In CIT v. Dr.Virendra Swaroop Educational Foundation, the division bench of the Allahabad High Court held that the term ‘education’ has wide connotation and it cannot be confined to a certain group for the purpose of Sections 2 (15) ad 10(23C) of the Income Tax Act.
The assessee-trust is engaged in educational activities. The C.I.T. refused to renew the approval of the assessee under Section 80G (5) of the Income Tax Act on ground that for the previous three years, the assessee has shown surpluses and, therefore the activities of the assessee were in the nature of commercial enterprises and no charitable activity whatsoever was being pursued by the assessee. When the order was challenged before the ITAT, the Tribunal observed that granted renewal under Section 80G (5) to the assessee and observed that exemption under Section 11 of the Income Tax Act can be allowed to the assessee. It was also held that there was no violation of the provisions contained in Section 13 of the Act and that for the earlier years it has been granted an approval and also recorded that there was no material changes from the facts of the earlier years in order to come to the conclusion that it was not carrying out activities of the charitable in nature.
Before the High Court, the Department contended that the question of genuineness of the charitable trust cannot be examined in assessment proceedings rather can be examined by the CIT and in case it is found, at any stage, that the activities of the trust are not genuine or that there is no element of charity in the activities of the assessee, the CIT can withdraw the registration in exercise of his powers vested u/s 12AA(3) of the Act.”The department further contended that in order to grant a certificate under Section 80G(5), it is necessary to prove that the purpose of the assessee-Trust is charitable within s. 2(15) of the Act.
The bench comprising of Justice Bharati Sapru and Justice Vinod Kumar Misra observed that the Revenue has not produced any evidence in support of their argument. Analyzing the provisions of s. 2(15), the bench noted that it is apparent from the section that the word education utilized in the section stands independently on its own and to suggest that the word may be confined either to the rich or poor or any other strata of the society is not acceptable.
“The word education has been used in its widest term. It cannot be confined to any section, indeed education is something which is the birth right of every individual. To confine it to a certain group would not be fair in view of the definition as given in Section 2 (15) of the Income Tax Act and in view of the provisions of Section 10 (23C) of the Income Tax Act. It is abundantly clear that the assessee was clearly entitled to be granted exemption under Section 80G (5) of the Income Tax Act for the current year as it has been done in the previous year in view of the law and in view of the findings recorded.” The appeals were dismissed.
Read the full text of the Order below.
