Article 226 of the Constitution of India, seeking, inter alia, issuance of appropriate writ (s) setting aside and quashing the impugned letter, dated 30.1.2003, aforementioned. As a result of non-renewal of the exemption certificate, the activities of the Petitioner trust have come to a grinding halt since after the assessment year 2001-2002. It is in such circumstances that the present writ petition has come up for hearing. 3. While considering the present petition, what is pertinent to note is that under the said Rules, an application for granting of exemption certificate is made under Rule 2(4) of the said Rules. A careful reading of Rule 2(4) makes it clear that exemption certificate is granted by the Commissioner of Taxes, Assam, after he is satisfied that the activities of the applicant, institution or the trust are charitable in nature within the meaning of Rule 2(1)(i) of the said Rules. 4. The above discussion brings us to Rule 2(1)(i), which defines charitable purposes. Rule 2(1)(i), it may be noted, runs as follows: 2. (1)(i) .... 4. The above discussion brings us to Rule 2(1)(i), which defines charitable purposes. Rule 2(1)(i), it may be noted, runs as follows: 2. (1)(i) .... Charitable purposes in this rule includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity of profit. 5. A bare reading of Clause (i) of Rule 2(1) of the said Rules indicates that charitable purposes, as defined therein, are inclusive in nature. 6. What follows from a combined reading of Rule 2(4) and Rule 2(1)(i) is that when an exemption certificate is granted, it implies that the activities, which the applicant organization, institution or trust carries on, are charitable in nature. It, therefore, logically follows that so long as the activities of an applicant, such as the Petitioner continue to be charitable in nature as defined in Rule 2(1)(i) and there is no violation committed of any of the conditions of law, renewal of the exemption certificate would be automatic. To put it differently, renewal of exemption certificate shall be a rule and denial thereof shall be an exception. To make out a case for exception, the authority, who is entrusted, under the said Rules with the power to grant exemption certificate or renewal thereof, shall assign reasons for declining to renew an exemption certificate. 7. Bearing in mind what have been pointed out above, when I turn to the factual matrix of the present case, what attracts my attention, most prominently, is that Respondent No. 2 had directed, vide his letter, dated 16.11.2001, the Petitioner trust to furnish to the Respondent No. 3, the registration and exemption certificate granted under the said Rules to the Petitioner trust and also the details of the charitable activities undertaken by the Petitioner trust, the fund utilized by the Petitioner trust during the last three years and the status of Lions Seva Kendra, Purbanchal Seva Samity, etc. By his letter, dated 16.11.2001, aforementioned, Respondent No. 3 sought for some explanation, which may be reproduced as follows: (a) It is seen from the application that the trustees are Sri Vijay Kumar Lohia, Sri Sudhir Lohia and Sri Deepak Lohia, but as per the original deed of Trust the trustees are Sri Ram Gopal Lohia, Sri Vijay Kumar Lohia and Sri Sudhir Lohia. Why is such difference? Why is such difference? (b) Secondly, it is seen that your Trust has received donation from M/s. Sankar Tea Co. Ltd. and M/s. Moud Tea and Seeds Co. Ltd., both being assesses under the Assam Agricultural Income Tax Act, 1939, and the trustees are found to be the directors of these Companies. Does it not show that the trustees are benefited out of it? 8. Responding to the letter, dated 16.11.2001 aforementioned, the Petitioner trust furnished their reply, which read as follows: 1. On the demise of Shri Ram Gopal Lohia, Trustee in March, 1999, Shri Deepak Lohia was appointed Trustee of this trust instead of Late Ram Gopal Lohia. 2. It is not correct to presume that trustees being Directors of the Doner Company are benefited out of the donation received from Sankar Tea Co. Ltd. and Moud Tea and Seed Co. Ltd. inasmuch as the Companies and trust have got separate entities. 3. Details of the charitable activities undertaken and the fund utilization during the last three years have been already been submitted to you in March 2001 by our authorized representative. However, copy(s) thereof enclosed herewith for your ready reference. Lions Seva Kendra, Tinsukia, is a trust duly registered being No. 561 of 1997 dated 13.1.1997 under Indian Trust Act. Purbanchal Seva Samity is duly registered under the Societies Act XXI of 1860 No. 1119 of 1981-82, which please note. 4. Photo copy of the registration and exemption certificate obtained under the Income Tax Act are enclosed herewith for your information and needful. 9. Thereafter, Respondent No. 3 declined to renew the exemption certificate by its impugned letter, dated 30.1.2003. In this letter, Respondent No. 3 merely stated that apart from the donations made to the Chief Minister's Relief Fund by the Petitioner trust, the other activities undertaken by the Petitioner trust were not charitable in nature. The contents of the letter, dated 30.1.2003, clearly show that so far as the queries made by the Respondent No. 3 vide his letter, dated 16.11.2001, aforementioned were concerned, the Petitioner trust had given satisfactory replies thereto and it was for this reason that the explanation, offered by the Petitioner trust, were not contradicted or rebutted by the Respondent No. 3 and yet the refusal to renew the exemption certificate was merely on the ground that the activities, undertaken by the Petitioner trust, were not charitable in nature. For the conclusion, which was so reached by the Respondent No. 3, no reason whatsoever was, however, assigned in the impugned letter, dated 30.1.2003, aforementioned nor is there any reason discernible, in this regard, from the materials on record including the affidavit-in-opposition filed by the Respondents. 10. As is already indicated hereinabove, renewal of every exemption certificate, under the said Rules, is general and refusal thereof is an exception and for making out an exceptional case for refusal to renew an exemption certificate, incumbent it is upon the authorities concerned to assign reasons for declining to renew an exemption certificate. However, in the present case, except making an omnibus and bald statement that the activities of the Petitioner trust went not charitable in nature, Respondent No. 3, as already indicated hereinabove, has assigned no reason at all. 11. Situated thus, it is abundantly clear that the refusal to renew the exemption certificate by the Respondents was not in accordance with law and the impugned letter, dated 30.1.2003, shall, if allowed to survive, cause serious miscarriage of justice. 12. Considering, therefore, the matter in its entirety and in the interest of justice, the impugned letter, dated 30.1.2003, is hereby set aside and quashed. In view of the fact that Respondents have miserably failed to show that the activities carried out by the Petitioner trust are not charitable in nature, the Respondents, particularly, Respondent No. 3 aforementioned is hereby directed to renew the exemption certificate of the Petitioner trust till 24.1.2002. For renewal of the exemption certificate beyond 24.1.2002, the Petitioner trust shall be at liberty to make requisite application and if any such application is made, the Respondents concerned shall deal with the same in accordance with the law contained in that behalf bearing, however, in mind the observations made in the preceding paragraphs of this judgment. If the Petitioner trust makes an application for renewal, as indicated hereinbefore, the same shall be considered and disposed of, in accordance with law, by the Respondent (s) concerned within a period of two months from the date of making of the application. 13. With the above observations and directions, this writ petition shall stand disposed of. 14. No order as to costs.