Income Tax Appellate Tribunal - Chennai
Katie Wilcox Education Association, ... vs Assessee on 19 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE
Dr. O.K.NARAYANAN, VICE PRESIDENT
and
SHRI HARI OM MARATHA, JUDICIAL MEMBER
ITA No.1446(Mds)/2011
&
S.P. No.58(Mds)/2011 in ITA No.1446(Mds)/2011
M/s. Katie Wilcox Education The Commissioner of
Association, Lady Doak Income-tax - I,
College Campus, Vs. Madurai.
Madurai-625002.
PAN AAAAK0221A.
(Appellant/Petitioner) (Respondent)
Appellant by : Smt. Pushya Sitaraman, Sr.Counsel for
Ms. J.Sree Vidya & Ms. G.Vardini
Respondent by: Shri T.N.Betgiri, JCIT.
Date of Hearing : 19th August, 2011
Date of Pronouncement : 19th August, 2011
ORDER
PER Dr.O.K.NARAYANAN, VICE-PRESIDENT:
This appeal is filed by the assessee. The appeal is filed against the order of the Commissioner of Income-tax-I at
-2 - ITA 1446 of 2011 & SP 58 of 2011 Madurai, cancelling the registration granted to the assessee under section 12A of the Income-tax Act, 1961. He has passed the order in exercise of the powers conferred on him under section 293C of the Income-tax Act, 1961.
2. The assessee was incorporated under section 25 of the Companies Act, 1956 in 1991. The assessee was in fact incorporated mainly to take over the management, affairs, assets and liabilities of Lady Doak College. The only activity that has been carried out by the assessee was to run the Lady Doak College for Women. The said college is a Government aided college. The assessee was granted registration under section 12A on 7-3-1994.
3. The Commissioner of Income-tax has cancelled the registration mainly on the ground that the objects of the assessee are mainly religious in nature. He has relied on the judgment of the Hon'ble supreme Court in the case of Upper Ganges Sugar Mills Ltd. vs. CIT, 227 ITR 578 and Explanation 3 to section 80G(5) to conclude that if the objects are religious in nature and the trust is not for charitable purpose, the assessee will not be eligible for approval under section 80G(5)(vi).
-3 - ITA 1446 of 2011 & SP 58 of 2011
4. On hearing both sides, we find that the reliance placed by the Commissioner of Income-tax on the judgment of the Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd. vs CIT, 227 ITR 578, seems to be a little misplaced. That decision was rendered in the limited context of section 80G where the rules prescribed for the exemption are different from the law stated in section 11 of the Income-tax Act, 1961. The law provides for cancellation of registration granted under section 12A, if the activities carried on by the assessee are not genuine or the activities are not being carried out in accordance with the objects of the trust.
5. In the present case, the assessee is carrying on a singular activity of running Lady Doak College. It is a Government aided institution. The assessee is admitting students from all walks of life. There is no material available on record to show that the assessee is refusing admission to students on the ground of religion, caste, creed, etc. Therefore, it is not possible to hold a view that the assessee is carrying on religious activities alone.
-4 - ITA 1446 of 2011 & SP 58 of 2011
6. It is well established that educational activities are essentially charitable activities in nature. The definition of charitable activity itself provides more prominence to activities of carrying on education and providing medical relief.
7. It is to be seen that section 11 itself provides that income from property held for charitable or religious purpose is exempt from tax. It is provided therein that income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India, and where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property, shall not be included in the total income of the previous year.
8. The expression "charitable or religious purposes"
has been considered by the Third Member in the case of The Society of Presentation Sisters vs ITO, 318 ITR(AT) 287 (T.M.) (Cochin) and it was held that charitable or religious purposes mean charitable purposes or religious purposes or both charitable and religious purposes. In view of the above Third
-5 - ITA 1446 of 2011 & SP 58 of 2011 Member decision, the stress given by the Commissioner of Income-tax on the alleged religious activities of the assessee is not relevant in law.
9. In the facts and circumstances of the case, we find that the Commissioner of Income-tax has erred in cancelling the registration granted to the assessee under section 12A. Accordingly, we set aside his order and restore the registration to the assessee under section 12A.
10. In result the appeal filed by the assessee is allowed.
11. As the appeal itself has been decided, the stay petition No.58(Mds)/2011 filed by the assessee has become infructuous and is liable to be dismissed.
Order pronounced in the open Court at the time of hearing on Friday, the 19th of August, 2011 at Chennai.
Sd/- Sd/- (Hari Om Maratha) (Dr. O.K.Narayanan) Judicial Member Vice-President Chennai, Dated the 19th August, 2011. V.A.P. Copy to: Assessee/CIT/DR/GF.