2010-VIL-421-ITAT-DEL

Income Tax Appellate Tribunal DELHI

I. T. Appeal No. 3360 (Del) of 2008.

Date: 30.04.2010

ST. THOMAS GIRLS SENIOR SECONDARY SCHOOL

Vs

DIRECTOR OF INCOME-TAX,

Appellant by : Shri K. Sampath, Adv.;
Respondent by : Shri B. Kishore, Sr. D. R.;

BENCH

SHRI R. P. TOLANI, JM AND SHRI K. D. RANJAN, AM

JUDGMENT

PER K. D. RANJAN, AM :

This appeal by the assessee is directed against the order passed under section 12-AA of the Income Tax Act, 1961 [hereinafter referred to as the Act] by the ld. Director of Income-tax [Exemption], New Delhi.

2. The relevant ground of appeal, raised by the assessee is reproduced as under :-

“ 1. On the facts and in the circumstances of the case, the Director of Incometax (Exemption) has misconstrued the status and position of the School and has erroneously cancelled the Registration under section 12-A of the Income-tax Act, 1961. The order being arbitrary, misconceived, capricious and unlawful must be quashed with direction for restoration of the status quo ante with full benefits of Registration under section 12-A(a) of the Act restored without break. ”

3. The facts of the case stated in brief are that the St. Thomas Girls Sr. Sec. School – (assessee) was granted registration under section 12-A vide order dated 1/06/2005 with effect from 1/04/2004 by the DIT (Exemption). During the course of proceedings under section 10(23-C) it was discovered that the assessee was not a legal entity. Registration under section 12-A of the Act was granted only on the basis of management committee constituted by the scheme of management and not on the basis of memorandum of association constituting a society or a trust or creating a trust or any other instrument creating a legal person. It was also noticed from the scheme of management filed in form No. 10 that the school was run by the management committee under the authority of Diocesse of Delhi and the properties of school vested with Delhi Diocesan Trust Association registered under the Indian Companies Act, 1913. The ld. DIT (Exemption) was, therefore, of the view that there was no instrument in the form of memorandum of association or trust deed constituting any company, society or trust or any other legal entity.

4. Before the ld. DIT (E) it was argued that the school itself is a person being an institution, but this contention of the assessee was rejected that section 2(31) of the I. T. Act, provides inclusive definition of persons which include individual, HUF, company, firm, AOP or BOI whether incorporated or not, local authority and every artificial juridical person. Ld DIT(E) further noted that before the assessee–school could be considered as an institution it has to be demonstrated that it was existed for itself and it has all the rights and liabilities to purchase and sell its properties and acquire new properties. The ld. DIT (E), however, on examination of scheme of management found that it was only meant for proper running of the school and has no pretence being the owner of the school with powers to acquire or dispose of the properties of the school. The owner of the properties was Delhi Diocession Association. The ld. DIT (E), therefore, concluded that the registration could not be allowed to be continued as the assessee– school was not a legal person at all. He accordingly withdrew the grant of registration under section 12-A of the Act.

5. Before us the ld. counsel for the assessee submitted that the ld. DIT (E) has granted registration under section 12-A of the Act and has withdrawn registration on the ground that the assessee–school is not a legal entity. Referring to the provisions of section 12-AA(3) of the Act, the ld. counsel of the assessee submitted that where a trust or institution has been granted registration under clause (b) of sub-section (1) and subsequently the ld. Commissioner is satisfied that the activities of the trust or institution are not genuine or are not being carried in accordance with the objects of the trust or institution, he shall pass an order in writing cancelling the registration of such trust. He, therefore, submitted that the genuineness of the activities of the school has not been doubted. The school is being run for the last so many years. Therefore, registration once granted cannot be denied. He placed reliance on the decision of the ITAT, Pune Bench in the case of Bhartividya Peeth Vs. ITO 28 SOT 32 (Pune). On the other hand, the ld. Sr. DR supported the order of the ld. DIT (Exemption).

6. We have heard both the parties and gone through the material available on record. The ld. DIT (E) has rejected the contention of the assessee being an institution on the ground that the school does not have power to acquire or dispose of the properties. The expression ‘institution’ has not been defined under the Income-tax Act. As per Oxford Dictionary the expression ‘institution’ means : “an establishment, organization or association, instituted for the promotion of some object especially one of public or general utility, religious, charitable, educational etc.” According to Webster’s New Dictionary, the word ‘institution’ means “an established or organized society or corporation; an establishment, especially one of a public character, or one effecting a community; a foundation.” Hon’ble Supreme Court in the case of Venkata Krishna Vs. Sub Collector AIR 1969 SC 563 has held that a tank is a charitable institution when there is a dedication in favour of that tank. Hon’ble Allahabad High Court in the case of CIT Vs. Radha Swami Satsang Sabha has held that Dayal Bagh Satsang Sabha of Agra is an institution. A ‘madarsah’ is an institution as held by Privy Council in Masjid Sahid Ganj Vs. Shiromani Gurudwara Prabandhak Committee AIR 1940 PC 116. From the above it appears that the word ‘institution’ is wide enough to include a school, which has been established for imparting education. Merely because the assessee-school does not have power to purchase, acquire or sell the property, does not mean that the school will cease to exist as an institution. The status of the assessee could be AOP in the absence of any memorandum of association or trust deed. Therefore, in our considered opinion, the ld. DIT (Exemption) has not examined the status of the assessee-school right perspective. We, therefore, set aside the issue to the file of the ld. DIT (Exemption) with the directions to examine the status of the school as an institution and decide the issue relating to restoring the grant of registration under section 12-A of the Act.

7. In the result, the appeal filed by the assessee is allowed, for statistical purposes.

The order pronounced in the open court on : 30th April, 2010.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.