Income Tax Appellate Tribunal - Mumbai
Jhulelal Educaiton Foundation, Navi ... vs Assessee on 26 November, 2014
अिधकरण "जे" खंडपीठ मुंबई
आयकर अपीलीय अिधकरण,
INCOME TAX APPELLATE TRIBUNALMUMBAI BENCHES "J" MUMBAI
सव[ौी राजेÛि,लेखा सदःय एवं संजय गग[,Ûयाियक सदःय के सम¢
Before S/Sh.Rajendra,Accountant Member and Sanjay Garg,Judicial Member
आयकर अपील सं/.ITA No.737/Mum/2013,िनधा[
िनधा[रण वष[/Assessment Year-2012-13
Jhulelal Education Foundation DIT (E)
Bldg. No. F-9, Flat No.2, Noopur CHS v/s. 6th Floor, Piramal Chambers,
Ltd. Sector-22, Kopar Khairne, Paral, Lalbaug,
Navi Mumbai-400 709 Mumbai-400 012
PAN:AABTJ5986B
(अपीलाथȸ/ Appellant) (ू×यथȸ / Respondent)
िनधा[ǐरती ओर से / Assessee by :S/Sh. S.S. Phadkar
राजःव कȧ ओर से/ Revenue by :Sh. S.D. Shrivastva
सुनवाई कȧ तारȣख/ Date of Hearing : 19/11/2014
घोषणा कȧ तारȣख / Date of Pronouncement : 26/11/2014
आदे श / O R D E R
Per Rajendra, A.M.लेखा सदःय राजेÛि के अनुसार:
Challenging the order dated 28.12.2012 of the Director Income-tax(Exemption),Mumbai(DIT-E) the assessee has raised following Grounds of Appeal:
i)On the facts and in the circumstances of the case and in law, the learned D.I.T.(E) erred in not granting registration U/s.12AA r.w.rule 17A of the Income Tax Act 1961 & Rules 1962 respectively.
ii)On the facts and in the circumstances of the case and in law, the learned D.IT.(E) erred in holding that the objects of the Trust are not covered within the ambit of Charitable purpose as defined U/s. 2(15) of the Income Tax Act, 1961.
iii)The appellant craves, leave to add, alter, amend or delete any ground(s) of appeal either before or during the course of hearing of the appeal."
2.The assessee trust filed an application for registration u/s.12A of the Act on 15.06.2012.The trust had been constituted by a Deed of Trust dated 17.09.2010.It was registered with the Charity Commissioner,Mumbai on 17.01.2011.On receiving an application filed by the assessee for granting registration,the DIT-E issued a notice to produce certain documents.After scrutinising the same, he held that as per the provisions of Section 12AA (1)(b)a trust was to be granted registration if the Commissioner was satisfied about the objects of the trust and the genuineness of its activities,that both the requirements were cumulative and not alternative,that the trust deed contained charitable as well as non-charitable commercial objects such as of computer center, Industrial & Technical institutions, running study-centres, & coaching centre, establishment of Employment Bureaus.He referred to the cases of Jaipur Charitable Trust (81ITR1),Yogiraj Chari - table Trust(103ITR777)Bihar Institute of Mining & Mine Surveying(208 ITR 608)Saurashtra Education Foundation (273 ITR 139).He also held that one of the objects of the assessee trust was to promote, assist and/or maintain all activities by whatsoever carried on or wherever carried on in India and the whole world in conformity with the objects of the trust,that there is no binding legal obligation on the trustees to apply income/ trust funds solely for charitable purposes,that the trustees are at liberty to decide from time to time the particular objects of the trust for which the income of the trust would be applied,that the trustees enjoyed full discretion to apply the income of the trust towards attainment of any one or more of its objects.He relied upon the order of State Bank of India(169ITR298).He finally held that it was immaterial in what manner the objects would 2 ITA No.737/Mum/2013 Jhulelal Education Foundation be carried out at a later point of time,that there was no room for non charitable/commercial objects in a Trust Deed creating a public charitable trust,there could be no doubt that any activity in pursuit of object embodied in clause (xxxiii) of the Trust Deed would entail application of funds of the assessee outside India so as to render it ineligible for exemption,that the said clause contravenes the provisions of Section 11(1) wherein it had been specifically provided that the application of income of the trust had to be for purposes within India in order to be eligible for exemption,that the assessee trust has failed to comply with the mandatory requirements prescribed u/s.12AA of the Act.As a result,he rejected the application filed by the assessee.
3.Before us,the Authorised Representative(AR)stated that none of the three clauses objected by the DIT(E)were non-charitable,that Cl.VI dealt with imparting modern education and providing shelter,food etc.to the students irrespective of cast,creed,religion or race,that Cl.XXV pertained to establish and run educational institutions,that Cl.XXXIII was about carrying out activities in India or outside India,that refusal to grant registration was not as per law,that all these objects clauses fell under 'Education'/'General public utility' and fulfilled all the condition as per Section 2(15) of the Act,that object of establishment of Employment Bureaus was in the nature advancement of object of general public utility,that no commercial activity was involved was providing these services and no cess or fees was going to be charged to the youth to whom the service were to be offered,that running study centres,tuition centres and coaching centres was part of educational activities,that clause (xxxiii) of its objects was also an object of general public utility which did not involve carrying on any activity of profit.He relied upon the cases of Dawoodi Bohara Jamat(43 taxmann.com.243),Samudra Institute of Maritime Studies Trust (49taxmann.510) and M K Nambyar Saraf Law Charitable Trust (140Taxman616)delivered by the Hon'ble Supreme Court,Bombay High Court and Delhi High Court respectively.
Departmental Representative (DR) supported the order of the DIT(E).
4.We have heard the rival submissions and perused the material.We find that the assessee-trust had filed an application for registration u/s.12A of the Act on 15.06.2012,that the trust was constituted by a deed of trust dated 17.09.2010,that it was registered with the Charity Commissioner,Mumbai,that that DIT-E vide his order dated 28.12.2012 refused the registration to it.It is further found that as per the DIT-E the trust had charitable as well as non charitable objects, that it immaterial in what manner these objects would be carried out at a later stage,that Cl.XXXIII was not in conformity with Section 11(1) of the Act,that there was doubt about the genuineness of the activities of the trust.In short,he had objected to Clause VI,XXV and XXXIII of the trust deed.We would like to reproduce the said clauses:
Cl.VI-
To assist the unemployed youth in finding jobs or becoming self employed in finding jobs or becoming self employed through the establishment of Employment Bureaus and other facilities needed and to create awareness of career options and to provide the opportunities under Government schemes and to work for the youth development activities. Cl.XXV-
(XXV)To open, found, establish, promote, set up, run, maintain, assist, finance, support and/or aid or help in the setting up and/or maintaining and/or aid or help in the setting up and/or maintaining and/or running schools, colleges, lecture halls,teaching classes, training centers, vocational centers, guidance centers,management centers/school and other establishments or institutions for advancement of education and of knowledge in arts, science, literature,humanities and all other useful subjects in all their maintenance (XXV)To open, found, establish, promote, set up, run, maintain, assist, finance, support and/or aid or help in the setting up and/or maintaining and/or aid or help in the setting up and/or maintaining and/or running schools, colleges, lecture halls,teaching classes, training centers, vocational centers, guidance centers,management centers/school and other establishments or institutions for advancement of education and of knowledge in arts, science, literature,humanities and all other 3 ITA No.737/Mum/2013 Jhulelal Education Foundation useful subjects in all their maintenance Cl.XXXIII-
To promote, assist and/or maintain all activities by whatsoever carried on or wherever carried on in India and the whole world in conformity with the objects of the trust and as are conductive to the well being and general welfare of nation or are conductive for advancement of any objects or objects of general public utility not involving/ carrying on any activity for profit.
In our opinion,object mentioned in Cl.VI is a pure charitable object.Establishment of employ -ment bureaus for unemployed youth to help them cannot be held a commercial activity. Nor can it be held to be a profit driven venture.Cl.XXV talks of establishing educational institutions for advancement of education.Provisions of section2(15)clearly mention that imparting education is a charitable activity.Without establishing institutions no one can impart formal or informal training.Therefore,to hold that including an object of establishing educational institution in the trust deed would disentitle the organisation from obtaining registration is not proper.If the turst ,in coming years,does not take up the educational activities or starts commercial activities that are not charitable the AO can take appropriate action while assessing the income of the trust for that particular year.But,at the time of granting registration what is to be seen is the objects as mentioned in the deed and not to imagine as what would happen in succeeding years. Secondly,all the clauses of trust have to considered as a whole while taking decision about registration of a trust.From both the angles the decision of the DIT-E is not endorsable.We are of the opinion that none of the three objects make the trust a profitable organisation.Now we will discuss Cl.XXXIII of the trust deed.The objection of the DIT-E is that the clause provides for spending of trust income outside India.We are of the opinion the stage for application of income is yet to arrive and at that time the AO can take action as per law.We find that in the case of M K Nambyar Saraf Law Charitable Trust the Hon'ble Delhi High Court has dealt with the same issue.In that case the assessee-trust had filed application for registration u/s.12A and recognition under section 80G.The DIT-E rejected the same on the ground that the assessee itself had admitted that the activities would be extended outside India as per the objects laid down.Hon'ble Dehli,while deciding the writ filed by the assessee,held as under:
"So far as the benefit of section 11 (I)(a) is concerned, it can be extended only to the extent to which such income is applied to such purposes in India. However, if income is applied to the purposes outside India, then clause (c) will be applicable and ([the permission is granted by the Board either by general or special order, then benefit can be extended.Section I2AA prescribes the procedure for registration. This section does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purpose in India as also with direction or order of the Board for application of income outside India."
It is also a fact that the assessee-trust will have to file return of income of every year.If the AO finds that the activities carried out by it are not charitable,he can take suitable action.Not only this, in certain circumstances the DIT-E is empowered to cancel the registration granted to the trust. Therefore at the time of registration what the DIT-E is to look in to is as whether the objects are prima facie charitable or not.In the case under consideration,all the three clauses objected to by the DIT-E,cannot be termed commercial /non-charitable nature.
Now we would like to discuss the cases relied upon by the DIT-E.The matter of Jaipur Charitable Trust (supra)deals with Indian Income tax Act,1922.Secondly,in that matter the trust was authorised to carry out business activities.Similar are the facts of the case of Yogiraj Charitable Trust(supra).In the case of Bihar Institute of Mining & Mine Surveying(supra) Hon'ble Patna High Court has held that the running of a private coaching institute for the purpose of training the students to appear at some specified examinations upon taking specified sum from the trainees would not bring the petitioner within the provisions of sections 2(15) of the Act.We find that the assessee trust is not created for training students for specified exams and charging fees for such training.None of the 4 ITA No.737/Mum/2013 Jhulelal Education Foundation clauses provides for charging sum for training. In the case of Saurashtra Education Foundation (supra)it was found that the assessee was conducting English improvement classes for standards X, XI and XII and also conducting guidance classes for C.A.entrance examination.Considering those particular facts it was held that the activities carried out by the trust were not of charitable nature.In the matter before us,issue is of granting of registration.As held earlier,if at a later stage the AO finds out that the activities carried out by the assessee are not in according with the provisions of the Act,he can always take appropriate action.But, at the stage of registration what is to be seen is whether the objects do not fall in the category of charitable activities or not.The cases relied upon by the AR of the assessee support the view that the activities cannot be held non charitable.
Considering the peculiar facts and circumstances of the case before us,we are of the opinion that the objects of the assessee-trust were charitable and it should have been granted registration by the DIT-E.Effective ground of appeal is allowed in favour of the assessee.
As a result,filed by the assessee stands allowed.
फलतः िनधा[ǐरती Ʈारा दाǔखल कȧ गई अपील मंजूर कȧ जाती है .
Order pronounced in the open court on 26th November, 2014.
आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांक 26 नवंबर को कȧ गई ।
Sd/- Sd/-
(राजेÛि / RAJENDRA) (SANJAY GARG /संजय गग[)
लेखा सदःय / ACCOUNTANT MEMBER Ûयाियक सदःय / JUDICIAL MEMBER
मुंबई/Mumbai,Ǒदनांक/Date: 26.11.2014
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. Assessee /अपीलाथȸ 2. Respondent /ू×यथȸ
3.The concerned CIT(A)/संबƨ अपीलीय आयकर आयुƠ, 4.The concerned CIT /संबƨ आयकर आयुƠ
5. DR "J" Bench, ITAT, Mumbai /ǒवभागीय ूितिनिध खंडपीठ,आ.अ.Ûयाया.मुब ं ई
6. Guard File/गाड[ फाईल स×याǒपत ूित //True Copy// आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai