2019 (10) TMI 77 - AT - Income Tax

Registration u/s 12A - proof of charitable activity u/s 2(15) - CIT held that not imparting any education which has common element of any schooling is not entitled for registration u/s 12A of the Act, even there is no profit motive - HELD THAT - Though the objectives of the Trust are charitable and the Trust is established in 2009-10 with the objects of running and developing Merchant Navy Educational Institution for the purpose of educational service to the public in general and more particularly to all the poor minority communities, SC, STs who are living in village, town, cities, who suffer from social and economic backwardness and thereby to pave way for their social and economic development. The assessee did not place any evidence to show that the assessee has got admitted the students as per the objects mentioned in the Trust Deed. AR did not place any evidence to establish the recognition of University Grants Commission or by the Govt. of India, or the state Boards for the courses offered by the assessee. The AMC is Australian Maritime College, Australia, which is not affiliated to any Indian Universities and it is stated to be affiliated to the University of Tasmania. Similarly, New Zealand Maritime school is also awarding the certificates. Sea World Maritime Academy is approved institution of AMC and New Zealand Maritime school as per the letter but not an affiliated institution of the universities in India. Therefore, it is observed from the facts of the case that the assessee is a coaching institution which is not imparting any formal education resulting in degrees awarded by the recognized schools/universities of India. We hold that the case of the assessee Trust is squarely covered by the decision of BIHAR INSTITUTE OF MINING AND MINE SURVEYING VERSUS COMMISSIONER OF INCOME-TAX 1993 (12) TMI 50 - PATNA HIGH COURT and accordingly not entitled for registration u/s 12AA of the Act. - Decided against assessee

Summary

Issues: Refusal of registration u/s 12AA of the Income Tax Act, 1961

Detailed Analysis:

Issue 1: Refusal of registration u/s 12AA
The appeal was filed against the order of the Commissioner of Income Tax (CIT) refusing registration u/s 12AA of the Income Tax Act. The CIT observed that the Trust, running a maritime engineering academy, did not impart formal education resulting in recognized degrees or certificates. The CIT relied on legal precedents to reject registration, noting the commercial basis of the academy and lack of evidence of public benefit. The Trust's surplus and fee structure were also scrutinized.

Issue 2: Arguments and Counter-arguments
During the appeal hearing, the Trust argued its charitable nature, emphasizing educational services without profit motive. The Trust's curriculum aligned with Australian and New Zealand maritime institutions, aiming at pre-sea and advanced diploma studies. In contrast, the Revenue argued commercial operations, lack of formal education recognition, and coaching activities not affiliated with Indian institutions, challenging the Trust's charitable status.

Issue 3: Tribunal's Decision
The Tribunal analyzed the Trust's objectives, operations, and lack of formal education recognition. It noted the absence of evidence regarding student admissions and formal recognition by Indian authorities. The Tribunal highlighted complaints against the academy and the non-affiliation with Indian universities. Relying on legal precedents and the nature of coaching activities, the Tribunal upheld the CIT's decision, dismissing the Trust's appeal for registration u/s 12AA.

Conclusion
The Tribunal upheld the CIT's decision to refuse registration u/s 12AA for the Trust, citing the lack of formal education recognition, commercial operations, and coaching activities not aligned with Indian educational institutions. The Trust's appeal was dismissed, affirming the original order.