2010 (9) TMI 570 - AT - Income Tax

Registration u/s 12A - the advancement of any other object of general public utility - Breach of condition of the trust deed would not entitle the institution from getting the benefit which the institution had been granted earlier being charitable - Held that - it is not a necessary element in a charitable purpose that it should provide something for nothing or for less than it costs or for less than the ordinary price. But the existence of the trust for a charitable purpose is necessary. Though the Assessee has filed a list of English cases as to the meaning of Education , the same were neither discussed nor referred to. - the case of the Appellant does not satisfy the requirement of being considered as existing for education. Regarding alternate plea - the advancement of any other object of general public utility - Held that - such a plea was not taken before the Respondent - matter remanded back for fresh decision.

Issues Involved:
1. Refusal of registration under Section 12A of the Income Tax Act, 1961.
2. Determination of whether the appellant's activities qualify as "charitable purpose" under Section 2(15) of the Act.
3. Consideration of whether the appellant's activities fall under "education" or "the advancement of any other object of general public utility."

Issue-wise Detailed Analysis:

1. Refusal of Registration under Section 12A:
The appellant, Jito Administrative Training Foundation, filed an appeal against the order dated 25/11/2009 by the Director of Income-Tax (Exemption), Mumbai, which refused to grant registration under Section 12A of the Income Tax Act, 1961. The appellant trust was constituted under a deed of trust dated 2/6/2008 and applied for registration to claim exemption under Section 11 of the Act for income from property held for charitable or religious purposes.

2. Determination of Charitable Purpose under Section 2(15):
The respondent questioned whether the appellant's objective could be considered charitable within the meaning of Section 2(15) of the Act, which defines "charitable purpose" to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. The respondent referred to the case of Bihar Institute of Mining and Mine Surveying Vs. CIT, where it was held that coaching students for specific examinations for a fee does not qualify as a charitable purpose under Section 2(15). The appellant argued that their activities were primarily educational and should be considered charitable, citing decisions from the Gujarat High Court and the Supreme Court.

3. Consideration of Educational Activities:
The respondent held that the appellant's activities were similar to those in the Bihar Institute of Mining and Mine Surveying case and did not qualify as charitable. The appellant's claim that they provided facilities free of cost was rejected due to the absence of criteria for selecting poor and needy students in their guidelines. The respondent also observed that the appellant was merely refreshing existing knowledge rather than imparting new education, referencing the Supreme Court's definition of "education" in the Lok Shikshana Trust case.

4. Advancement of Any Other Object of General Public Utility:
The appellant's alternative claim was that their activities should be considered as existing for "the advancement of any other object of general public utility." The learned counsel for the appellant argued that it is not necessary for a charitable purpose to provide something for free or at a reduced cost. The scope of enquiry for granting registration under Section 12A should be limited to determining if the trust's objects are charitable and if its activities are genuine. The appellant cited several decisions to support their claim, but the respondent maintained that the appellant's activities did not qualify as charitable.

5. Tribunal's Decision:
The Tribunal considered the rival submissions and found that the appellant's activities did not qualify as "education" under Section 2(15) of the Act, in line with the Patna High Court's decision in the Bihar Institute of Mining and Mine Surveying case. However, the Tribunal agreed with the appellant's contention that a charitable purpose does not necessarily require providing something for free or at a reduced cost. The Tribunal noted that the appellant's plea regarding "the advancement of any other object of general public utility" was not raised before the respondent. Therefore, the Tribunal set aside the respondent's order and remanded the issue back to the respondent to reconsider the registration on the grounds of "the advancement of any other object of general public utility," providing the appellant an opportunity to be heard.

Conclusion:
The appeal was treated as allowed for statistical purposes, with the issue remanded to the respondent for reconsideration of the appellant's registration under Section 12A on the grounds of existing for "the advancement of any other object of general public utility."

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