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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA Nos. 66 & 65/JP/2018
PER VIJAY PAL RAO, J.M.
These two appeals by the assessee are directed against two separate orders of ld. CIT (Exemptions), Jaipur both dated 22.09.2017 passed under section 12AA(1)(b) and 80G(5)(vi) of the I.T. Act respectively. The assessee has raised the following grounds of appeal :-
ITA No. 66/JP/2018
“ 1. The ld. CIT (Exemptions) has erred in law as well as on facts of the case by rejecting application seeking registration u/s 12AA of the I.T. Act, 1961.
2 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal before or at the time of hearing.”
The assessee is a company registered under section 8 of the Companies Act,
2013. Thus the assessee was registered as a charitable company as per the
certificate issued by the Registrar of Companies as well as Memorandum of
Association of the company. The assessee applied for registration under section
12A(A) of the IT Act through on line application dated 31.03.2017 in Form No. 10A.
The ld. CIT (Exemptions) asked the assessee to submit certain
documents/explanation and also to produce original trust deed/memorandum of
association for verification. The assessee filed the relevant details and reply to the
notice issued by the ld. CIT (E). The ld. CIT (E) denied the registration under
section 12AA on the ground that the assessee is not imparting any education but
providing only coaching classes and vocational training etc. Thus on examination of
the objects of the assessee company, the ld. CIT (E) came to the conclusion that the
object clause contains the computer training, coaching classes, vocational training
etc. which cannot be termed as systematic education as contemplated under the
head ‘education’ in section 2(15) of the IT Act.
Before us, the ld. A/R of the assessee has referred to the objects clauses of
the assessee and submitted that the computer training and vocational training as
well as coaching is only one clause out of the 7 clauses of objects of the assessee
and further it is part of the activities of skilled development. Therefore, by selecting
one object clause of the assessee the ld. CIT (E) has denied the registration ignoring
the over-all objects of the assessee company which are charitable in nature. He has
3 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
also relied upon the Certificate issued by the State Government and submitted that
the assessee company is involved in formal education as approved by the Rajasthan
Knowledge Corporation Ltd. The assessee is providing the education at a very
nominal and concessional rate of Rs. 1200/- per student. He has relied upon the
decision of Hon’ble Supreme Court in the case of CIT vs. Gujarat Maritime Board,
295 ITR 561 (SC) and submitted that the object of general public utility as per
section 2(15) of the Act includes all the objects which promote the welfare of the
general public. The ld. A/R has also relied upon the decision of Hon’ble Bombay
High Court in the case of Bar Council of Maharastra vs. CIT, 126 ITR 27 (Bom.)
wherein the Hon’ble High Court has devolved upon the term ‘any other object of
general public utility’ and held that State Bar Council is constituted for general public
utility and the entire income of such body is entitled to exemption under section 11
of the IT Act. Similarly, the Hon’ble Supreme Court in the case of CIT vs. Andhra
Chamber of Commerce, 55 ITR 722 (SC) has held that any other object of general
public utility should be construed to include for promotion, protection, aiding and
stimulating trade and commerce and industries. The Hon’ble Jurisdictional High
Court in case of CIT vs. Jodhpur Chartered Accountants Society, 258 ITR 548 (Raj.)
also held that to organize seminars, conferences and workshops to educate people
on commercial laws, tax laws, etc. are objects of general public utility. Hence, the ld.
A/R has submitted that the ld. CIT (E) has confined his finding only on the term
‘education’ as per section 2(15) of the Act without considering any other objects of
general public utility.
4 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
3.1. On the other hand, the ld. D/R has relied upon the impugned order of the ld.
CIT (A) and submitted that the main activity of the assessee is only coaching activity
which cannot be considered as a systematic imparting of education as provided
under section 2(15) or as any other objects of general public utility. Hence the
application seeking registration was rightly rejected by the ld. CIT (E).
We have considered the rival submissions as well as the relevant material on
record. The ld. CIT (Exemptions) while rejecting the application has considered the
object no. 3 in the objects clauses of the Memorandum of Association in para 4 of
the impugned order as under :-
Object No. Description
To promote informal education, coaching classes, giving vocational training, faculty training, skill development and to run Management and Computer training institutions.
Whereas the Memorandum of Association of the assessee contains as many as 7
objects as under :-
“ 1. To set up hospitals, medical colleges, nursing homes and healthcare centres and provide, encourage, initiate or promote facilities for the discovery, improvement or development of new methods of diagnosis, understanding and prevention and treatment of diseases.
To promote formal education, to set up and carry on educational institution like school, college, university and to carry on courses in all subjects or branches of engineering, science medical, commerce, industrial, commercial, arts, management and any other faculty of education.
To promote informal education, coaching classes, giving vocational training, faculty training, skill development and to run Management and Computer training institutions.
5 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
To promote commerce, arts, science, sports, education, research, social welfare, charity.
To rehabilitate victims of natural disaster, to assist physically and mentally disabled persons, old aged peoples, children, women, persons from economically weaker sections of the society, without any distinction of religion, caste and creed.
To achieve financial sustainability, viability and self reliance through its own activities.
To reinvest any incidental surplus into growth and strengthening of its social and humanitarian projects, through itself or by transfer to any other non-profit organization, institution, association, company, trust etc. situated in India or outside India.
Thus it is manifest from the objects of the assessee company that the pre-dominant
objects are to set up hospitals, medical colleges, nursing homes, health centres etc.
further to promote formal education and to set up and carry on educational
institutions like school, colleges, university etc. The ld. CIT (E) has picked up only
object no. 3 for rejecting the application of the assessee without considering the
other objects of the assessee. We also find merit and substance in the contention of
the ld. A/R of the assessee that even if the said clause of the object may not be
falling in the term ‘education’, the ld. CIT (E) has not considered the same whether
it is falling in the term ‘any other objects of general public utility’ as per the
provisions of section 2(15) of the IT Act. Hence we find that the impugned order of
ld. CIT (E) is passed by considering only one clause out of the 7 objects of the
assessee. Further, it is also required to be considered as to what activities are being
carried out by the assessee all through these years and, therefore, if the assessee
has restricted only a few activities and not covering all the objects as per the object
6 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
clauses then the application of the assessee has to be decided in the light of the
alternative plea of the assessee that the same can be considered as any other
objects of general public utility. The assessee has placed reliance on various
decisions which are relevant on the point. Accordingly, in view of the above facts
and circumstances of the case, we set aside the impugned order of ld. CIT (E) and
remit the matter back to the record of the ld. CIT (E) for deciding the same afresh
after giving a proper opportunity of hearing to the assessee and in the light of the
above observations of the Tribunal.
ITA No. 65/JP/2018 :
The assessee has raised the following grounds of appeal :-
“ 1. The ld. CIT (Exemptions) has erred in law as well as on facts of the case by rejecting application seeking exemption u/s 80G(5)(vi) of the I.T. Act, 1961.
The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal before or at the time of hearing.”
6 The ld. CIT (E) has declined to grant approval under section 80G in view of
the rejection of the application for registration under section 12A(A). Therefore, the
impugned order passed by the ld. CIT (E) is consequential to the order of denying
the registration under section 12AA. We have set aside the matter to the record of
ld. CIT (E) for fresh adjudication in the case of registration under section 12AA.
Accordingly, the issue of approval under section 80G is also set aside to the record
of the ld. CIT (E) being consequential in nature.
7 ITA Nos. 66 & 65/JP/2018 M/s. Aryabhatta Welfare Organization, Ajmer.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 11/07/2018.
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vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत