Income Tax Appellate Tribunal - Mumbai
Aamby International School Academy , ... vs Assessee on 28 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH: MUMBAI
BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No.6214/Mum/2009
Amby International School Academy,
Solitary Corporate Park,
Building No.4, 5th Floor,
167, Guru Hargovindji Marg,
Chakala, Andheri (E),
Mumbai -400 093 ......... Appellant
Vs
Director of Income-tax (Exemption),
6th Floor, Piramal Chambers,
Parel, Mumbai -400 093 ........ Respondent
PAN: AACTA 2640 Q
Appellant by: Shri A.V. Sonde
Respondent by: Shri P.K.B. Menon
Date of Hearing: 28.11.2011
Date of Pronouncement: 25.01.2012
ORDER
PER R.S. PADVEKAR, JM:
In this appeal the assessee challenged the order of the Ld. Director of Income-tax (Exemption), Mumbai (in short DIT (Exmt) dated 29.09.2009 passed u/s.12AA(1)(b)(ii) r.w.s. 12A of the Income- tax Act, 1961 refusing to grant the registration to the assessee.
2. The assessee is a trust and running an educational institution under the name and style as 'Amby International School Academy' in Mumbai. The assessee applied for getting registration u/s.12AA of the Income-tax Act as the assessee can claim exemption in respect of its income u/s.11 of the Income-tax Act. The Ld. DIT (Exmt) examined the fee structure of the assessee trust which is given in the impugned order on page No.2. The Ld. DIT (Exmt) observed that the fees charged by the assessee trust in imparting the education are exceptionally high and beyond the reach of the general public. He 2 ITA 6214/M/2009 Amby International School Academy also noted that the public trust should be for charitable purpose and it should have the object for giving relief to the poor, education and medical relief and any other object of general public utility. He observed that that the 'charitable purpose' is an essential ingredient of the public trust. The fee structure is a clear indication of commercial set-up of the institution which is in the nature of business of education. He also observed that the assessee is running and maintaining an elite school which has a commercial activity and does not have character of charity involved in it. He also relied on the decision of the Hon'ble High Court of Bombay in the case of Arur D.V. vs. CIT 13 ITR 465. The opinion of the Ld. DIT (Exmt) running the elite school cannot be treated as a 'charitable object' as the same is run for the benefit of few persons. The Ld. DIT (Exmt) rejected the application filed by the assessee for the registration by holding that the assessee trust is running and maintaining elite school which does not fall within the definition of charitable purpose, as defined in section 2(15) of the Income-tax Act. Now the assessee is in appeal before us.
3. The assessee has taken following two grounds:-
"1. Based on the facts and circumstances of the case and law, the learned Director of Income Tax (Exemptions) ("DIT") has erred in not granting registration to the appellant under Section 12AA of the Income Tax Act, 1961.
2. The appellant prays your Honours to direct the DIT to grant the registration under Section 12AA of the Income Tax Act, 1961 to the appellant."
4. We have heard the rival submission of the parties and perused the records. The issue in controversy is interpretation of the words 'charitable purpose' as defined u/s.2(15) of the Income-tax Act. The Ld. Counsel vehemently argued that the Ld. DIT (Exmt) mis- interpreted the definition given in sec. 2(15) of the Act. He submits 3 ITA 6214/M/2009 Amby International School Academy that as per the language used by the Legislature imparting 'education' itself is a charitable purpose and the object of the trust is not disputed. The Ld. Counsel relied on the following decision of the co- ordinate Benches:
(i) Shavak Shiksha Samiti vs. CIT -104 TTJ (Del) 127
(ii) Indo-American Society vs. ADIT(Exmt)- 96 ITD 61 (Mum) We have also heard the Ld. D.R.
