Itta/31/2014 Of The Director Of Income-Tax [Exemptions] v. Sahasra Edunl Socy

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH ATHYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAAND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.31 of 2014 Date: 07.02.2014 Between: The Director of Income Tax (Exemptions)Hyderabad. … Appellant And Sahasra Educational Society,Warangal. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.31 of 2014 JUDGMENT:(Per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against thejudgment and order dated 18.07.2013 of the learned Tribunal in relation to the assessment year 2012-13 on the following suggested questions of law. “1. Whether on the facts and in the circumstances of the case andwhen the assessee society is running those colleges with the soleintention of earning profit, thereby disentitling it to be treated as acharitable institution and hence registration u/s. 12AA of the IncomeTax Act, the observations of the Tribunal that where education isimparted by an institution with the purpose of profit, i.e., by runningthe schools/colleges purely on commercial basis, such case may beconsidered for exemption u/s. 11 of the Income Tax Act, are notperverse? 2. Whether on the facts and circumstances of the case, the Tribunalis right in law in holding that where education is imparted by an institutionwith the purpose of profit, i.e., by running the schools/colleges purelyon commercial basis, such case may be considered for exemptionu/s. 11 of the Income Tax Act, 1961? 3. Whether on the facts and circumstances of the case, the Tribunalis correct in law in holding that once the assessee is considered ascarrying on the educational activities that fall under the purview ofSection 2(15) of the Act, the DIT(E) cannot deny registration u/s. 12AAand he is duty bound to grant the registration? While looking at the aforesaid questions, we find that they are absolutely not the questions of law. However, ignoring the aforesaidquestions, as they are merely suggested questions of law, the Court mayformulate the questions of law. We have heard Mr. Prasad, learned counsel for the appellant andgone through the impugned judgment and order of the learned Tribunal. The assessee has applied for registration under Section 12AA of theIncome Tax Act, 1961 (hereinafter referred to “the Act”). The Director ofIncome Tax (Exemptions) (for short, “DIT(E)”), who is the authority to grantregistration, has refused to do so. Hence, the present appeal has beenpreferred. To grant registration pre-conditions mentioned in Section 12AA of theAct have to be satisfied upon relevant documents being placed showingcharitable activity. The Tribunal found that DIT(E) has exceeded his powerand has made a roving enquiry as to the factual activities of the assesseebefore registration being granted. We think while granting registration theofficer concerned must be satisfied about object of the trust or institution andgenuineness of its activity. To put it differently there shall be satisfactionfrom the relevant document that object is charitable and genuineness ofcharitable activity irrespective or earning profit. If the profit earned is utilizedfor charitable activity still registration cannot be denied. The learnedTribunal, in our view, has correctly observed that once the assessee isconsidered as carrying on the educational activities and that activities fallunder the purview of Section 2(15) of the Act, the DIT(E) cannot deny theregistration. We are also in agreement with the learned Tribunal that if thereis any violation of the object of the trust or institution, then the benefit ofexemption, as provided under the Act, can be withdrawn later on. Therefore,we do not find any element of law in this matter. The appeal is accordingly dismissed. No costs. ___________________