Income Tax Appellate Tribunal - Pune
Cit-5,, Pune vs Department Of Income Tax on 10 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri G.S.Pannu, Accountant Member, and
Shri R.S.Padvekar, Judicial Member.
ITA.No.604 & 605/PN/2011
Poveda Foundation,
G-39/40, Suryodaya Complex,
Kalbhornagar, Chinchwad,
Pune. .. Appellant
Vs.
Commissioner of Income-tax-V,
Pune. .. Respondent
Assessee by : Shri K.Shriniwasan
Department by : Shri S.K.Singh
Date of Hearing : 10.07.2012
Date of Pronouncement : 30.08.2012
ORDER
PER G.S.PANNU, AM:
The captioned two appeals by the assessee are directed against two separate orders of the Commissioner of Income-tax-V, Pune, (in short 'the Commissioner) dated 30.03.2011, whereby the assessee has been denied registration u/s.12A(1)(b)(ii) of the Income Tax Act, 1961 (in short 'the Act') and recognition u/s.80G(5)(vi) of the Act.
2. The petitioner before us is a Society registered under the Societies Registration Act, 1860, on 22.09.2009. The Society is also registered with the Charity Commissioner, Pune, vide registration certificate dated 18.09.2011. A copy of the Memorandum of Association has been placed on record and its perusal reveals that the substantive objective of the Society is to promote and provide quality education at all levels. In particular, we reproduce hereinafter some of the objects which would indicate the primary objectives of the Society.
2a) To start institutions imparting pre-primary, and primary education in various mediums.
b) To start secondary and higher secondary education in various medium.
c) To undertake educational programme for teaching personal including degree and Post graduation meant for primary secondary and university teaching in the nature of B.ED, M.ED, B.P.ED., D.ED, D.P.ED. etc.
d) To establish library meant for the use of educational institutions or of general importance for the FOUNDATION at large.
e) To start branched of any such institutions at one or more placed all over Maharashtra.
f) Generally to undertake any educational or semi-educational, research activities, which may be useful to the industrial labour, agriculturists, Rural development center, small scale development, upliftment of rural and urban educational any other section of the FOUNDATION in general.
g) And generally to do all such activities as may be necessary for the due and proper enforcement or execution of these objects.
The spread or promotion of educational learning in all its branches, in such manner as the trustee may think which includes the following:
1) Establish construction and maintenance or support or primary schools, high schools, colleges, Vidhyapiths, study centers medical technical colleges, and other institutions for imparting education and training of students.
2) Establish and support of professorship, fellowship, lectureship, scholarship, free ships and prizes at any schools, colleges or other educational institutions in Maharashtra.
3) Establish maintenance and construction of hostels and boarding facilities for students and other persons upon such terms and for such period in each case as the trustees may think fit.
4) ....
5) ....
6) To assist students who are preparing for entering upon or, engaged in any profession, trade, occupation or services by outright gifts or payments for instruction, payment of travelling expenses or such other means for the advancement and education in life or for enabling them to take education in life or for enabling them to take education to earn their own living.
7) ....
8) To promote social educational, cultural activities for general education.
9) ....
10) ....
11) ....3
12) To print and publish books, periodicals, references, information brouchers to develop computer software and to circulate the same.
13) And generally to do all other acts may be necessary for due, proper and effective realization or execution of the above objects.
3. In this background, the assessee's Society applied for registration u/s.12A with the Commissioner. The registration has since been denied by the Commissioner, primarily for the reason that the activities carried out by the Society involved running classes for teaching children which according to the Commissioner tantamounts to running a 'Coaching Centre'. As per the Commissioner, a 'Coaching Centre' does not satisfy the requirements of section 2(15) of the Act in as much as it cannot be construed as an activity for 'education'.
4. In support, the Commissioner has referred to the meaning of the expression 'education' as explained by the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT 101 ITR 234 (SC). In this background, Ld. Counsel for the assessee has pointed out that the Commissioner has wrongly appreciated the activities being carried out by the assessee. It was pointed out that assessee was formed with the object of carrying out educational activities and till now it is carrying out such objects by providing education to the poor and slum children by holding classes wherein only a nominal fee is collected which is insignificant and is otherwise inadequate to meet the expenditures incurred. It was therefore contended that the assessee cannot be construed as a 'Coaching Centre' in as much as running of 'Coaching Centres' envisages a commercial activity which is not the case in the present situation. The assessee further mentioned that the factual aspects of the activities being carried out by the assessee was explained before the Commissioner vide communication dated 23.12.2010, a copy of which has been placed in the Paper Book at pages 81 to 84 and also vide communication dated 23.11.2010, copy of which have been placed at pages 73 to 80 of the Paper Book. In this manner it 4 is sought to be canvassed that the assessee is engaged in a charitable activity so as to fall within the meaning of section 2(15) of the Act and in support reliance was placed on the following decisions:
− Delhi Music Society vs. Director General of Income-tax 65 DTR (Del) 337.
− Gian Educational Society vs. CIT 6 ITR(Trib)(Del) 350. − Director of Income-tax vs. Garden City Educational Trust 330 ITR 480.
− CIT vs. Surya Educational & Charitable Trust 203 Taxman 53 (P&H).
