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2014 (3) TMI 1012
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....by the CIT, Pune vide certificate of registration dt.17-09-1973. The objects of the Society as per its constitution are as under : i. to impart popular and reasonably affordable education in India & Abroad. ii. to start private schools. iii. to take the existing ones under its supervision. iv. to encourage Marathi Literature. v. to found Marathi instruction on sounder footing. vi. to educate handicapped, deaf and dumb pupils. vii. to encourage social & scientific research and development activities. viii. to invest any surplus funds of the S.P. Mandali as per the section 11(5) of the Income Tax Act, 1961 only in modes specified in that section. ix. and to adopt such other measures as might seem desirable for carrying out above mentioned objects. 2.1 The society runs a number of educational institutions. There was a search at the premises of the society at Therapeutic Drug Monitoring Laboratory, 194, Scheme No.6, Road No.15, Sion Koliwada, Sion East, Mumbai-22 o 21-07-2008. 2.2 After considering the evidences gathered during and after the search, the CIT Central Pune was of the view that the activities of the society were not genuine and were not ....
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....ed earlier should not be cancelled. 3. The assessee strongly challenged the above proposal of the Ld.CIT. It was submitted that the assessee is an institute of repute with a standing of more than 100 years. The objects of the assessee is to spread education at affordable cost. It is running 52 institutes catering to more than 50,000 students. Relying on the decision of the Pune Bench of the Tribunal in the case of Bharati Vidyapeeth Vs. ITO reported in 28 SOT 32 it was submitted that since the trust was granted registration u/s.12A, the CIT has no power to cancel the registration u/s.12AA(3). It was submitted that the power in section 12AA(3) for cancellation of the registration can be invoked if the activities of the trust are not genuine or the activities are not being carried out in accordance with the objects of the trust. However, the assessee is existing solely for education purposes which is evidenced by the fact that it is running several educational institutes. Further, it was approved u/s.10(23C)(vi) and has been granted approval u/s.80G(5). 3.1 The assessee denied the allegation that the society is accepting donations for admission and that the cash of 12 lakhs sei....
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....Annexure A3 was seized from the premises of the Mandali. Noted in this writing pad were various names against which certain percentages and some other figures were written. In his statement recorded u/s. 132(4) during the course of the search on 21/07/2008, Shri Anant Nilkant Mate, Vice Chairman of the assessee society stated that the names noted in the writing pad were of the students/parents who had visited him for admission to the institutes run by the society namely Ruia College, Poddar College and Welingkar Institute. The percentage noted against the names indicated the percentage of marks and the other figure indicated the donation to be paid by them for getting the admission. There was, thus, a clear admission by Shri Anant Nilkant Mate that the society was collecting donation for giving admission to the students. As already mentioned above, as per the entries in the seized documents the total donation collected/to be collected during a short period in F.Y. 2008-09 came to a huge sum of Rs. 296 lacs. 4.2 He observed that the collection of donation by the assessee society for granting admission was further confirmed by the statement of a number of parents recorded by the A....
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....sion in Ruia & Podar Colleges. The cash was collected as donation for admission in Ruia & Podar colleges from the following persons : 1. Tapas Choudhari Rs. 1.50 lacs 2. Shah Puja Rs. 1.00 lacs 3. Thakkar Rs. 1.50 lacs 4. Motivala Rs. 0.50 lacs The balance cash out of Rs. 10 lakhs above has been received from different students for admission in Ruia and Podar College, the names where of I do not recollect right now, and I will tell you shortly. The above mentioned cash has not been entered in Books of Accounts of SPM. Since it has been received today only. Q.6 Have you issued any receipts/vouchers for the receipt of the cash received by SPM (by you in the capacity as Vice Chairman of SPM) as stated by you in answer to Question No. 5 above. If yes, please produce the same? Ans. No, we have not issued any voucher/receipt. Q. 12 In the course of physical search of premises of SPM at TDM Laboratories Sion, Mumbai cash of Rs. 12,12,730/- has been found. Do you confirm the same? Ans. Yes, l confirm the same. Q.13 Please explain the source of the cash received? Ans. I have already explained in reply to Q. No. 5 to 11 above that cash has been received as donat....
