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2012 (11) TMI 511 - AT - Income TaxRegistration u/s 12AA - rejection of application as the objects of the assessee - trust were for a specific community - Held that - The fee concessions extended to the non-Anglo Indian and non-Christian students comprised were of Hindus and Muslim students for the academic years 2007-08 2008-09 and 2009-10. Further in the academic year 2009-2010 fifteen students of disabled category irrespective of their caste creed and religion have been extended fee concessions. None of the students were belonged to Anglo Indian community. Moreover the benefit derived by the Anglo Indian community did not exceed even 5% of the total expenditure incurred by the assessee trust. The above statistics furnished by the assessee has not been dispelled/controverted by the revenue thus it unambiguously testify that the assessee trust s objects were NOT for the benefit of a particular community as alleged by the DIT (E) and as a result of which he had invoked the provisions of s. 13(1)(b). Also while analyzing the list containing the fee concessions extended to the disabled students is that they were belonged to either Hindu or Muslim community but none were from the Christian or Anglo Indian community. This clearly exhibits the secular character of the assessee-trust that the educational institution has been serving the masses irrespective of their caste creed and religion - in favour of assessee.
Issues Involved:
1. Rejection of registration under Section 12AA of the Income Tax Act. 2. Examination of the charitable nature and genuineness of the assessee's activities. 3. Applicability of Section 13(1)(b) regarding benefits to a particular community. Detailed Analysis: 1. Rejection of Registration under Section 12AA: The primary issue revolves around the Director of Income-tax (Exemption) [DIT(E)] rejecting the assessee's application for registration under Section 12AA of the Income Tax Act. The DIT(E) observed that the Memorandum of Association and Articles of Association of the assessee contained objects that seemed to benefit a particular community, specifically citing: - Conducting activities on Christian principles. - Ameliorating the educational backwardness of Anglo Indians. Based on these observations, the DIT(E) concluded that the assessee's objects were confined to a specific community, thus violating Section 13(1)(b) of the Act. 2. Examination of Charitable Nature and Genuineness of Activities: The assessee argued that its primary objective was educational, and it had been imparting education to all students regardless of their community. The assessee emphasized: - Its activities were in line with object 4(c) of its Memorandum, focusing on maintaining high standards of education and discipline. - The institution was open to all students at state-fixed fees, and 100% of its income was applied for educational purposes. - The DIT(E) should have considered Section 12A as an enabling provision, focusing on whether the objects were charitable and the activities genuine. The assessee relied on case laws such as DIT (E) v. Garden City Educational Trust and Sanjeevamma Hanumanthe Gowda Charitable Trust v. DIT (E) to support its arguments. 3. Applicability of Section 13(1)(b): The DIT(E) invoked Section 13(1)(b), which denies exemption if the trust benefits a particular community. The assessee countered this by presenting data showing that: - The percentage of Anglo Indian students receiving fee concessions was minimal (2.07% to 2.34% over three academic years). - Fee concessions were also extended to non-Anglo Indian and non-Christian students, including Hindus and Muslims, and differently-abled students. - The trust's activities were secular, serving students irrespective of caste, creed, or religion. The assessee also amended its bye-laws to explicitly cater to all sections of the public without distinction. Conclusion: The tribunal concluded that the DIT(E) was not justified in rejecting the registration under Section 12AA based on the alleged benefit to a specific community. The facts demonstrated that the assessee's trust served the general public and adhered to its charitable purpose of imparting education. The tribunal ordered the grant of registration under Section 12AA, emphasizing that the DIT(E) should focus on the genuineness of the activities and the charitable nature of the objects, rather than speculating on future activities. Final Judgment: The appeal by the assessee was allowed, and the order of the DIT(E) rejecting the registration under Section 12AA was set aside. The tribunal reiterated that the assessee's trust was entitled to registration, as it genuinely served a charitable purpose by imparting education to all sections of society.
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