Income Tax Appellate Tribunal - Chennai
Sri Krishnaa Educational Trust, ... vs Assessee on 5 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI GEORGE MATHAN, JUDICIAL MEMBER
I.T.A. No. 1325/Mds/2011
Sri Krishnaa Educational Trust,
No.181/2A, Saravana Nagar, The Income Tax Officer.
T.V.S. Nagar, v. Company Ward - I,
Coimbatore - 641 025. Coimbatore.
PAN : AAJTS8352A
(Appellant) (Respondent)
Appellant by : Shri R. Mahadevan, CA
Respondent by : Shri K.E.B. Rangarajan,
Junior Standing Counsel,
Date of Hearing : 05.01.2012
Date of Pronouncement : 05.01.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
Through this appeal, assessee assails the order dated 27.5.2011 of Commissioner of Income Tax-I, Coimbatore, denying it registration under Section 12A of Income-tax Act, 1961 (in short "the Act").
2 I.T.A. No. 1325/Mds/11
2. Assessee constituted through a Trust deed dated 17.11.2003, had made an application before ld. CIT for registration under Section 12A of the Act. Assessee also executed a CODICIL to the original Trust deed on 11.5.2011. Such CODICIL, as per ld. CIT, was not registered. Ld. CIT, during the course of proceedings, noted that the managing trustee of the assessee had purchased on 5.7.2007 a piece of land measuring 70 Cents for ` 11 lakhs and leased out such land to assessee-Trust for a period of thirty years at a lease rental of ` 12,000/-. Ld. CIT was of the opinion that the assessee-institution was created with an intention to derive benefit to the trustees and the objects set out in object clause did not satisfy the requirement of charity as envisaged under Section 2(15) of the Act. Further, according to him, the CODICIL was executed only to conceal the delay in filing the application for registration under Section 12A of the Act. He, therefore, denied the registration sought.
3. Now before us, learned A.R., assailing the order of ld. CIT, submitted that the objects of the assessee were charitable in nature, which in addition to education, was having other charitable purpose also. Learned A.R. submitted that the assessee was running a model school called Sri Krishna Matriculation and Higher Secondary School 3 I.T.A. No. 1325/Mds/11 with classes upto XI Std with 900 students therein. According to him, the school was established in 2003. Assessee sought registration under Section 12A of the Act now, since its gross receipts was on the verge of exceeding ` 1 Crore. According to him, finding of ld. CIT that the Trust was revocable was wrong since in the Trust deed it was clearly stipulated that the Trust was irrevocable. Further, according to him, just because assessee had taken 70 Cents of land from its Trust for a paltry rent of ` 1000 per month, it would be incorrect to presume that there was any undue benefit taken by the trustees from the Trust. Even if there was a delay in filing application for registration, ld. CIT could have given the registration atleast from the year of application and this could not be cited as reason for denying registration.
4. Per contra, learned D.R. strongly supported the order of ld. CIT and submitted that assessee was not doing charity. According to him, running of a school by itself was not a charity. Assessee was unable to demonstrate before ld. CIT carrying on of any charitable activities. Under Section 12A of the Act, the CIT could look into the genuineness of activities and therefore, according to him, ld. CIT had 4 I.T.A. No. 1325/Mds/11 correctly denied the registration finding the activities and objects to be not genuine.
5. We have perused the orders and heard the rival contentions. There is no dispute that assessee was running a school called Sri Krishna Matriculation and Higher Secondary School since 2003. It is also not disputed that objects of the Trust was running a school, providing education to poor, taking over existing educational institutions etc. Education per se is a charity vide definition of charitable purpose under Section 2(15) of the Act. Except stating that the objects were generalized, ld. CIT was unable to point out any particular activity which did not satisfy the requirement of Section 2(15) of the Act. In so far as giving the land of 70 Cents on lease by one of the Trustees to the assessee was concerned, the rent was paltry, coming to ` 1000/- per month and for 70 Cents of land to say that such a rent, would have given any undue benefit to the Trustees will be quite unreasonable. In so far as non-registration of CODICIL is concerned, there is no requirement under the law that a CODICIL should be registered. Even otherwise, late filing of the application for registration under Section 12A is not fatal enough to warrant a denial. But, on the other hand, ld. CIT ought to have granted registration 5 I.T.A. No. 1325/Mds/11 atleast from the year in which it was sought. We are of the opinion that the conclusion of ld. CIT that the Trust functioning for the benefit of its Trustees was totally without any basis. Assessee is eligible for registration under Section 12A of the Act. Order of ld. CIT is quashed and he is directed to grant the assessee registration sought for.
6. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court after conclusion of hearing on 5th January, 2012.
sd/- sd/-
(George Mathan) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 5th January, 2012.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT-I, Coimbatore
(4) D.R.
(5) Guard file