TaxTMI 
TaxTMI 
2010 (10) TMI 302
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....f the society are not entirely charitable in nature and also, the same are not being carried out in accordance with the aims and objects of the society. Therefore, I hereby cancel the registration of the society u/s 12AA(3) of the IT. Act, 1961, as issued by the CIT, Varanasi vide F.No.CIT/Vns/Hq-020/2004-05 dated 25.8.2005. All necessary consequences of such cancellation to follow accordingly." 2. BECAUSE there has been no change in the objects of the "Appellant Society", since its very inception and the activities carried on by it were wholly genuine and covered by the provisions of section 2(15) of the "Act" and the observations made/findings given to the contrary, are erroneous on facts as well as in law. 3. BECAUSE reliance on the order dated 17.03.2009 as passed by the Ld. CIT, Allahabad refusing to grant continuance of earlier notification dated 20.12.2007 is wholly misplaced, as the CCIT's order dated 17.3.2009 itself is based on non-consideration/non-appreciation of the facts and circumstances of the case and the material and information on record, as is evident from a bare perusal of the analysis thereof as per Annexure - "A" and Annexure - "A-I" hereto. 4. BECAU....
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....ch work itself was the place from where he had been operating and procuring and storing the materials required for execution of work; and (f) other attendant facts and circumstances of the case. should have accepted the "Appellant Society's" contention that payments made to Sri Rajan Yadav were meant for educational purposes only and provision of sub-section (3) to section 12AA were not attracted. 8. BECAUSE the "Appellant Society" had duly submitted all the requisite details under various heads of expenditure for the Financial Years 2004-05, 2005-06 and 2006-07 relevant to the assessment years 2005-06, 2006-07 and 2007-08 along with "compilation" submitted before the "CIT" on 10.06.2006, as is evident from index of the said compilation, which is enclosed as Annexure A-II hereto, and the observations made by "CIT" in para 5.3 are wholly erroneous. 9. BECAUSE in any case the regular assessment of the "Appellant Society" for the assessment year 2006-07 had been made by the Assessing Officer after due scrutiny and examination of the books of account and other records, vide order dated 29.07.2008, and in view of the finding of facts as stood recorded therein, the "CIT" coul....
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....04.2004. Later on the learned CIT came to know that the application of the assessee for grant of exemption u/s 10(23C)(vi) of the Act was rejected by the CCIT, Allahabad for assessment years 2008-2009 to 2010-2011 vide order dated 17/03/2009. He, therefore, issued notice dated 28.04.2009 u/s 12AA(3) of the Act to the assessee as to why its registration u/s 12A of IT. Act, 1961 be not cancelled since the activities of the society have ceased to remain charitable in nature as defined u/s 2(15) of the Act. The assessee, vide reply dated 10/06/2009 submitted that it is a society duly registered under Societies Registration Act, 1860 and it had all along been engaged in the activities related to imparting of education through a number of educational institutions, therefore, it falls within the definition of 'charitable purpose' as defined in section 2(15) of the IT. Act, 1961 as amended by the Finance Act, 2008 and only after considering these objects the assessee was duly granted registration u/s 12A of the Act and later on it had been so notified also u/s 10(23C)(vi) of the IT. Act as per the order dated 20/12/2007 covered for the assessment years 2005-2006 to 2007-2008 as issued by t....
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....unt and other documents etc. The learned CIT further observed that the enquires made from Service Tax Department and Trade Tax Department revealed that Sri Rajan Yadav was not registered with them and worked only for the assessee in the F.Y. 2007-08 but there was no written contract between them. He also pointed out that Mr. Yadav had withdrawn Rs.7,00,000/- within 7 days ( on 15.11.2007 & on 22.11.2007) for cash payments but no substantial bill was produced by the assessee. Therefore, the withdrawals of Rs.7,00,000/- also stood unexplained. The learned CIT was of the view that the assessee engaged the so called civil contractor with no status, profile or experience as he had no office of his own and was running a one man show. Therefore, the withdrawals clearly reflected that the payments shown by the assessee to the contractor were bogus and not for the educational purposes. The learned CIT observed that the assessee failed to produce documents and corroborate evidence and as a result many of the expenses as detailed in its Income & Expenditure Account for the relevant Assessment years remained unverified and therefore, could not constitute to be expenditure solely incurred for e....
