2010 (5) TMI 829 - AT - Income Tax

University Appeal Granted for Registration but Dismissed for Approval Due to Religious Objects

O.P. Jindal Global University Versus Commissioner of Income-tax, Rohtak

O.P. Jindal Global University Versus Commissioner of Income-tax, Rohtak - TMI Issues Involved:1. Registration under Section 12AA of the Income-tax Act.2. Approval under Section 80G(5) of the Income-tax Act.Issue-wise Detailed Analysis:1. Registration under Section 12AA of the Income-tax Act:The assessee, a university, applied for registration under Section 12AA. The CIT-Rohtak rejected the application on grounds that the university was not a competent person to apply for registration, was not a charitable institution, and intended to benefit only a limited number of persons. The CIT's reasoning included that the power to dissolve the university lay with the sponsoring body, making the university an activity rather than an applicant, and that the university would charge substantial fees from students.On appeal, the tribunal considered whether the university was a competent person to file the application. The tribunal noted that the university came into existence by an ordinance and was added to the schedule of the Haryana Private Universities Act, 2006. Under Section 7 of that Act, the university was established as a body corporate with perpetual succession and the power to sue and be sued. The tribunal concluded that the university was a separate legal entity capable of making the application for registration.The tribunal also addressed whether the university was a charitable institution. The definition of 'charitable purpose' in Section 2(15) of the Income-tax Act includes education. The tribunal noted that the university's objects, as per the Haryana Private Universities Act, were educational and aimed at awarding diplomas and degrees. The tribunal referred to the Supreme Court's decision in Sole Trustee Loka Shikshana Trust v. CIT, which defined 'education' as systematic instruction to prepare students for work. The tribunal concluded that the university's objects were charitable and that charging fees did not negate its charitable status.The tribunal further examined the genuineness of the university's activities, noting that substantial expenditure had been incurred on building construction for educational purposes. The tribunal held that the conditions for registration under Section 12AA were satisfied and directed the CIT to grant registration from the date the university acquired land or the 1st day of April of the year in which the application was made.2. Approval under Section 80G(5) of the Income-tax Act:The assessee also applied for approval under Section 80G(5)(vi), which the CIT denied based on the same reasons for rejecting the registration application. The CIT also noted that the assessee was not approved under Section 10(23C) or registered under Section 12AA.The tribunal considered the relevant provisions of Section 80G(5) and Section 80G(5B), which require that the institution be wholly for charitable purposes and not have any objects of a religious nature. The tribunal noted that the sponsoring body, which would receive the university's assets upon dissolution, had objects that included religious activities. The tribunal referred to the Supreme Court's decision in Upper Ganges Sugar Mills Ltd. v. CIT, which held that even if one object of an institution is of a religious nature, it falls outside the scope of Section 80G.The tribunal concluded that since the sponsoring body had religious objects, the university was not entitled to approval under Section 80G, despite its perpetual existence. The tribunal emphasized that the rules governing the university allowed for the transfer of assets to the sponsoring body, which included religious objects, making the university ineligible for approval under Section 80G.Conclusion:The tribunal allowed the appeal for registration under Section 12AA, finding that the university was a competent person to apply and had charitable objects. However, the tribunal dismissed the appeal for approval under Section 80G, citing the sponsoring body's religious objects as a disqualifying factor.