2016 (4) TMI 1357 - HC - Income Tax

Exemption u/s 11 denied - assessee trust was not carrying on educational activities falling within the definition of education as contemplated under Section 2(15) - HELD THAT - The issue whether or not the educational activities carried out by the Trust in terms of objects did not satisfy Section 2(15) of the Act was not examined by the Tribunal. This in view of the decision of ACIT Vs. Surat City Gymkhana 2008 (4) TMI 16 - SUPREME COURT to the effect that once registration is granted a trust under Section 12A of the Act then it is not open to the Assessing Officer while examining compliance with Section 11 of the Act to revisit objects of the assessee and to hold contrary to the registration granted. Thus the nature of activity in terms of Section 2(15) of the Act was not verified nor considered by the Tribunal. In the above view, question (a) as posed does not arise out of the order of the Tribunal and thus, it is not entertained. Whether Tribunal was justified in holding that the AO cannot examine the objects to the Society as long as there is valid registration u/s 12A granted to the assessee? - The impugned order of the Tribunal has followed the decision of the Supreme Court in Surat City Gymkhana (supra) wherein it has been held that once the trust has received registration under Section 12A of the Act and that registration is subsisting then it is not open to the Assessing Officer to re-examine the objects of the trust to take a view contrary to the view taken while granting registration under Section 12A of the Act. The Tribunal observed that the only examination to be carried out by the Assessing Officer is whether or not the provisions of Section 11 have been complied with by the assessee for purpose of extending benefit of the exemption. As question (b) stands concluded by the judgment of the Apex Court in Surat City Gymkhana (supra). Therefore, question (b) as posed does not give any rise to any substantial question of law.

Summary

Issues:
1. Challenge to order of the Income Tax Appellate Tribunal under Section 260A of the Income Tax Act for Assessment Year 2008-09.
2. Questions of law framed by the revenue regarding exemption under Section 11 and examination of trust objects under Section 12A.

Analysis:

1. The appeal challenges the Income Tax Appellate Tribunal's order for the Assessment Year 2008-09. The revenue raised questions of law concerning the exemption under Section 11 of the Income Tax Act and the examination of trust objects under Section 12A.

2. Regarding the first question of law (a), the High Court noted that the Tribunal did not examine whether the educational activities conducted by the trust satisfied the definition of education under Section 2(15) of the Act. The Court referred to the decision in ACIT Vs. Surat City Gymkhana, which stated that once a trust is granted registration under Section 12A, the Assessing Officer cannot revisit the trust's objects while examining compliance with Section 11. As a result, the nature of the trust's activities under Section 2(15) was not assessed by the Tribunal, leading to the conclusion that question (a) did not arise from the Tribunal's order.

3. Moving on to the second question of law (b), the High Court observed that the Tribunal followed the Supreme Court's decision in Surat City Gymkhana. The Court reiterated that once a trust obtains registration under Section 12A and it remains valid, the Assessing Officer cannot reassess the trust's objects contrary to the initial registration. The Assessing Officer's role is limited to verifying compliance with Section 11 for granting exemptions. Consequently, question (b) was deemed settled by the Supreme Court's judgment in Surat City Gymkhana, and no substantial question of law arose from it.

4. Based on the above analysis, the High Court dismissed the appeal, stating that neither question (a) nor question (b) gave rise to any substantial legal issues. The Court made no order as to costs in this matter.