Sri Venkateswara Educational Trust, CHENNAI v. DIT, CHENNAI

ITA 32/CHNY/2011 | misc
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 3221714 RSA 2011
Assessee PAN AAITS7373M
Bench Chennai
Appeal Number ITA 32/CHNY/2011
Duration Of Justice 6 month(s) 19 day(s)
Appellant Sri Venkateswara Educational Trust, CHENNAI
Respondent DIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 05-08-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year misc
Appeal Filed On 10-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B. BEDI J.M. AND SHRI N.S. SAINI AM .. I.T.A. NO. 32/MDS/2011 M/S SRI VENKATESHAWARA EDUCATIONAL TRUST CHELLAMMAL COMPLEX NO. 5 JANAKI NAGAR ARCOT ROAD VALASARAWAKKAM CHENNAI (PAN NO. AAITS 7373 M) VS. THE DIRECTOR OF INCOME-TAX [EXEMPTIONS] CHENNAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. VISHWANATHAN CA DEPARTMENT BY : SHRI SHAJI P. JACOB O R D E R PER N.S. SAINI A.M :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. DIT[E] CHENNAI DATED 29.09.2010. 2. BRIEFLY STATED THE FACTS OF THE CASE AS NARRATE D BY THE DIT[E] IN THE IMPUGNED ORDER ARE AS UNDER: PAGE 2 OF 8 I.T.A. NO. 32/MDS/2011 THE MAIN ACTIVITY OF THE TRUST IS TO IMPART DISTANC E EDUCATION. THE TRUST HAS FILED THE MEMORANDUM OF UNDERSTANDING SIGNED WITH PRIST UNIVERSITY AND MANONMANIAM SUNDARANAR UNIVERSITY. ON SCRUTINY OF THE MOU WITH PRIST UNIVERSITY IT IS SEEN THAT THE APPLICAN T TRUST WILL BE CONDUCTING THE COURSES IN THE PREMISES OF SRIKARUMARIAMMAN EDUCATIONAL TRUST WITH WHICH THE APPLICANT TRUST HAS A TIE UP AND THE COURSES OFFERED WILL BE IN PART-TIME MODE. FURTHER FROM THE MOU BETWEEN THE APPLICANT TRUST AND MANONMANIAM SUNDARANAR UNIVERSITY IT IS CLEAR THAT T HE TRUST HAS SOUGHT RECOGNITION FOR THEIR ARIGNAR ANNA E-CAM PUS AND THE UNIVERSITY HAS PERMITTED THE APPLICANT TRUST TO C ONDUCT COURSES AND PROGRAMMES OF THE DIRECTORATE OF DISTANC E & CONTINUING EDUCATION OF MANONMANIAM SUNDARANAR UNIVER SITY UNDER DISTANCE EDUCATION MODE AND 70% OF THE FEE REAL IZED FROM THE STUDENTS WILL BE RETAINED BY THE TRUST AND T HE BALANCE 30% WILL BE PAID TO THE UNIVERSITY. FURTHER FROM ANOTHER AGREEMENT IT IS CLEAR THAT THE APPLICANT T RUST HAS PAGE 3 OF 8 I.T.A. NO. 32/MDS/2011 BEEN FIXED AS STUDY CENTRE FOR THE STUDENTS OF THE DI RECTORATE OF DISTANCE & CONTINUING EDUCATION MANONMANIAM SUNDARANAR UNIVERSITY AND THE STUDY CENTRE IS PERMITT ED TO SHARE THE TOTAL FEES COLLECTED FROM THE STUDENTS IN THE FOLLOWING TERMS: FOR NON COMPUTER COURSE : 35.65 [INSTITUTION : UNIVERS ITY] COMPUTER COURSE : 57.5:42.5 [INSTITUTION UN IVERSITY] IN FACT DISTANCE EDUCATION PROGRAMMES CAN BE TAKEN BY THE STUDENTS INDEPENDENTLY ALSO. THEREFORE THE APPLICAN T INSTITUTION ONLY SUPPORT AND COACH THOSE INDIVIDUAL S TUDENTS FOR THE COURSE OF THE UNIVERSITY. HENCE RUNNING PART TIME COURSES CONDUCTING COURSES AN D PROGRAMMES