TaxTMI 
TaxTMI 
2013 (10) TMI 824
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....nd break-up fees collection like admission fee, tuition fee, etc.. 3. Further in the Income & Expenditure Account for the year ended 31.3.2010, the total fee collection is shown at Rs. 95,98,345. However, in the statement of fee structure furnished by the above society during the proceedings, while indicating the strength under each 'course B.Com (Reg.), B.Com (Comp) and B.Sc., for each year and the respective fee for such course, the total fee are shown at Rs. 94,66,000/-. Thus, there is discrepancy in the fee collection as per such statement furnished and the amount as shown in the said Income & Expenditure Account. Similarly, in the Income & Expenditure Account for the accounting year ended 31.3.2011, the total fee collections are shown at Rs. 97,42,901, whereas, in the statement of fee structure for the said year furnished during the proceedings, the total fee are shown at Rs. 96,78,000. Thus, there is discrepancy noticed in such statement. Further, in the Receipts & Payments Account for the year ended 31-3-2012 furnished during the proceedings, the fee collections are shown at Rs. 84,91,788.. However, the fee structure statement for the financial year 2011-12, showing stren....
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....d fee was spent for the purpose of imparting education and proper facilities to the students. It was further stated that .the society utilized all the amounts collected in providing good education. Stating that the funds collected were applied for the purpose of objects of the society and it has complied with the provisions of the Income Tax Act, it was submitted that merely because there is a small difference in the fee collected, the same should not divest the institution from getting registration u/s. 12AA of the Act. 6. Considering the plea of the assessee the DIT(E) observed that there is no merit in such submissions of the above society. The contention that the society collected further amount than the prescribed fee for meeting various expenditure, is not correct. The other contention that the society utilized all the amounts collected from students for their main object of providing education to the students is also not fully correct. As seen from the Income & Expenditure Account for the year ended on 31-3-2009, the excess of income over expenditure is shown at Rs. 27,67,655. Thus, during that year, the society has got surplus i.e., earned profit of Rs. 27,67,655/- from ....
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.... about the activities. However, where no activity is commenced, the question of making any enquiry regarding any activity by the DIT(E) would not arise. The nature of enquiry would depend on the facts of each case. Hence the contention of the AR that scope of the DIT(E) is limited to ascertaining only whether the objects are charitable or not cannot be accepted. 10. The next question for our consideration is whether on the facts and in law, the registration u/s. 12AA of the Act can be refused to the assessee. For the purpose of sections 11 and 12, the word "charitable purpose" has been defined in section 2(15) of the Act which reads as follows: "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, co....
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.... the Act. Section 11 clearly provides that in order to claim exemption such institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds. Further, exemption can be denied if the provisions of section 13 are violated. Therefore, if there is any violation of either section 11 or section 13, then, the profits of such institution would be taxable. Further the fact that, only 75% of the income is to be applied for charitable purposes itself shows that element of profit is not excluded from the definition of charitable purpose for the purpose of sections 11 and 12. Because some profit has been earned by an educational institution registration u/s. 12AA cannot be denied so long as provisions of sections 11, 12 and 12AA are complied with. So long as it is established that income of the assessee society has been applied for the purpose of education in terms of section 11(2) and there is no violation of section 13, the assessee would be entitled to enjoy the benefit of registration u/s. 12AA of the Act. 14. Under both the categories mentioned above, the societies/trusts are created with the sole object to advance the cause of e....