Gujarat High Court
Commissioner Of Income Tax ... vs Dharmaj Kelvani ... on 13 June, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
O/TAXAP/347/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 347 of 2017
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COMMISSIONER OF INCOME TAX (EXEMPTIONS)....Appellant(s)
Versus
DHARMAJ KELVANI MANDAL....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 13/06/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the Revenue challenging judgement of the Income Tax Appellate Tribunal dated 07.10.2016 raising following question for our consideration:
"Whether the Appellate Tribunal is justified in directing the CIT(E), Ahmedabad to grant approval u/s. 10(23C)(vi) of the Act to the assessee and ignoring the finding of the CCIT, Baroda, as the applicant Trust does not fulfill the conditions laid down u/s. 10(23C)(vi) of the Act?''
2. The respondent-assessee is a Public Charitable Trust duly registered under the Bombay Public Trust Act. The objects of the Trust, as per the trustee, are as under:
"(a) To spread amongst the people of Dharmaj primary, Page 1 of 4 HC-NIC Page 1 of 4 Created On Fri Aug 18 08:40:01 IST 2017 O/TAXAP/347/2017 ORDER secondary, higher, commercial, industrial as well as agricultural eduction and to employ suitable means for the spread of intellectual, physical and moral eduction in the town.
(b) to collect funds, to accept Trust funds, to execute them and to whatsoever is necessary for the accomplishment of the abovementioned aims.
(c) To manage any public Institution of the village."
3. The Trust has been in existence since the year 1954 and had been granted registration under section 12AA of the Income Tax Act,1961 since 25.08.1998. It had also been granted exemption under section 80G of the Act.
4. Despite such facts, the Commissioner, on the premise that clause (c) of the objects noted above stated to be for the education purpose, held that the Trust does not fulfill the condition of section 10 (23C)(vi) of the Act. He was of the opinion that the Trust was not existing solely for education purpose. He accordingly, by an order dated 29.09.2014, held that the Trust does not satisfy the condition of section 10 (23C)
(vi) and is, therefore, not eligible for approval under the said section.
5. This order was challenged by the Trust before the Tribunal. The Tribunal, by the impugned judgement, allowed the appeal making following observations:
"14. In the light of the above, if we examine the facts of the Page 2 of 4 HC-NIC Page 2 of 4 Created On Fri Aug 18 08:40:01 IST 2017 O/TAXAP/347/2017 ORDER present case, then it would reveal that the assesse trust came to existence in 1954. It is running educational institutions. It has been registered under section 12AA of the Act since 25.08.1998. It is also enjoying the exemption under section 80G. Thus, the department has never doubted about the genuinenes of the activities of the trust and purpose of its existence. While rejecting the application of the Trust under section 10(23C), the ld. CCIT has not pointed out any specific aspect. He only harboured a belief that assessee might have some ancillary activities not associated with education. This is only a hypothetical observation. In all these decisions, it has been propounded that if the assessee has not taken other objections mentioned in the trust deed, the exclusively carried out activities of education, then approval under section 10(23C) will not be denied. Respectfully following these deoisiom, we allow the appeal of the assessee and direct the prescribed authority to grant approval under section 10(23C) (vi) of the Income Tax Act to the assessee for the Asst. Year 2013-14."
6. The Tribunal placed reliance on the decisions of Allahabad and Karnataka High Courts.
7. It can thus be seen that the Trust has been in existence since long and is engaged exclusively in the activities of education purposes. The Commissioner was not correct in holding that the Trust had not satisfied the condition of section 10(23C)(vi) of the Act. Even if the requirement that Trust must exist solely for educational purpose and not for purposes of profit is to be strictly complied, in the present case, the trust deed provided sufficient safeguard in this regard. Clause (a) of the trust deed envisaged the object of the Trust to spread amongst people of Dharmaj education and to employ suitable means for the spread Page 3 of 4 HC-NIC Page 3 of 4 Created On Fri Aug 18 08:40:01 IST 2017 O/TAXAP/347/2017 ORDER of intellectual, physical and moral education. Clause (b) pertains to collection of funds, to accept trust funds and to execute them for the accomplishment of the above mentioned aim. Clause (c) merely enable the Trust to manage any public institution of the village. This clause cannot be divorced from the earlier two clauses as to allow a freehand to the Trust to involve itself into management of any public institution irrespective of the fact whether it is engaged in education activity or not?
8. In the result, Tax Appeal is dismissed.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) Jyoti Page 4 of 4 HC-NIC Page 4 of 4 Created On Fri Aug 18 08:40:01 IST 2017