TMI Blog2003 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Institute at other places in the year 1972 itself, the activities of the Institute at Nainital were bifurcated for administrative convenience. The assessee society came into existence and got it registered with Registrar of Societies, U.P. under the Societies Registration Act, 1860. The assessee society had its memorandum of association and relevant portion of the objects are as under: "(a) To heal and teach charity and truth and to establish, construct, organize, consolidate, support, develop, conduct, acquire, takeover, equip, endow, improve, alter, extend, administer educational institutions, research institutions for the benefit and uplift of all persons, irrespective of caste, creed, race or religion. (b) To takeover, manage, establish, administer, carryon, conduct, develop, equip, improve, alter and close down or dispose of educational, scientific and technical institutions, works and activities of all kinds in any part of India in pursuance of this Memorandum for the benefit of the entire community, irrespective of caste creed, race or religion. (c) To take over and dispose of, establish, maintain and develop schools, hostels, colleges other institutions for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 28 of the paper book submitted the relevant information. After considering all the factual position, the Commissioner passed the impugned order in which the learned Commissioner had taken into consideration the income of the assessee for the year ending 31-12-1999, 31-3-2000 and 31-3-2002 as well as the details of the expenses shown by the assessee and noted there from that assessee society was spending only a negligible amount towards charity and main activities of the society consisted of hiring on rent the buildings and other properties owned by it to St. Mary's High School; St. Mary Boarding Department; and Nirmala Balika Vidyalaya. The rent received by the society was being spent mainly on the extension of existing buildings; its repairs and renovation and construction of immovable properties. The Commissioner was of the view that section 12AA(1) of the Act required that object of the applicant society must be charitable and said society is to establish that its activities were genuinely of the charitable nature. Learned Commissioner was of the view, from the record, that object of the assessee may be charitable but its activities were not charitable and thus it was not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impliedly approved the ratio rendered by Hon'ble Rajasthan High Court and the observation referred to by the learned counsel for the assessee relevant for the purpose of this case was appearing at page 317 of 224 ITR wherein Their Lordships of Supreme Court had observed that it would be rather unreal and hyper technical to hold that the assessee society was only a financing body and would not come within the scope of other educational institution. The learned counsel submitted that same analogy will be applicable to the present case as assessee society had supported educational institution and thereby fulfilled its test prescribed in section 12AA of the Act and it could not be said that assessee society acted merely as property owner. 5. About the nature of the activities of the assessee it was pointed out by the learned counsel that memorandum of association gives out the different objects of the assessee society and it is one of the objects that assessee society shall administer educational institution, support, develop and improve such eduational institutions for the benefit and uplifting of all persons irrespective of caste, creed, race or religion. Such type of activities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cieties Registration Act, 1860 and copy of latest registration deal is also filed. The contention is that section one of the Societies Registration Act, 1860 provides that any seven or more persons associated for any literary, scientific, or charitable purpose, or for any such purpose as is described in section 20 of this Act, may, come forward seeking registration under the Societies Act. Section 20 thereof provides the societies which can be registered and all the charitable societies are to be registered under this Act. Learned counsel pointed out that section 3(2) of this Act gives power to Registrar to refuse to register a society if anyone or more of the objects of the society sought to be registered was not an object mentioned in sections 1 20. Each year such registration is to be renewed and at that time power is again given to the authorities not to renew the registration if society commits any violation of the provisions of the Act. The contention is that once the assessee got registration of the society under the Societies Registration Act, a prima facie case is made out in the favour of the assessee that assessee had got charitable object that is why it got registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of charity spent in the year ending31-3-1999,31-3-2000and31-3-2001was Rs. 16,535, Rs. 34,136 and Rs. 37,710 only. He rightly treated the same as negligible amount. There was no other charitable activities and learned Commissioner was justified in concluding that object of the assessee may be charitable but activities of the assessee society were not charitable and application was rightly rejected. 12. Referring to the memorandum of association the learned D.R. pointed out that clause 3 provides object of the assessee society and clause 3(a) to 3(e) thereof provides different objects relating to educational institutions and that cannot be treated as charitable and it takes out the case of the assessee from sections 11 and 12 of the Act. Remaining objects 3(f) to 3(x) are no doubt charitable but none of these objects was being pursued by the assessee and learned Commissioner was justified in observing that activities of the assessee were not of charitable nature. 13. The learned D.R. has placed reliance on the decision of Hon'ble Supreme Court in the case of Gangabai Charities v. CIT [1992] 197 ITR 416 in which it was held by Their Lordships that income derived from letting bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year out of Rs. 6 lakhs were given to United Provinces Institute of the Blessed Virgin Mary, Allahabad towards building fund. The amount of Rs. 1,25,000 was spent in assessment year 1999-2000 on construction of toilets in Nirmala Balika Vidyalaya, Rs. 1,25,000 was spent in assessment year 2000-2001 for construction of boundary wall. In assessment year 2001-2002 an amount of Rs. 11,62,888 was spent out of which boarding big house was constructed for Rs. 7,65,618, boundary wall Rs. 1,99,000 and construction of water tank Rs. 1,98,262. All these activities are of charitable nature and it could not be said that assessee was accumulating funds and further, once the assessee society is registered with Registrar of Societies, in case the assessee society is dissolved its property will not be going to its members but it will go to the government as prescribed under section 14A of the Societies Registration Act, 1860. On these facts, the learned counsel submitted that all the properties were being maintained by the assessee for charitable purposes and not for any commercial purpose. The object as well as activities of the assessee society are that of charitable. 15. We have considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order shall show that assessee society had proceeded with main object to establish, construct, organize, consolidate, support, develop, acquire, take over, improve, and administer educational institutions. Other objects under clause 3 of memorandum of association up to 3(a) to 3(e) are in respect of advancement of educational activities any of its branches, particularly schools, colleges and institutions for all persons irrespective of religion, race, caste, community or social status. It has also come on record that assessee is owner of the properties which assessee society acquired in 1972 and these are listed at pages 36 to 38 of the paper book. The assessee had let out these properties to Ramnee Educational Institution on nominal rents and it is also not in dispute that Ramnee Educational Institution is running schools in these properties. So far as running educational institutions by Ramnee Educational Institute in the buildings owned by assessee society is concerned, the very purpose of Ramnee Educational Society will be the purpose of the assessee as held in the case of Agarwal Shiksha Samiti Trust and ratio of that decision was impliedly approved by Their Lordships of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