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....notice issued to you on 02.09.2008 as well as to Principal Trustee SPM on the same date. From these statements, it is quite clear that SP Mandali does not give admissions from, management quota without donation and SP Mandali is an institution primarily engaged in profitable activities. Further the conditions mentioned u/s. 11 to 12AA for getting exemption from income tax has also been violated. Further you yourself accepted in your statement dtd 21.07.2008 that SP Mandali has received donations for admission in Ruia and Podar Colleges in cash as well as through DD. Please explain? Ans: I cannot tell you anything right now. Q.25 Please explain how the donations received from different persons in Annexure A-3 have been entered into the books of account of SP Mandali? Ans: I am not able to explain. Q. 26 In your reply to show cause notice dtd 02.09.2008 you have stated that donations received are voluntary and you have also denied the claims made by different parents whose statements have been recorded in this office. Further you have stated that all the DD/ cheques of donations are properly deposited in the books of SP Mandali. Further you have negative (Sic) the statement ....
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....has been collecting huge donation for admission of students to the various institutes run by it which is in clear violation of the provisions of the Maharashtra Educational Institutions (Prohibition of Capitation Fee Act, 1987). The collection of such donations is thus illegal. It cannot therefore, be said that the activities of the society are genuine. 4.10 He further observed that the institutes are being run on commercial lines with profit motives which is further strengthened by the substantial surplus created year after year. He observed from the consolidated income and expenditure account for F.Y. 2004-05 to 2007-08 that the surplus for different years are as under : Sr.No. F.Y. Surplus 1 2004-05 2,96,86,643/ 2 2005-06 3,05,55,568/ 3 2006-07 7,33,98,517/ 4 2007-08 8,87,22,809/ According to him the surplus is not nominal by any standard. At the end of the F.Y. 2007-08 accumulated surplus was Rs. 32,20,71,791/-. Therefore, the generation of such huge surplus year after year from the activities of the society, is a clear indication that the activities of the society are running on commercial lines and are not charitable in natur....
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....violating the provisions of section 11(5) and section 13. g. The appellant society has obtained registration u/s.12A by practising fraud. 4. The learned CIT failed to appreciate that : a. The appellant society was not collecting any donations for admissions. b. The trustee Shri. Mate had admitted in his statement that the cash found with him was his own and not belonging to the society. c. The appellant society had not received any donations for admissions and whatever donations were received for the charitable purpose were duly accounted for. d. The charge of alleged unaccounted donations of Rs. 296 lakhs was totally based on surmises and presumptions . e. Just because of some surplus in some educational institutions, it was grossly incorrect to hold that the appellant society was existing for profits and was not a charitable organization. f. The appellant society as per the byelaws of the Co-op. Bank had to purchase the shares thereof for obtaining the loan required for its educational activities and hence, the shares was not an investment but the shares was an expenditure on the objects of the Trust. g. The appellant society is granted the exemption u/....
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.... the Government where the trust has no say. The trust has say in only 5% seats in 5 colleges under Management quota at entry level admission and total such seats are about 200 out of 70000 seats in various schools and colleges. The tuition fees is monitored by Shikshan Shulka Samiti of Government of Maharashtra and no compliant has ever been filed by anybody under the Maharashtra Educational Institutions (Prohibition of Capitation Fees) Act, 1987. He submitted that a search action was conducted against Shri A.N. Mate and other members of the trust and at one of the premises of the trust, (i.e. TDP Laboratory) in Mumbai on 21-07-2008. Shri A.N. Mate had been Trustee and Vice chairman of the trust. An amount of Rs. 12 lakh along with certain hand written notes in writing pads were seized from the premises and statement u/s.132(4) of the Act of Mr. Mate was recorded during the search. He submitted that the seized papers depicted names, amounts and percentage against each name. Total 121 names were there and the total amount was Rs. 296 lakhs. It was clarified by Mr. Mate in his statement that names recorded by him were of students/parents who visited him for entry level admission t....
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....e Ld. Counsel for the assessee referred to the details of loan outstanding and investment in shares of the cooperative bank under compulsion for A.Y. 2006-07 to 2009-10. Referring to the decision of the Pune Bench of the Tribunal in the case of Bharati Vidyapeeth Medical Foundation Vs. ACIT reported in 144 ITD 510 he submitted that the Tribunal in the said decision has held that where purchase of shares of the cooperative bank was made under compulsion for obtaining loan from said bank and assessee was still enjoying the overdraft facilities from the said bank there was no violation of provisions of section 11(5) r.w.s. 13(1)(d). He submitted that in the instant case the loan amount outstanding is more than Rs. 33 crores and the investment in shares was due to compulsion by the bank. Therefore, in view of the decision of the Pune Bench of the Tribunal in the case of Bharati Vidyapeeth Medical Foundation (Supra) there is no violation at all. He accordingly submitted that registration u/s.12A cannot be cancelled on this ground. 6.4 Now coming to the first issue, i.e. by charging huge donation for admission from students to various institutes the assessee has violated the provision....
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....ust are not genuine especially when there is nothing on record to show that the institutions are fake or that there is no educational activity. He submitted that the Chief Commissioner of Income Tax, Pune has examined the genuineness of the activities of the trust during 2007 and has held that the institutions are solely for education and not for profit when notification u/s.10(23C)(vi) was issued vide order dated 06-08-2007. Referring to the decision of the Tribunal in assessee's own case for A.Yrs. 2003-04, 2004-05 and 2005-06 order dated 24-05-2012 he submitted that the AO in those years taxed the surplus of the institutes of the trust namely Ruia college, poddar college, Wellingkar college and TDM Laboratory as business income, therefore, denied exemption u/s.11 or 10(23C) (iiiab). While doing so, the Assessing Officer had held that these institutions were charging inflated fees on commercial line disregarding the prevalent rules set by Mumbai University. The Hon. ITAT upheld the order of the CIT(A) deleting the addition. While doing so, the Tribunal at para 10 of the order held that the AO erred in selectively considering surplus of few institutes and that too few specific ....
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.... Bench of the Tribunal in the case of Dr. D.Y. Patil Education Society Vs. CIT Central Pune vide ITA No.1280/PN/2007 order dated 27-09-2011 he submitted that the registration was denied in this case since assessee was seen taking Capitation Fee, The Tribunal after elaborate discussion and following the decision of the Mumbai Bench of the Tribunal in the case of Ramaravo Adik Education Society has set-aside the order of the CIT(A) and directed him to decide the issue afresh in the light of the directions given therein. He accordingly submitted that since the assessee has not violated any of the provisions, therefore, the Ld.CIT was not justified in cancelling the registration u/s.12AA of the I.T. Act. 6.9 So far as the decision of Hon'ble Uttarakhand High Court in the case of CIT Vs. National Institute of Aeronautical Engineering Education Society reported in 315 ITR 428 and the decision in the case of CIT Vs. Queens Educational Society reported in 319 ITR 160 are concerned he submitted that the facts in those cases are quite different. In the case of National Institute of Aeronautical Engineering Education Society (Supra) the finding has been given that the institute w....
