Akkineni Annapurna Charitable Trust, Hyderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 1871/HYD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6050 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-12-2015
• Assessment Year: misc
• Appeal Filed On: 28-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1871/HYD/2 012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD (PAN - AACTA 9438 N ) V/S DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.SIVA KUMAR RESPONDENT BY : SHRI KONDA RAMESH DATE OF HEARING 3.12.2015 DATE OF PRONOUNCEMENT 01.03.2016 O R D E R PER D.MANMOHAN, VICE PRESIDENT : THIS APPEAL IS FILED AT THE INSTANCE OF THE ASSES SEE TRUST AND IT IS DIRECTED AGAINST THE ORDER PASSED BY THE DIRECTOR OF INCOME- TAX(EXEMPTION), REJECTING THE APPLICATION FILED B Y THE ASSESSEE SEEKING REGISTRATION UNDER S.12AA OF THE INCOME TA X ACT,1961. 2. FACTS NECESSARY FOR THE DISPOSAL OF THE MATTER ARE STATED IN BRIEF. THE ASSESSEE TRUST WAS CREATED BY A TRUST DE ED DATED 14.8.2010 WITH THE MAIN OBJECT OF PROMOTING SOCIAL, CULTURAL AND EDUCATIONAL ACTIVITIES AND ALSO ENCOURAGING ARTISTIC PURSUITS. IN ORDER TO AVAIL BENEFITS UNDER INCOME TAX ACT, THE ASSESSEE FILED A N APPLICATION IN FORM 10A ON 7.5.2012 SEEKING REGISTRATION UNDER S.1 2AA OF THE INCOME-TAX ACT, 1961. 3. ON A PERUSAL OF THE TRUST DEED, THE LEARNED DI RECTOR OF INCOME-TAX(EXEMPTION) WAS OF THE OPINION THAT THE A SSESSEE TRUST CANNOT BE TREATED AS CHARITABLE IN NATURE. IN TH IS REGARD, HE OBSERVED ITA NO.1871/HYD/2012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD 2 THAT THOUGH THE MAIN OBJECT OF THE TRUST WAS TO PRO MOTE SOCIAL, CULTURAL AND EDUCATIONAL ACTIVITIES, IT ALSO INTENDS TO PROV IDE COACHING TO CANDIDATES FOR THE PURPOSE OF APPEARING IN COMPETIT IVE EXAMINATIONS FOR GETTING JOBS AND ALSO FOR GETTING ADMISSION IN DIFFERENT INSTITUTIONS, ETC. ACCORDING TO THE DIRECTOR OF INCOME-TAX(EXEMP TION), COACHING OF STUDENTS IN AN INSTITUTION WOULD NOT FALL WITHIN TH E AMBIT OF EDUCATION IN THE LIGHT OF THE DECISION OF THE HON'BLE PATNA H IGH COURT IN THE CASE BIHAR INSTITUTE OF MINING AND MINE SURVEYING V/S. D CIT(208 ITR 608). HE ALSO REFERRED TO THE DECISION OF THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF CIT V/S. SORABJI NUSSERWANJI PAREKH(201 ITR 939), WHEREIN THE COURT HELD THAT IN ORDER TO AVAIL EXEMPTION, TH ERE HAS TO BE AN ACTIVITY OF NORMAL SCHOOLING OR ACTUAL IMPARTING OF EDUCATION BY AN INSTITUTION. IN SHORT, IF ONE OF THE OBJECTS WAS O F RUNNING COACHING CENTRES, IT WOULD NOT FALL WITHIN THE AMBIT OF EDU CATION AND IN TURN, SUCH ACTIVITY CANNOT BE CONSIDERED AS CHARITABLE P URPOSE AS DEFINED IN S.2(15) OF THE ACT. 4. WHEN THE SAME WAS POINTED BY REFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF YOGIRAJ C HARITY TRUST V/S. CIT (103 ITR 777), TO SHOW CAUSE AS TO WHY ASSESSE E SHOULD NOT BE DENIED REGISTRATION UNDER S.12AA OF THE ACT, WHEN T HE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE IN NATURE OR NON-CHARITABL E IN NATURE, THE ASSESSEE TRUST SUBMITTED THAT THE ACTIVITIES CONDU CTED BY THE ASSESSEE TRUST TILL DATE WERE PURELY CHARITABLE IN NATURE. FAMILIES OF POOR STUDENTS APPROACHED THE TRUSTEES FOR FINANCIAL ASS ISTANCE FOR EDUCATION OF THEIR CHILDREN AND AFTER DUE VERIFICATION OF THE PERSONS BY THE TRUSTEES, THEY SELECTED SOME OF THE STUDENTS FOR A SSISTANCE. IN OTHER WORDS, IT HAS GIVEN FINANCIAL ASSISTANCE TO