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....jan Yadav, Prop. M/s Rajan & Co. were not for educational purposes. However, he ignored this vital fact that Shri Rajan Yadav had filed the return for the assessment year 2008-2009 in due course and the payments made to him were supported by bills which contained all the details of the works executed by him and even the Assessing Officer examined Shif Rajan Yadav by issuing the summons u/s 131(1) of the Act and during the course of assessment proceedings, he had duly placed on record the works as executed by him for the assessee society and the payments received by him in lieu thereof. Therefore, the works executed by Shri Rajan Yadav stood fully verified by inspection as carried out by the Income Tax Inspector. It was contended that Shri Rajan Yadav had been exclusively working during the year under consideration for the assessee and the site of said work was on the place from where he had been operating and procuring and storing the materials for execution of the work. Therefore, the payments made to Shri Rajah Yadav for constructing the building to be used for educational purposes could not be considered a basis for cancelling the registration u/s 12AA(3) of the Act. It was cont....
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....any other object of general purpose utility. From the definition provided in sub-section 15 of section 2 of the Act, it is clear that the educational activity comes under the purview of activity for charitable purpose and even if there is surplus from such activity, the registration u/s 12A cannot be denied particularly when the object of the assessee society was to establish, run, manage schools or other educational institutions solely for educational purposes. Even the registration u/s 12A was granted to the assessee vide order dated 12/02/2005 with effect from 01/04/2004 after considering the objects as charitable in nature and it is not the case of the deptt that there is any change in the objects of the assessee society. It has not been brought on record that the assessee society was not engaged in the activities relating to imparting of education. In the present case, the learned CIT cancelled the registration alrady granted u/s 12A of the Act solely on the basis of this fact that the CCIT, Allahabad vide order No. F.No.CC-ALD/J-7/10(23C)(vi)/2007-08/4503 dated 17/03/2009 has rejected the registration u/s 10(23C)(vi) of the IT. Act. However, the Hon'ble Punjab & Haryana High ....
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....not the case of the learned CIT that the building constructed by Shri Rajan Yadav on behalf of the assessee was utilised for the purposes other than the educational purposes, therefore, the payments made to Shri Rajan Yadav for construction of the building which is to be utilised for imparting the education i.e. the main object of the assessee, cannot be a ground to cancel the registration already granted u/s 12A of the IT. Act. The learned CIT also relied on the decision of Hon'ble Uttranchal High Court in the case of CIT, Haldwani, v. M/s. Queens Educational Society (supra). The law laid down in the said case is not a good law in view of the judgment of Hon'ble Punjab & Haryana High Court in the case of Pinegrove International Charitable Trust v. Union of India [2010] 37 DTR (All.) 105 and the judgment of Hon'ble Bombay High Court in the case of Vanita Vishram Trust v. CCIT & Anr. [2010] 40 DTR (Bom.) 225 (supra). The relevant findings as have been given by their Lordships in paras 14 and 15 of the aforesaid referred to judgment in the case of Vanita Vishram Trust v. CCIT & Anr. read as under: "14. The first respondent while rejecting We applications of the petitioner has adve....
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....ious" objects, the assessee had done nothing to achieve them and had only pursued the main object of providing education and earning profit Now, it must be appreciated that in order to obtain the benefit of the exemption under s. 10(23C)(vi), the university or, as the case may be, educational institution must exist solely for educational purposes and not for the purposes of profit The requirement that the institution must exist solely for educational purposes would militate against an institution pursuing other objects. Consequently, the High Court was, in our view and with due respect, not correct in holding as a principle of law that the benefit of the exemption should be denied on the ground that the assessee has only pursued its ' main object of providing education and had not pursued the other objects for which the trust was constituted. Were the assessee to pursue other objects, it would clearly run afoul of sub-cl. (vi). The assessee must exist solely for educational purposes. In this view of the matter, while we hold that the facts of the present case are distinguishable, we have also recorded our reservations about the correctness of the statement of legal principle in the....