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....since the assessee trust is collecting huge donation from students for admission to the various institutes run by it in violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fe) Act, 1987. The collection of such donations according to him is illegal and therefore the activities of the said society are not genuine. He further observed that the institutes are being run on commercial lines with profit motive. He also held that the assessee trust has violated provisions of section 11(5) r.w.s. 13(1)(d) by investing in shares of cooperative banks. 8.1 Now coming to the second issue first, i.e. the assessee has violated the provisions of section 11(5) r.w.s. 13(1)(d) by investing in shares of the cooperative bank, we find the investment in shares of the cooperative bank was Rs. 5,00,150/- as per balance sheet of the trust for A.Y. 2006-07 to A.Y. 2009-10 whereas the borrowing from the bank during the above assessment years are Rs. 18.60 crores, Rs. 21.99 crores, 39.21 crores and Rs. 33.55 crores respectively. We find the assessee has taken loan from the bank for which it had to invest in the shares of the cooperative bank as per the by-laws of the said bank.....
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.... buy certain number of shares of the Bank as a pre-condition for such loan and the bank while granting such loan had deducted the subscription to such shares could not be controverted by the learned DR. The further submission of the learned counsel for the assessee that there was no objection by the revenue in the past for holding the shares of the Bank in the scrutiny assessments and that still there is overdraft loan from the Bank also could not be controverted by the Revenue. We find merit in the submission of the learned counsel for the assessee that the purchase of shares of the bank amounting to Rs. 25,250/- is very negligible considering the total assets of the trust at 23.24 crores and the same was under compulsion for obtaining loan from the bank and that the bank while disbursing the loan had deducted the amount towards such share subscription from the loan amount and therefore, the same should be considered as an application of income. In our opinion, under the peculiar facts and circumstances of the case the purchase of shares amounting to Rs. 25,250/- in the past which the assessee continued to hold during this year cannot be a ground to hold the same as in violatio....
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....arents stating that the assessee society has charged Capitation fee for giving admission which is in violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee Act) 1987. Even the CIT who is alleging that the assessee trust has collected huge donation for admission of students to various institutes run by it has not informed the Government of Maharashtra if he was serious about any such violation done by the society. The submission of the Ld. Counsel for the assessee that as against 70 Management Quota Seats it has collected donation from 9 students and such donation is within the permissible limit prescribed by the Government of Maharashtra and that all such receipts are reflected in the accounts could not be controverted by the Ld. Departmental Representative. 8.4 From the various details furnished by the assessee we find the assessee has received donation from 9 students out of which 4 are through cheques and 5 are in cash, the details of which are as under : Sr.No. Name of the Person whose statement u/s. 131 recorded Amount of Donation Name of student who sought Admission Receipt No Bank Details of Donation 1 Shri Pramod N Ka....
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....6.78 - 2003-04 438334841.84 466731866.40 - 28397024.56 2004-05 557831537.81 528144893.95 29686643.86 2005-06 673060487.97 642504919.63 30555568.34 2006-07 848077942.45 774679424.55 73398517.90 2007-08 946894691.52 858171882.07 88722809.45 2008-09 1077415402.47 1005830397.33 71585005.14 4,961,384,503.21 4686842116.30 302939411.47 28397024.56 From the above, it is clear that accumulation of surplus is within the permissible limit, therefore, it cannot be said that the assessee is running the educational institutions on commercial lines. 8.6 We find the Pune Bench of the Tribunal in assessee's own case for A.Yrs. 2003-04, 2004-05, and 2005-06 has observed as under : "9. We find that the basic contention of the assessee against the action of the A.O on the issue remained that the assessee being single charitable entity, profit/loss and exemption (Sec. 11) cannot be made applicable institution wise or activity wise but assessee wise. The Ld CIT(A) has accepted this basic contention of the assessee. In absence of rebuttal of....
