Sri Vijaya Educational Academy, ... vs Assessee

This is an appeal filed by the assessee against the order of

the Director of Income Tax (Exemptions) Hyderabad dated

29.04.2014 regarding rejection of application in form 10A for

registration u/s 12AA of the I.T. Act, 1961.

2. Brief facts of the case are that Sri Vijaya Educational

Academy, incorporated u/s 25 of the Companies Act, 1956 on

17.6.2011. It filed an application in form No.10A on 25.10.2013

seeking registration u/s 12AA of the Act. Director of Income Tax

(Exemption) observed that the institution has got too many

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objects which are highly descriptive in nature and there is no

dominant object. Further the DIT (E) stated as follows:

"2.1 From the above two main objects, it may be noticed that the same are highly descriptive in nature. In fact there are wide number of objects in each of such main objects. There is no dominant object. Rather, all such objects which are numerous can be construed as of equal importance. Under such vast number of objects, there will be little fund available for meeting each objective. Under these circumstacnes, the applicant institution will not be eligible for exemption u/s 11 of the Act. On a careful reading of the said main object, it may be noticed that the assessee intends to provide learning, skills, training and guidance etc., in areas of stock market, trade, taxation and technology etc. Such objectives cannot be considered as of charitable in nature. Further, consultancy services, advisory services and curriculum design etc. as mentioned under that main object No.2 are of not charitable nature. The same are in fact non charitable and under the circumstances, when there is admixture of both charitable and non charitable objects in the case of the assessee institution, it will not be eligible for exemption u/s 11 of the Act and hence consequently it will not be eligible for registration u/s 12A of the Act. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in Yogiraj Charitable Trust vs. CIT (103 ITR 777) wherein, it was held that, if no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no exemption can be claimed. In this context, it is pertinent to refer to the following observations made by the Hon'ble Supreme Court in that decision:

"The question is whether exemption can be granted where some objects are charitable and some non-charitable. Where there are several objects of a trust, some of which are charitable and some non-charitable, and the trustees in their discretion are to apply the income to any of the objects, the

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whole trust fails and no part of the income is exempt from tax. Where the objects are distributive, each and every one of the objects must be charitable in order that the trust might be upheld as a valid charity. If no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no exemption can be claimed. (See East India Industries (Madras) Pvt. Ltd. v. Commissioner of Income-tax [1967] 65 ITR 611 (SC) and Mohammad-Ibrahim Riza Malak v. Commissioner of Income-tax AIR 1930 PC 226)".

3. The DIT (E) refused to grant registration u/s 12AA of the

Act to the institution and the application in form No.10A was

rejected. Aggrieved, the assessee is in appeal before us.

4. The ld Counsel for the assessee Shri A.V. Raghuram

pointed out that the assessee cannot be denied registration u/s

12AA on the ground that it was having mixed objects. Further

the ld Counsel also submitted before us that the assessee would

amend the objects which are general and in its place incorporate

specific objects for the purpose of imparting education to the

needy. The ld Counsel affirmed that u/s 25, the Company was

established mainly for imparting education in different fields and

hence it would be appropriate for the assessee/company to have

its objects incorporated clearly instead of the present one which

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consists of mixed objects and also objects which are not so

specific.

5. The ld DR raised no objection for the matter to be sent

back to the DIT (E) for giving an opportunity to the assessee to

amend the objects and file afresh the Memorandum's Articles of

Association before the DIT (E). In these circumstances, we set

aside the issue to the file of the DIT(E) to consider the issue de

novo and give an opportunity to the assessee who shall amend

the Memorandum and Articles of the Association with specific

objects for imparting education and thereafter the DIT (E) shall

decide the issue in accordance with the law.

6. In the result, appeal of the assessee is allowed for

statistical purposes.

Order pronounced in the Open Court on 20th March, 2015.

Sd/- Sd/- (P.M. Jagtap) (Asha Vijayaraghavan) Accountant Member Judicial Member

Hyderabad, dated 20th March, 2015. Vnodan/sps Copy to:

1. M/s. Mahesh, Virender & Sriram, C/As 6-3-788/36 & 37A, Ameerpet, Hyderabad

2. Director of Income Tax (Exemptions) Hyderabad

3. The DR, ITAT, Hyderabad

4. Guard File By Order

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