SRI KAMARAJ EDUCATIONAL TRUST,PUDUKKOTTAI vs. CIT EXEMPTIONS, CHENNAI

The only effective ground of appeal in this appeal of assessee is against rejection of application seeking approval u/s 80G of the Income-tax Act, 1961 (hereinafter “the Act”).

The assessee is a trust registered u/s. 12A of the Act and has made an application in Form-10AB seeking approval under clause (iii)

of first proviso to sub section 80G(5) of the Act seeking approval u/s. 80G of the Act. The Ld. CIT(E) has rejected the application holding that the trust is only engaged in the process of establishing educational institution for a long period time, which cannot be considered as education for charitable purpose. The Ld. CIT(E) has held that the assessee had spent Rs.1,90,96,124/- towards building construction purpose and fund for which has been sourced through unsecured loan and therefore, the genuineness of fund flow and outflow could not be established without doubt with available details.

The Ld Authorized Representative (AR) of the assessee has argued that the assessee was granted registration u/s. 12A of the Act for A.Y 2022-23 to 2026-27 and was also granted provisional registration u/s. 80G(5)(iv) of the Act. However, the Ld. CIT(E) has rejected the application on the ground that the assessee is not engaged in providing education. The Ld. AR has argued that the Ld. CIT(E) has to see the object of the trust and it is evident that the object of the trust is to establish, maintain, run, develop, sponsor schools, colleges, research institution, universities, polytechnics, professional engineering institutions, technical, vocational, art, craft, science :- 3 -: schools and colleges and generally all kinds of educational institution including teachers training institutes, B.Ed. colleges and catering colleges/institutes. The Ld AR argued that the assessee is constructing school building and spent more than Rs. 1.9 Cr. which is for the purpose of education. The Ld. AR also relied on the various case laws including judgment of the Hon’ble Allahabad High Court in the case of Fifth Generation Education Society v. CIT 185 ITR 634 (All.) and ITAT decision in the case of Anugraha Education Trust vs.

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of Ld CIT(E) and argued that application was correctly rejected.

We have heard the rival submissions and perused the material available on record. It is seen that the Ld. CIT(E) has primarily based his conclusion on the current stage of activities without fully considering the intent, objects, and future plans of the assessee trust.

While actual engagement in educational activities is a relevant factor, the creation of infrastructure essential for such activities is also a necessary and integral part of a charitable project. Furthermore, the analysis of the financials appears to be summary in nature without a :- 4 -: detailed examination in the context of the trust's stated objects. In view of the above, and in the interest of justice, we deem it appropriate to remit the matter back to the file of the Ld. CIT(E) for fresh consideration. The Ld. CIT(E) is directed to re-examine the application of the assessee u/s. 80G of the Act after affording due opportunity of being heard and taking into account the assessee’s submissions, financial statements, activities in furtherance of its objects, and relevant judicial precedents.