Shri Sharda Vidya Pratisthan Education and Charity Trust, RAJKOT-GUJARAT V. The Commr. of Income Tax - III, RAJKOT-GUJARAT

ITA 334/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6818 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2014
• Assessment Year: misc
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D GARSAR
• Assessee Lawyers: A D VYAS
• Keywords: Charitable institution
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 334/RJT/2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION AND CHARITY TRUST, 31,SHIVNAGAR SOCIETY, B/H. VRUDHASHRAM LATHI ROAD, AMRELI PAN : AAMTS 3407 K ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SMT A. D. VYAS, CA / REVENUE BY SHRI B.D. GARSAR, DR / DATE OF HEARING 12.06.2014 !'# / DATE OF PRONOUNCEMENT 02.07.2014 / ORDER THIS APPEAL BY THE ASSESSEE-INSTITUTION/ASSOCIATION IS AGAINST THE ORDER DATED 25.04.2014 OF COMMISSIONER OF INCOME-TAX, RAJKOT-II I, RAJKOT REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME -TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-INSTI TUTION/ASSOCIATION NAMELY SHARDA VIDHYA PRATISHTHAN EDUCATION AND CHARITABLE TRUST C AME INTO EXISTENCE THROUGH A TRUST DEED ON 02.03.2006 AND IS DULY REGISTERED UND ER BPT ACT 1951 VIDE CERTIFICATE DATED 18.04.2006. THE MAIN OBJECTS OF THE TRUST AR E CHARITABLE AND EDUCATIONAL. THE TRUST IS RUNNING A PRIMARY, A SECONDARY AND A HIGHE R SECONDARY (GENERAL & SCIENCE) SCHOOL NAMELY PATHAK SCHOOLS, AMRELI. IN THE IMPU GNED ORDER, LD.CIT,RAJKOT-III, RAJKOT REJECTED THE APPLICATION OF THE ASSESSEE-INS TITUTION/ASSOCIATION U/S 12AA OF THE ACT ON THE FOLLOWING THREE GROUNDS:- (I) THE TRUST IS IMPARTING THE EDUCATION BY COLLECT ING FEE FROM THE STUDENTS. THE FEES COLLECTED FROM THE STUDENTS IS QUITE HIGH IN COMPARISON TO SMALL CENTRE LIKE AMRELI, WHICH ACCORDINGLY TO LD. CIT, THE TRUS T IS COLLECTING FEES FROM ALL THE STUDENTS AND NO FREE EDUCATION IS IMPARTED/CONCESSI ON GRANTED AS CLAIMED BY THE TRUST. (II) THE SCHOOL IS WORKING IN LEASED PREMISES OF SH RI VASANTBHAI PATHAK AND SMT. VARSHABEN PATHAK. ON VERIFICATION OF LEASE DEED, IT WAS NOTICED THAT SHRI PATHAK VASANTKUMAR KANTILAL AND SMT. VARSHABEN VASA NTKUMAR PATHAK (LESSORS) HAVE LEASED THE PREMISES TO SHRI VASANTKU MAR KANTILAL, ONE OF THE MANAGING TRUSTEES OF THE TRUST. SINCE SHRI VASANTBH AI PATHAK, ONE OF THE 2 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) PROPERTY HOLDERS HAS GIVEN PROPERTY TO HIMSELF IN T HE CAPACITY OF MANAGING TRUSTEE ON RENT FOR THE USE OF THE TRUST; THEREFORE , THERE IS A VIOLATION OF SECTION 13(1)(C) OF THE INCOME-TAX ACT, 1961. (III) THE TRUST DEED IS DEFECTIVE AS IT DOES NOT CO NTAIN DISSOLUTION CLAUSE. AGGRIEVED WITH THE ORDER OF LD. CIT, THE ASSESSEE-I NSTITUTION/ASSOCIATION IS NOW IN APPEAL BEFORE THIS TRIBUNAL, ON THE FOLLOWING GR OUNDS:- GROUND NO 1 LEARNED CIT HAS GRIEVOUSLY ERRED IN REJECTING THE A PPLICATION FORREGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT. GROUND NO 2 2.1 LEARNED CIT WITHOUT APPRECIATING THE