Manidhaneyam Charitable Trust vs Government of Tamil Nadu and Others

M. Chockalingam, J.—The petitioner, a charitable trust represented by its managing trustee, has sought for a writ of certiorarified mandamus to quash the notice issued by the second respondent on September 18, 2006, in Na. Ka. No. 158/06 and also to direct the second respondent to return the document, viz., gift deed registered on July 10, 2006, by giving effect to the remission as per G. O. Ms. No. 1224/Revenue, dated April 25, 1964, read with G.O. Ms. No. 224/Commercial Taxes (Jl), dated December 11, 2003.

The court heard learned Counsel on either side.

The case of the petitioner, as could be seen from the affidavit filed in support of the petition and also after hearing learned Counsel for the petitioner, is that he is the managing trustee of the trust in question, and the petitioner was registered, vide the deed of declaration of trust dated January 24, 2005. It is also registered as a public charitable trust u/s 12AA of the Income Tax Act, 1961, by the Director of Income Tax (Exemptions), vide his order No. DIT(E) No. 2 (970)/04-05, dated May 18, 2005, and approved by the Director of Income Tax (Exemptions) u/s 80G of the Income Tax Act, 1961, vide his order No. DIT(E) No. 2 (970)/04-05 dated May 18, 2005 for the period from February 17, 2005, to March 31, 2006. Further, the petitioner had filed an application for renewal of the approval u/s 80G before the Director of Income Tax (Exemptions) on February 6, 2006, well before the expiry of the approval and the same was also approved by the Director of Income Tax (Exemptions) for the period from April 1, 2006, to March 31, 2009, vide his order No. DIT(E) No. 2(970)/04-05, dated August 22, 2006, that one Sa. Duraisamy, the sole and absolute owner of the property comprised in T.S. No. 66/9 (old S. No. 33), Block No. 20, Velachery Village, Mambalam-Guindy Taluk, Chennai District, measuring an extent of 40.70 cents, being 17,746 sq.ft. of land with the building measuring about 5,457 sq.ft. built thereupon, has executed a gift deed on July 10, 2006, transferring the property to the petitioner. At the time when the deed of gift was placed for registration before the second respondent, the petitioner had claimed one half (50 per cent.) remission of stamp duty leviable on the above transaction of gift in view of G.O. Ms. No. 1224/Revenue, dated April 25, 1964, read with G.O. Ms. No. 224/ Commercial Taxes (J1), dated December 11, 2003. The second respondent had accepted the deed of gift dated July 10, 2006, and registered the same after the payment of Rs. 2,90,300 along with Rs. 45,250 worth stamp paper, totally a sum of Rs. 3,35,550 towards stamp duty, being 50 per cent. of the stamp duty on the value of the property. The second respondent issued the impugned notice on September 18, 2006, demanding a sum of Rs. 4,39,983 being the remission of stamp duty claimed by the petitioner on the ground that the approval u/s 80G of the Income Tax Act was granted subsequent to the registration of the gift deed. The petitioner has also filed a petition dated October 6, 2006, before the third respondent praying for clarification in this regard and direction to the second respondent to return the gift deed dated July 10, 2006, by accepting the claim of the petitioner. But they have not passed any order thereon. Under the compelled circumstances, the petitioner has filed the present writ petition before this Court.

The court heard the learned Counsel for the respondent.

It is not in controversy that the petitioner was registered as a public charitable trust u/s 12AA of the Income Tax Act, 1961, and it was also approved by the Director of Income Tax u/s 80G of the Income Tax Act by order dated May 18, 2005, for the period from February 17, 2005, to March 31, 2006. When the gift deed was executed by one Duraisamy in respect of the immovable property, the same was placed for registration on July 10, 2006, in the office of the second respondent, the petitioner had claimed one half (50 per cent.) remission of stamp duty leviable on the above transaction of gift in view of the G.O. Ms. No. 1224/ Revenue, dated April 25, 1964, read with G.O. Ms. No. 224/Commerdal Taxes 01), dated December 11, 2003, and also in view of the approval u/s 80G of the Income Tax Act. It is not in controversy that accepting the same, the document was registered as gift deed. Thereafter, the impugned notice was served demanding a sum of Rs. 4,33,983 being the remission of stamp duty claimed by the petitioner. Aggrieved over the same, the petitioner had filed a petition before the third respondent on October 6, 2006, but the same was not considered by the third respondent. Hence, the above writ petition has been brought forth for the relief as stated above.

The petitioner has claimed the remission of 50 per cent. stamp duty leviable on the above transaction of gift, in view of G.O. Ms. No. 1224/Revenue, dated April 25, 1964, along with G.O. Ms. No. 224, Commercial Taxes 01), dated December 11, 2003.

Item 47 of G.O. Ms. No. 1224, dated April 25, 1964, reads as follows:

All gifts or settlements for charitable or religious purposes-Duty reduced to one half of the duty leviable on such instruments (G.O. Ms. No. 639, Revenue, dated March 20, 1948, and G.O. Ms. No. 2993, Revenue, dated December 15, 1948).

Provided that, the above G.O. will apply only in the case being society or trust approved u/s 80G of the Act, 1961 (Central Act 43 of 1961). From the reading of the above G.O., it is abundantly clear that the remission of 50 per cent. of stamp duty is to be given, on the petitioner satisfying two conditions, firstly, the gift or settlement should be one for charitable or religious purpose, and, secondly, the said donee, society or trust should have been approved u/s 80G of the Income Tax Act, 1961. In the instant case, it is not in controversy that the petitioner''s society, a charitable trust, originally applied for benefits under Sections 80G of the Act and the same has been approved from February 17, 2005, to March 31, 2006. From the materials available on record, it is quite clear that renewal was applied even before March 31, 2006. It would clearly reveal that the renewal application was made as early as February 6, 2006, and renewal was also granted u/s 80G of the Income Tax Act from April 1, 2006, to March 31, 2009. It was also made clear in the order that the renewal was valid in respect of the donation received by the trust from April 1, 2006, to March 31, 2009. In the instant case, the document of gift was actually registered on July 10, 2006. When the document was registered, it has got to be examined u/s 80G of Act. Now, the petitioner, on notice, was directed to make the above said payment as stamp duty only for the reason that the approval u/s 80G of the Act was granted subsequent to the registration of the gift deed. After looking into the materials available on record, this Court is of the considered opinion that the notice itself has been issued erroneously. Though the order of renewal was passed by the Department on August 22, 2006, on an application made by the petitioner on February 6, 2006, it is made clear in the order itself that the renewal u/s 80G of the Act would have given effect from April 1, 2006, to March 31, 2009, and even this order has not been placed before the authority and the authority, having not looked into the order of exemption, issued notice, which in the opinion of the court, is bad and invalid. In the instant case, once the petitioner was entitled to have the remission of 50 per cent. of the stamp duty by the operation of the G.O., referred, viz., G. O. Ms. No. 1224/Revenue, dated April 25, 2004, and it was also had its approval on the relevant date, i.e., on July 10, 2006, without any hesitation, the above writ petition has got to be strictly ordered.

With the above observation, the writ petition is ordered. No costs. Consequently, M. P. Nos. 2 and 3 of 2007 is closed.