IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `E' : NEW DELHI)
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
and
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No.2824/Del./2019
M/s. Om Gupta Educational Trust, vs. CIT (E),
04 & 05, Southern Park, 3rd Floor, Delhi.
Saket District Center,
New Delhi 110 017.
(PAN : AAATO6442J)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Saubhagya Agarwal, Advocate
REVENUE BY : Ms. Pramita M. Biswas, CIT DR
Date of Hearing : 08.07.2019
Date of Order : 22.07.2019
ORDER
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, M/s. Om Gupta Educational Trust (hereinafter referred
to as the `assessee') by filing the present appeal sought to set aside the
impugned order dated 27.02.2019 passed by the Commissioner of
Income-tax (Exemptions), New Delhi on the grounds inter alia that :-
"1. That having regard to the facts and circumstances of the
case, Ld. CIT(E) has erred in law and on facts in denying
registration u/s 12AA of the Income Tax Act, 1961 without
looking at all necessary conditions.
2. That on facts and circumstances of the case, the Ld.
CIT(E) was not justified in rejecting application for registration
u/ s 12AA of the Income tax Act, 1961 by disputing the fact that
2 ITA No.2824/Del./2019
objects of the assessee trust are of charitable nature in terms of
provisions of section 2(15) of the Income Tax Act, 1961.
3. That having regard to the facts and circumstances of the
case, the CIT (E) has erred in not appreciating that the assessee
trust is created for purpose of providing education and various
other allied objects as enshrined in the trust deed which are
purely of charitable nature and in accordance with provisions of
section 2(15) of the Income Tax Act, 1961.
4. That having regard to the facts and circumstances of the
case, Ld. CIT(E) has erred in law and on facts in not
appreciating that the benefit of education and training was of
charitable nature in accordance with objects of the trust and the
CIT(E) was not justified in disputing the same."
2. Briefly stated the facts necessary for adjudication of the
controversy at hand are : the application moved by the assessee trust in
Form No.10A seeking approval for registration under section 12AA of
the Income-tax Act, 1961 (for short `the Act') has been rejected by the
ld. CIT (E) on the grounds inter alia that perusal of objects of the trust
mentioned in the Trust Deed shows that the same appeared to be
commercial in nature; that statement of the applicant that the objects
pointed out by the ld. CIT (E) are incidental to the main objects of the
trust is factually incorrect; that activities of the trust are not genuine.
3. Feeling aggrieved, the assessee trust has come up before the
Tribunal by challenging the impugned order passed by ld. CIT (E)
by way of filing the present appeal.
4. We have heard the ld. Authorized Representatives of the
parties to the appeal, gone through the documents relied upon and
3 ITA No.2824/Del./2019
orders passed by the revenue authorities below in the light of the
facts and circumstances of the case.
5. Trust Deed dated 07.11.2017, available at pages 12 to 31 of the
paper book, enumerates following aims and objects of the Trust :-
"Aims and the objects of the Trust
The Trust is being established for the advancement of
education. The Trustees shall each year apply the income of the
Trust or part thereof and may at their discretion at any time and
from time to time apply the Trust funds towards the advancement
of one or more of the following objectives in such manner as the
Trustees in their absolute discretion think proper. PROVIDED
FURTHER THAT NOTWITHSTANDING anything
hereinbefore or hereinafter contained, the income as also the
corpus of the Trust funds shall be applied and be applicable only
to or for such public charitable purpose and objects and subject
to such conditions and/or limitations, if any, as may, from time to
time be laid down in the Income Tax Act, 1961, or any other Act
governing the taxation of income. The aims and objects of the
Trust shall be as under :
a. establishing, acquiring, operating, managing,
maintaining, supporting schools, colleges, training
centres, tutorial centres, pre-schools, including
kindergartens, nurseries, child care centres, before and
after school service centres, enrichments classes, remedial
classes, crèches, study centres, research institutes,
universities, lecture class or examination room or rooms,
office or offices and other institutions and/or granting
monetary assistance and establishing endowments at any
of the aforesaid establishments or fund the imparting and
promotion of education, knowledge and training of
students,
b. establishing, acquiring, operating, managing, controlling,
maintaining, supporting schools, colleges, training
institutes, professional institutes providing formal degrees
etc.;
c. establishing and maintaining hostels and/or boarding
houses and/or residence quarters and granting free
boarding and/or lodging to students, scholars, teachers,
staff members, etc., of any school owned or operated by
the Trust upon such terms and for such period as the
Trustees may deem fit;
4 ITA No.2824/Del./2019
d. awarding scholarships, fellowships, grant and monetary
assistance by way of loans or otherwise to deserving
students on such terms and conditions as the Trustees