FACTS ON RECORDS CHALLENGED THE ACTION OF THE TRUST OF CHARGING THE FEES FROM THE S TUDENTS AND ALLEGED THAT FEES CHARGED BY THE TRUST IS QUITE HIGH AND TRUST H AS NOT PROVIDED THE SCHOLARSHIP TO THE NEEDY STUDENTS . LEARNED CIT FUR THER INVOKED THE PROVISIONS OF SECTION 2 (15) AND CHALLENGED THE CHA RITABLE OBJECTS OF THE TRUST. LEARNED CIT OUGHT TO HAVE CONSIDERED THE FAC T THAT TRUST IS NOT RUNNING FOR PROFIT MOTIVE OR FOR PERSONAL ENJOYMENT OR FOR AVOIDING TAX AS STIPULATED IN SECTION 2 (15). 2.2 YOUR APPELLANT WOULD LIKE TO DRAW THE ATTENTION OF YOUR HONOUR TO SECTION 12AA THAT: 'PROCEDURE FOR REGISTRATION LAID DOWN IN SECTION 12 AA REQUIRES THE CIT TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND THE CHARITABLE NATURE OF THE OBJECTS OF THE TRUST.' HOWEVER LEARNED CIT WITHOUT CONSIDERING THE FACTS O N RECORDS, BASED ON HIS OWN ASSUMPTION CONCLUDED THAT TRUST IS NOT WORK ING FOR THE CHARITABLE OBJECTS. GROUND NO 3 3.1 LEARNED (IT FURTHER ERRED IN CONCLUDING THAT AS THE PREMISES OF THE TRUSTEES ARE TAKEN ON LEASE FOR RUNNING THE SCHOOL, THE SAME IS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 13 (1) OF THE INCOME TAX ACT. LEARNED CIT OUGHT TO HAVE INTERPRET THE SECTION 13 (1) IN RIGH T PERSPECTIVE. THE SAID SECTION SAYS THAT THE INCOME OF THE CHARITABLE INST ITUTION SHOULD NOT BE APPLIED FOR DIRECT OR INDIRECT BENEFIT OF THE TRUST EE. 3.2 AN INSTITUTION CAN NOT RUN WITHOUT SCHOOL BUILD ING. PAYING RENT TO THE TRUSTEES DOES NOT MEAN THAT THE INCOME IS APPLIED F OR THE BENEFIT OF THE TRUSTEES. ANY REASONABLE CONSIDERATION PAID FOR LE ASING THE PREMISES CAN NOT BE CONSIDERED AS BENEFIT PASSED ON TO TRUSTEES. YOUR HONOUR OUGHT TO HAVE CONSIDERED THAT THE SAME IS NOT THE VALID. GROUND FOR REJECTION FOR REGISTERING THE TRUST U/S 12AAOF THE INCOME TAX ACT. 3 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) GROUND NO 4 4.1 LEARNED CIT FURTHER ERRED IN CONCLUDING THAT A S TRUST DEED IS SILENT ON IRREVOCABILITY OF THE TRUST ON ITS DISSOLUTION, TRU ST DEED IS DEFECTIVE TO THAT EXTENT. 4.2 LEARNED CIT HAS FAILED TO CONSIDER THE PROVISI ONS OF THE BOMBAY PUBLIC CHARITABLE TRUST ACT REGARDING REVOCABILITY OF THE TRUST ON DISSOLUTION. THAT' NO AMOUNT CAN GO BACK TO FOUNDER BECAUSE PROPERTIES ARE TRANSFERRED WITH THE PERMISSION OF THE CHARITY COMMISSIONER ONLY TO THE OTHER TRUSTS HAVING SIMILAR OBJECTS. INCLUSION OF DISSOLUTION CLAUSE IS NOT NECESSARY AS SPECIFIC LEGISLATION BARS SUCH REVERSION. 4.3 IN SPITE OF OUR SUBMISSION DATED 22ND APRIL 20 14 LEARNED CIT DID NOT CONSIDER THE RECENT DECISION OF AHMEDABAD ITAT BEN CH C IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST, ... VS ASSESSEE DEC IDED ON 17 MAY, 2013 ON THE SAME MATTER. 4.4 AS WE ARE GOVERNED BY THE BOMBAY PUBLIC CHARIT ABLE TRUST ACT AND AS PER THE ACT ITSELF ON DISSOLUTION OF THE TRUST PROP ERTIES ARE TRANSFERRED WITH THE PERMISSION OF THE CHARITY COMMISSIONER ONLY TO THE OTHER TRUSTS HAVING SIMILAR OBJECTS, SO CONTENTION OF THE LEARNED CIT I N THIS REGARDS IS ERRONEOUS AND NEEDS TO BE RE CONSIDERED. 3. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, ON B EHALF OF THE ASSESSEE- INSTITUTION/ASSOCIATION, SMT. A.D. VYAS, CA, APPEAR ED AND FILED A PAPER-BOOK CONTAINING 88 PAGES WHICH INTER-ALIA INCLUDE WRITT EN SUBMISSION. THE LD. COUNSEL OF THE ASSESSEE-INSTITUTION/ASSOCIATION POINTED OUT TH AT THE TRUST IS PROVIDING EDUCATIONAL FACILITY IN REMOTE AREA LIKE AMRELI, WHERE IT IS VE RY HARD TO PROVIDE EDUCATIONAL FACILITIES REQUIRED. SHE ALSO POINTED OUT THAT IT IS VERY HAR D TO SUSTAIN GOOD TEACHERS, GOOD SURROUNDING, PROPER SEATING ARRANGEMENTS, OTHER FAC ILITIES LIKE COMPUTER LABORATORY, SCIENCE LABORATORY, LIBRARY, SPORTS EQUIPMENTS, DIG ITAL PROJECTOR, SCHOOL PICNIC FACILITY ETC. TO MEET UP WITH THE COST FOR ACQUIRING THE SA ID FACILITIES, THE ASSESSEE- INSTITUTION/ASSOCIATION HAS FORMED A FEES STRUCTURE AND NO PROFIT MOTIVE IS INCLUDED IN IT. LOOKING TO THE FACILITY PROVIDED TO THE STUDENT S AND COST INCURRED FOR ACQUIRING THE SAME, THE FEES CHARGED FROM THE STUDENTS IS NEITHER EXCESSIVE NOR UNREASONABLE. IN SUPPORT OF THIS, SHE RELIED UPON THE CASE OF ACIT V . SURAT ART SILK CLOTH MANUFACTURING ASSOCIATION REPORTED IN (1980) 2 SCC 31, WHEREIN IT WAS HELD THAT THE TEST OF PREDOMINANT OBJECT OF THE ACTIVITY IS TO BE SEEN WH ETHER IT EXISTS SOLELY FOR EDUCATION AND NOT TO EARN PROFIT. HOWEVER, THE PURPOSE WOULD NOT LOSE ITS CHARACTER MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. THE L D. COUNSEL OF THE ASSESSEE- 4 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) INSTITUTION/ASSOCIATION ALSO RELIED UPON THE DECISI ON OF ITAT DELHI F BENCH IN THE CASE OF DCIT VS. BEER SHIVA EDUCATIONAL SOCIAL WELF ARE SOCIETY, [2007] 103 ITD 403 (DELHI); WHEREIN IT IS HELD THAT RELIEF OF POOR, EDUCATION AND MEDICAL RELIEF ARE CHARITABLE ACTIVITIES PER SE AND IF ANY INSTITUTION IS CARRYING OUT ANY OF THESE OBJECTS, THEN, SUCH AN INSTITUTION WOULD BE PURSUING A CHARI TABLE PURPOSE. 3.1 REGARDING GROUND NO.2, THE LD. COUNSEL OF THE A SSESSEE-INSTITUTION/ASSOCIATION SUBMITTED THAT A SCHOOL/INSTITUTION CANNOT RUN WITH OUT A SCHOOL BUILDING. PAYING RENT TO THE TRUSTEES DOES NOT MEAN THAT THE INCOME IS APPLI ED FOR THE BENEFIT OF THE TRUSTEES AND ANY REASONABLE CONSIDERATION PAID FOR LEASING T HE PREMISES CANNOT BE CONSIDERED AS BENEFIT PASSED ON TO TRUSTEES. IN SUP PORT OF THIS, THE LD. COUNSEL OF THE ASSESSEE-INSTITUTION/ASSOCIATION RELIED UPON THE DE CISION IN THE CASE OF SHUBHRAM TRUST VS. DIT (E) REPORTED IN 317 ITR (AT) 65, WHER EIN IT WAS HELD THAT THE PROVISIONS OF SECTION 13(1)(C) DO NOT RESTRICT ANY COMMERCIAL TRANSACTION EVEN WITH THE SPECIFIED PERSONS, IF SUCH TRANSACTIONS ARE AT AN ARMS LENGT H AND NO BENEFIT IS PASSED ON BY THE TRUSTS ON ACCOUNT OF SUCH TRANSACTIONS. SHE ALS O POINTED OUT THAT THIS VIEW HAS ALSO BEEN SUPPORTED BY THE ITAT, HYDERABAD BENCH B IN THE CASE OF NTR MEMORIAL TRUST V. DIT. 3.2 WITH RESPECT TO GROUND NO.3, THE LD. COUNSEL OF THE ASSESSEE- INSTITUTION/ASSOCIATION SUBMITTED THAT THE ASSESSEE -INSTITUTION/ASSOCIATION IS GOVERNED BY THE BOMBAY PUBLIC CHARITABLE TRUST ACT AND AS PE R THE ACT ITSELF, UPON DISSOLUTION OF THE TRUST THE PROPERTIES OF THE TRUST ARE TRANSF ERRED TO OTHER TRUSTS HAVING SIMILAR OBJECTS WITH THE PERMISSION OF THE CHARITY COMMISSI ONER. IN THIS REGARD, THE LD. COUNSEL OF THE ASSESSEE-INSTITUTION/ASSOCIATION REL IED UPON THE DECISION OF THE AHMEDABAD ITAT BENCH C IN THE CASE OF SITARAM KUT IR CHARITABLE TRUST V. CIT. BY THE AFORESAID SUBMISSIONS, THE LD. COUNSEL OF T HE ASSESSEE- INSTITUTION/ASSOCIATION POINTED OUT THAT THE LD. CI T, RAJKOT-III, RAJKOT BE DIRECTED TO GRANT THE REGISTRATION U/S 12AA OF THE ACT TO THE A SSESSEE-INSTITUTION/ASSOCIATION. 4. ON THE OTHER HAND, SHRI B.D. GARSAR, LD. DEPART MENTAL REPRESENTATIVE, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPO RTED THE ORDER OF THE LD. CIT, 5 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) RAJKOT-III, RAJKOT. HE POINTED OUT THAT THE ASSESS EE-INSTITUTION/ASSOCIATION HAS BEEN COLLECTING FEES FROM THE STUDENTS AND NO FREE EDUCA TION HAS BEEN GIVEN AS CLAIMED BY THE TRUST. HE ALSO ARGUED THAT THE ASSESSEE-INSTIT UTION/ASSOCIATION VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT SINCE SHR I VASANTBHAI PATHAK, ONE OF THE PROPERTY HOLDERS/TRUSTEES HAS GIVEN PROPERTY TO HIM SELF IN THE CAPACITY OF MANAGING TRUSTEE ON RENT FOR THE USE OF THE TRUST. HE ALSO P OINTED OUT THAT THE TRUST DEED IS DEFECTIVE AS POINTED OUT BY THE LD. CIT SINCE THE S AME DOES NOT HAVE ANY DISSOLUTION CLAUSE IN CASE OF ITS DISSOLUTION. THE LD. DR, POIN TING OUT AFORESAID FACTS, SUBMITTED THAT THE ACTION OF LD. CIT, RAJKOT-III, RAJKOT REJE CTING THE APPLICATION OF THE ASSESSEE- INSTITUTION/ASSOCIATION U/S 12AA OF THE ACT BE UPHE LD. 5. AFTER HEARING BOTH THE SIDES, I HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN PARAGRAPH 7 OF THE IMPUGNED O RDER THE LD. CIT HAS GIVEN THE DETAILS OF FEES COLLECTED FROM THE STUDENTS. FROM T HESE DETAILS, IT IS OBSERVED THAT THE ANNUAL FEE CHARGED BY THE ASSESSEE-INSTITUTION/ASSO CIATION IS IN THE RANGE BETWEEN RS.6500/- TO RS.15,000/- AS PER DIVISION/SECTION I. E. FROM NURSERY TO HIGHER SECONDARY. IN MY OPINION, THE FEES CHARGED FROM TH E STUDENTS IS NEITHER EXCESSIVE NOR UNREASONABLE CONSIDERING THE PREVAILING MARKET COST INCURRING FOR GIVING EDUCATION IN THE REMOTE AREA LIKE AMRELI. THE FEES STRUCTURE, AS PROVIDED IN THE TABULAR SHEET BY THE LD. CIT IN THE IMPUGNED ORDER, IS FORMED BY THE ASSESSEE- INSTITUTION/ASSOCIATION TO COPE UP WITH THE COST OF AMENITIES PROVIDED TO THE STUDENTS; THEREFORE NO PROFIT MOTIVE INVOLVED. WITHOUT PREJU DICE TO THIS, IT IS PERTINENT TO NOTE THAT THE EDUCATIONAL ACTIVITIES CANNOT DO IN SUCH A WAY THAT THE EXPENDITURE EXACTLY MEETS WITH ITS INCOME; THEREFORE, THE PURPOSE WOULD NOT LOSE ITS CHARACTER MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITIES. TH EREFORE, WHERE THE PREDOMINANT OBJECT OF THE ACTIVITY IS TO CARRY OUT THE CHARITAB LE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOS E MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY AS OBSERVED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION, REPORTED IN (1980) 2 SCC 31. 