Sri Krishnaa Educational Trust, Coimbatore V. CIT, Coimbatore

ITA 1325/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57784 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2012
• Assessment Year: misc
• Appeal Filed On: 18-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGARAJAN JUNIOR
• Assessee Lawyers: R MAHADEVAN
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1325/MDS/2011 SRI KRISHNAA EDUCATIONAL TRUST, NO.181/2A, SARAVANA NAGAR, T.V.S. NAGAR, COIMBATORE 641 025. PAN : AAJTS8352A (APPELLANT) V. THE INCOME TAX OFFICER. COMPANY WARD I, COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI R. MAHADEVAN, CA RESPONDENT BY : SHRI K.E.B. RA NGARAJAN, JUNIOR STANDING COUNSEL, DATE OF HEARING : 05.01.2012 DATE OF PRONOUNCEMENT : 05.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THROUGH THIS APPEAL, ASSESSEE ASSAILS THE ORDER D ATED 27.5.2011 OF COMMISSIONER OF INCOME TAX-I, COIMBATO RE, DENYING IT REGISTRATION UNDER SECTION 12A OF INCOME-TAX ACT, 1 961 (IN SHORT THE ACT). I.T.A. NO. 1325/MDS/11 2 2. ASSESSEE CONSTITUTED THROUGH A TRUST DEED DATED 17.11.2003, HAD MADE AN APPLICATION BEFORE LD. CIT FOR REGISTRA TION UNDER SECTION 12A OF THE ACT. ASSESSEE ALSO EXECUTED A CODICIL T O THE ORIGINAL TRUST DEED ON 11.5.2011. SUCH CODICIL, AS PER LD. CIT, WAS NOT REGISTERED. LD. CIT, DURING THE COURSE OF PROCEEDI NGS, NOTED THAT THE MANAGING TRUSTEE OF THE ASSESSEE HAD PURCHASED ON 5 .7.2007 A PIECE OF LAND MEASURING 70 CENTS FOR ` 11 LAKHS AND LEASED OUT SUCH LAND TO ASSESSEE-TRUST FOR A PERIOD OF THIRTY YEARS AT A LEASE RENTAL OF ` 12,000/-. LD. CIT WAS OF THE OPINION THAT THE ASS ESSEE-INSTITUTION WAS CREATED WITH AN INTENTION TO DERIVE BENEFIT TO THE TRUSTEES AND THE OBJECTS SET OUT IN OBJECT CLAUSE DID NOT SATISFY TH E REQUIREMENT OF CHARITY AS ENVISAGED UNDER SECTION 2(15) OF THE ACT . FURTHER, ACCORDING TO HIM, THE CODICIL WAS EXECUTED ONLY TO CONCEAL THE DELAY IN FILING THE APPLICATION FOR REGISTRATION UN DER SECTION 12A OF THE ACT. HE, THEREFORE, DENIED THE REGISTRATION SOUGHT . 3. NOW BEFORE US, LEARNED A.R., ASSAILING THE ORDER OF LD. CIT, SUBMITTED THAT THE OBJECTS OF THE ASSESSEE WERE CHA RITABLE IN NATURE, WHICH IN ADDITION TO EDUCATION, WAS HAVING OTHER CH ARITABLE PURPOSE ALSO. LEARNED A.R. SUBMITTED THAT THE ASSESSEE WAS RUNNING A MODEL SCHOOL CALLED SRI KRISHNA MATRICULATION AND HIGHER SECONDARY SCHOOL I.T.A. NO. 1325/MDS/11 3 WITH CLASSES UPTO XI STD WITH 900 STUDENTS THEREIN. ACCORDING TO HIM, THE SCHOOL WAS ESTABLISHED IN 2003. ASSESSEE SOUGH T REGISTRATION UNDER SECTION 12A OF THE ACT NOW, SINCE ITS GROSS R ECEIPTS WAS ON THE VERGE OF EXCEEDING ` 1 CRORE. ACCORDING TO HIM, FINDING OF LD. CIT THAT THE TRUST WAS REVOCABLE WAS WRONG SINCE IN THE TRUST DEED IT WAS CLEARLY STIPULATED THAT