may deem fit for the purposes of imparting education,
training and qualification including academic, learning,
professional, vocational, technical and encouraging
research, etc. in any branch of knowledge for such period
as the Trustees may deem fit;
e. supplying books, food, clothes and fees to students or
scholars or grant monetary assistance, etc. to them for
such purpose as aforesaid;
f. establishing, maintaining, supporting and providing
monetary assistance to libraries, museums, reading
rooms, laboratories, research centers and other facilities,
for advancement of education and knowledge;
g. developing and conducting workshops, training programs
for teachers, non-academic staff, academicians and
public on educational technology, processes and
methodologies and conducting teacher training activities
in all forms and through all mediums;
h. developing and carrying out research in systems processes
and methodologies to improve the functioning of schools
and higher education institutions, etc. and developing and
deploying technologies, equipment, software to achieve
this aim and objective;
i. exploring and implementing new vocational areas
including in the field of science and technology and/or
any other areas;
j. developing and establishing pre-school(s) and out of
school activity centres catering to the needs of children in
sports, find arts, cultural and vocational activities,
educational trips and other mentally stimulating and
personality enriching and enhancing activities;
k. associating, collaborating and raising funds, conducing,
managing and controlling events and activities with other
societies, trusts or non-profit organizations having one or
more aim and object similar to that of this Trust;
l. rendering educational and research services to any such
company, association, institutions or organizations in
5 ITA No.2824/Del./2019
academic field as also imparting training and knowledge
skills;
m. undertaking research and experimentation in the field or
developing and producing educational material,
curriculum, modules, programs, software, in any form
and medium, with a view to make the process of learning
and teaching more meaningful, educative, interesting and
elevating and to promote knowledge and understanding in
the education field;
n. supporting the initiative of any individual, group or
organization in promoting education both formal and
informal for adults and children or otherwise associating,
subscribing, collaborating, cooperating and/or
coordinating with any company, association,
organization, society, trust or institution for furtherance
of the objectives of the Trust and for all such purposes as
incidental thereto;
o. establishing help lines and counseling centres for school
students including for career counseling and other social
issues; and
p. promoting education and learning in all branches of
knowledge and for all its allied purpose."
It is expressly provided that if any one or more of the objects
herein above specified are held not to be objects of a charitable
nature, the Trustees shall not carry out such object or objects but
the validity of the said Trust as a Trust for charitable purposes
shall not be affected in any manner."
6. Perusal of the aims and objects of the assessee trust when
examined into totality go to show that the dominant object of the
applicant trust is imparting and supporting education by establishing,
acquiring and operating schools, colleges, training centers, tutorial
centers, study centers, etc. and supplying books, food, clothing and fees
to the students, scholars and grant monetary assistance etc. to them.
However, applicant trust has inserted a proviso to the main aims and
objects that, "if any one or more of the objects herein above specified
6 ITA No.2824/Del./2019
are held not to be objects of a charitable nature, the Trustees shall not
carry out such object or objects but the validity of the said Trust as a
Trust for charitable purposes shall not be affected in any manner."
7. When we examine the impugned order passed by the ld. CIT (E)
in the light of the aims and objects of the assessee trust, it leads to the
conclusion that the ld. CIT (E) proceeded merely on the basis of
assumptions and presumption by recording the finding that following
objections mentioned in the Trust Deed seem to be commercial in nature
and that the objects mentioned in the Trust Deed are on commercial
lines and assessee trust may deviate from the charitable activities.
8. Ld. DR for the Revenue filed written submissions containing case
laws which are extracted as under :-
" In the above case, it is humbly submitted that the
following decisions may kindly be considered with regard to
Section 12AA of I.T. Act and proviso to section 2(15):
1. Rajah Sir Annamalai Chettiar Foundation Vs OIT
[2011] 15 taxmann.com 313 (Chennai) / [2011] 10 ITR(T)
424 (Chennai)/[2011] 48 SOT 502 (Chennai) (copy
enclosed)
Where Hon'ble ITAT Chennai held as follows:
The principle that the institutions run by the charitable
societies may collect fees and service charges does not mean
that the institutions can charge fees, etc., at commercial
rates from all the people without giving any element of
charity to needy people. The charitable purpose defined and
manifested as including relief of the poor, education,
medical relief, etc., is to protect the basic concept of charity.