5.1 THE HONBLE GUJARAT HIGH COURT IN THE CASE OF D IRECTOR OF INCOME-TAX (EXEMPTION) VS. AHMEDABAD MANAGEMENT ASSOCIATION IN ITS JUDGEMENT DELIVERED ON 6 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) 13.06.2014 IN TAX APPEAL NO.707 OF 2013, WHILE INTE RPRETING THE PROVISO TO S. 2(15) WHICH DENIES EXEMPTION TO A CHARITABLE INSTITUTION CARRYING ON COMMERCIAL ACTIVITIES DOES NOT APPLY TO INSTITUTIONS CARRYING OUT RELIEF TO THE POOR, EDUCATION OR MEDICAL RELIEF BUT APPLIES ONLY TO THOSE CARRYING OUT ADVA NCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, HELD THAT. (I) ON THE ISSUE AS TO WHETHER THE ACTIVITIES OF T HE ASSESSEE ARE FOR EDUCATION & CHARITABLE IN NATURE, THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN USED IN S. 2(15) OF THE ACT IS THE SYSTEMA TIC INSTRUCTION, SCHOOLING OR TRAINING GIVEN TO THE YOUNG IS PREPARATION FOR THE WORK OF LIFE. IT ALSO CONNOTES THE WHOLE COURSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THOUGH THE WORD EDUCATION IS NOT USED IN A LOOSE SENSE SO AS TO INCLUDE ACQUISITION OF ALL SORTS OF KNOWLEDGE, IT SHOULD AL SO NOT BE INTERPRETED IN A NARROW OR PEDANTIC SENSE. IT ENCOMPASS SYSTEMATIC D ISSEMINATION OF KNOWLEDGE AND TRAINING IN SPECIALIZED SUBJECTS. THE CHANGING TIMES AND THE EVER WIDENING HORIZONS OF KNOWLEDGE MAY BRING IN CH ANGES IN THE METHODOLOGY OF TEACHING AND A SHIFT OF THE BETTER I N THE INSTITUTIONAL SETUP. ADVANCEMENT OF KNOWLEDGE BRINGS WITHIN ITS FOLD SUI TABLE METHODS OF ITS DISSEMINATION AND THOUGH THE PRIMARY METHOD OF SITT ING IN A CLASSROOM MAY REMAIN IDEAL FOR MOST OF THE INITIAL EDUCATION, IT MAY BECOME NECESSARY TO HAVE A DIFFERENT OUTLOOK FOR FURTHER EDUCATION. IT IS NO T NECESSARY TO NAIL DOWN THE CONCEPT OF EDUCATION TO A PARTICULAR FORMULA OR TO FLOW IT ONLY THROUGH A DEFINED CHANNEL. ITS PROGRESS LIES IN THE ACCEPTANCE OF NEW IDEAS AND DEVELOPMENT OF APPROPRIATE MEANS TO REACH THEM TO RECIPIENTS. ON F ACTS, ACTIVITIES SUCH AS CONTINUING EDUCATION DIPLOMA AND CERTIFICATE PROGRA MME; MANAGEMENT DEVELOPMENT PROGRAMME; PUBLIC TALKS AND SEMINARS AN D WORKSHOPS AND CONFERENCES ETC CONSTITUTE EDUCATION SO AS TO QUA LIFY AS A CHARITABLE PURPOSE U/S 2(15) (LOK SHIKSHAN TRUST 101 ITR 234 (SC) & GUJARAT STATE COOP UNION 195 ITR 279 (GUJ) FOLLOWED); (II) THE MERE EXISTENCE OF PROFIT WILL NOT DISQUALI FY AN INSTITUTION FOR EXEMPTION U/S 10(22) IF THE SOLE PURPOSE OF ITS EXISTENCE IS NOT PROFIT MAKING BUT IS EDUCATIONAL ACTIVITIES; (III) ON THE ISSUE OF THE PROVISO TO S. 2(15), THE SAME HAS BEEN EXPLAINED IN CIRCULAR NO.11/2008 DATED 19/12/2008. FROM THE S AID CIRCULAR IT APPEARS THAT THE NEWLY INSERTED PROVISO TO S. 2(15) OF THE ACT WILL APPLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E. FOURTH LIMB OF DEFINITION OF CHARITABLE PURPOSE C ONTAINED IN S. 2(15) AND HENCE SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION U/ S 11 OR U/S 10(23C) OF THE ACT IF THEY CARRY ON COMMERCIAL ACTIVITIES. THE PROVISO WILL NOT APPLY IN RESPECT OF THE FIRST THREE LIMBS OF S. 2(15) I.E. RELIEF TO TH E POOR; EDUCATION OR MEDICAL RELIEF. THUS, WHERE THE PURPOSE OF A TRUST OR INSTI TUTION IS RELIEF OF THE POOR; EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CH ARITABLE PURPOSE EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF THE COMMER CIAL ACTIVITIES. FOLLOWING THE AFORESAID DECISION OF JURISDICTIONAL HIGH COURT, I AM OF THE VIEW THAT THE ASSESSEE-INSTITUTION IS PURSUING CHARITABL E PURPOSE. 5.2 WITH REGARD TO THE VIOLATION OF PROVISIONS OF S ECTION 13(1)(C) OF THE ACT, AS OBSERVED BY THE LD. CIT IN HIS ORDER DATED 25.04.20 14, SINCE ONE OF THE TRUSTEES 7 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) HIMSELF HAS GIVEN THE PROPERTY TO HIMSELF IN THE CA PACITY OF MANAGING TRUSTEES ON RENT FOR THE USE OF THE TRUST; I AM OF THE OPINION THAT THE PROVISIONS OF SECTION 13(1)(C) DO NOT RESTRICT ANY COMMERCIAL TRANSACTIONS EVEN WITH THE SPECIFIED PERSONS, IF SUCH TRANSACTIONS ARE AT AN ARMS LENGTH AND NO BENEFIT IS PASSED ON BY THE TRUSTS ON ACCOUNT OF SUCH TRANSACTIONS AS OBSERVED BY THE ITA T, HYDERABAD BENCH B IN THE CASE OF NTR MEMORIAL TRUST V. DIT IN ITA NO.461&462 /HYD/2010. 5.3 THE LAST GROUND OF REJECTION POINTED OUT BY THE LD. CIT IS THAT THE TRUST DEED OF THE TRUST DOES NOT CONTAIN THE DISSOLUTION CLAUSE I N THE EVENT OF ITS DISSOLUTION. THIS ISSUE HAS ALREADY BEEN COVERED IN FAVOUR OF ASSESSE E-INSTITUTION/ASSOCIATION BY THE DECISION OF ITAT AHMEDABAD C BENCH IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST V. CIT IN ITA NO.71/AHD/2013, DECIDED ON 17.05.2013 ; WHEREIN IT WAS HELD THAT IN CASE THE TRUST REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST AND THE TRUST BEING AN IRREVOCABLE TRUST, THE OBVIOUS POSITION SH ALL BE THAT THE CHARITY COMMISSIONER SHOULD TAKE OVER THE ASSETS ON DISSOLU TION; HENCE REJECTION OF REGISTRATION BY THE LD COMMISSIONER ON THE GROUND T HAT THERE WAS NO SPECIFIC CLAUSE IN THE INSTRUMENT IN REGARD TO THE TREATMENT TO BE GIVEN IN THE EVENT OF DISSOLUTION WAS NOT ON A SOUND FOOTING. IN VIEW OF THE FOREGOING, I AM OF THE VIEW THAT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, AS SOUGHT BY THE ASSESSEE-INS TITUTION/ASSOCIATION, CANNOT BE REFUSED AND I, THEREFORE, DIRECT THE LD. CIT, RAJKO T-III, RAJKOT TO GRANT THE REGISTRATION U/S 12AA TO THE ASSESSEE-INSTITUTION/ASSOCIATION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE-INSTITUTIO N/ASSOCIATION IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 02.07.2014 !$ /RAJKOT *BT 8 334-RJT-2014 SHRI SHARDA VIDYA PRATISTHAN EDUCATION & CHARITY TRUST- 12AA- (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI SHARDA VIDYA PRATISTHAN EDUCATIO N AND CHARITY TRUST, 31,SHIVNAGAR SOCIETY, B/H. VRUDHASHRAM, LATHI ROAD, AMRELI 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED JT. CIT, RANGE 2, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT