CIT Vs Divine Shiksha Samiti (Madhya Pradesh High Court)
Summary: The Madhya Pradesh High Court dismissed the Revenue’s appeal under Section 260-A of the Income Tax Act, 1961, challenging the Income Tax Appellate Tribunal, Indore’s order dated 5 October 2018 in ITA No.1034/Ind/2016. The Tribunal had allowed the appeal of Divine Shiksha Samiti and set aside the order of the CIT(E), Bhopal refusing registration under Section 12AA.
Divine Shiksha Samiti had applied for registration under Section 12AA. The CIT refused registration primarily on the ground that the Society existed for the profit of its office bearers rather than for charitable purposes. The Revenue alleged that rent was being paid to related parties and that the Society had incurred repair and maintenance expenditure which, according to the CIT, indicated diversion of Society funds for the personal benefit of office bearers and their families.
Before the Tribunal, the Society disputed these findings. It submitted that its principal object was to spread education and that it was running St Mary’s Higher Secondary School at Sehore, affiliated to the M.P. Board. Regarding rent, the Society furnished details concerning land area, built-up area, open land, number of rooms and rent payable under the agreements. It contended that the rents were reasonable and within the fair rental value assessed by the PWD.