OF THE DIRECTORATE OF DISTANCE & CONTINUI NG EDUCATION AND RUNNING STUDY CENTRES ON BEHALF OF A UNI VERSITY AND SHARING THE FEES RECEIVED ARE CLEARLY COMMERCIA L ACTIVITIES AND NEVER CAN BE CONSIDERED AS CHARITABL E IN NATURE AND THE ABOVE ACTIVITIES WILL NOT FALL UNDER THE DEF INITION OF CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE I.T. A CT. HENCE THE APPLICATION FILED IS REJECTED. PAGE 4 OF 8 I.T.A. NO. 32/MDS/2011 AS THE ACTIVITIES ARE NOT IN CONFORMITY WITH THE DE FINITION OF CHARITABLE OBJECTS U/S 2(15) THE APPLICATION FILED F OR REGISTRATION U/S 12AA IS HEREBY REJECTED AND THE REG ISTRATION IS NOT GRANTED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT IT IS NOT IN DISPUTE THAT THE ACTIVIT Y UNDERTAKEN BY THE ASSESSEE TRUST TO ACT AS A STUDY CENTRE OR TO FACIL ITATE DISTANT STUDY ARE EDUCATIONAL IN NATURE OR INCIDENTAL TO EDUCATIO N. THE OBJECTION OF THE LD. CIT IS THAT FOR THIS ACTIVITY THE ASSES SEE IS CHARGING FEE AND SHARING THE SAME WITH THE UNIVERSITY WITH WHICH IT ENTERED INTO MEMORANDUM OF UNDERSTANDING. WE FIND THAT THE HON' BLE ALLAHABAD HIGH COURT IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CCIT [2009] 315 ITR 382 [ALL] HAS HELD AS UNDER : IN THE INSTANT CASE THE ASSESSEE IS PREPARING STUDE NTS BY PROVIDING COACHING/GUIDELINES TO GET ADMISSIONS IN PROFESSIONAL INSTITUTIONS TO PURSUE THEIR STUDIES. THE SENSE IN WHICH THE WORD 'EDUCATION' HAS BEEN USED IN S. 2(15) OF THE ACT IS THE SYSTEMATIC INSTRUCTION SCHOOLING OR TRAI NING GIVEN PAGE 5 OF 8 I.T.A. NO. 32/MDS/2011 TO THE YOUNG IN PREPARATION FOR THE WORK OF LIFE. SI MILARLY EXTENDING FINANCIAL ASSISTANCE/SCHOLARSHIP ETC. T O STUDENTS FOR THEIR EDUCATIONAL PURPOSE WOULD SQUARELY AND FAIRLY FALL WITHIN THE CONNOTATION OF 'EDUCATION' AS PER THE RA TIO LAID DOWN IN THE CASE OF CIT VS. SARASWATH POOR STUDENTS FUND (1985) 46 CTR (KAR) 107 : (1984) 150 ITR 142 (KAR). THUS THE ASSESSEE IS ENGAGED IN 'EDUCATIONAL ACTIVITIES' WHIC H FALLS UNDER CHARITABLE PURPOSE. 4. THE HON'BLE DELHI HIGH COURT IN THE CASE OF ICAI ACCOUNTING RESEARCH FOUNDATION VS. DIRECTOR GENERAL OF INCOME- TAX [EXEMPTIONS] [2009] 183 TAXMAN 462 [DEL] HAS HELD AS UNDER: SERVICES PROVIDED TO VARIOUS GOVERNMENT BODIES WERE THE RESEARCH PROJECTS WHICH WERE GIVEN TO THE PETITIONE R FOUNDATION HAVING REGARD TO ITS EXPERTISE IN THIS FI ELD. THEREFORE THESE ACTIVITIES PER SE WOULD NOT BRING O UT THE PETITIONER FOUNDATION OUT OF THE AMBIT OF S. 2(15). IT CAN BE SAID THAT THE ACTIVITIES AMOUNTED TO 'ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY' WHICH ALSO APPEARS IN THE DEFINITION OF CHARITABLE PURPOSE IN S. 2(15). THE ON LY ASPECT IN THIS BACKDROP WHICH NEEDS TO BE CONSIDERED IS A S TO WHETHER CHARGING OF AMOUNT FROM THE MCD KMC ETC. FO R UNDERTAKING THESE RESEARCH PROJECTS WOULD MAKE THE AC TIVITY COMMERCIAL. IT IS TO BE NOTED