Itta/308/2015 Of The Director Of Income Tax (Exemptions) v. P R Chellaram Charitbale Trust

HON'BLE SRI JUSTICE RAMESH RANGANATHAN AND HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY INCOME TAX TRIBUNAL APPEAL No.308 OF 2015 JUDGMENT:(Per Hon’ble Sri Justice Ramesh Ranganathan) This Appeal, under Section 260-A of the Income Tax Act, 1961 (for short “theAct”), is preferred against the order passed by the Income Tax Appellate Tribunal,Hyderabad in I.T.A. No.596/Hyd/2013 dated 14.08.2013. The Appeal, in I.T.A.No.596 of 2013, was preferred by the respondent-assessee against the orderpassed by the DIT(E), Hyderabad dated 22.02.2013 rejecting the assessse’sapplication seeking approval under Section 80G(5)(vi) of the Act. In the order under Appeal, the Tribunal noted that the assessee was a trustregistered under Section 12A of the Act; they had applied to the DIT(E) seekingapproval under Section 80G(5)(vi) of the Act; thereafter, the DIT(E) had rejected theassessee’s application holding that the assessee was procuring goods frommanufacturers and selling them to students which was a commercial activity and,hence, they were not entitled to approval; the order of the DIT(E) was challengedbefore ITAT in Appeal No.565 of 2012, and the Tribunal, by its order dated10.08.2012, remanded the matter to the DIT(E) for its consideration afresh;thereafter, the DIT(E) rejected the application of the respondent-assessee on twogrounds: 1) that the assessee was regularly paying service tax on its turnoverrelating to commercial training courses imparted through the computer traininginstitute run by them; 2) they had also admitted that services were being rendered ascommercial training and coaching centres; the buildings, being constructed by them,were for the personal use of trustees, including the founder of the trust; andaggrieved thereby, the respondent-assessee carried the matter in Appeal to theTribunal. The Tribunal observed that the assessee was engaged in impartingeducation of training in computers; there was no sale of any material by themprocuring them from manufacturers; the assessee was registered as a charitabletrust under Section 12A of the Act, and the registration continued till date; the mainobject of the assessee was charitable in nature; for the purpose of achieving themain charitable object, the trust was not precluded from carrying on any businessactivity, and earning profit therefrom, which was ancillary and incidental to the mainobject of the trust; and the profit earned was also utilized by them for achieving themain object of the trust. The Tribunal made a comparison with educationalinstitutions whose main object was charitable in nature, but they may also runsubsidized canteens for the benefit of children and staff and sell books and uniformsto the students. The Tribunal held that such activity could not be considered to be acommercial activity. With regards acquisition of flats, the Tribunal accepted the contention of theassessee that the flats, which were still under construction, were intended to beused for the purpose of a girl hostel for outside girl students. The Tribunal saw noreason to disbelieve the submission of the assessee in this regard. It further held thatthere could not be any doubt with regard to the charitable object of the trust as it hadbeen granted registration under Section 12A of the Act, which had not beenwithdrawn/cancelled till date; all these issues could be examined at the stage ofassessment proceedings while considering the assessees claim of exemption underSection 11 of the Act; and these aspects were not required to be examined at thestage of granting approval under Section 80G(5) of the Act. With regards acquisition of flats, the Tribunal accepted the contention of theassessee that the flats, which were still under construction, were intended to beused for the purpose of a girl hostel for outside girl students. The Tribunal saw noreason to disbelieve the submission of the assessee in this regard. It further held thatthere could not be any doubt with regard to the charitable object of the trust as it hadbeen granted registration under Section 12A of the Act, which had not beenwithdrawn/cancelled till date; all these issues could be examined at the stage ofassessment proceedings while considering the assessees claim of exemption underSection 11 of the Act; and these aspects were not required to be examined at thestage of granting approval under Section 80G(5) of the Act. It has not been disputed before us that, for the purpose of achieving the maincharitable object, the trust is not precluded from carrying on any business activity,and earning profit therefrom which are ancillary and incidental to the main object ofthe trust. The mere fact that the assessee had sold study material to the students,which were internally generated by them, did not amount to a commercial activitymore so, as it is not in dispute that the assessee was engaged in impartingeducation/training in computers. The Tribunal also saw no reason to disbelieve thesubmission of the assessee that the flats, which were under construction, were forthe purpose of a girl hostel for outside girl students. The Tribunal is the final Court of facts and, save a perverse finding or a findingbased on no evidence, no substantial question of law would arise necessitatinginterference under Section 260-A of the Act. It is not even contended before us thatthe findings recorded by the Tribunal suffers from any such infirmity. We see noreason, therefore, to entertain this Appeal. The Appeal fails and is, accordingly, dismissed. Miscellaneous Petitions pending, ifany, shall also stand dismissed. There shall be no order as to costs. _____________________________ RAMESH RANGANATHAN, J _____________________________M. SATYANARAYANA MURTHY, J Date: 05-11-2015.Dsh HON'BLE SRI JUSTICE RAMESH RANGANATHAN AND HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY 06112015 INCOME TAX TRIBUNAL APPEAL No.308 OF 2015 (Judgment of the Division Bench delivered by DSH Hon’ble Sri Justice Ramesh Ranganathan) Date. 05-11-2015