Presence of real charity cannot be diluted. Charity always
means helping the needy supporting the poor, working with
compassion and dedication for the society. Running of an
institution without any of the above virtues cannot be
7 ITA No.2824/Del./2019
considered as a charitable institution. The object of the
assessee-trust is to establish a number of educational
institutions in a brand name and run it on commercial lines.
This cannot be a charitable activity.
2. CIT Vs National Institute of Aeronautical
Engineering Educational Society [2009] 181 Taxman 205
(Uttaranchal) (copy enclosed)
where Hon'ble Uttaranchal High Court held that in
expression 'charitable purpose', charity is soul of expression
and mere trade and commerce in education cannot be said
to be a charitable purpose entitling a society to grant of
registration under section 12AA. It was held as follows:
"Section 12AA provides procedure for registration clause
(a) of section 12AA(1)(a) empowers the Commissioner to
call for such documents or information from the trust or an
institution, as he thinks necessary in order to satisfy himself
about the genuineness of the activities of the trust or an
institute and may also make such inquiries, as he may deem
necessary in this behalf. Said provision in section 12AA
makes it clear that the Commissioner is not supposed to
allow the registration with blind eyes. In the instant case,
the order passed by the Commissioner showed that he had
considered the income and expenditure account of the
society for the financial years 2000-01 to 2002-03, and
concluded that the assessee was not carrying on any
charitable activity as its dominant object was to earn profits
under the garb of 'education'. The Commissioner had
further observed that the assessee was charging substantial
fee from the students and was making huge profits. The
order passed by the Commissioner further disclosed that the
surplus had been transferred to the capital fund of the
assessee. It had been further clarified in the finding of the
Commissioner that no expenditure was made by the assessee
for the charitable purpose. [Para 6]
Mere imparting education for primary purpose of earning
profit cannot be said to be a charitable activity as
interpreted by the Apex Court in Municipal Corpn. of Delhi
v. Children Book Trust [199213 see 390. In the expression
'charitable purpose', charity is soul of the expression. Mere
trade and commerce in education cannot be said to be a
charitable purpose."
8 ITA No.2824/Del./2019
3. CIT Vs A.R.Trust [2017] 86 taxmann.com 6
(Allahabad)
Where Hon'ble Allahabad High Court held that Tribunal
has no jurisdiction in law to direct for registration of trust
without there being satisfaction recorded by registering
authority as contemplated by section 12AA.
4. G D Singla Charitable Trust Vs CIT [ITA
No.594/2013] (Copy enclosed)
Where Hon'ble ITAT Amritsar held that benefit of
registration u/s 12AA cannot be granted to a trust that is
controlled by a single family."
9. The ld. CIT (E) vide show-cause notice dated 27.12.2018,
available at pages 6 & 7 of the paper book, called upon the assessee to
furnish plethora of documents/information so as to satisfy himself as to
the genuineness of the charitable activities but has not discussed any of
the documents whatsoever to prove that he was actually not satisfied as
to the genuineness of the charitable activities to be carried out by the
assessee rather based the order on the basis of whims and fancies.
10. Impugned order passed by the ld. CIT (E) rejecting the
registration u/s 12AA of the Act is wholly and exclusively based upon
whims and fancies without examining the aims and objects in totality.
One cannot pick up two or three objects to decide the issue in
controversy. The ld. CIT (E) has not called upon the assessee to furnish
any documents or information, bank statements, to prove extent of the
charitable activities carried out so as to satisfy himself about the
genuineness of the activities of the trust rather dismissed the application
summarily by harping upon four objects picked up from the Trust Deed.
9 ITA No.2824/Del./2019
We are of the considered view that the ld. CIT (E) has not satisfied
himself as required u/s 12AA of the Act to arrive at the decision rather
dismissed the application on the basis of presumptions and assumptions.
11. In view of what has been discussed above, we are of the
considered view that to impart the justice once for all, this case is
required to be remanded back to the ld. CIT (E) to decide afresh after
providing adequate opportunity of being heard to the assessee.
Consequently, the appeal filed by the assessee is allowed for statistical
purposes.
Order pronounced in open court on this 22nd day of July, 2019.
Sd/- sd/-
(R.K. PANDA) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 22nd day of July, 2019
TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(E), New Delhi.
5.CIT(ITAT), New Delhi. AR, ITAT
NEW DELHI.
|