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.... page no. 79 & 80 of paper book. 3)O level and NRY Account - These courses are approved/authorized by an authorized Body of Ministry of Information Technology, Government of India and Municipal Corporation of Greater Bombay. The courses is designed to impart computer training to boys below poverty line. Refer page 82 to 85 of paper book. 4) Ruia College of Computer and Electronics - In this account, receipt and expenditure is maintained in respect of computer and electronics training given to students after 10th (Allowed by Directorate of Vocational Training) Page 86 to 88 of Paper Book. Ruia College Information Technology Centre - ( Computer purchase Accountthrough Bank loan) College Silver Jubilee Fund - In this account, Silver Jubilee function of Junior college was organized. Receipts & expenditure of this account is maintained in this. Diamond Jubilee Fund- The Diamond Jubilee function of Senior college was organized in 1997-98. The amount collected at that time was kept in F.D. and the interest received is shown in income. Special Education Facility and Material Account- This account has been maintained for receiving donation from old students of this col....
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....nsitivity and accuracy. The Assessing Officer without noticing or understanding the fact that this is research wing for the students has assumed it to be business income and taxed accordingly. (page 46 & 47 of Paper Book) The net surplus is Rs. 25,40,673/- (page 10 of Assessment Order) Thus, in view of the above, it can be said that the laboratory is not carrying on any Business Activity and solely exists for education only. 7C)R.A. Poddar College...... approved Commerce College and showing following position. (page 47 & 48 of Paper Book) Particulars Surplus/Deficit Junior College Deficit of Rs. 1, 54212/ Senior College Deficit of Rs. 29, 91,560/- Poddar College Hall Hostel account and sundry income Surplus Rs. 9, 25,516/- All the collection under the head hostel & sundry income is legal and allowable. Here also The Learned Assessing Officer has ignored deficit of Poddar Junior & Senior college and has taxed hostel and sundry income. There is surplus of Rs. 9,25,516/- under hostel and misc. Income. Various amounts under this head comprises of :- a) Hostel income :- Hostel has 7 rooms accommodating 15 boys. A incidental but necessary activity f....
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....s of same colleges. For example, in case of Ram Narayan Ruia College, the A.O while considering major surplus on account of miscellaneous account comprising of various allowable legal collections from students other than normal fees showing a surplus of Rs. 82,64,329/- has not considered other 2 accounts i.e. junior college and senior college showing a net deficit of Rs. 24,07,457/- and Rs. 78,42,892/- respectively. In the case of Therapeutic Drug Monitoring (T.D.M) Laboratory, the A.O. without knowing or understanding the fact that it is research wing for the students, has assumed the net surplus of Rs. 2540673/- to be business income and taxed accordingly. In case of R.A. Poddar College, the A.O has considered surplus of Rs. 9,25,516/- under hostel and miscellaneous income without considering the deficit of Poddar Junior and Senior College shown at Rs. 1,54,212/- and Rs. 29,91,560/- respectively. Likewise in the case of Wellingkar College, Mumbai, the A.O while considering the surplus on account of autonomous courses (Rs. 63,22,417/-), Post Graduate/Diploma in Business Administration (Rs. 63,45,208/-) and Diploma in Management Studies recognized by University (Rs. 5,90,735/-) ....
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....what is to be considered is whether having regard to all the facts and circumstances of the case, the dominant object of the activity is profit making or carrying out a charitable purpose. If it is the former , the purpose would not be a charitable purpose but if it is a latter, the charitable character of the purpose would not be lost. The revenue have also not satisfactorily rebutted this submission of the assessee with specific instances that there was no violation of government circular for fee charging from the students in different courses. It is also not in dispute that in later 2 Assessment years, the A.O himself has not taxed the surplus shown in T.D.M. Laboratory. We thus fully concur with the finding of the Ld CIT(A) that it was incorrect on the part of the A.O to deny exemption u/s. 11 to the 4 above mentioned institutes. The first appellate order in this regard is thus upheld and we also uphold the benefit given by the Ld CIT(A) on this account. The issue No. 1 is thus decided in favour of the assessee. Ground nos. 2 and 3 are thus rejected. 11. An identical issue has been raised in the appeals for A.Ys. 2004-05 and 2005-06. In the A.Y. 2004-05, the A.O had selectiv....
