M/s Madhuvan Sai Vidyashram Trust, Trivandrum V. Commisioner of Income Tax, Trivandrum

ITA 31/COCH/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2072 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-12-2009
• Assessment Year: misc
• Appeal Filed On: 19-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: BIJU NARAYANAN
• Keywords: Charitable institution
• Section: 12; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.31/COCH/2009 ASSESSMENT YEAR: M/S. MADHUVAN SAI VIDYASHRAM TRUST, TRIVANDRUM. PA NO. AACTM 2295H VS. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI BIJU NARAYANAN RESPONDENT BY SHRI T.J. VINCENT, DR O R D E R PER N.VIJAYAKUMARAN,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE, M/S. MADH UVAN SAI VIDYASHRAM TRUST, TRIVANDRUM. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 18-11-2008 OF THE COMMISSIO NER OF INCOME-TAX, TRIVANDRUM, WHO DENIED REGISTRATION U/S .12A OF THE INCOME-TAX ACT,1961. 2. THE ASSESSEE TRUST IS REGISTERED WITH SUB REGIST RAR OFFICE, MALAYINKIL, TRIVANDRUM VIDE DOCUMENT NO.17/ 07. THE ASSESSEE TRUST HAS FILED AN APPLICATION FOR REG ISTRATION U/S.12A OF THE INCOME-TAX ACT,1961 ON 30-5-2008. I T IS ITA NO.31/COCH/2009 2 PLEADED BY THE ASSESSEE THAT THE OBJECT OF THE TRUS T IS TO ESTABLISH AND MAINTAIN PRE SCHOOLS, KG SCHOOLS AND SCHOOLS OF ALL LEVELS TO IMPART EDUCATION. ON VERIFICATION OF THE STATEMENT OF INCOME FILED BY THE ASSESSEE ENDED ON 31-3- 2006 AND 31-3-2007, THE LD. COMMISSIONER OF INCOME- TAX FOUND FROM THE DETAILS OF FEE COLLECTED BY THE ASSE SSEE TRUST THAT THE ASSESSEE TRUST IS NOT DOING ANY CHARITY TO THE DESERVING STUDENTS. THE LD. COMMISSIONER OF INCOME -TAX FURTHER FOUND THAT THE ASSESSEE TRUST WAS ACTING ON COMMERCIAL PRINCIPLES ONLY AND IT HAS ALSO DEBITED HEAVY EXPENDITURE TO BRING OUT A DEFICIT. THE LD. COMMI SSIONER OF INCOME-TAX WAS OF THE VIEW THAT REGISTRATION U/S.12 A CAN BE GRANTED ONLY AFTER RECORDING SATISFACTION ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST AS DEFINED U/S.2(15) OF THE I.T.ACT. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NTS. ALL CHARITABLE TRUST WHICH DESIRE TO AVAIL THE BENEFITS OF TAX EXEMPTION AVAILABLE U/S.11 AND 12 OF THE ACT ARE, I NTER ALIA REQUIRED TO FILE AN APPLICATION U/S.12A IN THE PRES CRIBED FORM FOR REGISTRATION OF THE TRUST BEFORE THE COMMISSION ER OF INCOME-TAX. SUCH APPLICATION HAS TO BE MADE AT LE AST ITA NO.31/COCH/2009 3 WITHIN ONE YEAR FROM THE DATE OF CREATION OF THE TR UST OR THE DEAD LINE DATE WOULD BE THE 1 ST JULY 1973. THE CONCERNED AUTHORITY MAY IN HIS DISCRETION CONDONE THE DELAY I N FILING AN APPLICATION FOR REGISTRATION ADMITTING BELATED APPL ICATIONS FOR REGISTRATION IN DESERVING CASES. 