THE STU DENTS AS PER ITS OBJECTS, I.E. TO PROMOTE EDUCATIONAL ACTIVITY. ITA NO.1871/HYD/2012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD 3 5. THE LEARNED DIRECTOR OF INCOME-TAX(EXEMPTION) OBSERVED THAT PARA 5 OF THE ASSESSEES TRUST DEED ONLY PERTA INS TO ESTABLISHMENT AND MAINTENANCE OF EDUCATIONAL INSTITUTIONS AND HEN CE SUCH PAYMENT MADE AS DONATION TO THOSE STUDENTS IS NOT AS PER TH IS OBJECTS CLAUSE. HE FURTHER OBSERVED THAT COACHING STUDENTS FOR COMP ETITIVE EXAMS WOULD NOT FALL WITHIN THE AMBIT OF EDUCATION. HE ALSO REFERRED TO THE OBJECT SHOWN AS SL.NO.3, WHEREIN IT WAS MENTIONED T HAT SCHOLARSHIPS AND FELLOWSHIPS AND RENDERING FINANCIAL ASSISTANCE , BY ANY MEANS, INCLUDING BY PROVISION OF LOAN TO POOR IS REFERRED TO ONLY IN S. NO. R, WHICH WAS INTENDED FOR DESTITUTE ACTORS, ARTISTS AN D ARTISANS, ETC. AND NOT FINANCIAL ASSISTANCE TO STUDENTS FOR EDUCATIONA L PURPOSES. FOR THE ABOVE REASONS, HE CONCLUDED THAT THE ASSESSEE TRUST CANNOT BE GRANTED REGISTRATION UNDER S.12AA OF THE ACT. 6. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE TH E TRIBUNAL CONTENDING, INTER-ALIA, THAT THE LEARNED DIRECTOR ( EXEMPTIONS) HAS PREDOMINANTLY TAKEN INTO CONSIDERATION THE FACT THA T THE ASSESSEE WAS RUNNING COACHING CLASSES, WHICH ACCORDING TO HIM, I S NOT AN EDUCATIONAL ACTIVITY, OVERLOOKING THE FACT THAT THE ITAT, HYDERABAD BENCHES HAVE CONSISTENTLY TAKEN A STAND THAT COND UCTING COACHING CLASSES WOULD FALL WITHIN THE DEFINITION OF THE TER M EDUCATION AND IN TURN CHARITABLE PURPOSE WITHIN THE MEANING OF S.2 (15)OF THE ACT. LEARNED COUNSEL SUBMITTED THAT BENCH B OF ITAT, H YDERABAD IN THE CASE OF HYDERABAD STUDY CIRCLE (ITA NO.1645/HYD/201 3 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 30.1.2015) OBSERVED THAT THOUGH THE EXPRESSION EDUCATION AS USED IN SECTIO N 2(15) CANNOT BE CONSTRUED IN A VERY WIDE AND EXTENDED SENSE, AS OBS ERVED BY THE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOKA SIK SHANA TRUST V/S. CIT (101 ITR 796), IT CANNOT BE INTERPRETED IN A MA NNER TO MEAN THAT ITA NO.1871/HYD/2012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD 4 THE EDUCATION AS IMPARTED IN SCHOOLS AND COLLEGES ARE ONLY COVERED BY THE SAID DEFINITION. IF EDUCATION IS CONSIDERED TO MEAN TRAINING AND DEVELOPING SKILLS, KNOWLEDGE, MIND AND CHARACTER OF STUDENTS, THEN THE ACTIVITY OF THE ASSESSEE CAN BE TERMED TO BE COMING WITHIN THE EXPRESSION EDUCATION AS USED IN S.2(15) OF THE AC T. THE HYDERABAD BENCH HAD ALSO OBSERVED THAT EVEN S.10(23C)(IIIAD) USED THE WORDS ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION AND THE ACTIVITY OF THE ASSESSEE WOULD FALL WITHIN THE EXPRESSION OTHER ED UCATIONAL INSTITUTION. IT WAS THUS SUBMITTED THAT THE LEA RNED DIRECTOR OF INCOME-TAX(EXEMPTION) WAS NOT JUSTIFIED IN PLACING A NARROW MEANING ON THE EXPRESSION EDUCATION 7. HE FURTHER SUBMITTED THAT THOUGH THE INTENTIO N OF THE ASSESSEE WAS TO PROMOTE EDUCATION AND TO HELP THE P OOR AND NEEDY, WHEN THE SAME WAS PUT IN WRITING, IT MIGHT NOT HAVE REFLECTED THE SPIRIT OF THE SETTLOR OF THE TRUST AND THE REAL INTENTION THUS MIGHT NOT HAVE BEEN REFLECTED IN THE WRITTEN TRUST DEED. THEREFOR E, BY AN AMENDMENT TO THE TRUST DEED (DATED 24.11.2015), IT WAS CLARIF IED THAT SCHOLARSHIPS ARE GIVEN TO THE POOR AND NEEDY STUDENTS. LEARNED C OUNSEL REQUESTED THE BENCH TO TAKE INTO CONSIDERATION THE AMENDED TR UST DEED DATED 24.11.2015, SO THAT A GENUINE