The Sivakasi Lions Kinder Garten School Committee, Virudhunagar V. ITO, CHENNAI

ITA 86/CHNY/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0982 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: N CHANDIRASEKAR
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 86/MDS/2011 ASSESSMENT YEAR : -- THE SIVAKASI LIONS KINDER GARTEN SCHOOL COMMITTEE, PALANIANDAVARPURAM COLONY, SIVAKASI-626 189, VIRUDHUNAGAR DT. V. THE INCOME TAX OFFICER, WARD-I(1), VIRUDHUNAGAR. (PAN: AAATT1097L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. CHANDIRASEKAR RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX-II, MADURAI REFUSING TO GRANT THE ASSESSEE REGISTRATION U/S 80G(5) OF THE INCOME TAX ACT, 1961 VIDE ORDER IN C. NO. 102/41/CIT-II/1968-69 DATED 23-11-2010. 2. SHRI N. CHANDIRASEKAR, ADVOCATE REPRESENTED ON B EHALF OF THE ASSESSEE AND SHRI P.B. SEKARAN, LEARNED CIT-DR REPRESENTED O N BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS A TRUST WHICH HAD BEEN GRANTED REGISTRA TION UNDER SECTION 12AA VIDE I.T.A. NO.86/MDS/2011 2 AN ORDER DATED 02-08-1988. THE ASSESSEE HAD ALSO B EEN GRANTED EXEMPTION U/S 80G(5) OF THE ACT VIDE AN ORDER DATED 18.09.2007 FO R THE ASSESSMENT YEARS 2007-08 TO 2009-10. THE ASSESSEE HAD APPLIED FOR T HE RENEWAL OF EXEMPTION UNDER SECTION 80G OF THE ACT VIDE AN APPLICATION DA TED 11-06-2010. THE LEARNED CIT HAD, ON THE GROUND THAT NO CHARITABLE ACTIVITI ES WERE BEING CONDUCTED BY THE ASSESSEE, DENIED THE ASSESSEE RENEWAL OF EXEMP TION UNDER SECTION 80G(5) OF THE ACT. IT WAS THE SUBMISSION THAT THE ASSESSE E WAS RUNNING A SCHOOL UNDER THE NAME AND STYLE OF SIVAKASI LIONS KINDERGARTEN SCHOOL COMMITTEE. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS RUNNING THE ED UCATIONAL INSTITUTION FOR MORE THAN 42 YEARS AND HAD CLASSES FROM UKG TO 12 TH STANDARD. IT WAS THE SUBMISSION BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE LEARNED CIT WAS OF THE VIEW THAT THE BASIC ELEMENT OF CHARITY WAS NOT VISIBLE AND WHAT WAS BEING ACTUALLY DONE WAS CARRYING ON EDUCATIONAL ACTIVITY WITH THE RECEIPT OF FEES OF SUBSTANTIAL AMOUNT WHICH WAS PURELY A COMMERCIAL AC TIVITY AND EVEN THOUGH THE COMMERCIAL ACTIVITY WAS PERMITTED UNDER THE ACT FOR THE ATTAINMENT OF THE CHARITABLE OBJECT, SEPARATE BOOKS OF ACCOUNTS HAD N OT BEEN MAINTAINED AND THE INCOME & EXPENDITURE ACCOUNT DID NOT SHOW ANY APPLIC ATION TOWARDS CHARITABLE PURPOSES WITHIN THE DEFINITION OF SECTION 2(15) OF THE ACT AS ALSO AS PER THE OBJECTS OF THE TRUST AD THERE WAS HUGE SURPLUS DURI NG THE YEARS WHICH HAD NOT BEEN USED FOR GENUINE CHARITABLE ACTIVITY. IT WAS THE SUBMISSION BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE WAS RUN NING A SCHOOL AND AS PER THE I.T.A. NO.86/MDS/2011 3 DEFINITION OF CHARITABLE PURPOSE IN SECTION 2(15) OF THE ACT, EDUCATION IS CONSIDERED AS A CHARITABLE PURPOSE. IT WAS THE FUR THER SUBMISSION THAT THE SURPLUS HAD BEEN USED TOWARDS THE BUILDING OF THE E DUCATIONAL INSTITUTION, BEING THE BUILDINGS ETC. HE DREW OUR ATTENTION TO THE SC HEDULE OF FIXED ASSETS WHICH SHOWED THE ADDITIONS TO THE BUILDING, LIBRARY, COMP UTER, OFFICE EQUIPMENT, FURNITURE & FITTINGS AND THE CAPITAL WORK IN PROGRE SS BEING THE DINING HALL UNDER CONSTRUCTION. IT WAS THE SUBMISSION THAT THE ASSES SEE WAS A CHARITABLE TRUST WHICH WAS RUNNING THE EDUCATIONAL INSTITUTION AND T HE SURPLUS IF ANY GENERATED WAS ALSO USED ONLY FOR THE CHARITABLE ACTIVITY BEIN G THE OBJECT OF THE ASSESSEE TRUST REPRESENTING THE BUILDING AND THE RUNNING OF THE EDUCATIONAL INSTITUTION. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSEE TRUST WAS RUNNING THE INSTITUTION IN SIVAKASI AND IT HAD BEEN HAVING 100% RESULT CONSECU TIVELY FOR MORE THAN 2 DECADES. HE FURTHER RELIED UPON THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTE V. CBDT AND OTHERS REPORTED IN 301 ITR 86. 4. IN REPLY, THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDER OF THE LEARNED CIT. IT WAS THE SUBMISSION THAT RUNNING OF EDUCATI ONAL INSTITUTION ALONE DID NOT LEAD TO CHARITABLE ACTIVITY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SECTI ON 2(15) OF THE INCOME TAX ACT, 1961 DEFINES CHARITABLE PURPOSE TO INCLU DE EDUCATION. A PERUSAL OF THE ORDER OF THE LEARNED CIT ITSELF CLEARLY SHOWS T HAT IT IS UNDISPUTED THAT THE I.T.A. NO.86/MDS/2011 4 ASSESSEE IS RUNNING AN EDUCATIONAL INSTITUTION AND THAT THE ASSESSEE HAS ACTUALLY CARRIED ON AN EDUCATIONAL ACTIVITY. THUS ONCE IT I S ACCEPTED THAT THE ASSESSEE IS A TRUST WHICH IS CARRYING ON THE ACTIVITY OF PROMOT ING EDUCATION, THEN IT FALLS UNDER THE CATEGORY OF A TRUST DOING ACTIVITIES WHIC H ARE CHARITABLE IN NATURE. A PERUSAL OF THE INCOME & EXPENDITURE ACCOUNT AS ALSO THE BALANCE SHEET FOR THE EARLIER YEARS CLEARLY SHOWS THAT THE ASSESSEE HAS U SED THE SURPLUS TOWARDS PROVIDING FACILITIES IN THE EDUCATIONAL INSTITUTION WHICH IS BEING RUN BY THE ASSESSEE TRUST. NO PORTION OF THE EXPENDITURE HAS BEEN SHOWN TO BE OUT SIDE THE EDUCATIONAL ACTIVITY CONDUCTED BY THE ASSESSEE. FU RTHER, IT IS NOT THE CASE OF THE REVENUE THAT PROVIDING EDUCATION IS NOT THE OBJECT OF THE TRUST. IN FACT, IT IS A CONVERSE. IT IS ALSO NOTICED THAT THE ASSESSEE IS NOT RUNNING THE EDUCATIONAL INSTITUTION AS AN INCIDENTAL ACT FOR THE ATTAINMENT OF THE CHARITABLE OBJECT. PROVIDING OF EDUCATION THROUGH EDUCATIONAL INSTITUT ION IS THE ACTUAL CHARITABLE ACTIVITY WHICH IS BEING CONDUCTED BY THE ASSESSEE. IT IS FURTHER NOTICED THAT THE SURPLUS WHICH IS GENERATED BY THE ASSESSEE IS NOT A REGULAR SURPLUS FROM THE RUNNING OF THE EDUCATIONAL INSTITUTION. IT IS INCI DENTAL TO THE RUNNING OF THE INSTITUTION AND THIS SURPLUS ALSO HAS BEEN USED ONL Y FOR FURTHERING OF THE ACTIVITIES CONDUCTED BY THE EDUCATIONAL INSTITUTION. FURTHER IT IS NOTICED THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SEC. 12AA AS A CHARITABLE TRUST AS EARLY AS IN 1988 AND THE REGISTRATION CONTINUES EVEN TODAY. ON CE THE TRUST IS REGISTERED AS A CHARITABLE TRUST AND ITS ACTIVITIES HAVE BEEN ACCEP TED AS BEING CHARITABLE IN I.T.A. NO.86/MDS/2011 5 NATURE, IN VIEW OF THE PROVISIONS OF SEC. 2(15) OF THE ACT THE ASSESSEE CANNOT BE DENIED THE APPROVAL FOR EXEMPTION UNDER SECTION 80- G OF THE ACT. IN THE CIRCUMSTANCES, THE LEARNED CIT IS DIRECTED TO GRANT THE ASSESSEE THE APPROVAL UNDER SECTION 80-G(5) OF THE INCOME TAX ACT, 1961 A S PRAYED FOR BY THE ASSESSEE. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 22/03/2 011. SD/- SD/ - (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 22 ND MARCH, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE