Income Tax Appellate Tribunal - Chennai
Alpha Educational Trust, Chennai vs Assessee on 19 February, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
ITA No.2157/Mds/2012
M/s. Alpha Educational Trust, Vs. The Assistant Director of Income Tax
M/s.Subbaraya Aiyar (Exemptions-II),
Padmanabhan & Ramamani Chennai-600 034.
Advocates
75A, Dr.Radhakrishnan Salai,
Mylapore, Chennai-600 004.
PAN: AACTA9230A
(Appellant) (Respondent)
Appellant by : Mr. R.Vijayaraghavan, Advocate
Respondent by : Mr.Shaji P.Jacob, Addl. CIT
Date of Hearing : 19th February, 2013
Date of Pronouncement : 28th February, 2013
ORDER
Per Vikas Awasthy, JM:
The appeal has been filed by the assessee impugning the order of the Director of Income Tax (Exemptions), Chennai dated 28.9.2012 rejecting the application of the assessee for registration under section 12AA of the Income Tax Act, 1961.
2. The assessee has filed the appeal with the delay of two days. An affidavit in support of application for condonation of 2 ITA No.2157/Mds/2012 delay has been filed. We have perused the reason for delay in filing of the appeal and are satisfied that there is a reasonable cause for delay in filing of the appeal. In the interest of justice, we condone the delay of 2 days in filing of the appeal. The application for condonation of delay is allowed and the appeal is admitted to be heard on merits.
3. The brief facts of the case are that the assessee trust was constituted way back on 1.11.1985. Initially the assessee had applied for registration under section 12AA of the Act on 23.3.2011. The said application of the assessee was rejected by the Director of Income Tax (Exemptions) vide order dated 30.9.2011 for the reason that page containing the object clause was not filed along with the application. Therefore, the objects for which the trust was formed could not be ascertained. The assessee again filed an application for registration under section 12AA of the Act in the prescribed form on 9.3.2012. The Director of Income Tax (Exemptions) sought certain clarifications and additional information vide letter dated 3.8.2012. The assessee allegedly furnished the information and reply to the queries 3 ITA No.2157/Mds/2012 vide letter dated 27.8.2012. The Director of Income Tax (Exemptions) vide impugned order dated 28.9.2012 rejected the application of the assessee on the ground that although the trust has been running educational institution since 1985, with gross receipts exceeding ` 1 crore, no return of income has been filed under the provisions of the Act. The Director of Income Tax (Exemptions) further observed that objects of the running trust have been amended, particularly with the inclusion of object clause 4(b) in the Amendment Deed viz "Medical" , which is not in consonance with the original objects viz. 'Education' the trust does not qualify for registration under section 12AA.
4. The A.R. appearing on behalf of the assessee submitted that the complete trust deed dated 1.11.1985 was placed before the Director of Income Tax (Exemptions). The objects of the trust as per the original trust deed mentions running of educational institution for the benefit of public. Education per se is a charitable activity. The objects of the trust were amended to include : "maintain and manage hospital, clinic, laboratories and medical research centres and 4 ITA No.2157/Mds/2012 to provide the poor with medical aid" and to enlarge scope of working of the trust for the benefit of the poor. The counsel for the assessee submitted that for granting registration under section 12AA what is to be seen is the objects of the trust and activities being carried out by the trust. If the objects of the trust are charitable in nature and the activities are genuine, the trust is entitled for registration under section 12AA. In order to support his contentions, the counsel for the assessee relied on the judgement of the Hon'ble Allahabad High Court - Lucknow Bench in the case of CIT Vs. Lucknow Educational and Social Welfare Society reported as 340 ITR 86(All). The counsel for the assessee in order to further support his submissions, also relied on the order of the co- ordinate Bench of the Tribunal in the case of Anjuman-E- Khyrkhah-E-Aaam Vs. Director of Income Tax (Exemptions) reported as 49 SOT 242(Chennai) and the order of the Tribunal in the case of Sri Elumalayan Educational Trust Vs. CIT reported as 5 ITR (Trib) 127(Chennai). The A.R. further submitted that amendment in object clause cannot be a reason for denial of registration under section 12AA as the 5 ITA No.2157/Mds/2012 assessee trust is carrying on charitable activities since the time of its inception in the year 1985. In order to support his submissions, the AR relied on the judement of the Hon'ble Madras High Court in the case of Director of Income Tax (Exemptions) Vs. Vallal M.D.Seshadri Trust reported as 79 CCH 443 Chen HC.
5. On the other hand, Shri Shaji P.Jacob appearing on behalf of the Revenue submitted that at the time of initial registration the assessee has deliberately not filed the objects of the trust, the application for registration under section 12AA was therefore rejected. A perusal of the order of the Director of Income Tax (Exemptions) dated 30.9.2011 shows that page 3 containing the object clause was not filed along with the registration documents in the year 2011. Again in the year 2012 when application for registration was filed before the Director of Income Tax (Exemptions), the assessee trust has amended its objects in violation of the provisions of the Indian Trust Act. Once the trust has been created, its objects cannot be amended without the decree of the Civil Court except where the power to amend object clause has been 6 ITA No.2157/Mds/2012 specifically provided in the trust deed itself. In order to support his contentions, the DR relied on the order of the Tribunal in the case of Ramanujam Spirtual Public Charitable Trust Vs. CIT reported as 138 ITD 81.
6. We have heard the submissions made by both the parties and have perused the orders of the authorities below. The A.R. has filed paper book containing trust deed dated 1.11.1985 and the amended trust deed dated 13.12.2010. The object clause of trust deed dated 1.11.1985 is reproduced herein below:-
"a) To run educational institution for the benefit of the public in particular to take over and run the school under the name and style of Alpha English Medium School, Jeeva Street, Mondiamman Ngar, Red Hills, Madras-600 052.
b) To establish libraries, reading rooms with the stress on the primary objects.
c) To carry out all other charitable purposes including relief of the poor, education, medical relief of the poor, education, medical relief and the advancement of any other objects of General Public Utility not involving the carrying on of any activity for profit or, for any other purposes as 7 ITA No.2157/Mds/2012 defined in the income reliefs provided under the said act."
7. A perusal of the object clause shows that the trust has been formed to run educational institution under the name and style of Alpha English Medium School at Red Hills, Madras. A further perusal of clause 'c' of the objects show that the trust was formed to carry out other charitable purposes including relief of poor, education, medical relief etc. The objects in the original trust deed clearly mention that the trust is created to carry out charitable activities.
8. The trust deed has been subsequently amended in the year 2010 to enlarge the scope of charitable activities being carried out by the Trust. Although in the original trust deed, it has been mentioned that charitable purpose include "medical relief" by virtue of amendment in the object clause the term medical relief has been elaborated.
9. The learned counsel for the assessee has relied on the judgement of the Hon'ble jurisdictional High Court in the case of Vallal M.D.Seshadri Trust (supra) to say that amendment in trust will have no bearing on the registration of trust under section 12AA as long as the objects and activities of the trust 8 ITA No.2157/Mds/2012 are charitable in nature. The Hon'ble High Court in the said judgement has held as under:-
"7. As far as the amendment made to the trust deed is concerned, it is not the concern of the assessing authority, and only the civil Court is empowered to decide the said issue and in any event that cannot be the reason for denying the charitable nature of the institution, if it is otherwise charitable."
10. De hors the controversy with respect to amendment of the trust deed, we are of the considered opinion that the original trust deed specifically mentions about charitable activities being carried out by the assessee trust. The Director of Income Tax (Exemptions) has erred in rejecting the application of the assessee on the ground that the assessee has amended its trust deed, therefore, it is not eligible for registration under section 12AA of the Act.
11. We, therefore, set aside the impugned order and remit the file back to the Director of Income Tax (Exemptions) to 9 ITA No.2157/Mds/2012 decide the application of the assessee for registration afresh by taking into consideration the original trust deed and also the activities being carried out by the assessee from the period of its inception. The appeal of the assessee is allowed for statistical purposes in the aforesaid terms. Order pronounced in the open court on Thursday, the 28th day of February, 2013 at Chennai.
Sd/- Sd/-
(Abraham P.George ) (Vikas Awasthy)
Accountant Member Judicial Member
Chennai,
Dated the February, 2013.
somu
Copy to: (1) Appellant (4) CIT(A)
(2) Respondent (5) D.R.
(3) CIT (6) G.F.