TaxTMI 
TaxTMI 
2013 (10) TMI 1077
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....llate Tribunal, Hyderabad Bench 'B', Hyderabad. During such appeal, after considering the plea and submissions of the assessee, the Hon'ble ITAT vide their order in ITA.No.711/Hyd/2012, dt. 10.08.2012, has set aside the said matter to the file of the DIT(E) for deciding the same afresh. The relevant observations made by the Honble ITAT in this regard, in para 5 of the said order, is reproduced as under : "Before parting, it is pertinent to mention that the learned Counsel further made a statement at bar that the assessee is ready to furnish further information required by the Director of Income Tax (Exemptions) to verify he unsecured loan creditors and other liabilities discussed in paras 3 to 5 of the impugned order. Further, the learned Counsel also made a statement at the bar that in the second round of proceedings before the Director of Income Tax (Exemptions),he shall demonstrate to the satisfaction of the Director of Income Tax (Exemptions) that the expenditure incurred by the assessee society is wholly for activities of charitable nature, which, in the earlier round, was not accepted, as per the discussion given in paras 6 and 7 of the impugned order. Considering the tota....
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....s providing free education to about 120 students and also providing concession in the fees to economically weaker students without any discrimination in caste, creed or race in accordance with their paying capacity. But in support of such claim, the assessee has not produced any proof or documentary evidence. 6. The DIT(E) observed that when as per the said order of the Hon'ble ITAT, the assessee was required to furnish supporting evidence in that regard to demonstrate its case, it has not been able to make the desired compliance during the present proceedings. 7. The DIT(E) further held as mentioned in the earlier order, the assessee has made investment in chit during different years and such investment is in contravention of the provisions of section 11(5) of the Act and also the same is not a charitable activity, having regard to the meaning of 'charitable purpose' as per section 2(15) of the Act. 8. The DIT(E) observed that in the said letter filed during proceedings, it is stated that since there was delay in obtaining term loans from the banks for constructing school building, contribution was made to chit in order to meet the immediate fund requirements, which has b....
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....ssessee was not carrying on the business of chit funds and relied on the decision of the Tribunal in the case of St. Joseph Education Society vs. DDIT(E)-1, Hyderabad in ITA.No.298/Hyd/2010 dated 16.3.2012. 14. The learned DR on the other hand stated that the society has to adhere to the fees structure and there is nothing on record that the fees fixed by the Government bodies has been adopted by the society/trust. The DR supported the Order of the DIT(E) stating that investment in chit funds is in violation of sec. 11 (5) and hence, the society is not eligible for exemption under section 12AA of the Act. 15. We have heard both the parties and perused the material available on record. We find that the Lucknow Bench of the Tribunal has clearly brought out the crux of the matter as follows: "6. The above findings of the CIT are required to be tested in the light of the provisions of section 12AA of the Act. A bare perusal of the provisions of section 12AA of the Act clearly reveals that the CIT is required to satisfy himself about the genuineness of the activities of the trust or institution and may also make such enquiry as deemed fit in this behalf. Further, after satisfyi....
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....12 in the case of M/s. Saivani Educational Society vs. DIT(E), Hyderabad, has clarified the provisions which are applicable to educational institutions. The relevant portion is reproduced hereunder. 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, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retent....