Gujarat High Court
The Commissioner Of Income Tax ... vs The Star Education Trust on 14 September, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav, Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/602/2023 ORDER DATED: 14/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 602 of 2023
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THE COMMISSIONER OF INCOME TAX EXEMPTIONS AHMEDABAD
Versus
THE STAR EDUCATION TRUST
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Appearance:
MS MAITHILI D MEHTA(3206) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 14/09/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)
1. Challenge in this appeal is to the order dated 11.01.2023 passed by the Income Tax Appellate Tribunal, Surat in ITA No. 539/SRT/2019 (for short 'the Tribunal').
2. The substantial question of law raised for consideration of this court is as under:
"Whether in the law and the facts of the case, the Hon'ble Tribunal has erred in directing the CIT (Exemption) to grant registration / certificate to the Page 1 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023 NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined assessee trust under Section 10(23C)(vi) [Erroneously mentioned as "u/s. 10(23C)(vii)] of the Act?"
3. Facts in brief would indicate that the assessee made an application under Form 56D on 26.09.2018 seeking approval under Section 10(23C)(vi) of the Income Tax Act, 1961 (for short 'the Act'). The application was accompanied by a copy of trust deed. Certificate of Charity Commissioner and Audit Report for the financial year 2015-16, 2016-17 and 2017-18 were also produced with the application. It is the case of the assessee that the trust is carrying out educational activities through its institution namely Tiny Star Higher Secondary School at Rajkot.
3.1 It appears that the CIT(E) called for details and on such details being furnished and on the basis of the written submissions filed by the trustee, the CIT(E) rejected the contentions of the assessee. On examination Page 2 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023 NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined of records and the trust deed and the objects of the society together with the Profit and Loss Accounts, the CIT(E) found that it cannot be said that the trust was predominantly engaged in carrying educational activities.
4. On an appeal, the Tribunal in paras 13 to 16 observed as under:
"13. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(Exemption) and other materials brought on record. Before us, the Ld. Counsel has submitted the English Translation copy of object clause of the trust deed of the assessee, which is reproduced below:
"Free English Translation of object clause of Trust deed of the Star Education Trust dated 12.03.1998.
1. to carry all types of activities so as to spread and impart education among people and to comment and develop institution, hostels, kindergarten, bal anganvadi etc. for imparting education from preprimary to post-graduation.Page 3 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023
NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined
2. The trust will undertake activities for overall development of human in the field of social, economic, cultural, sports and General Public Utility.
3. To carry out and support all types of activities for building the character of students and their intellectual and physical development and make them self-reliant and hardworking.
4. the trust will undertake educational and moral activities and also become helpful to those institutions running such activities.
14. From the above objects, of the assessee- trust it is abundantly clear that assessee's sole object is to provide education to students. The other ancillary activities, like promotion of cultural, social and sports, are necessary for building the character of students, therefore these other ancillary activities are just to promote the main activity of education. Hence, after going through the object clause of the assessee trust, we note that assessee trust is solely engaged in educational activities. In order to promote good principles and ethical behavior among the students, the other activities, such as sports, social and cultural etc. are carried out by the assessee-Trust.
15. The ld Counsel submitted before the Bench the acknowledge copy of return of income along with computation of total income for assessment year 2018-19 which is placed at paper book page no.12. The audit report for AY.2019- 20 is submitted, which is placed at paper book page no.14. The copy of profit and Page 4 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023 NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined loss account and balance sheet for AY.2018-19 is submitted, which is placed at paper book page nos. 17 to 18. The trust deed of the assessee trust is placed at paper book page no.19. The assessee also submitted the Certificate of Registration with Charity Commissioner. which is placed at paper book page no.23 of the assessee`s paper book.
16. From the above documents and evidences, it is vivid that Profit and loss account of the assessee-trust contains the activity, stating fee received from students, bus transportation fee and books fees etc. received from students, whereas in the expenses side, we note that there are transportation expenses, educational expenses, expenses to purchase the books, salary payment to teachers and staffs. Therefore, from the above Profit and loss account of the assessee trust it is clearly established that assessee trust is engaged in the educational activities and there is nominal profit which are earned by the assessee while conducting these charitable activities. The assessee-trust does not have profit motive, the small profit generated while carrying out charitable activities, does not mean that assessee is engaged in the commercial activities. Such small profit so earned is again utilised for charitable activities by the assessee- trust."
5. Appreciation of facts by the Tribunal would indicate that on reproduction of the trust deed, it found that the Page 5 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023 NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined trust carried out all activities so as to spread and impart education among people and to comment and develop institutions, hostels, kindergarten, aanganwadi etc. As far as the other purposes of the trust in running other activities is concerned, it was found that though it was the sole object of the institution to provide education, the ancillary activities such as promotion of cultural and social activities were co-related to the main activity of education.
6. Perusal of the order of the Tribunal would indicate that the Tribunal found that the fees received from the students and transportation etc. were for reimbursing expenses for such purposes. The Profit and Loss account of the trust also clearly established that the trust is engaged in the educational activities and the nominal profit that it earned was not a ground on which the CIT(E) would have disregarded the application.
7. Having perused the order of the Tribunal, we find no Page 6 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023 NEUTRAL CITATION C/TAXAP/602/2023 ORDER DATED: 14/09/2023 undefined reason to interfere. No substantial question of law is involved for consideration of this court, as based on facts and the appreciation of the trust deed, the Tribunal has rightly found that the order of the CIT(E) rejecting the application is misconceived.
8. In view of the above, appeal is dismissed.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) DIVYA Page 7 of 7 Downloaded on : Sat Sep 16 17:11:54 IST 2023