THAT THE PROJECTS UN DERTAKEN PAGE 6 OF 8 I.T.A. NO. 32/MDS/2011 ON BEHALF OF THESE LOCAL BODIES IS NOT A REGULAR ACT IVITY OF THE PETITIONER FOUNDATION. PRIMARY ACTIVITY REMAINS THE SAME NAMELY RESEARCH IN ACCOUNTING RELATED FIELDS. EVEN THESE PROJECTS WHICH WERE TAKEN UP ON BEHALF OF THOSE LOC AL BODIES FIT IN THE DESCRIPTION OF RESEARCH PROJECTS WHIC H CAN BE TERMED AS ANCILLARY ACTIVITY ONLY. THE CIRCUMSTANCES UNDER WHICH THE PROJECTS WERE UNDERTAKEN MAKE IT CLEAR THA T IT WAS AT THE INSTANCE OF THE GOVERNMENT OF INDIA OR THE S TATE GOVERNMENT FOR IMPROVING THE ACCOUNTING AND BUDGETARY SYSTEMS IN THESE LOCAL BODIES. THE EXPERTISE OF THE PETITIONER FOUNDATION IN CARRYING OUT RESEARCH IN THIS FIELD WAS SOUGHT TO BE UTILIZED. THEREFORE IT CANNOT CONSTITUTE BUSINESS/COMMERCIAL ACTIVITY. MERELY BECAUSE SOME REMUNERATION WAS TAKEN BY THE PETITIONER FOUNDATION F OR UNDERTAKING THESE PROJECTS WOULD NOT ALTER THE CHARAC TER OF THESE PROJECTS WHICH REMAINED RESEARCH AND CONSULTA NCY WORK. THE IMPORTANT TEST IS THE APPLICATION OF THE AMOUNTS RECEIVED FROM THOSE PROJECTS. IT IS NOWHERE DISPUTED THAT THE RECEIPTS ARE UTILIZED BY THE PETITIONER FOUNDATION FO R ADVANCEMENT OF ITS OBJECTIVES. THE MEMORANDUM OF ASSOCIATION SPECIFICALLY STIPULATES THAT THESE ARE N OT TO BE DISTRIBUTED TO THE MEMBERS AS DIVIDENDS OR PROFITS. IT IS CLEAR THAT MOST OF THE AMOUNT RECEIVED QUA THESE PROJECTS W AS SPENT ON THE PROJECT AND SURPLUS IF ANY IS USED FOR ADVANCEMENT OF THE OBJECTIVES FOR WHICH THE PETITIO NER FOUNDATION IS ESTABLISHED.ADDL. CIT VS. HAMDARD DAW AKHANA PAGE 7 OF 8 I.T.A. NO. 32/MDS/2011 (WAKF) (1985) 49 CTR (DEL) 107 : (1986) 157 ITR 639 (DEL) RELIED ON. 5. WE FIND THAT IN THE INSTANT CASE IT IS NOT THE CASE OF THE DEPARTMENT THAT ASSESSEES ACTIVITY OF SHARING OF F EE OR COLLECTION OF FEE RESULTS IN PERSONAL BENEFIT TO THE TRUSTEE OR S ETTLER OR ANY OTHER PROHIBITED PERSON. IN VIEW OF THE ABOVE WE ARE NO T ABLE TO AGREE WITH THE VIEW OF THE LD. CIT THAT THE ACTIVITY OF T HE ASSESSEE IS NON CHARITABLE ACTIVITY WITHIN THE MEANING OF SECTION 2 (15) OF THE ACT. WE FIND THAT BOTH THE PARTIES BEFORE US HAVE NOT FU RNISHED BEFORE US COPY OF TRUST DEED AND ACTIVITY REPORT OF THE TRUST . WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT AND RESTORE THE ISSUE BACK TO HIS FILE FOR ADJUDICATING THE ISSUE AFRESH IN LIGHT OF THE DISCUSSIONS MADE ABOVE AND AFTER TAKING INTO CONSIDERATION THE DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF ADDITIONAL CIT VS. SUR AT ART SILK CLOTH MANUFACTURER ASSOCIATION [1980] 121 ITR 1 [SC]. TH IS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. PAGE 8 OF 8 I.T.A. NO. 32/MDS/2011 6. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 05-08-2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 5 TH AUGUST 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE