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TMI Blog2014 (5) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... – Relying upon CIT v. Sarvodaya Ilakkiya Pannai [2012 (2) TMI 160 - Madras High Court] and Circular No.11 of 2008 dated 19th December, 2008 - The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of sec 2(15), i.e. relief of the poor, education or medical relief - where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities - the amended provisions of Section 2(15) of the Act clearly provide that charity includes education and the applicability of the proviso to the section excludes education – thus, the order of the CIT is set aside and the registration granted earlier by the Revenue is restored – Decided in favour of Assessee. - I.T.A.No.1591/Mds./2013 - - - Dated:- 14-3-2014 - SHRI A.MOHAN ALANKAMONY AND SHRI CHALLA NAGENDRA PRASAD, JJ. G. Baskar for the Appellant Anirudh Rai for the Respondent ORDER A. Mohan Alankamony, Accountant Member - This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax-II, Madurai, dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y income sufficient to donate the institution. Under the above circumstances, we humbly request you not to cancel the registration U/s. 12AA and not to treat the donation as our own money and brought to tax. 3.2 Thereafter, Ld. CIT on examining the activity of the society and the provisions of section 2(15) of the Act came to the following conclusions:- 4. Perusal of the Income and Expenditure Accounts for various years reveals that the only activity carried on by the society is profitably running educational institutions. No other activities are carried on by the society. The surplus is not utilized for any charitable purpose. The educational institutions are run on commercial lines to make profit. 4.1 According to Sec.2(15) of the Income Tax Act,1961,'charitale purpose' includes i. Relief to the poor ii. Education iii. Medical relief (iv) Preservation of environment (including watersheds, forests and wildlife) (v) Preservation of monuments or places or objects of artistic or historic interest and (vi) The advancement of any other object of general public utility. 4.2 The word 'charity' is not defined in the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poor, education, medical relief and the advancement of any other object of general public utility . At the end of the definition not involving the carrying on of any activity for profit was added later in the Income Tax Act 1961 and were omitted by the Finance Act 1983 w.e.f. 01.04.1984 4.6 The definition in the Income Tax Act 1961 follows the four main divisions of charity enunciated by Lord Macnaghten in his classical speech in Commissioners for special purposes of Income Tax v. Pemsel [1891] 3 TC 53 (HL). In the pre-independence era, the education was provided by the Government and Philanthropists only. Hence the charity, benevolence, eleemosynary, etc. were ingrained in the word education itself. At the time passes, because of advancement in every walk of life, the need for education increased. The Government and Philanthropists could not meet the needs of the people in this area. The government, in its wisdom, thought that the education cannot be kept as the exclusive prerogative of the Government alone, had thrown open it to people at large. The private sector involved itself to meet the growing education needs of ever increasing population. Corresponding changes in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... education itself is charitable, and their incomes are exempted, however, those decisions are per-incuriam. 7. Based on the above findings, Ld. CIT cancelled the registration granted U/s. 12AA of the Act to the assessee by observing as under: 7. Because of the above findings, I am of the firm conviction that the society is not at all entitled for registration U/s. 12AA of the Income Tax Act and its income is not eligible for exemption U/s. 11 of the Income Tax Act. Accordingly, the registration granted U/s. 12A(a) of the Income Tax Act is hereby cancelled. 8. Before us, Ld. A.R. filed several decisions of the Hon'ble High Courts and argued that the Ld. CIT had erred by cancelling the registration to the assessee U/s. 12AA of the Act. Ld. A.R. further argued that the assessee society was functioning as an educational institution since 1958 without discriminating caste, creed, or religion. It was therefore requested that the order of the Ld. CIT may be cancelled. Ld. D.R relied on the order of the Ld. Ld. CIT, and argued in support of the same. 9. We have heard the rival submissions and carefully perused the materials available on record. It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, none of the conditions U/s. 12AA(3) were violated. Further, the Hon'ble High Court of Bombay in the case of Tolani Education Society v. Dy. DIT (Exemptions) [2013] 351 ITR 184held that provisions of section 10(23C) cannot be interpreted regressively to deny exemptions to institution which existed solely for educational purposes merely because incidental surplus was used to upgrade educational facilities in educational institution. Further Circular No.11 of 2008 dated 19th December, 2008 have clarified that The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of sec 2(15), i.e. relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities. Needless to mention that the amended provisions of Section 2(15) of the Act clearly provide that charity includes education and the applicability of the proviso to the section excludes education. The decisions of the Hon'ble Supreme Court Hon'ble High Courts rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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