M/S. SUBHIKSHA HINDI VIDHYALAYA,MAYILADUTHURAI vs. CIT, EXMETIONS,, CHENNAI

PDF · subscribers
ITA 125/CHNY/2025Status: DisposedITAT Chennai21 May 2025AY 2022-235 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that in the interest of justice and considering the principles of natural justice, the assessee deserves another opportunity to present its case before the CIT(E). The Tribunal set aside the order passed by the CIT(E) and remitted the matter to his file for a fresh decision on the application under Section 12A(1)(ac)(iii). The assessee was directed to cooperate and appear before the CIT(E). Similarly, for the application under Section 80G, the matter was restored to the file of the CIT(E) for fresh consideration in line with the directions given for the Section 12A appeal. The ratio is that procedural fairness and an opportunity to be heard are paramount, especially when factual submissions regarding charitable activities need substantiation. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Subhiksha Hindi Vidhyalaya, filed appeals for Assessment Years 2022-23 against orders of the Commissioner of Income Tax (Exemption), Chennai (CIT(E)). The CIT(E) rejected the assessee's application for registration under Section 12A(1)(ac)(iii) of the Income-tax Act, 1961, and approval under Section 80G of the Act. The rejection was based on the finding that the Trust was operating a private Hindi tuition center commercially with a profit motive, and failed to provide documentary evidence that services were free or at concessional rates to the underprivileged, or that fees charged were nominal. The assessee contended that the Trust promotes education for the downtrodden and that payments to teachers constituted charitable spending. The assessee requested another opportunity to present its case.

What were the issues?

1. Whether the Tribunal was correct in rejecting the assessee's application for registration under Section 12A(1)(ac)(iii) of the Income-tax Act, 1961, on the grounds that the Trust was operating commercially with a profit motive and failed to provide evidence of providing services to the underprivileged at concessional rates or nominally, as held by the CIT(E)? Assessee's Contention: The Trust is engaged in promoting education for the socially and economically downtrodden, especially in villages, and helping unemployed youth. The CIT(E) erred in observing no charitable spending, ignoring payments of Rs. 5,68,975/- to teachers. The assessee requested another opportunity to prove its case. Revenue's Contention: The Revenue relied on the orders of the lower authorities. 2. Whether the Tribunal was correct in rejecting the assessee's application for approval under Section 80G of the Act, following the same reasons as for the Section 12A rejection, as held by the CIT(E)? Assessee's Contention: Identical to the submissions in the Section 12A appeal. Revenue's Contention: The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(iii),Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI JAGADISH

Hearing: 06.05.2025Pronounced: 21.05.2025

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid two appeals filed by the assessee for Assessment Years (AYs) 2022-23 arises out of the orders of Learned Commissioner of Income Tax (Exemption), Chennai [hereinafter “CIT(E)”] dated 19.11.2024.

1.

& 126/Chny/2025 :- 2 -: registration u/s. 12A(1)(ac)(iii) of the Income-tax Act, 1961 (hereinafter “the Act. The Ld. CIT(E) has rejected the application concluding that the Trust is actually engaged in running a private Hindi tuition center without approval from any competent authority and is operating in a commercial manner with a profit motive. The Ld. CIT(E) also noted that the assessee failed to furnish documentary evidence proving that the services are being provided free of cost or at concessional rates to the underprivileged and downtrodden, especially in villages and the Trust failed to demonstrate that the fees charged were nominal when compared to prevailing market rates. The Ld. CIT(E) also recorded that the assessee failed to respond to the specific query regarding the nature of income raised in the show cause notice dated 30.10.2024.

3.

The Ld. Authorized Representative (A.R) of the assessee has submitted that the assessee’s trust is engaged in the promotion of Hindi/General education of the socially and economically downtrodden people especially in the villages and to help the unemployed youth in all possible ways and therefore, the activities falls under the education.

The Ld. AR has further submitted that Ld. CIT(E) was not correct in observing that there is no charitable spending, ignoring the fact that & 126/Chny/2025 :- 3 -: the assessee has paid Rs.5,68,975/- to various teachers shown under the head honorarium out of total receipts of Rs. 8,10,153/- . The Ld AR has submitted that the Ld. CIT(E) has not gone through the accounts and activities of the trust and requested one more opportunity be granted to prove its case.

4.

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.

5.

We have heard the rival submissions, and perused the materials available on record. The Ld. CIT(E) has held that the Trust has failed to prove with documentary evidences that services are offered at free of cost or concessional rate underprivileged / downtrodden people especially in the villages and also failed to prove that fee charged by it are very nominal. The Ld. AR has submitted that proper opportunity was not provided by the Ld. CIT(E) therefore, one more opportunity be provided to substantiate its claim. In the interest of justice and considering the principles of natural justice, we are of the opinion that the assessee deserves another opportunity to present its case before the Ld. CIT(E). Accordingly, we set aside the order passed by the Ld. CIT(E) and remit the matter to his file to decide the application afresh, after providing due opportunity of being heard to the assessee in & 126/Chny/2025 :- 4 -: accordance with law. The assessee is also directed to cooperate with the proceedings and appear before the Ld. CIT(E) on the date of hearing without fail. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.

: 6. The Ld. CIT(E) has rejected the application filed by the assessee in form 10AB seeking approval u/s. 80G of the Act following the same reasons as in the order rejecting registration u/s. 12A of the Act. Since, the submissions made by the Ld. AR are identical to those in the above appeal, we restore this matter also to the file of the Ld. CIT(E) for fresh consideration in line with the directions given in the above appeal.

7.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced on 21st May, 2025.

More judgments on Section 12A(1)(ac)(iii)

All 1,616 judgments and leading authorities on Section 12A(1)(ac)(iii) →

Recent GST High Court judgments

Search GST case law →