Dy. Director of IT v. Kuttukaran Foundation

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The Tax Publishers2012 TaxPub(DT) 2179 (Coch-Trib) : (2012) 051 SOT 0175 INCOME TAX ACT, 1961 --Charitable trust--Exemption under section 11Charitable purpose--Assessee was conducting coaching classes for students of various courses, who were appearing for open university/distance education. It was claiming exemption under section 11 on the ground that it was registered under section 12A. AO, after examining the activity of assessee came to conclusion that since no regular school or college was managed or established by the assessee activity of assessee, preparing those students examination by conducting coaching classes was not a charitable activity within the meaning of section 2(15). Accordingly, he denied the exemption claimed under section 11. Held : Mere registration would not automatically grant exemptions under sections 11 and 12. As the open university was open to all individual, who could appear without even taking any training from the coaching classes. So a mere coaching class for preparing the students to attend the examination conducted by open university or by the other university or distance education could not be considered to be regular and systematic schooling within the meaning of section 2(15) of the Act. Therefore, the activity of the assessee is not 'education' institution within the meaning of section 2(15) and hence, the assessee was not entitled for exemption under section 11. Income Tax Act, 1961, Section 11 Income Tax Act, 1961, Section 2(15) INCOME TAX ACT, 1961 --Charitable trust--Registration under section 12APower of AO to cancel the registration under section 12A--Assessee was conducting coaching classes for students of various courses, who were appearing for open university/distance education. It was claiming exemption under section 11 on the ground that it was registered under section 12A. In the relevant year, AO rejected/cancelled the registration under section 12A and completed the assessment as 'AOP'. The issue arose as to whether assessing officer had power to reject the registration granted under section 12A. Held: Once the registration was granted under section 12A by the CIT, the AO as a subordinate officer to the Commissioner could not cancel the registration. It was for the CIT to cancel the registration provided the conditions under section 12AA(3) were satisfied. Therefore, the cancellation/rejection of registration under section 12A and completion of assessment under 'AOP' by the AO was without jurisdiction. Income Tax Act, 1961, Section 12AA(3) IN THE ITAT COCHIN BENCH N.R.S. GANESAN, J.M. & B.R. BASKARAN, A.M. Dy. DIT v. Kuttukaran Foundation ITA No. 102 (Coch) of 2010 & C.O. No. 4 (Coch) of 2010 A.Y. 2005-06 29 March, 2012 ORDER *N.R.S. Ganesan, J.M.* Being aggrieved by the order of the Commissioner (Appeals)-II, Kochi, dt. 30-11-2009 the revenue filed the present appeal for the assessment year 2005-06. The assessee filed the cross objection against the very same order of Commissioner (Appeals). Therefore, we heard the appeal as well as the cross objection together and dispose them off by this common order, for the sake of convenience. 2. The only issue arises for consideration is grant of exemption' under section 11 of the Income-tax Act. 3. Smt. Vijayaprabha, the learned Departmental Representative submitted that the assessee was a registered trust' under section 12A of the Act. The main object of the assessee as per the trust deed was to open, takeover or run educational institutions like schools, college, etc. However, the assessee has not established or run any regular school or college so far. The assessee is conducting coaching classes for students of various courses, who are appearing for open university/distance education. According to the learned representative, preparing these students for examination by conducting coaching classes is not a charitable activity within the meaning of section 2(15) of the Act. Therefore, the assessee is not entitled for exemption' under section 11 of the Act. However, the Commissioner (Appeals) without considering the reasons for disallowance made by the assessing officer allowed the appeal of the assessee on the ground that the assessee is entitled for exemption' under section 10(23C)(iiiad) of the Act. The learned DR pointed out that no approval was granted' under section 10(23C) of the Act. The assessing officer, after examining the activity of the assessee came to a definite conclusion that no regular school or college was managed or established or run by the assessee, therefore, the assessee is not entitled for exemption' under section 11 of the Act. The learned Departmental Representative placed reliance on the judgment of the Supreme Court in Sole Trustee, Loka Shikshana Trust v. CIT (1975) 101 ITR 234 (SC): 1975 TaxPub(DT) 344 (SC) and Patna High Court in the case of Bihar Institute of Mining And Mine Surveying v. CIT (1994) 208 ITR 608 (Pat) : 1994 TaxPub(DT) 865 (Pat-HC). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2179 (Coch-Trib) : (2012) 051 SOT 0175