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.... by the institutions. That alone, would not suffice to deny the exemption under Section 10(22) of the IT Act. There is in fact no material to show or a complaint that there has even been any coercive process to recover these amounts. 27. It cannot be lost sight of that if an institution has to expand, additional infrastructure has to be created, quality education has to be imparted, all these activities require funds. There may be an original corpus of the Society but thereafter the corpus for such activity can be created only through voluntary donations either from any philanthropist or through collection of funds in the process of admission. We are not concerned with the morality of the issue while deciding whether exemption has to be granted. Personal prejudices seem to have stepped in when allegations were made without any material against certain members (which have rightly been struck off by the majority opinion of Tribunal) alleging that these members were well known for making profit through educational institutions. We also fail to appreciate the doubts cast or the possibilities expressed about there being something more to it in view of the funds being deposited in pri....
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....itution amounts to application of funds for charitable purposes. The law has made it very clear that the charitable activities may be carried out directly by an eligible Institution or through another eligible Institution for that matter. Therefore, those observations of the Commissioner stated to be adverse to the Assessee-Trust are not in fact prejudicial to the case of the Assessee- Trust. 49. The Karnataka High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income Tax (Exemption) [285 ITR 327] has considered that in matters of registration and exemption of Charitable Institutions, the satisfaction of the Commissioner should be regarding the application of the income of the trust for the specified purposes, which only entitles the assessee to claim exemption. The Court observed that for arriving at such satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application the trust has received income from its property, then find out how the said income has been expended, and whether it can be said that the income is utilized towards charitable....
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....hich were beyond the scope of enquiry envisaged under section 12AA of the Act. We, therefore, deem it fit and proper to set aside the order of the Commissioner and restore the matter back to his file to be examined afresh strictly in terms of the scope of the enquiry envisaged under section 12AA(1) of the Act." 8.9 We find the Pune Bench of the Tribunal in the case of Maharashtra Academy of Engineering & Educational Research (MAEER) Vs. CIT reported in (2010) 133 TTJ (Pune) 706 while adjudicating cancellation of registration u/s.12AA for taking donation and capitation fee has observed as under : "(VI) Conclusion : 11. In the recent past the question of interpretation of newly inserted s. 12AA (w.e.f. 1st April, 1997) has always been perennial teaser not only to the trust or institutions but also to the Revenue Department as also faced by the judiciary. To get the answer we have heard both the sides at length, carefully perused the impugned order and also several correspondences filed in the compilation in the light of the case laws cited. 11.1 The law now introduced is to streamline the "Procedure for registration" and by saying so we do not want to enter into the contr....
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....erwise liable for exclusion under any of the clauses of s. 11 and s. 12 of the Act. 11.3 On due consideration of the rival arguments we can summarise the section of the Act governing the issue in hand. The purpose of framing the "Conditions for applicability of ss. 11 and 12" i.e., s. 12A and framing the rules of "Procedure for registration" i.e., s. 12AA is basically meant to open the door to a trust to enter into the framework of the provisions of the statute, in a way; an entitlement to enter into a room where the eligibility of exemptions is kept for adjudication. Thus in a case of refusal of registration, the trust would even not be allowed to enter the room to seek a claim of such exclusion of a receipt from the total income. In simple words; in case of no registration a trust is debarred by law to claim exemption. This is the first step to climb to the level where the exemptions are placed. At this first step the CIT is conferred with the powers to call for such documents and information in order to satisfy himself about the genuineness of the activities and also to enquire that those genuine activities are as per the objects of the trust for which it is seeking registrat....
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.... also be not in conflict with the general public utility. Naturally an institution if established to carry out an illegal activity or activities are causing any type of nuisance not in the interest of the public at large should definitely lead to cancellation of registration. Therefore, this is the first requisite of the statute to mandate for the registration and in the absence of such registration disentitlement of exemption. So what is explicit is that though an institution may be doing charitable activities as prescribed but in the absence of registration cannot be entitled for the exemptions or benefits of ss. 11 and 12 of the Act. It is also explicit that registration ipso facto does not necessarily entitle an institution to get the receipts excluded from the income or exemption be granted automatically by just showing the registration certificate to the Revenue authorities. In no way the registration certificate is a license to do any type of activity and to get away from the ambits of the tax. An institution has to follow the norms as laid down in other related sections for availing prescribed benefits. 11.6 Procedure of registration is a first step and a preliminary ....
