Sri Vijaya Educational Academy, Hyderabad V. Director of Income-Tax (Exemptions), Hyderabad

ITA 1141/HYD/2014

• Counselvise Citation: 114122514 RSA 2014
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-03-2015
• Assessment Year: misc
• Appeal Filed On: 06-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution
• Section: 12; 11; 12A; 12AA

Judgement Text

ITA NO.1141 OF 2014 SRI VIJAYA EDUCATIONAL ACADEMY HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1141/HYD/2014 (ASSESSMENT YEAR: 2013-14) SRI VIJAYA EDUCATIONAL ACADEMY HYDERABAD PAN-AAQCS 0462 F VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SMT. G. APARNA RAO, DR DATE OF HEARING : 17/03/2015 DATE OF PRONOUNCEMENT : 20 /03/ 2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD D ATED 29.04.2014 REGARDING REJECTION OF APPLICATION IN FO RM 10A FOR REGISTRATION U/S 12AA OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT SRI VIJAYA EDUC ATIONAL ACADEMY, INCORPORATED U/S 25 OF THE COMPANIES ACT, 1956 ON 17.6.2011. IT FILED AN APPLICATION IN FORM NO.10A O N 25.10.2013 SEEKING REGISTRATION U/S 12AA OF THE ACT. DIRECTOR OF INCOME TAX (EXEMPTION) OBSERVED THAT THE INSTITUTION HAS GOT T OO MANY ITA NO.1141 OF 2014 SRI VIJAYA EDUCATIONAL ACADEMY HYDERABAD PAGE 2 OF 4 OBJECTS WHICH ARE HIGHLY DESCRIPTIVE IN NATURE AND THERE IS NO DOMINANT OBJECT. FURTHER THE DIT (E) STATED AS FOLL OWS: 2.1 FROM THE ABOVE TWO MAIN OBJECTS, IT MAY BE NOTICED THAT THE SAME ARE HIGHLY DESCRIPTIVE IN NAT URE. IN FACT THERE ARE WIDE NUMBER OF OBJECTS IN EACH OF SUCH MAIN OBJECTS. THERE IS NO DOMINANT OBJECT. RATHER, ALL SUCH OBJECTS WHICH ARE NUMEROUS CAN BE CONSTRUED AS OF EQUAL IMPORTANCE. UNDER SUCH VAST NUMBER OF OBJECTS, THERE WILL BE LITTLE FUND AVAILA BLE FOR MEETING EACH OBJECTIVE. UNDER THESE CIRCUMSTACNES, THE APPLICANT INSTITUTION WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. ON A CAREFUL READING O F THE SAID MAIN OBJECT, IT MAY BE NOTICED THAT THE ASSESSEE INTENDS TO PROVIDE LEARNING, SKILLS, TRAIN ING AND GUIDANCE ETC., IN AREAS OF STOCK MARKET, TRADE, TAXATION AND TECHNOLOGY ETC. SUCH OBJECTIVES CANNOT BE CONSIDERED AS OF CHARITABLE IN NATURE. FURTHER, CONSULTANCY SERVICES, ADVISORY SERVICES AND CURRICULUM DESIGN ETC. AS MENTIONED UNDER THAT MAIN OBJECT NO.2 ARE OF NOT CHARITABLE NATURE. THE SAME ARE IN FACT NON CHARITABLE AND UNDER THE CIRCUMSTANCES, WHEN THERE IS ADMIXTURE OF BOTH CHARITABLE AND NON CHARITABLE OBJECTS IN THE CASE OF THE ASSESSEE INSTITUTION, IT WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT AND HENCE CONSEQUENTLY IT WILL NOT BE EL IGIBLE FOR REGISTRATION U/S 12A OF THE ACT. RELIANCE IN TH IS REGARD IS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN YOGIRAJ CHARITABLE TRUST VS. CIT ( 103 ITR 777) WHEREIN, IT WAS HELD THAT, IF NO DEFINITE PART OF THE PROPERTY OR ITS INCOME IS ALLOCATED TO CHARI TABLE PURPOSES AND IT WOULD BE OPEN TO THE TRUSTEES TO AP PLY THE WHOLE INCOME TO ANY OF THE