February 2012
Baba Amarnath Educational Society v. CIT ACE Educational & Charitable Society v. CIT ITAT ‘B’ Bench, Chandigarh Before Sushma Chowla (JM) and Mehar Singh (AM) ITA Nos. 825 & 826/Chd./2011 Decided on: 29-12-2011 Counsel for assessees/revenue : P. N. Arora/ Jaishree Sharma
By Jagdish D. Shah, Jagdish T. Punjabi
Chartered Accountants
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Section 12A read with section 2(15) — Registration of charitable institution — Assessees engaged in educational activities — One of the objects permitted assessee to export computer and other similar activities — The said object was never acted upon by the assessee — Whether the CIT justified in rejecting registration application of the trust — Held, No.
Facts:
In the present two appeals, since the facts of the cases as well as the grounds of appeal were identical, the Tribunal decided to dispose of the same by a consolidated order.
The assessee-trusts were established primarily to promote education. The assessees’ application for registration u/s.12A was rejected by the CIT on the ground that their one of the object clauses provided for promotion of export of computers hardware/ software, telecommunication, internet, e-commerce and allied services. For the purpose the CIT relied on the decisions of the Supreme Court in the cases of Yogi Raj Charities Trust v. CIT, (103 ITR 777) and of East India Industries (Madras) Pvt. Ltd. (65 ITR 611).
Held:
From the detailed list of activities carried out by the two assessees, the Tribunal noted that they have carried out activities pertaining to achieving their charitable objects viz., imparting education. The object clause, which was objected to by the CIT and the ground on which the registration was rejected was never acted upon and it remained on paper. According to it, single inoperative object cannot eclipse the whole range of other charitable objects and actual conduct of charitable activities. According to it, it was not the letter or language of one single object clause which is conclusive, but it was the activity of the appellants, which was more relevant. Further, it observed that the first proviso to section 2(15) was not applicable to the first three objects enumerated in the definition. The said proviso only restricts the scope of the expression ‘ advancement of any other object of general public utility’. The proposition was also supported by the Board Circular No. 11/2008, dated 19-12-2008 which inter alia states “where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute charitable purpose, even if it incidentally involves the carrying on of commercial activities”.
