2014 (3) TMI 101 - AT - Income Tax

Allowability of exemption u/s 11 and 12 of the Act Scope of the term Charitable purposes u/s 2(15) of the Act Whether the research activity conducted by the society has been found to be in the nature of education which falls u/s 2 (15) of the IT Act - Held that - The main aims and objects of the assessee Society, as per its Memorandum of Association includes medical research and informal education and communication activities on health and nutritional issues for urban slums and rural communities - the activities in question is undisputedly the activity of research, i.e., techno-medical research support for research and compilation of data on account of ROTA VIRUS project, to SAS thus, the activity carried on by the assessee cannot be said to be beyond its main aims and objects - It also remains irrefuted that the assessee Society continues to enjoy registration u/s 12A of the Act, as a Charitable Trust, confirming that the charitable purpose for which the assessee Society was established remains unchanged - The activity of the assessee during the year is in pursuance of such purpose. The decision in Harnam Singh Harbans Kaur vs. Director of Income-tax (Exemption), Delhi 2011 (12) TMI 232-ITAT DELHI followed - charitable institutions registered u/s 12A of the IT Act and doing the activity in the nature of charity, cannot be held to be engaged in the activity of advancement of any other object of general public utility - the research report of the assessee, which was published in medical journals, was in the nature of doing education activity - The department has not been able to refute this finding, as also the finding that the assessee is mainly engaged in the field of medical research and during the year under consideration, it has done research work in collaboration with various international organizations, like WHO, UNICEF and Research Council of Norway - this aspect was duly verified by the DIT at the time of granting registration to the assessee u/s 12AA of the Act thus, there is no reason to interfere in the findings of the CIT(A) Decided against Revenue.

Summary

Issues:
1. Whether the activities of the assessee fall within the purview of charitable purpose under Section 2(15) of the IT Act, 1961?
2. Whether the research activity conducted by the assessee Society is in the nature of education or advancement of any other object of general public utility?

Analysis:

Issue 1:
The Department filed an appeal against the order allowing exemption u/s 11 & 12 of the IT Act, 1961, for Assessment Year 2009-10. The Memorandum of Association of the Society outlined aims related to research, training, education, and health activities. The Assessing Officer raised concerns regarding contractual income received by the assessee from another society, questioning the charitable nature of the activities. The Assessing Officer concluded that the activities did not fall under relief to the poor, medical relief, or education, and therefore, could be categorized as general public utility. Consequently, the Assessing Officer disallowed the benefit of Sections 11/12 of the Act for the year under consideration. However, the Ld. CIT (A) held that the research activity conducted by the assessee Society was in the nature of education, falling within the charitable purpose as defined in Section 2(15) of the IT Act.

Issue 2:
The dispute revolved around whether the research activity conducted by the assessee Society was considered education or advancement of any other object of general public utility. The Ld. CIT (A) held that the activity was educational in nature, aligning with the charitable purpose definition. The department contended that the activity did not fall under education but under general public utility. The Ld. CIT (A) relied on the decision in 'Harnam Singh Harbans Kaur vs. Director of Income-tax (Exemption), Delhi' to support the classification of the activity as education. The activities of the assessee Society, as per its Memorandum of Association, included medical research and education on health and nutritional issues. The research work conducted by the assessee, particularly the 'ROTA VIRUS' project, was deemed charitable and aligned with the organization's main aims and objects. The Ld. CIT (A) considered various factors, including the publication of research reports in medical journals and collaborations with international organizations, to support the educational nature of the activity.

In conclusion, the Tribunal confirmed the order of the Ld. CIT (A), rejecting the department's appeal and upholding the classification of the assessee's research activity as falling within the realm of education and charitable purpose as defined in the IT Act.