Kandukuri Bangaramma Charitable Trust v. Commissioner of Income-tax-2, Visakhapatnam
[Citation -2019-LL-0927-94]

Citation 2019-LL-0927-94
Appellant Name Kandukuri Bangaramma Charitable Trust
Respondent Name Commissioner of Income-tax-2, Visakhapatnam
Court ITAT-Visakhapatnam
Relevant Act Income-tax
Date of Order 27/09/2019
Judgment View Judgment
Keyword Tags charitable purpose • service agreement • grant of registration • refusal of registration • charitable institution • charitable trust • profit motive
Bot Summary: The Ld.CIT further observed that the main object of the Trust is to give training and coaching to the enrolled students training and coaching given by the assessee Trust is not resulting in any formal education of degrees or certificates by the academy of the Trust or the recognized universities of India or the institutions. The Ld.CIT further examined the income and expenditure account and found that the assessee trust has collected the fees for various courses for the period ended 31.03.2014 as under : DME Course Fee - Rs.9,70,000/- GES Course Fee - Rs.41,90,000/- GME Course Fee - Rs.19,50,000/- The Ld.CIT observed from the income and expenditure account, the net surplus of Rs.9,66,406/- which gave the impression to the Ld.CIT that the academy is being run on commercial basis, charging substantial fee to earn profits, thus, held that the decision of High Court of Uttarakhand is also applicable in the case of the assessee. The, Ld.CIT further observed from the objects of the assessee Trust that the assessee has not placed any material to indicate that public in general are getting benefited by the Trust. The Ld.AR argued that as per the objectives of the Trust, it is a charitable Trust imparting education requested set aside the order of the Ld.CIT and to grant the registration u/s 12A of the act. The institute is not affiliated to any of the institutions in India i.e. either schooling, pre university or university modes, thus, the coaching or education given by the Trust / academy is not resulting in any formal education argued that the activities of the assessee Trust cannot be treated as charitable activities and accordingly argued that no interference is called for in the order of the Ld.CIT. 6. Though the objectives of the Trust are charitable and the Trust is established in 2009-10 with the objects of running and developing Merchant Navy Educational Institution for the purpose of educational service to the public in general and more particularly to all the poor minority communities, SC, STs who are living in village, town, cities, who suffer from social and economic backwardness and thereby to pave way for their social and economic development. The assessee did not place any evidence to show that the assessee has got admitted the students as per the 7 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam objects mentioned in the Trust Deed.


IN INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM. BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER I.T.A.No.606/Viz/2014 (Assessment Year) M/s Kandukuri Bangaramma Vs. Commissioner of Income Tax-2 Charitable Trust Visakhapatnam 204, 1st Floor, Vyshnavi Legend Apartments Akkayyapalem Visakhapatnam [PAN AACTK1821D] (Appellant) (Respondent) Appellant by Shri C.Kameswara Rao, AR Respondent by Shri D.K.Sonowal, CIT, DR / Date of Hearing 28.08.2019 Date of Pronouncement 27.09.2019 ORDER Per Shri D.S.Sunder Singh, Accountant Member This appeal is filed by assessee against order of Commissioner of Income Tax (CIT)-2, Visakhapatnam vide F.No.CIT-II/VSP/2014-15/12A/05 dated 30.09.2014. 2 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam 2. All grounds of appeal are related to refusal of registration u/s 12AA of Income Tax Act, 1961 (in short Act ). In this case, assessee has filed application in Form No.10A seeking registration u/s 12AA of Act. In application, assessee Trust stated that it is running academy to impart training in maritime engineering in name and style of Sea World Maritime Academy. Ld.CIT observed that assessee Trust has entered into agreement with Australian Maritime College, Australia for training aspirants leading to award of following Diploma Certificates (i) Advanced Diploma of Applied Science awarded by University of Tasmania, Australia. (ii) Certificate of competency as Watch Keeper Deck issued by Australian Maritime Safety Authority. 2.1. Further Trust entered into another agreement with New Zealand Maritime School, New Zealand for imparting training leading to award of following certificate / degree : (i) New Zealand Second Mate Foreign Going Certificate of Competency (ii) Maritime Engineer Class 3 Certificate in Competency for Graduate Engineers. 