SAHAJ JEEVAN EDUCATION TRUST,NAVI MUMBAI vs. CIT (E), MUMBAI

सुनवाई क� तार�ख / : 03.04.2018 Date of Hearing घोषणा क� तार�ख / : 11.05.2018 Date of Pronouncement आदेश / O R D E R Per Saktijit Dey, J. M.: This is an Appeal by the Assessee challenging the order dated 29.04.2016 passed by the ld. Commissioner of Income Tax (Exemptions), Mumbai rejecting the application for approval u/s. 10(23C)(vi) of the Act.

Sahaj Jeevan Education Trust 2. Briefly the facts are that the assessee is a trust registered under the Societies Registration Act, 1860 as well as under the Bombay Public Trust Act, 1950. Further, the assessee has been granted registration u/s. 12A of the Act by the DIT(Exemption) vide order dated 26.07.2001.

Sahaj Jeevan Education Trust Commissioner of Income Tax (Exemptions) referring to section 10(23C)(vi) of the Act observed that as per the said provision, educational institution should exist solely for the purpose of education. In response to the show cause notice, the assessee submitted its reply stated therein that the main object of the assessee is education.

Therefore, it fulfills the condition of section 10(23C)(vi). After considering the submissions of the assessee, the ld. Commissioner of Income Tax (Exemptions) observed, as per section 10(23C)(vi) of the Act, three conditions have to be fulfilled which are, 1) there has to be an educational institution (2) which should exist solely for the education purpose and (3) it should not be for the purpose of profit. He observed, the aforesaid three conditions are cumulative and even if one of the conditions is not fulfilled, the Trust shall not be entitled for approval u/s. 10(23C)(vi).

The ld. Commissioner of Income Tax (Exemptions) observed, the objects as per the Trust deed of the assessee indicated that it does not exist solely for the purpose of education. It is free to utilize the funds for activities other than education. He also observed that the Trust has been formed for promotion of education for a particular Gujarati speaking community. Further, the ld. Commissioner of Income Tax (Exemptions) observed that during the year 2014, the assessee has incurred expenditure of Rs.7.31 lacs for a Gaushala. Thus, ultimately he concluded that as per the object of the Trust deed it does not exist solely for the purpose of education.

Accordingly, he rejected assessee’s application seeking approval u/s. 10(23C)(vi) of the Act.

Sahaj Jeevan Education Trust 4. The ld. Authorized Representative contesting the decision of the ld.

Commissioner of Income Tax (Exemptions) submitted that the assessee has fulfilled all the conditions of section 10(23C)(vi) of the Act. Referring to the order dated 24.04.2007 of the Assistant Charity Commissioner, Thane, a copy of which is at PB pg. 17, he submitted, though in the Trust deed there were mixed objects, however, the assessee has filed a draft scheme before the Charity Commissioner as per which the main object of the assessee is for providing education. He submitted, to achieve the aforesaid object, the assessee runs a English medium school. He submitted that the assessee has submitted the scheme approved by the Charity Commissioner in lieu of the original trust deed. However, the ld. Commissioner of Income Tax (Exemptions) completely ignoring the draft scheme and referring to the objects mentioned in the original trust deed concluded that the assessee trust is not existing solely for the purpose of education. In this context, he drew our attention to letter dated 09.03.2016 filed before the ld. Commissioner of Income Tax (Exemptions). Further, referring to the audited accounts of the Trust, the ld. Authorized Representative submitted that it has not incurred any expenditure other than the activities of this school. He submitted, gaushala expenses referred to by the ld. Commissioner of Income Tax (Exemptions) is a onetime expenditure and, that too, it is a negligible amount in comparison to the total expenditure of Rs.2 crores. Further, the amount paid to gaushala was out of the surplus available with the assessee and not from the donations, which were exclusively used for school activity.

Sahaj Jeevan Education Trust 5. The ld. Authorized Representative drawing our attention to the original trust deed as well as the scheme approved by the Charity Commissioner submitted that the dominant object of the Trust is education and it has not carried out any other activities such as donation to hospitals, vyamshalas, etc. As regards the observation of the ld. Commissioner of Income Tax (Exemptions) that even the educational activity is restricted to a particular community, the ld. Authorized Representative submitted that a reading of the provision contended u/s. 10(23C)(vi) of the Act would suggest that there is no restriction imposed in the said provision regarding the provision of education for a particular community. Further, drawing our attention to details of students furnished before the Commissioner, he submitted that Gujarati community students are less than 10% of the total strength of the students. The ld. Authorized Representative submitted that till now assessee’s registration u/s. 12A continues which signifies that the assessee is a charitable Trust and its objects are for charitable purpose. He submitted, though, as per the Trust Deed and the subsequent scheme, the dominant object of the assessee is education, still, the assessee is prepared to file an affidavit and take necessary steps to modify its objects solely to education. He submitted, the decision of the Hon’ble High Court in the case of New Noble Educational Society vs. CCIT [2011] 334 ITR 303 (AP), relied upon by the ld. Commissioner of Income Tax (Exemptions) also propounds that if the primary/ dominant purpose of any institution is education, any other object which is merely ancillary or incidental to the primary or dominant object would not disentitle the Sahaj Jeevan Education Trust institution from the benefit of exemption u/s. 10(23C)(vi). He also relied upon the following decisions:

Sahaj Jeevan Education Trust education. Thus, it requires examination as to whether in such case assessee’s claim of approval u/s. 10(23C)(vi) of the Act is unacceptable merely because certain other ancillary and incidental objects are provided in the Trust deed, irrespective of the fact whether the assessee had actually carried out such activities or not. On a reading of the order of the ld. Commissioner of Income Tax (Exemptions), it appears that he has not properly appreciated the claim of the assessee vis-à-vis the facts and materials on record. As rightly submitted before us by the ld. Authorized Representative, in case of New Noble Educational Society (supra), the Hon’ble Andhra Pradesh High Court did observe that if the primary and dominant object of the institution is education, the other objects which are merely ancillary and incidental to the primary and dominant object, could not disentitle the institution from the benefit of exemption u/s. 10(23C)(vi) of the Act. The Hon’ble High Court observed, the test which has to be applied is, whether the object, which is said to be non-educational, is the main or primary object of the institution or it is ancillary or incidental to the dominant or primary object which is 'educational'. The test is the genuineness of the purpose tested by the obligation created to spend the money exclusively on 'education'. If that obligation is there, the income becomes entitled to exemption. The ld. Authorized Representative has contended before us that the assessee has carried out only educational activities by running a English medium school and the donations received have been utilized/expended for running the school activity and have not been used for any other purpose. Even, the donation to gaushala was out of surplus funds available and one time expenditure. The aforesaid

Sahaj Jeevan Education Trust submissions of the assessee require to be examined in proper perspective. If the primary and dominant object of the assessee is educational purpose and its activities are confined to fulfilling of that object, in our view, assessee’s claim u/s. 10(23C)(vi) requires consideration.

To substantiate such fact, the assessee has filed students list as well as financial statements of the Trust for three years. These facts have not been properly examined or appreciated by the ld. Commissioner of Income Tax (Exemptions) while rejecting assessee’s application. Therefore, on overall consideration of facts and materials on records, we are of the view that assessee’s claim that it is solely existing for the purpose of education and, therefore, is entitled for approval u/s. 10(23C)(vi), requires to be examined afresh after considering the submissions made by the assessee and having due regard to the facts and materials brought on record. Further, ld. Commissioner of Income Tax (Exemptions) must also examine the applicability of the Sahaj Jeevan Education Trust ratio laid down in the decisions to be relied upon by the assessee. The grounds are allowed for statistical purpose.