ALEXANDRA SCHOOL vs. COMMISSIONER OF INCOME TAX

ITA/190/2014HC Punjab & HaryanaPHHC01109320201430 July 2015Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE A.B. CHAUDHARI9 pages
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What were the facts?

The appellant, Alexandra School, a society registered in 1976, applied for registration under Section 12AA of the Income Tax Act, 1961, on October 30, 2012, for assessment year 2012-13. The Commissioner of Income Tax-II, Amritsar (CIT), rejected the application, holding that the school was established for the benefit of a particular religious community (Christian) and thus ineligible for benefits under Sections 11 and 12 due to Section 13(1)(a) and (b). The Income Tax Appellate Tribunal (Tribunal) upheld the CIT's order. The appellant contended that while founded by the Christian community, its Memorandum of Association and objectives clearly stated it provided education to all communities regardless of caste, creed, or distinction, aiming to produce enlightened citizens. Data showed less than 10% of students were Christian.

What did the High Court hold?

The High Court allowed the appeal, holding that the reasoning of the CIT and the Tribunal was unjustified. The Court found that the Memorandum of Association and the objectives of the trust had not been considered in the proper perspective. A perusal of the Memorandum revealed that apart from imparting education to children of a particular religion, the purpose was also to provide sound education to persons belonging to other communities regardless of caste, creed, colour, or distinction, aiming to produce enlightened and responsible citizens. The Court noted that the data showing less than 10% of students belonging to the Christian community was not controverted or discussed by the authorities. The Court relied on the Supreme Court's decision in Commissioner of Income Tax Vs. Dawoodi Bohara Jamat, which held that trusts with composite objects of religious and charitable purposes are sheltered under Section 11, and that establishing institutions for imparting religious education does not necessarily mean they are only for the benefit of a particular religion. The Court concluded that the predominant purpose of the trust was charitable and allowed the appeal, directing the respondent authority to issue the required registration. The substantial question of law was answered in favour of the appellant.

What were the issues?

1. Whether an educational society run by a particular community is debarred from registration under Section 12AA of the Income Tax Act, 1961, even if it carries out charitable activities benefiting the community at large, including persons of other religions? (Question of law) Assessee's contentions: - The school's Memorandum of Association clearly states its purpose is to provide sound education to persons belonging to other communities regardless of caste, creed, colour, or distinction. - The school is secular, does not preach or teach Christianity, and only teaches parts of Christianity that promote humanity and secularism. - The percentage of Christian students is very small (less than 10% in the last year). - The predominant purpose of the trust is charitable, which includes education for all. - Relied on Commissioner of Income-Tax Vs. Jodhpur Chartered Accountants Society [2002] 258 ITR 548 (Rajasthan HC) and Commissioner of Income Tax Vs. Dawoodi Bohara Jamat (2014) 102 DTR Judgments 360 (SC). Revenue's contentions: - The school was created for the benefit of a particular religious community (Christian). - Therefore, under Section 13(1)(a) and (b) of the Act, it was not entitled to the benefits of Sections 11 or 12. - The Tribunal held that the education was primarily for children of the Christian community, which is contrary to law, and the main objective of providing quality education in a Christian environment is also contrary to law. The administration being controlled by persons of a particular community was also a reason for upholding the CIT's order.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 12AA,Section 12A,Section 13(1)(a),Section 13(1)(b),Section 11,Section 2(15)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Reserved on 06.7.2014 Date of decision: 30.07.2015 Alexandra School $.Appellant Vs.

Commissioner of Income Tax-II, Amritsar $.Respondent CORAM: HON'BLE MR.JUSTICE S.J.VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR.JUSTICE GURMEET SINGH SANDHAWALIA Present: Mr. Sunil K. Mukhi, Advocate for the appellant.

Mr. Denesh Goyal, Advocate for the respondents. **** G.S.SANDHAWALIA, J.

The present appeal has been filed by the assessee under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against the order dated 26.04.2013 (Annexure A/1) whereby the Commissioner of Income Tax-II, Amritsar(hereinafter referred to as “the CIT”) declined to grant registration under Section 12AA of the Act on the application filed by the appellant. The order dated 26.2.2014 (Annexure A/2) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No.329 (Asr)/2013 for the assessment year 20012-13 upholding the order of the Commissioner is also subject matter of challenge.

The reasoning given by the authorities as per

The order continues below.

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