3 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam 3. Ld.CIT issued letter dated 05.08.2014, in response to which, Ld.AR appeared and submitted unaudited receipts and payments account for year ended 31.03.2014 and other details. Ld.CIT observed that Sea World Maritime Academy, Visakhapatnam is giving training and coaching, thereby preparing students who enrolled in academy for giving exams for above mentioned Diploma / Certificate courses. Diploma / Certificates are awarded by Australian Maritime College and New Zealand Maritime School, but not academy of Trust. Ld.CIT further observed that main object of Trust is to give training and coaching to enrolled students, therefore, training and coaching given by assessee Trust is not resulting in any formal education of degrees or certificates by academy of Trust or recognized universities of India or institutions. Therefore, Ld.CIT held that not imparting any education which has common element of any schooling is not entitled for registration u/s 12A of Act, even there is no profit motive. Ld.CIT relied on decision of Hon ble High Court of Bihar in case of Institute of Mining & Mine Surveying Vs. CIT [208 ITR 608] and decision of Hon ble High Court of Uttarakhand in case of CIT Vs. National Institute of Aeronautical Engineering Educational Society [315 ITR 428] and accordingly rejected registration u/s 12AA of 4 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam Act. Ld.CIT further examined income and expenditure account and found that assessee trust has collected fees for various courses for period ended 31.03.2014 as under : DME Course Fee - Rs.9,70,000/- GES Course Fee - Rs.41,90,000/- GME Course Fee - Rs.19,50,000/- Ld.CIT observed from income and expenditure account, net surplus of Rs.9,66,406/- which gave impression to Ld.CIT that academy is being run on commercial basis, charging substantial fee to earn profits, thus, held that decision of High Court of Uttarakhand is also applicable in case of assessee. The, Ld.CIT further observed from objects of assessee Trust that assessee has not placed any material to indicate that public in general are getting benefited by Trust. Accordingly, Ld.CIT viewed that assessee Trust is not fit case for granting registration u/s 12AA of Act, accordingly rejected same. 4. Against order of Ld.CIT, assessee filed appeal before this Tribunal. During appeal hearing, Ld.AR argued that assessee is charitable institution rendering educational services to public at large. 5 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam assessee is not coaching institute and it is imparting training and education as per curriculum of Australian Maritime College (AMC). training as per guidelines given by AMC are resulting in Pre-sea training of Deck Cadet, Sea going training of 18 to 24 months and Advanced Diploma studies at AMC, Australia for 9 months. Apart from above New Zealand Maritime School also has agreed to offer jointly approved training programmes awarding Diplomas or Certificates to trainees. Ld.AR further stated that there is no profit motive involved in imparting training. Ld. AR placed paper book and submitted that during year under consideration, assessee had received total receipt of Rs.71.73 lakhs, out of which surplus was only Rs.9.66 lakhs less than 15% of gross receipts and more than 85% was spent for charitable purposes, thus, argued that there is no profit motive involved in activities of assessee trust. Ld.AR argued that as per objectives of Trust, it is charitable Trust imparting education, hence, requested set aside order of Ld.CIT and to grant registration u/s 12A of act. 5. On other hand, Ld.DR argued that institution is running on commercial lines and it is charging huge fee from students as evidenced 6 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam from Profit & Loss account filed by assessee. Further, Ld.DR argued that it is purely conducting coaching classes for their students in name of Sea World Maritime Academy and training their students. institute is not affiliated to any of institutions in India i.e. either schooling, pre university or university modes, thus, coaching or education given by Trust / academy is not resulting in any formal education, therefore, argued that activities of assessee Trust cannot be treated as charitable activities and accordingly argued that no interference is called for in order of Ld.CIT. 6. We have heard both parties and perused material placed on record. Though objectives of Trust are charitable and Trust is established in 2009-10 with objects of running and developing Merchant Navy Educational Institution for purpose of educational service to public in general and more particularly to all poor minority communities, SC, STs who are living in village, town, cities, who suffer from social and economic backwardness and thereby to pave way for their social and economic development. assessee did not place any evidence to show that assessee has got admitted students as per 7 