2006 (9) TMI 224 - AT - Income Tax

Tribunal Upholds Exemption for Educational Charity Society

Assistant Commissioner Of Income-Tax. Versus Graphic Era Educational Society.

The Tribunal upheld the CIT(A)'s decision to grant exemption under section 11 of the IT Act to the society registered for educational and charitable ... Charitable Trust Issues:1. Exemption under section 11 of the IT Act.2. Treatment of voluntary receipts as business receipts.3. Restoration of the Assessing Officer's order.Exemption under section 11 of the IT Act:The appeals were filed by the Revenue challenging the order of the CIT(A) regarding the exemption under section 11 for the assessment years 1999-2000 and 2000-01. The society in question was registered under the Societies Registration Act with specific objectives related to education and charitable activities. The Revenue contended that the society was not fulfilling the conditions for exemption under section 11. The Assessing Officer (AO) raised concerns about the society's income sources and the nature of its activities, particularly related to charging fees for educational services.Treatment of voluntary receipts as business receipts:The Revenue also disputed the treatment of voluntary receipts as business receipts by the CIT(A). The AO questioned the accounting norms followed by the society and raised issues regarding the utilization of funds raised through fees and charges. The AO argued that the society was not deriving income from property held under trust but rather from fees charged to students. Additionally, the AO examined the applicability of section 10(23C)(iiiad) for the assessment year 2000-01, denying exemption under this section due to profit-making motives.Restoration of the Assessing Officer's order:The Revenue sought the restoration of the AO's order, contending that the CIT(A) erred in granting exemption under section 11 to the society. However, the CIT(A) upheld the society's entitlement to exemption under section 11 after detailed analysis and findings. The Tribunal reviewed the contentions of both parties, considered relevant case laws, and concluded that the society fulfilled the conditions for exemption under section 11. The Tribunal emphasized that the society's activities were for the general benefit of the public, adhered to university guidelines, and operated without the intention of personal gains or profit-making.In conclusion, the Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decision to grant exemption under section 11 to the society. The judgment highlighted the charitable nature of the society's activities, its compliance with legal requirements, and the absence of profit motives in its operations.