C.T. EAPEN TRUST Vs. ITO
LAWS(IT)-2014-7-7
INCOME TAX APPELLATE TRIBUNAL
Decided on July 25,2014

C.T. Eapen Trust Appellant
VERSUS
ITO Respondents

JUDGEMENT

N.R.S.Ganesan, Member (J) - (1.) BOTH the appeals of the assessee are directed against the respective orders of CIT(A) for the assessment years 2009 -10 and 2010 -11.
(2.) SHRI R Krishna Iyer, the ld. representative for the assessee submitted that the assessee trust is running educational institutions. For the year under consideration, the assessee filed return of income claiming exemption u/s. 11 of the Act. However, the assessing officer rejected the claim of the assessee for exemption u/s. 11 on the ground that the assessee trust was not registered as charitable institution u/s. 12AA of the Act. According to the ld. counsel, the registration of the trust was rejected by the Administrative Commissioner and this Tribunal and the appeal is now pending before the High Court. The ld. representative further submitted that the application filed by the assessee for condonation of delay in filing the application for registration is pending before CBDT. According to the ld. representative, grant of exemption u/s. 11 does not require registration u/s. 12AA of the Act. Even otherwise, according to the ld. representative, the assessee is entitled for exemption u/s. 10(23C)(iiiab) and (iiiad) of the Act since the receipt of each educational institution is less than Rs. 1 crore. According to the ld. representative, the aggregate income of the trust should not be taken for the purpose of section 10(23C) of the Act. Each institution shall be taken as such for the purpose of exemption u/s. 10(23)(iiiab) and (iiiad) of the Act. Therefore, in respect of the institution, whose annual receipt is less than Rs. 1 crore has to be granted exemption u/s. 10(23C) (iiiad) of the Act. Moreover, when the government substantially finances, such institution is exempted under section 10(23C)(iiiab) of the I.T. Act. For the purpose of computing the aggregate receipt, the government aid has to be excluded. Since these points were not considered by the lower authorities, according to the ld. representative, for the purpose of considering these points, the matter may be remitted back to the file of the assessing officer for reconsideration. According to the ld. representative, approval of the Chief Commissioner is required u/s. 10(23C) only if the annual receipt exceeded Rs. 1 crore. The ld. representative placed his reliance on the decision of the Delhi Bench of this Tribunal in Jat Education Society vs. DCIT : (2011) 58 DTR (Del)(Trib) 188, copy of which is available at page 27 of the paper book. The ld. representative has also placed his reliance on the judgment of the Karnataka High Court in CIT vs. Children's Education Society : (2013) 92 DTR (Kar) 158. On the contrary, Shri M. Anil Kumar, the ld. DR submitted that admittedly, as on today, the assessee trust was not registered u/s. 12AA of the Act. Therefore, the assessee is not entitled for exemption u/s. 11 & 12 of the Act. According to the ld. DR, registration u/s. 12AA is mandatory for grant of exemption u/s. 11 of the Act. The ld. DR placed his reliance on the judgment of the Apex Court in U.P. Forest Corporation & Anr. Vs. Dy. CIT : (2008) 297 ITR 1 (SC). The ld. DR further submitted that the trust which is running the educational institution has to be considered as an individual unit and the aggregate income of the trust shall be taken into consideration for the purpose of exemption. According to the ld. DR, the aggregate receipt of the assessee trust exceeds Rs. 1 crore, therefore, the assessee cannot get any exemption u/s. 10(23C) of the Act unless the same is approved by the competent authority, viz. the Chief Commissioner of Income -tax.
(3.) WE have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee was not registered u/s. 12AA of the Act as charitable institution. The appeal is said to be pending before the High Court and the application for condonation of delay on filing application for registration is said to be pending before CBDT.;


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