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam objects mentioned in Trust Deed. assessee is having lot of objects as under : To establish, maintain run and develop Merchant navy educational Institution for purpose of educational service to public in general and more particularly to all poor minority communities, Scheduled castes, Scheduled Tribes who are living in village town cities, who suffer from social and economic backwardness and thereby to pave way for their social and economic development. In order to achieve have objects trust intends to establish and run maritime Institution in name of Sea World Maritime Academy at Visakhapatnam. Smt. K Saritha and Sri K.V.S.Sridhar will be directors for Institute and both of them are authorised to open any account with any bank to be mutually decided and they will be autho sed to operate account jointly and or severally. academy will run under KANDUKURI BANGARAMMA EDUCATIONAL TRUST and will not carry out any activity with intention of earning profit. b) To develop self discipline, based on social behaviour which will lead to support society and to become progressive citizen. c) To develop leadership qualities and self confidence by acquiring required educational/professional qualification. d) To generate confidence, knowledge and experience in building up individual personality which will promote self employment thereby reducing burden on Government and in turn reducing long waiting list in employment exchanges. e) To promote good neighbour behaviours, secularism through adult education and by taking up other projects. f) To encourage sportsmen and create confidence in ladies in general and war widows in particular to enable them to undertake cottage/self/employment projects. g) To develop art & culture which will suit Indian society on modern line. 8 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam 6.1. From P&L account and submissions of Ld.AR made during appeal hearing, it is mainly engaged in giving various coaching / courses and collecting exhorbitant fees. As per available information on records, course conducted by institution are not approved by DG Shipping for giving continuous discharge certificate. As per information available on record, there was complaint against academy that this institution, Sea World Maritime Academy indulging in cheating innocent students. As submitted by Ld.DR, during appeal hearing, none of courses are recognized by University Grants Commission or by Govt. of India, or state Boards such as Schooling Boards, Intermediate Boards etc. Ld.AR did not place any evidence to establish recognition of University Grants Commission or by Govt. of India, or state Boards for courses offered by assessee. AMC is Australian Maritime College, Australia, which is not affiliated to any Indian Universities and it is stated to be affiliated to University of Tasmania. Similarly, New Zealand Maritime school is also awarding certificates. Sea World Maritime Academy is approved institution of AMC and New Zealand Maritime school as per letters placed in paper book page No.16 to 19, but not affiliated institution of universities in India. Therefore, it is observed from facts of case that assessee is 9 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam coaching institution which is not imparting any formal education resulting in degrees awarded by recognized schools/universities of India. assessee relied on decision of ITAT, Delhi in case of Vidyadayani Shiksha Samiti, Roorkee, which is running schools and colleges, whereas in instant case, assessee is neither running schools nor colleges which are affiliated to Indian institutions/organisations. institution is giving coaching and imparting trainings as per guidelines of AMC and New Zealand Maritime School, New Zealand for appearing for their exams. Therefore, we hold that case of assessee Trust is squarely covered by decision of Hon ble High Court of Bihar in case of Institute of Mining & Mine Surveying (supra) and accordingly not entitled for registration u/s 12AA of Act. Therefore, we do not see any reason to interfere with order of Ld.CIT and same is upheld. 7. In result, appeal of assessee is dismissed. 10 I.T.A. No.606/Viz/2014 M/s Kandukuri Bangaramma Charitable Trust, Visakhapatnam Order pronounced in open court on 27th September, 2019 Sd/- Sd/- (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /Visakhapatnam /Dated 27.09.2019 L.Rama, SPS /Copy of order forwarded to- 1. Assessee - M/s Kandukuri Bangaramma Charitable Trust, 204, 1st Floor, Vyshnavi Legend Apartments, Akkayyapalem, Visakhapatnam 2. Revenue Commissioner of Income Tax-2, Visakhapatnam 3. DR, ITAT, Visakhapatnam 4. Guard file / BY ORDER // True Copy // Sr. Private Secretary ITAT, Visakhapatnam Kandukuri Bangaramma Charitable Trust v. Commissioner of Income-tax-2, Visakhapatnam
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