Case Law Details
At the outset, it is required to be noted that the revenue has not doubted and/or disputed the object and purpose of the assessee- trust/foundation so mentioned in the Memorandum of Association and Article of Association of the foundation. It appears that the main object of the foundation seems to be to promote, establish, develop, run, support, maintain and advance the cause of education,to grant aid or other assistance to all types of educational institutions including Schools, Colleges, Universities, libraries, reading rooms, formal and non formal educations, vocational training centers and other institutions for the benefit of the students. It is also required to be noted at this stage that it was the first year after the assessee- trust/foundation came to be established. Under the circumstances and considering the object and purpose of the trust narrated herein above, it cannot be said that the ITAT has committed any error and/or illegality in allowing the appeal directing to grant the registration under Section 12A of the Income Tax Act to the assessee trust/foundation.
While passing the impugned order, the tribunal in paragraph no. 5 has observed and held as under;
“Having heard both sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that as per Memorandum of Association and Articles of Association, the foundation is registered under Section 25 of the Companies Act under registration certificate dated 06/06/2012. The total donation received by the assessee- trust is only Rs. 7103/-. The total amount given as donation/scholarship to girl students is about Rs. 4000/-. Looking to the magnitude of the income in the previous year relevant to assessment year under appeal, the charitable activities carried out cannot be called as low magnitude. Considering the totality of the facts and circumstances of the case, we are of the view that the learned CIT refusing registration under Section 12AA of the I.T. Act. 1961 has observed irrelevant considerations. We therefore, direct him to grant the registration to the foundation under Section 12AA of the I.T. Act, 1961.”
HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 907 of 2013
COMMISSIONER OF INCOME TAX
Versus
SATVARA EDUCATION FOUNDATION
Date : 11/11/2013
ORAL JUDGMENT
(PER : HONORABLE MR.JUSTICE M.R. SHAH)
1. The present Tax Appeal has been preferred by the revenue against the impugned judgment and order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as ‘the ITAT’) dated 21/06/2013 in ITA No. 45/Rjt/2013 by which the ITAT has allowed the said appeal preferred by the assessee and has quashed and set aside the order passed by the CIT, Rajkot dated 10/12/2012 rejecting the application dated 12/07/2012 of the assessee for registration under Section 12A of the Income Tax Act, 1961.
2. The facts leading to the present appeal in nutshell are as under;
2.1. The assessee- trust made an application for registration under Section 12A of the Income Tax Act in prescribed Form No. 10A. The said application was accompanied with the xerox copies of the Memorandum of Association and Articles of Association of the foundation and registration certificate under the Companies Act dated 06/06/2012. It is not in dispute that the main object of the foundation is to promote, establish, develop, run, support, maintain and advance the cause of education,to grant aid or other assistance to all types of educational institutions including Schools, Colleges, Universities, libraries, reading rooms, formal and non formal educations, vocational training centers and other institutions for the benefit of the students.
3. It appears that the Commissioner (hereinafter referred to as ‘CIT’) was not satisfied with respect to the activities and was of the opinion that no substantial charitable activities were carried out by the assessee- trust/foundation. The CIT thus issued show-cause notice dated 21/11/2012 calling upon the assessee- trust/foundation to show cause as to why the application for registration should not be rejected as the foundation failed to comply with the statutory requirement. In response to the same, the assessee stated that it intends to promote and encourage education by providing them financial assistance, especially the weaker section of the society. In support, copy of three receipt vouchers, were provided. The CIT was not satisfied with the documentary evidence produced on record and, therefore, the CIT rejected the application under Section 12A of the Income Tax Act by observing that the scholarships, as claimed, have been given to the families with income ranging to Rs.90,000/- to Rs. 1,00,000/- per annum and they have not been given any extraordinary brilliant students. The CIT observing that since no other major activities have been carried out by the assessee-trust/foundation, he is not satisfied with the genuineness of the foundation and accordingly rejected the application of the assessee.
3.1. Being aggrieved and dissatisfied with the order passed by the CIT rejecting the application of the assessee for registration under Section 12A of the Income Tax Act, the assessee-trust/foundation preferred appeal before the ITAT. The ITAT vide impugned judgment and order has allowed the appeal quashing and setting aside the order passed by the CIT rejecting the application for registration under Section 12A of the Income Tax Act and directing to grant the registration to the assessee- trust/foundation under Section 12A of the Income Tax Act. Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present Tax Appeal with the following substantial question of law;
“(A) “Whether the ITAT is justified in law as well on facts in directing to grant registration to the assessee under Section 12AA of the Income Tax Act, 1961?”
4. We have heard Shri Pranav Desai, learned Counsel appearing on behalf of the appellant and perused the order passed by the ITAT as well as the CIT. At the outset, it is required to be noted that the revenue has not doubted and/or disputed the object and purpose of the assessee- trust/foundation so mentioned in the Memorandum of Association and Article of Association of the foundation. It appears that the main object of the foundation seems to be to promote, establish, develop, run, support, maintain and advance the cause of education,to grant aid or other assistance to all types of educational institutions including Schools, Colleges, Universities, libraries, reading rooms, formal and non formal educations, vocational training centers and other institutions for the benefit of the students. It is also required to be noted at this stage that it was the first year after the assessee- trust/foundation came to be established. Under the circumstances and considering the object and purpose of the trust narrated herein above, it cannot be said that the ITAT has committed any error and/ or illegality in allowing the appeal directing to grant the registration under Section 12A of the Income Tax Act to the assessee trust/foundation. While passing the impugned order, the tribunal in paragraph no. 5 has observed and held as under;
“Having heard both sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that as per Memorandum of Association and Articles of Association, the foundation is registered under Section 25 of the Companies Act under registration certificate dated 06/06/2012. The total donation received by the assessee- trust is only Rs. 7103/-. The total amount given as donation/ scholarship to girl students is about Rs. 4000/-. Looking to the magnitude of the income in the previous year relevant to assessment year under appeal, the charitable activities carried out cannot be called as low magnitude. Considering the totality of the facts and circumstances of the case, we are of the view that the learned CIT refusing registration under Section 12AA of the I.T. Act. 1961 has observed irrelevant considerations. We therefore, direct him to grant the registration to the foundation under Section 12AA of the I.T. Act, 1961.”
5. In view of the above, we see no reason to interfere with the impugned order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed.
(M.R.SHAH, J.)
(R.P.DHOLARIA,J.)
