Convent, not being a separate Entity, not eligible for S. 12A Registration: Kerala HC [Read Judgment]

A division bench of the Kerala High Court, in Sacred Heart Convent v. CIT, held that a convent is not eligible for taking registration under Section 12A of the Income Tax Act, 1961 as it is not a separate legal entity.

The assessee is a Convent, under the Generalate of the Sacred Heart Congregation of the Syro Malabar Church. The constitution of the Generalate speaks of a specific hierarchy with the Generalate as the apex body, Provinces below the Generalate and then the Region and the last unit being the Convents, called the “House”. The appellant is a ‘House’ coming within the constitution of the Generalate.

The sole grievance of the appellant is that their application for registration under Section 12A of the Income Tax Act, 1961 was rejected by the department by holding that they are not a separate entity, but one of the Convents under the Generalate.

Before the High Court, the appellant contended that the constitution of the Generalate regulates the Houses also, which come under the Generalate.

While dismissing the second appeal, the Tribunal found that the appellant comes under the exclusive control of the Generalate through the hierarchies as disclosed from the constitution and there could be no separate registration granted to the Convent.

Upholding the order of the Tribunal, Justices K. Vinod Chandran and Ashok Menon held that “With the available materials, we are inclined to say that the orders of the Commissioner and the Tribunal are correct. However, we feel that there could be materials examined as to whether the appellant is a separate entity who is entitled to hold property for themselves and who has absolute control in its affairs without interference from the Generalate. A more comprehensive enquiry and reading of the constitution would be required. We are of the opinion that since such facts are involved, there should be a remand to the Commissioner, who shall direct the Income Tax Officer to conduct a comprehensive enquiry and after looking at the constitution also, decide the issue as to whether there could be, as claimed by the appellant, status of a separate entity as distinguished and distanced from the Generalate. To enable such consideration, the orders impugned are set aside.”