5. The short controversy is in very narrow compass. The assessee is running a school and imparting education. The serious reservation of the Ld. DIT (Exmt) is that the assessee is charging high fees and running the elite educational institution/school and poor students of the society are unable to take/derive the benefit of the assessee-
school. The identical issue has been considered by the ITAT, Mumbai Bench in the case of Indo-American Society (supra) and while interpreting the definition of the 'charitable purpose' given in sec.2(15) of the Act and has held as under:-
"10. ..... To serve a charitable purpose, it is not sine qua non that the object should be to benefit the whole of mankind or even all persons living in a particular country or province. It is sufficient if the intention is to benefit a section of the public as distinguished from specified individuals. The section of the community sought to be benefited must undoubtedly be sufficiently defined and identifiable. It is nowhere laid down that to enable the benefit of section 11 of the Act, education must be provided to the poor persons only. Therefore, the objection revenue that the educational programmes conducted by the society are within the reach of elite class is of no consequence. Relief to the Poor cannot be construed conjointly within education. Education also comes within the ambit of charitable purpose. In England the term 'charity' was defined in the statute of Elizabeth (strictly in the fashion, style and language as used in the original statute) as : "relief of aged, impotent and poor people,...." As per
4 ITA 6214/M/2009 Amby International School Academy literal interpretation of the statute, in order to avail the benefit of charity one must qualify all the conditions laid down, i.e. he should be aged, impotent and poor. But this interpretation is far from pragmatism. The words aged, impotent and poor ought not to be construed conjunctively, so as to deny benefit separately to aged people, and poor people. This aspect was considered in the case Re Robinsons, Davis v. Robinson [1950]2 All E.R. 148. It was held in the said case that the words "aged, impotent and poor" in the statute of Elizabeth should be read disjunctively so that aged people need not also be poor to come within the ambit purview, and scope of the statute. Likewise, to enable the benefit of section 11 it is not sine qua non that education should only be imparted to the poor class and not to the elite class. ....."
The above view is also supported by the decision of the co-ordinate Bench in the case of Shavak Shiksha Samiti (supra).
6. The Ld. DIT (Exmt) is relied on the decision of the Hon'ble jurisdictional High Court in the case of Arur (D.V.) (supra). The decision in the said case is rendered in the Income-tax Act, 1922. It was claimed by the assessee that the assessee trust was educational in character and, therefore, was of the charitable purpose. As per the Trust Deed of the said assessee, it was permissible to award Scholarship outside the 'Arur Family' and also provided that the applicants deserving in the 'Saraswat Community'. As per the Scheme of the Trust Deed as a whole, it was seen that the dominant object was benefits of scholarship for any members of the 'Arur family', in the case of female members limited to three degrees of relationships from the donee. The power to use surplus income for scholarship for deserving Members of the 'Saraswat Community' and the power to make advances to enable a start in life to be made by a scholar are subsidiary objects. It was held that the trust, though educational in character was for benefit of only family members and was having limited scope. In our humble opinion, the issue before their Lordships 5 ITA 6214/M/2009 Amby International School Academy in the case of D.V. Arur (supra) was different and has not relevance to the issue before us.
7. We, therefore, hold that the assessee is entitled for registration u/s.12AA of the Act as the assessee is imparting the 'education' which is a 'charitable purpose'. We, accordingly, set aside the order of the DIT (Exmt), Mumbai and direct that the assessee should be granted registration within 30 days from the date of receipt of this order.
8. In the result, assessee's appeal is allowed.
Order pronounced in the open court on this day of 25th January, 2012 Sd/- Sd/-
(G.E. VEERABHADRAPPA) (R.S. PADVEKAR)
PRESIDENT JUDICIAL MEMBER
Mumbai, Date: 25th January, 2012
Copy to:-
1) The Appellant.
2) The Respondent.
3) The DIT (Exemption), Mumbai.
4) The DIT/DDIT (Exemption), Mumbai.
5) The D.R. "A" Bench, Mumbai.
By Order
/ / True Copy / /
Asstt. Registrar
I.T.A.T., Mumbai
*Chavan