TRUST SHOULD NOT SUF FER ON ACCOUNT OF ANY AMBIGUITY IN THE MAIN TRUST DEED, WHICH DID NOT REFLECT THE TRUE INTENTION OF THE SETTLOR/TRUSTEE. IN THIS REGARD, LEARNED COUNSEL RELIED UPON THE DECISION OF THE HON'BLE RAJASTHAN HIGH COU RT IN THE CASE OF LAXMINARAIN LATH TRUST (33 TAXMANN 194), WHEREIN TH E BENCH OBSERVED THAT PREDOMINANT INTENTION OF THE SETTLOR SHOULD BE TAKEN INTO CONSIDERATION, WHERE THE SETTLOR HAS INDICATED HIS INTENTION IN CREATING THE TRUST BY EXECUTING A SUPPLEMENTARY DEED, THE AS SESSEE SHOULD BE GIVEN OPPORTUNITY TO PLACE THE SAME BEFORE THE CON CERNED OFFICER, SO AS TO CONSIDER THE ISSUE AS TO WHETHER THE ASSESSEE WAS ENTITLED TO ITA NO.1871/HYD/2012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD 5 REGISTRATION UNDER S.12AA OF THE ACT. UNDER IDENTI CAL CIRCUMSTANCES, ITAT, A BENCH IN THE CASE OF SRI VIJAYA EDUCATI ONAL ACADEMY (ITA NO.1141/HYD/2014 DATED 20.3.2015) ALSO SET ASIDE T HE MATTER TO THE FILE OF THE DIRECTOR OF INCOME-TAX(EXEMPTION) FOR DE NOVO CONSIDERATION. LEARNED COUNSEL THUS REQUESTED FOR O NE MORE OPPORTUNITY TO PLACE THE AMENDED DEED BEFORE THE DI RECTOR OF INCOME- TAX(EXEMPTION) FOR RECONSIDERATION. 8. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRONGLY OBJECTED TO THE CONTENTION S OF THE ASSESSEE AND SUBMITTED THAT THE HON'BLE PATNA HIGH COURT HAD TAKEN A DIFFERENT VIEW ON THIS MATTER, WHEREIN IT WAS HELD THAT ACTIV ITY CARRIED ON IN THE FORM OF CONDUCTING COACHING CLASSES CANNOT BE EQUAT ED TO PROVIDING EDUCATION IN SCHOOLS AND COLLEGES. HE HOWEVER, DID NOT RAISE ANY SERIOUS OBJECTION WITH REGARD TO THE CONTENTION OF THE ASSESSEE THAT SOME OF THE OBJECTIONS RAISED BY THE DIRECTOR OF I NCOME- TAX(EXEMPTION), HAVING BEEN CLARIFIED IN THE FORM O F AMENDMENTS TO THE DEED, THE ASSESSEE COULD BE GIVEN ONE MORE OPP ORTUNITY BEFORE THE DIRECTOR OF INCOME-TAX(EXEMPTION). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE RECORD IN THE LIGHT OF THE ORDERS PASSE D BY THE ITAT, HYDERABAD BENCHES. WE ARE OF THE VIEW THAT THE DIR ECTOR OF INCOME- TAX(EXEMPTION) WAS NOT CORRECT IN PROCEEDING MAINLY ON THE ASSUMPTION THAT CONDUCTING COACHING CLASSES WOULD N OT FALL WITHIN THE MEANING OF THE EXPRESSION EDUCATION. SO FAR ASSE SSEE HAS NOT CONDUCTED ANY COACHING CLASSES BUT ONLY FINANCED PO OR STUDENTS, EVEN WITH REGARD TO THE OTHER OBJECTIONS RAISED BY THE D IRECTOR OF INCOME- TAX(EXEMPTION), THE ASSESSEE HAVING NOW FURNISHED AN AMENDED TRUST DEED, WHICH WAS TAKE ON RECORD, IN THE INTERESTS OF SUBSTANTIAL JUSTICE ITA NO.1871/HYD/2012 AKKINENI ANNAPURNA CHARITABLE TRUST, HYDERABAD 6 AND IN THE LIGHT OF THE DECISION OF THE HON'BLE RAJ ASTHAN HIGH COURT, NOTED ABOVE, WE DEEM IT FAIR AND REASONABLE TO SET ASIDE THE MATTER TO THE FILE OF THE DIRECTOR OF INCOME-TAX(EXEMPTION ), WHO IS DIRECTED TO RECONSIDER THE MATTER AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE AMENDED DEED, AND ALSO IN THE LIGHT OF THE JUDGMENT S PLACED ON RECORD, AFTER GIVING REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE, IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 01.03.2016 SD/- SD/- ( B.RAMAKOTAIAH ) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT DT/- 01 MARCH 2016 COPY FORWARDED TO: 1. AKKINENI ANNAPURNA CHARITABLE TRUST, 8 - 2 - 203/82/A ROAD NO.2, JUBILEE HILLS HYDERABAD 2. DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD 3. ASST. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.