IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: JODHPUR

(BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER)

I.T.A. No. 395/Jodh/2014

(A.Y. 2008-09)

Patel Education and Social Welfare Trust Vs. The ITO Nai Mandi, Gharsana Suratgarh PAN NO. AABTP 4023 B (Appellant) (Respondent)

Assessee by:- Shri Suresh Ojha Department by :- Shri Jai Singh, CIT- D.R.

Date of hearing : 26/08/2014 Date of pronouncement : 28/08/2014

O R D E R

PER HARI OM MARATHA, J.M. :

This appeal of the assessee-trust for A.Y. 2008-09 is directed

against the order of ld. CIT(A), Bikaner dated 22/04/2014.

2. Briefly stated, the facts of this case are that the assessee-trust

filed its Return of Income [ROI] for A.Y. 2008-09 on 30.9.2008, claiming

exemption of its total income u/s 11 of the Income-tax Act, 1961 ['the

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Act' for short] which was processed u/s 143(1) of the Act.

Subsequently, the A.O issued a notice u/ 148 of the Act dated

07.04.2010. The assessee asked for a copy of reasons for issuing this

notice; which was supplied. The assessee trust was registered vide

deed dated 16.11.2006 by Sub-registrar, Gadsana and also registered

with Asstt. Commissioner, Devasthana Deptt, Bikaner vide order dated

26.2.2007. The assessee trust runs a B.Ed college in the name of

‘Patel Co-education Teacher Training College’. The total receipts of

the Trust for this year are Rs. 13,24,000/- which has been claimed as

exempt u/s 11 of the Act. Since the assessee trust was not registered

u/s 12AA of the Act, the A.O has denied this claim and has added this

entire amount. In the alternative, the assessee trust had claimed

exemption u/s 10(23C) of the Act of Rs. 12,62,006/- and this was also

denied, because the assessee trust did not have any income during the

relevant year from the educational institution. The A.O has added a

sum of Rs. 17,600/- being interest income.

2.1 Aggrieved, the assessee filed appeal and the ld. CIT(A) also

denied relief and that is why this second appeal. Following grounds

have been raised in this appeal:

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“1. That the order passed by the A.O and sustained by

the ld. CIT(A) is illegal and against the law.

2. That the activity of the trust is well within the

charitable nature.

3. That the trust is entitled for exemption u/s 10(23)(C)

of the Act.

4. That the action taken u/s 147 by the A.O and

sustained by the ld. CIT(A) is illegal.

5. That the addition made by the A.O and sustained by

the ld. CIT(A) is illegal and against the law.”

2.2 We have heard the rival submissions and have carefully perused

the relevant material on record. Both the parties have reiterated their

stands. The undeniable facts of this case are that the assessee trust

has been created for running educations institutions as stated above.

The objects of the trust are charitable in nature but it was not

registered u/s 12AA in the year. Initially, the appellant claimed

exertion u/s 11 of the Act. But while replying to the notice issued

u/s148 of the Act, the assessee had taken the stand that the beneficial

provisions of section 10(23C) of the Act are applicable to the facts of

this case. The A.O as well as ld. CIT(A) have agreed in principle that

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this benefit of section 10(23C) is available to this assessee,

nevertheless, both have refused to grant this benefit on the premise

that the ‘activities of the Trust seems to be not charitable in nature’.

The A.O has also mentioned that no receipt could be attributed to the

educational activities as the requisite permission to start B.Ed college

had not been granted during the relevant period.

2.3 The contention of the assessee is that before the A.O itself the

assessee had claimed benefit of section 10(23C). We are in agreement

with this submission of the ld. A.R as this is evident from the A.O’s

order as well as ld. CIT(A)’s order. The objects of the assessee-trust

are undeniably charitable in nature. Therefore, the receipt is exempt

u/s 10(23C) of the Act and cannot be denied. On trivial irregularities,

the judgments of the Hon'ble Supreme High Court in the case of Shree

Meenakshi Mills Ltd. Vs. CIT, Madras reported in 63 ITR 207 [SC] and

that of the Hon’ble Delhi High Court in the case of CIT Vs. Associates of

Financial Planners dated 11.7.2011 are relevant and support our above

finding. Accordingly, we allow the appeal and set aside the orders of

the authorities below.

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3. In the result, the appeal of the assessee-trust in ITA No.

395/JU/2014 for A.Y. 2008-09 stands allowed.

Order Pronounced in the Court on 28th August, 2014.

Sd/- Sd/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 28th August, 2014

VL/-

Copy to:

1. The Appellant

2. The Respondent

3. The CIT By Order

4. The CIT(A)

5. The DR

Senior Private Secretary

ITAT, Jodhpur