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Issues Involved:
1. Whether the rejection of the application for renewal of exemption u/s 80G of the Income Tax Act, 1961, was beyond the jurisdiction due to the delay in passing the order. 2. Whether the activities of the Trust are charitable within the meaning of Section 2(15) of the Income Tax Act, 1961, and whether the Trust satisfies the conditions laid out u/s 80G(5) of the Income Tax Act, 1961. Summary: Issue 1: Jurisdiction and Delay in Passing the Order - Ground Not Pressed: The appellant did not press the ground regarding the delay in passing the order for renewal of exemption u/s 80G beyond the stipulated six months, and thus, it was rejected as not pressed. Issue 2: Charitable Nature of Activities and Compliance with Section 80G(5) - Application and Show Cause Notice: The assessee filed an application on 5.11.09 seeking renewal of exemption u/s 80G. The DIT(E) issued a show cause notice asking for various documents and explanations regarding payments made to Career Launcher (India) Ltd. and Career Launcher Education Infrastructure & Services Ltd., among other details. - DIT(E)'s Observations: The DIT(E) rejected the application, noting that the Trust's activities were commercial and profit-oriented, contrary to its charitable aims. The DIT(E) highlighted that the Trust was running an unrecognized business school, charging high fees, and that the main trustees were the main beneficiaries of the Trust's income. - Assessee's Contentions: The assessee argued that it is a Trust established for educational purposes, registered u/s 12A, and previously granted approval u/s 80G. It contended that the activities of the Trust are charitable, focusing on education and skill development, and that the payments made were for services essential for running the educational institution. - Tribunal's Findings: - Aims and Objects of the Trust: The Tribunal noted that the Trust's main object is to provide education and related services, which is a charitable purpose u/s 2(15) of the Act. The Trust deed explicitly prohibits the distribution of income among its members and mandates that surplus funds be transferred to another similar trust upon dissolution. - Registration u/s 12A: The Tribunal emphasized that once registration u/s 12A is granted, the charitable nature of the Trust's activities cannot be questioned unless the registration is withdrawn. The DIT(E) did not initiate any proceedings to withdraw the registration. - Proviso to Section 2(15): The Tribunal held that the proviso to section 2(15) is not applicable to the Trust, as its main object is education, not the advancement of any other object of public utility. The fees charged by the Trust do not convert its activities into commercial ones. - Payments to Specified Persons: The Tribunal found that the payments made to Career Launcher (India) Ltd. and Career Launcher Education Infrastructure & Services Ltd. were for services rendered and were at arm's length. The mere fact that payments were made to specified persons does not violate section 13(3) of the Act, as long as they are commensurate with the services provided. - Conclusion: The Tribunal concluded that the DIT(E) erred in rejecting the application for renewal of exemption u/s 80G. The order was deemed illegal, arbitrary, and unsustainable. The Tribunal directed the DIT(E) to grant the approval u/s 80G to the assessee. Order Pronounced: The appeal of the assessee was partly allowed, and the order was pronounced in the open court on 10.02.2012.
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