2011 (10) TMI 108 - HC - Income Tax

Registration under Section 80G(5)(vi) of the Act - Respondent is a society which is running five educational institutions - Collection of fee for imparting education - charitable purposes - Held that - as in the case Sonepat Hindu Educational & Charitable Society v. CIT 2005 (5) TMI 52 - PUNJAB AND HARYANA High Court it was held that where the petitioner society has been regularly allowed exemption under Section 80G and especially where it is registered under Section 12A for charitable purposes then the position has to be sustained and not changed in subsequent years without any sufficient proof that the institution is not carrying its activities in furtherance of its object - mere making of profit would not be ground to deny registration once the objects of the society are for charitable purpose - conditions laid down Rule 11AA of the Income Tax Rules 1962 have also been complied with and held that the Trust is eligible for registration under Section 80G(5)(vi) - Decided in favor of assessee.

Issues:
1. Condonation of delay in refiling and filing the appeal.
2. Appeal against the order of the Income Tax Appellate Tribunal regarding Section 80G(5)(vi) of the Income Tax Act, 1961.
3. Interpretation of provisions under Section 80G(5) and Rule 11AA of the Income Tax Rules, 1962.
4. Substantial questions of law framed by the Revenue.
5. Discretion of the Commissioner in granting approval under Section 80G(5)(vi).
6. Precedents regarding registration of charitable institutions despite making a profit.

Analysis:

1. The judgment begins by condoning the delay in refiling and filing the appeal for reasons mentioned in the applications, allowing the Civil Misc. Applications.

2. The appeal challenges the order of the Income Tax Appellate Tribunal, which set aside the Commissioner of Income-tax's rejection of the respondent's application under Section 80G(5)(vi) of the Income Tax Act, 1961. The Tribunal found that the society was established for spreading education without discrimination and that the surplus arising from charitable activities does not disqualify the institution from being considered charitable.

3. The Tribunal's decision was based on the provisions of Section 80G(5) read with Rule 11AA of the Income Tax Rules, 1962. It emphasized that charging fees for education does not negate the charitable nature of the institution, especially when the income derived is not included in the total income as per Sections 11 and 12 of the Act. The judgment also highlights that education is inherently a charitable purpose under Section 2(15) of the Act.

4. The Revenue raised substantial questions of law, questioning the Tribunal's decision to direct the Commissioner to grant approval under Section 80G(5)(vi). The questions primarily revolved around the genuineness of the institution's activities, inclusion of income in total income, and compliance with the conditions for approval.

5. The discretion of the Commissioner in granting approval under Section 80G(5)(vi) was discussed, emphasizing the need for the Commissioner to be satisfied that the conditions specified in the relevant clauses are fulfilled before granting approval.

6. The judgment referenced precedents such as Pinegrove International Charitable Trust v. Union of India to support the registration of charitable institutions despite making a profit. It highlighted that the mere existence of surplus should not be a ground for denying registration under Section 80G(5)(vi) of the Act.

In conclusion, the Court upheld the Tribunal's decision, dismissing the appeal and affirming that the respondent trust is eligible for registration under Section 80G(5)(vi) of the Act.

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