TaxTMI 
TaxTMI 
2013 (3) TMI 435
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....of charity within the meaning of Section 2(15) of the Act which is unfounded, without any basis and as such the order is arbitrary and unjustified. 3 That the registration has been refused only on the basis of suspicion, conjectures and surmises which is not permitted under the law and as such the order refusing registration is illegal, arbitrary and unjustified." 3. After considering the rival submissions we find that the assessee is a registered society running a school and have applied for registration u/s 12AA of the Act. Ld. Commissioner observed that education per say cannot be called a charitable activity in the light of the decision of Hon'ble Supreme Court in case of MCD V. Children Book Trust, 1992, 3SCC, 390. It was further not....
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....s placed at page 16 to 29 of paper book, was furnished before the Ld. Commissioner which contains all the particulars of land which has been taken on lease by the society. Further the lease amount was Rs. 15,000 3pm as is clearly mentioned at page 3 of the lease deed for the first 10 years and Rs. 22,500 for the next 10 years and then Rs. 30,000 for the last 10 years. He further submitted that it would not make any difference whether the assessee has taken over the students as well as the furniture and fixtures from another school, Saint Carmel School, Giani Zail Singh Nagar, Ropar because the assessee is still doing the activity of providing education. At the time of registration what is required to be seen is the objects of the society an....
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....0(22) had an automatic effect. Even: after the new dispensation from April 1,1999 the test of pre-dominant object of the activity continues to apply as under section 10(22) of the Act. As long as an institution exists solely for educational purposes it would qualify for grant of exemption under section 10(23C)(vi) of the Act. Merely because profits have resulted from the activity of imparting education that would not change the character of the institution existing solely for educational purpose. From April 1, 1999, monitoring provisions have been incorporated by inserting numerous provisos to section 10(23C) of the Act. The procedure for obtaining exemption has been prescribed by various provisos which postulate the filing of an applicat....
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....eeting its expenditure. Rule 2BC of the Income-tax Rules, 1962 has prescribed the limit of Rs. 1 crore where the requirement of seeking approval for exemption would applicable. If the turnover is more than Rs. 1 crore exemption in terms of section 10(23C)(vi) is required. The third proviso postulates the investment deposits of surplus funds. An educational institution could make deposits and can also earn interest, which is permissible. There are certain limits imposed on the accumulations which of course have to be met. The words "not for the purposes of profit" accompanying the "existing solely for educational purposes'" have to be read and interpreted in view of the third proviso to section 10(23C)(vi), which prescribes the methodology ....
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....ake use" or "to put to practical use". In clause 11 of Form 56D of the Rules it is mentioned that the amount of income of an university or educational institution that has been or deemed to have been utilized wholly and exclusively for its objects shall have the meaning assigned to it in sections (1) and (1A) of section 11. Both on principle and precedents the capital expenditure is to be deducted from the gross income of the educational institutions. Had it been the intention of the Legislature to exclude capital expenditure while applying the income of the institution under the third 9 to section 10(23C)(vi) the proviso would have contained an express embargo against such exclusion. The determination of the existence of educational insti....
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....ial and arose year after year and stating that if substantial profits were earned in one year it should be the duty of the institution to lower its fees for the subsequent year so that such profits were not intentionally generated." 7. From the highlighted portion of the observation, it becomes clear that at the stage of application for registration, what is required is the authorities can pursue the objects of the society as well as verify the genuineness of the activities.From the Memorandum of Association of the Society, it becomes clear that the society is mainly floated for the purpose of education and also to provide scholarships to the students and to do other general charitable works like establishing and maintenance of parks, gard....