2014 (5) TMI 736 - AT - Income Tax

Rejection of application for registration u/s 12A(a) of the Act - Objects of the Trust are mixed charitable and commercial Held that - The main and generic objects of the Trust are education , being a charitable activity for the general public utility - Income and Expenditure statement filed does not indicate the spending of the same for the objects narrated by the DIT (E) - it is a premature to deny the registration of the Trust u/s 12AA of the Act Relying upon Sole Trustee, Lok Shikshana Trust 1975 (8) TMI 1 - SUPREME Court - Education is a broad and generic term and the same should be understood in the context of the educational objects of the Trust also in Samria Charitable Trust Versus DIT (E), Mumbai 2013 (6) TMI 330 - ITAT MUMBAI it has been held that Education has different shades and all kinds of education are not covered by the provisions of section 2(15) of the Act - The education for the purpose of earning profits, imparting knowledge, which is required for getting employment are not covered by the provisions - the assessee is yet to commence its activities - there is neither institution nor any coaching classes conducted by the assessee as stated by the Managing Trustee at Bar - the matter should be re-visited by the DIT (E) for examining the basic facts thus, the matter is remitted back to the DIT(E) Decided in favour of Assessee.

Summary

Issues:
1. Rejection of registration under section 12AA of the Income Tax Act based on mixed charitable and commercial objects and lack of legal commitment on trustees.
2. Discrepancy in the interpretation of the Trust's objects between the DIT (E) and the appellant.
3. Premature denial of registration due to lack of activity by the Trust.
4. Application of legal precedents and provisions related to charitable activities and education.

Analysis:
1. The appeal was filed against the rejection of registration under section 12AA of the Income Tax Act by the DIT (E) based on mixed charitable and commercial objects of the Trust and the perceived lack of legal commitment on trustees regarding the application of funds. The DIT (E) found the Trust's objects to be essentially commercial and not charitable, citing a Supreme Court judgment and minimal charitable activities carried out by the Trust during the year.

2. The appellant contested the DIT (E)'s decision, arguing that the Trust was registered under the Bombay Public Trusts Act with public charitable objects, including education, medical relief, and rural development. The appellant highlighted the Trust Deed's provisions and objected to the DIT (E)'s selective interpretation of the Trust's objects, emphasizing the charitable nature of the activities undertaken by the Trust.

3. The appellant further argued that the denial of registration was premature as the Trust had not fully engaged in its charitable activities, spending only a nominal amount on educational and medical relief. The appellant relied on various legal decisions to support the claim for registration and emphasized the importance of allowing the Trust to establish its activities before making a conclusive judgment.

4. The appellate tribunal, after hearing both parties and examining the Trust's objects and activities, concluded that the denial of registration was premature and directed the DIT (E) to re-examine the case considering the broader interpretation of charitable activities and the Trust's objectives. The tribunal emphasized the importance of understanding the term "education" in the context of charitable purposes and directed a fresh examination of the Trust's eligibility for registration under section 12AA.

In conclusion, the appellate tribunal allowed the appeal for statistical purposes, instructing a re-evaluation of the Trust's registration application in light of the discussion and legal provisions presented during the proceedings.