THE TRUST WAS IRREVOCABLE. FURTHER, ACCORDING TO HIM, JUST BECAUSE ASSESSEE HAD TAKEN 70 CENTS OF LAND FROM ITS TRUST FOR A PALTRY RENT OF ` 1000 PER MONTH, IT WOULD BE INCORRECT TO PRESUME THAT THERE WAS ANY UNDUE BENEFIT TAKEN BY T HE TRUSTEES FROM THE TRUST. EVEN IF THERE WAS A DELAY IN FILING APP LICATION FOR REGISTRATION, LD. CIT COULD HAVE GIVEN THE REGISTRA TION ATLEAST FROM THE YEAR OF APPLICATION AND THIS COULD NOT BE CITED AS REASON FOR DENYING REGISTRATION. 4. PER CONTRA, LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT AND SUBMITTED THAT ASSESSEE WAS NOT DOING CHARITY. ACCORDING TO HIM, RUNNING OF A SCHOOL BY ITSELF WAS NOT A CHARIT Y. ASSESSEE WAS UNABLE TO DEMONSTRATE BEFORE LD. CIT CARRYING ON OF ANY CHARITABLE ACTIVITIES. UNDER SECTION 12A OF THE ACT, THE CIT COULD LOOK INTO THE GENUINENESS OF ACTIVITIES AND THEREFORE, ACCORDING TO HIM, LD. CIT HAD I.T.A. NO. 1325/MDS/11 4 CORRECTLY DENIED THE REGISTRATION FINDING THE ACTIV ITIES AND OBJECTS TO BE NOT GENUINE. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE WAS RUNNING A SCH OOL CALLED SRI KRISHNA MATRICULATION AND HIGHER SECONDARY SCHOOL S INCE 2003. IT IS ALSO NOT DISPUTED THAT OBJECTS OF THE TRUST WAS RUN NING A SCHOOL, PROVIDING EDUCATION TO POOR, TAKING OVER EXISTING E DUCATIONAL INSTITUTIONS ETC. EDUCATION PER SE IS A CHARITY VI DE DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT. EXCEPT STATING THAT THE OBJECTS WERE GENERALIZED, LD. CIT WAS UNABLE TO POINT OUT ANY PARTICULAR ACTIVITY WHICH DID NOT SATISFY THE REQUI REMENT OF SECTION 2(15) OF THE ACT. IN SO FAR AS GIVING THE LAND OF 70 CENTS ON LEASE BY ONE OF THE TRUSTEES TO THE ASSESSEE WAS CONCERNED, THE RENT WAS PALTRY, COMING TO ` 1000/- PER MONTH AND FOR 70 CENTS OF LAND TO SAY THAT SUCH A RENT, WOULD HAVE GIVEN ANY UNDUE BENEFI T TO THE TRUSTEES WILL BE QUITE UNREASONABLE. IN SO FAR AS NON-REGIS TRATION OF CODICIL IS CONCERNED, THERE IS NO REQUIREMENT UNDER THE LAW THAT A CODICIL SHOULD BE REGISTERED. EVEN OTHERWISE, LATE FILING OF THE APPLICATION FOR REGISTRATION UNDER SECTION 12A IS NOT FATAL ENOUGH TO WARRANT A DENIAL. BUT, ON THE OTHER HAND, LD. CIT OUGHT TO HAVE GRANT ED REGISTRATION I.T.A. NO. 1325/MDS/11 5 ATLEAST FROM THE YEAR IN WHICH IT WAS SOUGHT. WE A RE OF THE OPINION THAT THE CONCLUSION OF LD. CIT THAT THE TRUST FUNCT IONING FOR THE BENEFIT OF ITS TRUSTEES WAS TOTALLY WITHOUT ANY BASIS. ASS ESSEE IS ELIGIBLE FOR REGISTRATION UNDER SECTION 12A OF THE ACT. ORDER O F LD. CIT IS QUASHED AND HE IS DIRECTED TO GRANT THE ASSESSEE REGISTRATI ON SOUGHT FOR. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 5 TH JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 5 TH JANUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT-I, COIMBATORE (4) D.R. (5) GUARD FILE