4. CHARITABLE PURPOSE HAS DEFINED IN SECTION 2(15) OF THE I.T.ACT, INCLUDES RELIEF TO THE POOR, EDUCATION, ME DICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE HONBLE SUPREME COURT IN ITS CELEBRI TY JUDGMENT OF ADDL. COMMISSIONER OF INCOME-TAX VS. SURAT ART S ILK CLOTH MFRS. ASSOCIATION REPORTED IN 121 ITR 01 OBSERVED IN PAGE 03 (IV) THAT THE TRUE MEANING OF THE LAST 10 WORDS IN SECTION 2(15), VIZ. NOT INVOLVING THE CARRYING ON OF ANY A CTIVITY FOR PROFIT, IS THAT WHEN THE PURPOSE OF A TRUST OR INS TITUTION IS THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTIL ITY, IT IS THAT OBJECT OF GENERAL PUBLIC UTILITY AND NOT ITS ACCOMPLISHMENT OR CARRYING OUT WHICH MUST NOT INVOL VE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. SO LONG A S THE PURPOSE DOES NOT INVOLVE THE CARRYING ON OF ANY ACT IVITY FOR PROFIT, THE REQUIREMENT OF THE DEFINITION WOULD BE MET AND IT IS IMMATERIAL HOW THE MONIES FOR ACHIEVING OR IMPLE MENTING SUCH PURPOSE ARE FOUND, WHETHER BY CARRYING ON AN A CTIVITY FOR PROFIT OR NOT. ITA NO.31/COCH/2009 4 5. WE HAVE TO SEE THAT EVEN IF THERE IS NO SUCH EXP RESS PROVISION, THE NATURE OF THE CHARITABLE PURPOSES, T HE MANNER IN WHICH THE ACTIVITY FOR ADVANCING THE CHARITABLE PURPOSE IS CARRIED ON AND THE SURROUNDING CIRCUMSTANCES WHICH MAY CLEARLY INDICATE THAT THE ACTIVITY IS NOT PROPELLED BY A DOMINANT PROFIT MOTIVE. THE OBSERVATION OF THE HO NBLE SUPREME COURT IN THE CASE OF SURAT ART SILK CLOTH M FRS. ASSOCIATION IS DIRECTLY APPLICABLE FOR THE PURPOSE OF ADJUDICATING THIS ISSUE. 6. IN THIS CASE, THE ASSESSEE TRUST WAS ESTABLISHED WITH AN OBJECT TO RUN AND MAINTAIN PRE SCHOOLS, KG SCHOOLS AND SCHOOLS OF ALL LEVELS TO IMPART EDUCATION AS STATED WITHOUT ANY PROFIT MOTIVE OR ANY OTHER COMMERCIAL CONSIDERA TION. HOWEVER, THE LD. COMMISSIONER OF INCOME-TAX FOUND T HAT THE ASSESSEE TRUST IS NOT DOING ANY CHARITY AND ACTING ON COMMERCIAL PRINCIPLES ONLY AND HIS FINDING WAS SUPP ORTED ON THE FACT THAT HE HAS OBSERVED THAT THE TRUST HAS DE BITED HEAVY EXPENDITURE TO BRING OUT A DEFICIT FOR THIS A SSESSMENT YEAR WHICH CLEARLY SHOWS THAT THE TRUST IS NOT ENTI TLED TO REGISTRATION U/S.12A OF THE I.T.ACT. THE OBSERVAT ION OF THE LD. COMMISSIONER OF INCOME-TAX COULD NOT BE CONTROV ERTED AND IT IS NOT ESTABLISHED BY THE ASSESSEE THAT THE ASSESSEE ITA NO.31/COCH/2009 5 TRUST WAS NOT CARRYING ON ANY ACTIVITIES FOR PROFIT AND THE TRUST IS ENGAGED IN THE ADVANCEMENT OF ITS OBJECT O F GENERAL PUBLIC UTILITY. IN THE ABSENCE OF PROOF AND BY FOLL OWING THE DECISION OF THE HONBLE APEX COURT REPORTED IN 121 ITR 01, CITED SUPRA, WE ARE OF THE VIEW THAT THE DENIAL OF REGISTRATION MADE BY THE LD. COMMISSIONER IS QUITE JUSTIFIED WHI CH REQUIRES NO INTERFERENCE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 18 TH DECEMBER,2009. PM. COPY FORWARDED TO: 1. M/S. MADHUVAN SAI VIDYASHRAM TRUST, PULIYARAKONAM, TRIVANDRUM. 2. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 3. D.R.