ECUMENICAL CHRISTIAN CENTRE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this writ petition the order of the Commissioner, refusing the recognition and issuing of a certificate under s. 80G of the I.T. Act, 1961, by his order dated March 15, 1975, is challenged. The petitioner is a company registered under the Companies Act. 1956, and it was incorporated on February 25, 1966. It had also been granted a licence under s. 25 of the Companies Act and permitted to get itself registered as a company with limited liability and without the addition of the word "limited" to its name. On March 23, 1966, the petitioner applied for exemption of its income under s. 88 of the I.T. Act (which later became s. 80G). This application was granted by an order dated November 10, 1969, for the year ending on March 31, 1970. The petitioner applied for renewal and an order was made by a succeeding commissioner on November 10, 1971, renewing the exemption granted up to December 31, 1973. At the expiry of that period, the petitioner sought for a renewal by an application dated April 17, 1974. There was a new incumbent as Commissioner and he refused the renewal by an order dated May 25, 1974, that order was not a speaking one and was challenged before this court in W.P. No. 2684 of 1974. The order of the Commissioner was set aside by this court with a direction to decide the question afresh in accordance with law. Thereafter the Commissioner issued a notice formulating the grounds on which he considered that the petitioner was not entitled to a certificate and the petitioner was asked to show cause why the recognition should not be refused, the notice issued by the Commissioner was dated November 4, 1974, and an exhaustive reply was filed on behalf the petitioner and arguments were also advanced before him in support of the contentions put forth. But the Commissioner refused to grant a certificate by his order dated March 15, 1975, which is marked as Ex. G to the writ petition.

(2.) IT is contended by SriSantosh Hegde. Learned counsel for the petitioner, that the order of the Commissioner is vitiated as it is based on a wrong approach and untenable construction of the relevant clauses in the memorandum of association and the objects of the company and has ignored the relevant material on record. The principal contention on behalf of the petitioner was that its main object was education and, therefore, was a charitable purpose as contemplated under s. 11 of the I.T. Act. 1961, and in fact it was engaged in education, and the refusal of the Commissioner to recognise it as a charitable institution entitled to the benefit of s. 80G is untenable.Clause 3 of the memorandum of association of the company reads as follows :

(3.) HE also referred to the provision inclause 4 of the memorandum of association. The petitioner, as stated earlier, sent an exhaustive reply. The licence that was granted under s. 25(1) of the Companies Act, details of the educational programmes undertaken by the institution, the prospects of Vhicharodaya College and a copy of the letter dated March 18, 1968, that had been sent to the Commissioner on an earlier occasion to the effect that it was not spending any amount outside India and if and when any amount was sought to be spent outside India necessary permission would be obtained from the Central Board of Direct Taxes, were also enclosed with the reply. The Commissioner considered only the provisions in the memorandum of association and he observed that it was not necessary for him to look into the various documents that had been filed before him, reflecting the actual activities carried on by the company. Failure to take into account the materials that had been placed by the petition in regard to its activities is not proper. If, as has been contended for the petitioner, the activities carried on were in pursuance of the objects of the company. The materials in regard to the activities carried on could not be ignored. The activities should have been taken note of in order to find out whether they would be in implementation of the objects of the company. In a way, they would also have explained the objects of the company, as, necessarily, such objects would have been mentioned in general or wide terms and not always loaded with details.