AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 1012
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....on 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 being carried out in accordance with the objects of the society. Accord....
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....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 seized during the search is out of such donations. It was submitted that Shri An....
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.... 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 ADIT (Inv) 5(1), Mumbai as per details given below : Sr.No. Name of the person whose sta....
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.... 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 donation for admission in Ruia and Podar colleges. The same has not been entered in the Books of Accounts and no receipts have issued for the same and the same is therefore unaccounted. Out of this only Rs. 12,730/- is accou....
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....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 of Mr. Shah involving in donation of Rs. 4 lakhs. All these statements are quite contrary to your statement dtd 21.07.2008 wherein you have accepted in clear cut terms that SP Mandali is giving admissions out of management quota in Ruia an....
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....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 nature. 4.11 The Ld.CIT further observed that the assessee had invested shares in the cooperative bank from which it has obtained loans. According to him as per the provisions of section 13(1)(d) if any funds of the society are invested or deposited otherwise than in any one or more o....
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....s 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/s. 10 (23 C)/11 over the years and just because of the above incident, the society does not cease to be a charitable organization and it cannot be held that the society is not entitled to the exemption u/s.10 (23C)/11. h. The surplus cannot be looked into in isolation but has to be seen in light of Gross Collection of the ....
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.... 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 to Poddar college, Mumbai and Ruia College through management quota. He also clarified that percentage noted was percentage of marks of the admission seekers and amount noted was of donation offered. Varying amount of donation was because of capacity to pay and percentage of the marks. It was therefore inferred that cash found was against d....
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....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 provisions of The Maharashtra Educational institutions (Prohibition of Capitation Fee) Act, 1987 and that institutes are being run on commercial lines with profit motive he submitted that there is no violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987 as no complain has ever been filed against any of the institut....
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.... 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 accounts ignoring losses by others. The Hon. ITAT also held in para 9 of the order that the assessee should be considered as a whole as a single charitable entity and that profit & loss cannot be considered in respect of few institutions. The ITAT also held in para 10 of the order that there was no violation of any rule and that the surplus of the institu....
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.... 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 was charging fees from students making huge profits. However, in the instant case, there is no question of charging any substantial fees from any student. As against 70 seats under the Management Quota in the two colleges the assessee has collected some donation in case of only 9 students. Further, as per Government Regulations under Management Quota the assessee ca....
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....nstitutes 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. We find the Pune Bench of the Tribunal in the case of Bharati Vidyapeeth Medical Foundation (Supra) while deciding an identical issue has observed as under : "18. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited....
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....till 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 violation of provisions of section 11(5) r.w.s. 13(1)(d) especially when the assessee is still having an overdraft of Rs. 12,87,665/- from the bank as mentioned by the AO. Since the assessee is still enjoying overdraft facility from the bank, therefore, we find no logic on the part of the AO & CIT(A) to hold that there is violation of provisions of section 11(5) r.w.s. 13(1)(d) because the assessee con....
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....t 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 Karlekar Rs. 5 Lacs Shri Mandar for Admission in 11th Standard in Ruia College 6520/02.08.08 Chq. No- 009968 , Axis Bank 2 Smt. Leena S Dharne Rs. 4.25 Lacs Shri Aditya for admission in 11th Standard in Ruia College 5890/ 10.07/08 Chq. No - 016823, HDFC Bank 3 Shri Tapaskumar Choudhary Rs. 65,000/- Shri Suvradip Tapas Choudhary for admission in F.Y.Bsc (Computer) Donation in Cash - Deposited in Bank Account....
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....t 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 the above contention of the assessee by the revenue, we do not find infirmity in the first appellate order accepting the same. It is an admitted fact that the assessee society is the single taxable entity. The revenue has also not been able to deny these material contentions of the assessee that the assessee has consistently been recognized u/s. 10(23) and u/s. 80 G and is registered u/s. 12A, eligible for tax exemption u/s. 11 of the Act for the last so many years; the A.O has selectively considered surplus of the institutes named above and that too few specific accounts or certain profit making Divisions of cert....