− U.P.Forest Corporation & Anr. Vs. DCIT 297 ITR 1 (SC). − St.Mary's Christian Charitable Trust vs. ITO 11 ITR (Trib)(Chennai) 205.
− CIT vs. Red Rose School 212 CTR (All) 394.
− DIT vs. Garden City Educational Trust 330 ITR 480.
5. On the other hand, Ld. DR appearing for the Revenue has contested the plea of the assessee by pointing out that the 'Coaching Centre' run by the assessee does not fall within the ambit of education and, therefore, the Commissioner has correctly held that the objects do not fall within the meaning of expression 'Chartiable purpose' as contained in section 2(15) of the Act.
6. We have carefully considered the rival submissions. Section 12AA(1)(b) of the Act prescribes that the Commissioner after being satisfied about the objects of the applicant and the genuineness of its activities, may pass an order registering the applicant or if he is not so satisfied, he shall pass an order refusing to register the applicant. In the present case, the Commissioner was not satisfied about the objects of the applicant in as much as according to him the activities of the assessee do not qualify to be for charitable purpose within the meaning of section 2(15) of the Act. The Commissioner has observed that the assessee was running 'Coaching Centres'. Section 2(15) contains definition of 'Charitable purpose'. Shorn of other details, section 2(15) prescribes charitable purpose to mean activities involving relief of poor, education, etc. As per the Commissioner, the conduct of 'Coaching 5 Classes' did not amount to an activity of 'education' as mentioned in section 2(15) of the Act.
7. We have carefully considered the factual matrix of the present case and find ourselves unable to appreciate the same in the manner as done by the Commissioner. At page 83 of the Paper Book is contained a Note on activities being carried out by the assessee, which is a part of the written communication addressed to the Commissioner dated 23.12.2010. It is stated that the assessee is running an education centre for slum communities at Siddalaxmi Engineering MIDC to serve children from the Morwadi slum and the second centre is being run at Vetalnagar, Balwadi, to serve children from Vitalnagar, Indiranagar and Duttanagar slums. It is canvassed that the centres run from Monday to Friday for 2½ hours each day before or after the children's school timings. Apart therefrom, extra curricular activities by way of science exhibition, sports, Botany trips, etc., were carried out. It is further pointed out in a communication dated 25.03.2011 to the Commissioner, which is placed at page 97 of the Paper Book, that in the year 2009-10 the total number of children enrolled was 58 and in the year 2010-11 it was 32. It is further pointed out that the enrollment of children is done against a nominal fee with the objective of developing a habit in the children not to receive things for free. In this regard it was also pointed out that in the year 2009-10, a total of just about Rs.3,000/- was received in fee which was totally insignificant and nominal in relation to the costs incurred to run such centres. In this manner, it is sought to be made out that not only the assessee carries on an activity in the field of education but through the running of centres for the slum communities, it is also engaged in providing relief to the poor which too is an activity for 'charitable purpose'.
8. We have considered the aforesaid factual matrix and find that the activities of running learning centres for the slum communities cannot be equated to running of 'Coaching Centres' on a 6 commercial scale, as has been understood by the Commissioner. Quite clearly, the assessee is providing facilities to the poor and needy children of slum communities against a nominal fee which is too insignificant considering the costs involved. The activities of the slum centres are carried out with donations, etc., for instance in terms of the Income and Expenditure account for the year ending 31.03.2010, the expenditure on educational activities is Rs.1,04,770/- whereas the fee collected from the slum children is only to the tune of Rs.3,080/-. Quite clearly, it cannot be said that the activity of running learning centres for slum children in the instant case is akin to running of 'Coaching Centres' on commercial lines. Perhaps, the Commissioner would be justified to hold that running of 'Coaching Centres' does not fall within the purview of section 2(15) so however, the factual matrix in the present case does not justify such an interference. The nature of activities being carried out clearly establish that the same seeks to provide help in acquiring education to the needy persons and the same is not being run on commercial lines. Therefore, in our view, having regard to the nature of activities being carried out, the Commissioner has erred in holding that the same does not qualify to be treated as 'education' within the meaning of section 2(15) of the Act.
9. In this view of the matter we therefore set aside the order of the Commissioner and direct that the assessee be granted registration u/s.12AA(1)(b) of the Act.
10. In the result, the appeal of the assessee in ITA No.604/PN/2011 is allowed.
11. In so far as the assessee's application for recognition u/s.80G of the Act is concerned, the same was declined by the Commissioner on the ground that the registration u/s.12A was denied. In the appeal of the assessee against the denial of registration u/s.12A, we have allowed the assessee's claim for registration and as a consequence, the objection of the 7 Commissioner to deny recognition u/s.80G no longer exists. Therefore, the Commissioner is directed to allow recognition u/s.80G of the Act as per law.
12. Resultantly both the appeals of the assessee are allowed as above.
Pronounced in the open court on this the 30th day of August, 2012.
Sd/- Sd/-
( R.S.PADVEKAR ) ( G.S.PANNU )
JUDICIAL MEMBER ACCOUNTANT MEMBER
gsps
Pune, dated the 30th August, 2012
Copy of the order is forwarded to:
1. The Assessee
2. The CIT-V, Pune.
3. The DR "B" Bench, Pune.
4. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.