TaxTMI 
TaxTMI 
2012 (12) TMI 187
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....f the Society w.e.f. assessment year 2008-2009 onwards. 5. The Appellant craves leave to add, alter, amend or vary any of the above grounds of appeal at or before the time of hearing." 2. The assessee is a society registered under the Societies Act in the year 1968. The main objects of the society are as under :- a) To establish and maintain the institution for imparting education. b) To establish and maintain the institution for providing medical relief to the needy. c) To organize discourses on education and topics of moral character and other topic of general interest to print and or to publish literature on such subjects. d) To undertake work of a charitable nature and of providing relief and general welfare in Society. e) To hold and or acquire and maintain property in the name of the society, and f) To do all such acts or things as may be incidental or conducive to the attainment of any or all of the aforesaid objects. The assessee society registered under Section 12A(a) of the Income-tax Act vide its registration No.JE-3(14)/686/6778-80 dated 20.09.1973. At present, the assessee is running two schools, i.e., Hans Raj Smarak Sr. Secondary School, Di....
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....rs of society 1,98,037.00 1,22,800.00 The ld. AR also pleaded that even though the amount/donations were shown under the head "building fund", however, the same was included in the total income of the assessee while filing the computation of income. The ld. DIT (E) has wrongly cancelled the registration of the society u/s 12A w.e.f. 2008-09 onwards with retrospective effect vide its order dated 13.02.2012 which is against the established law. The DIT (E) is not justified in stating that the activities of the society are not charitable. The assessee society is running these two schools and through which imparting the education. As per section 2(15) of the Income-tax Act, 1961, imparting education falls specifically within the charitable purposes. The assessee society is carrying out the activities of imparting education by means of these two schools. Imparting education is the first object of the society. Ld. AR submitted that it is incorrect to state that activities are not being carried out in accordance with the object of the society. Whatever money is received in whatever form / all receipts, be it in the form of fee or donations, be it voluntary or involuntary is indee....
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....n students without cost, therefore, the case of CIT vs. M.P. Anaj Tilhan Vyapari Mahasangh helps the assessee. She also relied on the decision of Padanilam Welfare Trust vs. DCIT - 10 ITR (Trib) 479 (Chennai) and Maharashtra Academy of Engg. & Educational Research vs. CIT - ITAT, Pune 'A' Bench - (2010) 133 TTJ (Pune) 706. She also pleaded that while cancellation of the registration u/s 12AA(3), the principles to be followed must be the same which needs consideration while granting the registration u/s 12A read with section 12AA(1). For granting registration, CIT / DIET (E) has to satisfy himself about the genuineness of the activities of such institution and the same must be being carried out in accordance with the objects of the trust / institution. For this proposition, Ld. AR relied on the following judgments :- (i) Aryan Educational Society - 281 ITR 71 (Delhi); (ii) Director of Income-tax vs. Garden City Educational Trust -330 ITR 480 (Karn); and (iii) CIT vs. Red Rose School - 212 CTR (All) 394. Alternatively, she also pleaded that amended section 12AA(3) w.e.f. 1.6.2010 wherein the scope of section has been enlarged for cancellation of the registration u/s 12A o....
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....ol Education Act were not applicable to schools run by society. The case laws relied upon by the DIT (E) for cancellation of registration was on the issue of exemption under sections 11 and 12 of the Income-tax Act, 1961 or under these Acts. In our considered view, the ld. AR has successfully able to distinguish the case laws relied upon. We also find force in the pleadings of Ld. AR that the DIT (E) has to look into the same parameters which were necessary for granting the registration u/s 12A while canceling the same. The activities of any such institution must be genuine and the same are to be carried out in accordance with the object of the trust or institution. Assessee's activities are genuine and carried out in accordance with its objects. In the case of Padanilam Welfare Trust vs. DCIT, cited supra,, the ITAT, Chennai 'A' Bench has held as under :- "The assessee-trust was registered under section 12AA of the Incometax Act, 1961 as a charitable trust from the assessment year 1993-94 onwards, A search action was carried out by the Department at the premises of the assessee-trust as well as in the premises of the trustees and on the basis of the documents and materials foun....
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....for activities other than charitable activities. The assessee had furnished the details of payments made by one of the trustees towards capitation fee for obtaining a medical seat for his daughter as reflected in the account maintained with bank. All these transactions were reflected in .the books of account. Therefore the action of the Commissioner in withdrawing the registration granted to the assessee under section 12AA was not sustainable in law. Accordingly, the registration granted under section 12AA was to be restored." In this case, acceptance of capitation fee has been considered not a ground of cancellation of a charitable trust till the assessee is not diverting the funds and the amount is reflected in the accounts maintained. All transactions were reflected in books of assessee and the same used for the objects of the trust. 4.1 In the case of Maharashtra Academy of Engineering & Educational Research (MAEER) vs. CIT, cited supra, the ITAT, Pune 'A' Bench has held as under :- "In the recent past sub-s. (3) was inserted in S. 12AA w.e.f. 1st Nov., 2004 which gives power of cancellation of registration to the CIT, if he finds that the activities are not genuine or....
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....ion. Strange enough there is no finding recorded by the CIT contrary to this fact. Be that as it may, the real and the only substantial objection for refusal of registration was that the institution has collected donations thus adopted some wrong means of collection of fees. But whether at this preliminary stage he had the right to draw an adverse inference so as to refuse registration or alternatively confine himself to the enquiry about the objects and the activities of the trust as per the limits of the jurisdiction of s. 12AA. Rather this is also not the case of the CIT that the institution is doing some other activity of earning profit other than the activity of running educational institutions. The established factual position is that the institution is not doing in any other activity except running educational institutions. In such circumstances, the action of cancellation of registration cannot be upheld. As far as the objective of the appellant is concerned this is not the case of the Revenue that the assessee was not imparting education. Since the question about the imparting of education has not been doubted or challenged by the Revenue therefore, the impugned order p....
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....ever presently the situation is that the Revenue has not said about any immoral activity of the appellant or the collection of fees was by wrongful means. Prima facie no case was made out by the CIT so as to even vaguely demonstrate that the activities of the appellant were not genuine or activity of imparting of education, for which the trust was created, were not carried out. Even the CIT has failed to establish that any part of the income/receipt of the trust was in any manner misutilized by the trustees for their personal benefit i.e., not in fulfillment of the object of the trust. Otherwise also there are three ways to look at this problem. One is, that the donations are raised but not utilized for achieving the objects i.e., towards imparting education; then such an institution must bear the consequence of cancellation of registration since ipso facto infringed s. 12AA(3) condition. Second aspect is, that though the donations received are meant to fulfill the objects but together with fees have infringed Anti Capitation Prohibition Act; that comes within the clutches of that Act but definitely not under s. 12AA(3) provisions. The third aspect is, that the donation plus fees d....