Madras High Court
The Commissioner Of Income-Tax Ii vs P.S.Ramasamy Telugu Minority ... on 1 July, 2025
TCA No.324 of 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 01.07.2025
CORAM :
THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SUNDER MOHAN
TCA No.324 of 2011
The Commissioner of Income-tax II,
Madurai.
Appellant
Vs
P.S.Ramasamy Telugu Minority Educational
and Charitable Trust,
No.9E, N.P.S.N.Arumugam Road,
Sivakasi-626 123.
Respondent
Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961
against the order of the Income Tax Appellate Tribunal “A” Bench,
Chennai, dated 24.12.2010 in ITA No.1568/Mds/2010.
For Appellant: Mr.J.Narayanaswamy
Senior Standing Counsel
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TCA No.324 of 2011
For Respondent: Mr.R.Sivaraman
assisted by
Ms.Vandana Vyas
and Ms.B.R.Varshini
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
On 23.8.2011, the appeal was admitted on the following substantial
question of law:
“Whether on the facts and in the circumstances of the case, the
Income Tax Appellate Tribunal was right in law in directing the
Commissioner of Income-tax to grant approval of Section 80G of
the Income Tax Act, even though the primary statutory requirement
under Section 80G(5)(i) is complied with by the Trust?”
2. Assessee is a trust incorporated on 10.4.1998. Assessee is also
registered under the provisions of the Income-tax Act, 1961 [the Act]. The
declared object of assessee is to carry on educational activities and it runs
an engineering college. Assessee claimed deduction under Section 10(23C)
of the Act.
3. Assessee was enjoying exemption provided under Section
80G(5)(vi) of the Act. Assessee had made application for renewal of
exemption granted under Section 80G of the Act. This renewal request was
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rejected by appellant/Commissioner of Income Tax. Appellant came to a
conclusion that assessee was collecting fees from students and, hence, was
engaged in commercial activities not covered by Section 11(1)(a) of the Act.
Appellant also held that expenditure incurred by assessee trust related to
commercial activities and, therefore, fall under Section 11(4)(a) of the Act.
Appellant further did not consider the capital expenditure that assessee had
incurred in carrying on its activities.
4. Assessee preferred an appeal before the Income Tax Appellate
Tribunal [the ITAT] and by an order pronounced on 24.12.2010, the appeal
that was pertaining to the Assessment Year 2007-2008 came to be allowed.
It is that order which is impugned in this petition.
5. Shri Sivaraman submitted that:
(a) Commissioner of Income Tax has objected to certain
donations made by assessee trust to other educational
institutions mainly on the ground that those receiving
institutions have not been exempted under Section 80G of
the Act;
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(b) the donations and assistance were given to other
institutions carrying on similar activity and there is no rule
that the receiving institutions must also be enjoying the
benefit of deduction available under Section 80G of the
Act.
(c) the condition for exemption under Section 80G of the
Act is that assessee must carry on activities in charity and
eduction is always considered as an activity of charity.
(d) Assessee, being an educational trust, was carrying on
nothing but charitable activity and donations and
assistance granted by it did not affect the eligibility of
assessee's trust for claiming the benefit of Section 80G of
the Act.
Hence, Shri Sivaraman submitted that Commissioner of Income Tax had
erred in relying on unsustainable grounds to reject the renewal application
of assessee.
6. Shri Narayanaswamy submitted that assessee having given
donation even to a political party, for which there was not even a receipt,
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there is a glaring anomaly and, hence, assessee was not eligible to claim the
benefit of Section 80G of the Act.
7. In our view, the ITAT was perfectly justified in allowing the appeal.
8. Revenue's case was that assessee trust had made donations and
assistance to other entities without adhering to the principles of charitable
activities. The schools to which the donations were made perhaps did not
have registration/benefit of exemption under Section 80G of the Act, but
Shri Narayanaswamy was unable to show any rule or provision that
contemplated that if a donation is given to any school, unless donee had
registration/benefit of exemption Section 80G of the Act, donor institution
will not be eligible for claiming the benefit of Section 80G of the Act. We
must keep in mind that those schools were also carrying on educational
activities, which are in the nature of charitable activity.
9. Some of the donations were given by assessee trust to temples and
for that there was no objection.
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10. Another defect that Shri Narayanaswamy pointed out from the
order of Commissioner of Income Tax was that assessee incurred
expenditures like bank interest, vehicle maintenance, building
maintenance, etc., and these were not in the nature of expenditure incurred
for charitable activities.
11. We would agree with the ITAT that every institution – whether
charitable or otherwise – has to run its own establishment for its
functioning and, therefore, incurring of such expenses cannot be pointed
out as a defect to deny the benefit of Section 80G of the Act.
12. Moreover, we do not find anywhere, as rightly observed by the
ITAT, that assessee did not carry out its objectives. Assessee has been
enjoying the exemption in the past and only when it sought renewal, these
objections are raised without pointing out any difference in the activities
carried on by assessee in the past and in the immediate previous three
years which were considered by appellant to deny the exemption. The
nature of activities of assessee has been the same since its incorporation.
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13. On the submission made by Shri Narayanaswamy that assessee
had donated Rs.50,000/- and another sum of Rs.20,000/- to the General
Secretary, DMK, a political party, and those funds could not be treated as
given for charitable activities and there were no receipts also, instead of
denying the claim for benefit under Section 80G of the Act on this ground,
in our view, Assessing Officer should have reduced those amounts from the
85% required to be spent under Section 11(1) of the Act.
In the circumstances, we find no merit in the appeal. Appeal is
dismissed. There shall be no order as to costs.
(K.R.SHRIRAM, CJ.) (SUNDER MOHAN, J.)
01.07.2025
Index : Yes
Neutral Citation : Yes
sasi
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To:
1. The Assistant Registrar
Income Tax Appellate Tribunal
Chennai Benches, Chennai.
2.The Commissioner of Income Tax-II,
Madurai.
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THE HON'BLE CHIEF JUSTICE
AND
SUNDER MOHAN,J.
(sasi)
01.07.2025
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