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....o the charitable and educational nature of the institution. In fact, the objects of the institution as declared in the trust deed, which are extracted earlier, does reflect that all are philanthropic or benevolent in nature, precisely for the purpose of imparting education. Strange enough there is no finding recorded by the learned 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 of the Act. Rather this is also not the case of the learned 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, can we uphold the action of cancellat....
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....benefit. In the present appeal none of the above criteria for rejection of registration was in existence, however mainly confined to the finding that by charging donation the trust has infringed the rules of Prohibition of Capitation Fee Act. 11.10 Before we part with it is worth to cite an another latest decision pronounced by respected Co-ordinate Bench of Chandigarh in the case of Himachal Pradesh Environment Protection and Pollution Control Board vs. CIT (ITA No. 74/Chd/2009) [reported at (2009) 125 TTJ (Chd) 98 : (2009) 28 DTR (Chd)(Trib) 289-Ed.] wherein the worth noting observations were as follows : "17. On a perusal of these objectives, as sanctioned by the statute, it is obvious that the activities performed by the assessee trust are regulatory functions for the public good, and any collection for fees or charges, in the course of discharging these regulatory functions, cannot be viewed as a consideration of rendering these services of pollution control measures. We are unable to see any substance in learned CIT's stand that the income earned by assessee as licence fees, consent fees and testing charges are receipts in consideration of rendering the servi....
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....es, the withdrawal of registration granted under s. 12AA cannot be sustained in law. Learned CIT has extensively referred to as to why the assessee is not eligible for exemption under s. 11 as the activities of the assessee cannot be said to be for 'charitable purposes' defined under s. 2(15), but then this aspect of the matter is relevant for the assessment proceedings and not in the context of exercise of CIT's powers under s. 12AA(3). The impugned order passed by the learned CIT is thus vitiated in law on this count as well. 20. For the detailed reasons set out above, we quash the order of the learned CIT and hold that the learned CIT did not have any good reasons, sustainable in law, to withdraw the registration. The impugned order is accordingly set aside." On reading the above verdict it is gathered that if the objects as permissible in the eyes of law are carried out legally and the object of advancement of education as also the object of general public utility are carried out with due sincerity then the claim of registration is within the ambiguity of s. 12A of the Act. 11.11 As far as the objective of the appellant is concerned this is not the case of ....
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....rve to Revenue by cancelling a registration if the activities are in public interest because in case of any breach of the laws the same is subject to tax under ss. 11 and 12 of IT Act. These two provisions and few other provisions are competent enough to tackle firmly a defaulter of philanthropic application of income or funds of the trust. The other adverse side of cancellation is that on refusal of registration the entire receipts shall be subject to assessment without granting benefit of s. 11 and s. 12 of IT Act to assess income which do not form part of total income though the factual position could be that major part might have been devoted towards achieving the objects i.e., imparting education, as in this case, but the AO shall be automatically forbidden to grant advantage of exemption consequent upon the cancellation as is mandatory in statute; relevant section already reproduced ante. The outcome of the deliberation made in detail hereinabove is that percurian opinion is to debar the CIT to enter into the area of investigation of source of income and also application of income, so that the amount of correct exempt income be not prejudged. 11.13 The aspect of mor....
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....ut the violation of prohibition of Capitation Fee Act. But on facts that too did not stand the test of those provisions since admittedly did not exceed the prescribed limit. 11.14 Facts of this appeal are peculiar, as already discussed in above paras in detail and thereupon can comment that prima facie no case was made out by the learned 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 learned 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 Pr....