IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 13.12.2011 Coram The Honourable Mr.Justice P.JYOTHIMANI and The Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case Appeal Nos.554 & 555 of 2011 and M.P.No.1 of 2011 The Director of Income Tax, (Exemptions), Chennai. .. Appellant in both the appeals vs. M/s.Vallal M D Seshadri Trust, B4, Ceebros Rangam Apartments, Old No.11/New No.32, Cenotaph Road, Teynampet, Chennai-600 018 .. Respondent in both the appeals The above tax case appeals are preferred under Section 260-A of the Income Tax Act, 1961, against the common order dated 16.6.2011 passed by the Income Tax Appellate Tribunal 'C' Bench, Chennai,in I.T.A.Nos.508 and 509/Mds/2011. Respectively against the proceedings of the Director of Income Tax Exemptions, Chennai dated 26.11.2010 and made in DIT (E) No.2(101)10-11. For Appellant : Mr.T.Ravikumar JUDGMENT (Judgment of the Court was made by P.JYOTHIMANI.J.) The Revenue has preferred these tax case appeals as against the order dated 16.6.2011 passed by the Income Tax Appellate Tribunal 'C' Bench, Chennai, in I.T.A.Nos.508 and 509/Mds/2011, suggesting the following substantial questions of law: "(a) Whether on the facts and circumstances of the case, the Tribunal was right in directing to grant registration under Section 12AA on violation of Sec.2(15) of the I.T.Act? https://hcservices.ecourts.gov.in/hcservices/ (b) Whether on the facts and circumstances of the case, the Tribunal was right in directing to grant approval under Section 80G in violation of Rule 11AA of the IT Act?" 2. A reference to the order of the Director of Income Tax (Exemptions) shows that the application filed by the assessee for registration, under Section 12AA of the Income Tax Act, has been rejected at the threshold itself holding that one of the object clauses, namely, clause No.16 speaks about publishing newspapers in regional, national and English languages by establishing necessary facilities for the same and that the original contents of the trust deed came to be amended in respect of object clause 11(b), vide amendment deed dated 2.11.2010 and the same is not permissible. Based on these two reasons, the assessing officer has rejected the application filed under Section 12AA of the Act and consequently, rejected the application filed under Section 80G of the Act, for approval. 3. The Tribunal has found that the trust deed can be amended and the finding by the Director of Income Tax(Exemption) is not based on sound reasons. That apart, the Tribunal, in the impugned order has found that publishing of newspapers and periodicals does not ipso facto become commercial activity. It is on that basis, the appeals filed by the assessee came to be allowed by the Tribunal. Being aggrieved by the said order the Department has filed the present appeals on the above substantial questions of law. 4. Section 12AA of the Act contemplates the power of the Commissioner to call for information for the purpose of satisfying himself about the genuineness of the activities of the trust or institution, which is as follows: "Sec.12AA. The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-Section (1) of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he deem necessary in this behalf; and (b) after satisfying himself about the objets of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant. Provided that no order under sub-clause (ii) shall be https://hcservices.ecourts.gov.in/hcservices/ passed unless the applicant has been given a reasonable opportunity of being heard." 5. On a reference to the order passed by the Director of Income Tax (Exemptions), it is clear that nowhere he found fault with the genuineness of the trust. In so far as it relates to the publication is concerned, Section 2(15) of the Act is usefully extracted hereunder: "Sec.2(15) Charitable purpose includes relief of the poor, education, medical relief, preservation of environment including watersheds, forests and wildlife and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility; Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty five lakh rupees or less in the previous year." 6. A plain reading of the above would show that the term 'charitable' includes the word 'education' also. The word 'education' came to be interpreted by the Honourable Apex Court in the case in SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. THE COMMISSIONER OF INCOME TAX, MYSORE (1995) 101 ITR 234, wherein it was held that the word 'education' should be construed with wider connotation. The relevant portion of which is extracted hereunder: "The sense in which the word 'education' has been used in Section 2(15) in the systematic instruction, schooling or training given to the young is preparation for the work of life. It also connotes the whole course of scholastic institution which a person has received. The word "education" has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling your acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not https://hcservices.ecourts.gov.in/hcservices/ straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling." 7. As far as the amendment made to the trust deed is concerned, it is not the concern of the assessing authority, and only the civil Court is empowered to decide the said issue and in any event that cannot be the reason for denying the charitable nature of the institution, if it is otherwise charitable. 8. The learned counsel for the appellant would rely upon the judgement of the Kerala High Court in IDEAL PUBLICATIONS TRUST V. COMMISSIONER OF INCOME TAX (2008) 305 ITR 143, which relates to Section 11 of the Act and the same in our opinion is not applicable to the facts of the present case, as in this case at the threshold itself the application under Section 12AA of the Act has been rejected. 8. In the light of the above, we are of the view that there is no reason to interfere with the order passed by the Tribunal. There is no question of law much less substantial question law would arise for consideration. Accordingly, the tax case appeals stand dismissed. Connected miscellaneous petition is closed. No costs. Sd/ Assistant Registrar /True Copy/ Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Assistant Registrar,Income Tax Appellate Tribunal, Madras Bench "C". 2.The Secretary, Central Board of Direct Taxes, New Delhi. 3.The Commissioner of Income Tax (Appeals) V, 121, Mahatma Gandhi Road, Chennai-600 034. 4.The Director of Income Tax (Excemptions),Chennai 600 034 Tax Case Appeals 554 & 555 of 2011 KSJ (CO) BMD 30/12/2011 https://hcservices.ecourts.gov.in/hcservices/