INCOME TAX ACT, 1961

--Charitable trust--Exemption under section 11Charitable purpose--Assessee was conducting coaching classes for students of various courses, who were appearing for open university/distance education. It was claiming exemption under section 11 on the ground that it was registered under section 12A. AO, after examining the activity of assessee came to conclusion that since no regular school or college was managed or established by the assessee activity of assessee, preparing those students examination by conducting coaching classes was not a charitable activity within the meaning of section 2(15). Accordingly, he denied the exemption claimed under section 11. Held : Mere registration would not automatically grant exemptions under sections 11 and 12. As the open university was open to all individual, who could appear without even taking any training from the coaching classes. So a mere coaching class for preparing the students to attend the examination conducted by open university or by the other university or distance education could not be considered to be regular and systematic schooling within the meaning of section 2(15) of the Act. Therefore, the activity of the assessee is not 'education' institution within the meaning of section 2(15) and hence, the assessee was not entitled for exemption under section 11.

Income Tax Act, 1961, Section 11

Income Tax Act, 1961, Section 2(15)

INCOME TAX ACT, 1961

--Charitable trust--Registration under section 12APower of AO to cancel the registration under section 12A--Assessee was conducting coaching classes for students of various courses, who were appearing for open university/distance education. It was claiming exemption under section 11 on the ground that it was registered under section 12A. In the relevant year, AO rejected/cancelled the registration under section 12A and completed the assessment as 'AOP'. The issue arose as to whether assessing officer had power to reject the registration granted under section 12A. Held: Once the registration was granted under section 12A by the CIT, the AO as a subordinate officer to the Commissioner could not cancel the registration. It was for the CIT to cancel the registration provided the conditions under section 12AA(3) were satisfied. Therefore, the cancellation/rejection of registration under section 12A and completion of assessment under 'AOP' by the AO was without jurisdiction.

Income Tax Act, 1961, Section 12AA(3)

IN THE ITAT COCHIN BENCH

N.R.S. GANESAN, J.M. & B.R. BASKARAN, A.M.

Dy. DIT v. Kuttukaran Foundation

ITA No. 102 (Coch) of 2010 & C.O. No. 4 (Coch) of 2010

A.Y. 2005-06

29 March, 2012

ORDER

N.R.S. Ganesan, J.M.

Being aggrieved by the order of the Commissioner (Appeals)-II, Kochi, dt. 30-11-2009 the revenue filed the present appeal for the assessment year 2005-06. The assessee filed the cross objection against the very same order of Commissioner (Appeals). Therefore, we heard the appeal as well as the cross objection together and dispose them off by this common order, for the sake of convenience.

2. The only issue arises for consideration is grant of exemption' under section 11 of the Income-tax Act.

3. Smt. Vijayaprabha, the learned Departmental Representative submitted that the assessee was a registered trust' under section 12A of the Act. The main object of the assessee as per the trust deed was to open, takeover or run educational institutions like schools, college, etc. However, the assessee has not established or run any regular school or college so far. The assessee is conducting coaching classes for students of various courses, who are appearing for open university/distance education. According to the learned representative, preparing these students for examination by conducting coaching classes is not a charitable activity within the meaning of section 2(15) of the Act. Therefore, the assessee is not entitled for exemption' under section 11 of the Act. However, the Commissioner (Appeals) without considering the reasons for disallowance made by the assessing officer allowed the appeal of the assessee on the ground that the assessee is entitled for exemption' under section 10(23C)(iiiad) of the Act. The learned DR pointed out that no approval was granted' under section 10(23C) of the Act. The assessing officer, after examining the activity of the assessee came to a definite conclusion that no regular school or college was managed or established or run by the assessee, therefore, the assessee is not entitled for exemption' under section 11 of the Act. The learned Departmental Representative placed reliance on the judgment of the Supreme Court in Sole Trustee, Loka Shikshana Trust v. CIT (1975) 101 ITR 234 (SC): 1975 TaxPub(DT) 344 (SC) and Patna High Court in the case of Bihar Institute of Mining And Mine Surveying v. CIT (1994) 208 ITR 608 (Pat) : 1994 TaxPub(DT) 865 (Pat-HC).