COMMISSIONER OF INCOME TAX vs. M/S SRI BALAJI EDUCATIONAL &

T.C.A. No.99 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.07.2025 CORAM THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE SUNDER MOHAN Tax Case Appeal No.99 of 2016 Commissioner of Income Tax, Central III, No.108, Mahatma Gandhi Road, Chennai. .. Appellant -vs- M/s.Sri Balaji Educational & Charitable Public Trust, 3rd Floor, Jai Durga Complex, New No.60, First Avenue, Ashok Nagar, Chennai 600 083. PAN: AACTS1386D .. Respondent Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961, against the order dated 24.07.2015 passed in ITA No.260/Mds/2014 on the file of Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai. For Appellant : Mr.R.Karthik Stdg. Counsel For Respondent : Mr.A.S.Sriraman Page 1 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm ) T.C.A. No.99 of 2016 JUDGMENT (Judgment of the Court was delivered by the Hon'ble Chief Justice) Respondent/assessee is a trust running a Medical College along with Engineering Colleges, Dental College and College for Education at Puducherry. Assessee filed an application in Form 10G on 03.04.2008 seeking approval for exemption under Section 80G of the Income Tax Act, 1961 (in short 'the Act'), effective from 01.04.2008. Assessee is registered under Section 12AA of the Act as a charitable trust. 2. The provisions of granting approval for deductions in respect of donations to certain relief funds, charitable institutions, etc., are contained in Section 80G of the Act read with Rule 11AA of the Income Tax Rules, 1962. As per Section 80G (5), the donations made to any institution or fund as referred to in Sub Clause (iv) of Clause (a) of Sub Section (2) of Sec. 80G of the Act are eligible for deduction only if it is established in India for charitable purpose and if it fulfills the conditions mentioned in (i) to (v) of Sec. 80G(5). As per the provision of Rule 11AA (5) of the Income Tax Rules, 1962, where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of Sub Section (5) of Sec. 80G are Page 2 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm ) T.C.A. No.99 of 2016 not fulfilled, he shall reject the application for approval, after recording reasons for such rejection in writing and after giving an opportunity of being heard. 3. Appellant/Revenue rejected the application for exemption under Section 80G of the Act, vide order dated 24.09.2008. Against that order, an appeal was preferred before the Income Tax Appellate Tribunal, which, by an order pronounced on 24.07.2015, allowed the appeal and directed that approval under Section 80G of the Act be granted. It is the said order that is impugned in this appeal. 4. The present appeal filed under Section 260A of the Act came to be admitted on 16.02.2016 and the following substantial question of law was framed: "Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal is correct in directing the Commissioner of Income Tax to grant approval under Section 80G of Income Tax Act, when the assessee has not fulfilled the conditions as laid down in clause (i) and (iv) of Sub-Section (5) of Section 80G of Income Tax Act ?" Page 3 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm ) T.C.A. No.99 of 2016 5. The Commissioner of Income Tax, in our view, had proceeded with bias, because the very first sentence at paragraph 4 of the order dated 24.09.2008 reads as under: "4. It is a fact that many of the so called charitable institutions imparting medical and engineering educations are actually running them for profit by collecting capitation fees in the name of voluntary donations..." We repeatedly asked Sri.Ranganathan as to whether any of the donors has filed an affidavit saying that the money which was given as donation was, in fact, capitation fee and not donation. In fairness, Sri.Ranganathan accepted that it was not so. 6. In a parallel matter, this High Court in TCA Nos.1052 to 1058 of 2014, vide order dated 24.03.2015, has accepted a finding by the Tribunal that assessee is carrying genuine educational activities entitled to be treated as charitable activities and there is no evidence to show that assesseee has accepted capitation fee against allotment of seats. That order has attained finality. Therefore, to reject the application seeking approval for exemption under Section 80G of the Act on the surmise that charitable institutions imparting medical and engineering educations are actually running them Page 4 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm ) T.C.A. No.99 of 2016 for profit by collecting capitation fees in the name of voluntary donations cannot be accepted. In our view, the Income Tax Appellate Tribunal, therefore, was justified in allowing the appeal. Accordingly, the question of law as framed is answered in favour of the assessee. Appeal is dismissed. No costs. (K.R.SHRIRAM, CJ.) (SUNDER MOHAN, J.) 01.07.2025 Index : Yes/No Neutral Citation : Yes/No sra To 1. The Income Tax Appellate Tribunal Madras 'A' Bench. 2. The Commissioner of Income Tax, Central III, Nungambakkam, Chennai. Page 5 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm ) T.C.A. No.99 of 2016 The Hon'ble Chief Justice and Sunder Mohan, J. (sra) T.C.A. No.99 of 2016 01.07.2025 Page 6 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/07/2025 09:20:56 pm )