NON-CHARITABLE OBJEC TS, NO EXEMPTION CAN BE CLAIMED. IN THIS CONTEXT, IT IS PERTINENT TO REFER TO THE FOLLOWING OBSERVATIONS MA DE BY THE HON'BLE SUPREME COURT IN THAT DECISION: THE QUESTION IS WHETHER EXEMPTION CAN BE GRANTED W HERE SOME OBJECTS ARE CHARITABLE AND SOME NON-CHARITABLE . WHERE THERE ARE SEVERAL OBJECTS OF A TRUST, SOME OF WHICH ARE CHARITABLE AND SOME NON-CHARITABLE, AND THE TRUSTEE S IN THEIR DISCRETION ARE TO APPLY THE INCOME TO ANY OF THE OB JECTS, THE ITA NO.1141 OF 2014 SRI VIJAYA EDUCATIONAL ACADEMY HYDERABAD PAGE 3 OF 4 WHOLE TRUST FAILS AND NO PART OF THE INCOME IS EXEM PT FROM TAX. WHERE THE OBJECTS ARE DISTRIBUTIVE, EACH AND E VERY ONE OF THE OBJECTS MUST BE CHARITABLE IN ORDER THAT THE TRUST MIGHT BE UPHELD AS A VALID CHARITY. IF NO DEFINITE PART O F THE PROPERTY OR ITS INCOME IS ALLOCATED TO CHARITABLE P URPOSES AND IT WOULD BE OPEN TO THE TRUSTEES TO APPLY THE WHOLE INCOME TO ANY OF THE NON-CHARITABLE OBJECTS, NO EXEMPTION CAN BE CLAIMED. (SEE EAST INDIA INDUSTRIES (MADRAS) PVT. LTD. V. COMMISSIONER OF INCOME-TAX [1967] 65 ITR 6 11 (SC) AND MOHAMMAD-IBRAHIM RIZA MALAK V. COMMISSIONE R OF INCOME-TAX AIR 1930 PC 226). 3. THE DIT (E) REFUSED TO GRANT REGISTRATION U/S 12 AA OF THE ACT TO THE INSTITUTION AND THE APPLICATION IN FORM NO.10A WAS REJECTED. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US. 4. THE LD COUNSEL FOR THE ASSESSEE SHRI A.V. RAGHUR AM POINTED OUT THAT THE ASSESSEE CANNOT BE DENIED REGI STRATION U/S 12AA ON THE GROUND THAT IT WAS HAVING MIXED OBJECTS . FURTHER THE LD COUNSEL ALSO SUBMITTED BEFORE US THAT THE AS SESSEE WOULD AMEND THE OBJECTS WHICH ARE GENERAL AND IN ITS PLAC E INCORPORATE SPECIFIC OBJECTS FOR THE PURPOSE OF IMPARTING EDUCA TION TO THE NEEDY. THE LD COUNSEL AFFIRMED THAT U/S 25, THE COM PANY WAS ESTABLISHED MAINLY FOR IMPARTING EDUCATION IN DIFFE RENT FIELDS AND HENCE IT WOULD BE APPROPRIATE FOR THE ASSESSEE/COMP ANY TO HAVE ITS OBJECTS INCORPORATED CLEARLY INSTEAD OF THE PRE SENT ONE WHICH ITA NO.1141 OF 2014 SRI VIJAYA EDUCATIONAL ACADEMY HYDERABAD PAGE 4 OF 4 CONSISTS OF MIXED OBJECTS AND ALSO OBJECTS WHICH AR E NOT SO SPECIFIC. 5. THE LD DR RAISED NO OBJECTION FOR THE MATTER TO BE SENT BACK TO THE DIT (E) FOR GIVING AN OPPORTUNITY TO TH E ASSESSEE TO AMEND THE OBJECTS AND FILE AFRESH THE MEMORANDUMS ARTICLES OF ASSOCIATION BEFORE THE DIT (E). IN THESE CIRCUMSTAN CES, WE SET ASIDE THE ISSUE TO THE FILE OF THE DIT(E) TO CONSID ER THE ISSUE DE NOVO AND GIVE AN OPPORTUNITY TO THE ASSESSEE WHO SH ALL AMEND THE MEMORANDUM AND ARTICLES OF THE ASSOCIATION WITH SPECIFIC OBJECTS FOR IMPARTING EDUCATION AND THEREAFTER THE DIT (E) SHALL DECIDE THE ISSUE IN ACCORDANCE WITH THE LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH MARCH, 2015. VNODAN/SPS COPY TO: 1. M/S. MAHESH, VIRENDER & SRIRAM, C/AS 6-3-788/36 & 3 7A, AMEERPET, HYDERABAD 2. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD 3. THE DR, ITAT, HYDERABAD 4. GUARD FILE BY ORDER