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....logy 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 college. Miscellaneous Account- This has following sub-heads SPM Room Rent:- The college is giving on rent different rooms of the college to the banks, coaching classes etc. in the evening and is charging Rs. 1100/- per day. Identity Card Fee ( permitted by university) page 77 of Paper Book- Collected from students at Rs. 100/- per student. Sale of prospectus - A routine, normal allowable activity. Animal House (for Zoology students) - The students enroll for post graduation and conduct research on selected subject under the guidance of their guide. Ram Narayan Ruia College has more than 20 recognized research guides and about 120 resear....
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.... 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 for college. b) Sundry Income has following sub-heads 1. Sale of prospectus. 2. Transcript Charges 3. Sale of Identity cards 4. Sale of exam forms 5. Course Material charges 6. Class room service charges 7. Hall charges All these charges are allowed to be collected by University and are legal. Also these are incidental to educational activity and cannot be termed as Business and taxed by withdrawing exemption u/s 11. Moreover, it is equally pertinent to note that all the amounts collected are exclusively used for educational purposes only and it is incorrect to assume same to be business income. 7D) Wellingkar College, Mumbai- A very reputed management school, located i....
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....,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/-) has not considered the deficit of Rs. 13,75,417/- on account of University Courses. The assessee has also tried to explain that the above named 4 institutions are imparting education and the surplus was not diverted for any other purpose than towards the objects of the assessee society. This contention of the assessee has not been satisfactorily rebutted before us, hence only because there was surplus in some accounts of some institutions an inference cannot be drawn that the surplus was business income and thus not entitled to exemption u/s. 11 of the Act and above all, the assessee being single taxable entity profit/loss and exemption (Sec. 11) cannot be made applicable institution-wise or activity-wise but assessee-wise. At page....
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.... 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 selectively taxed surplus of Rs. 3,06,04,584/- arising from (1) Ruia College (Miscellaneous A/c.), (2) R.A. Poddar College, and (3) Wellingkar College besides donation from institutions. The A.O has neverthless granted exemption u/s. 11 to TDM Laboratories. Similarly, in the appeal for the A.Y. 2005-06, the A.O has selectively taxed surplus of Rs. 4,73,92,391/- arising from (1) Ruia College (Miscellaneous A/c), (2) R.A. Poddar College and (3)Wellingkar College, besides Donation from institutions and Development Fund. The A.O. has, however, granted deduction u/s. 11 to T.D.M. Laboratories. 12. Similar arguments as advanced in the A.Y. 2003-04 have been adopted on the issue in the A.Ys. 2004-05 and 2005-06. We thus following the decision taken on....
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....ed. 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 private banks. The opinion is completely based on surmises and conjectures as it seems to suggest that merely because funds were in a private bank, there may have been divergence of funds to the members of the Society. Similarly, the factum of construction being carried out by Ahluwalia Construction Co. (P) Ltd., stated to be a family concern of the President, was not material as there was no allegation of any inflated cost of construction or unreasonable profits being derived from the same by third parties as a mode of divergence of funds." 8.8 We find the Pune Bench of the Tribunal in the case of Dr. D.Y. Patil Education society (Supra) has observed as under : "13. Though the assessee has denied receipt of capitation fee/donations and running o....
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.... 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 and religious purposes. Therefore, for the purposes of registration u/s. 12AA of the Act, what the authorities have to satisfy is the genuineness of the activities of the trust or institution and how the income derived from the trust property is applied to charitable or religious purposes and not the nature of the activity by which the income was derived to the trust. 50. The above judgment proposes that what is to be looked into is the character of application of funds and the character of the activities carried out by an assessee and not the colour and nature of the sources out of which necessary funds were collected by the assessee. In other words, the source of funds is not an important ingredient in assessing the character of the activities carried o....
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.... 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 controversy whether the applicability of s. 12AA(3) was retrospective or prospective in nature. Rather we can make an observation that this issue stood answered by Co-ordinate Benches. We want to express that earlier to this section there was no guidelines in the statute for refusal of registration, therefore it was considered eminent to introduce in the statute the said procedure. What bothered the Tribunals and High Courts in the recent past is the scope and the purpose of introduction of s. 12AA in the statute. All those judgments as listed above, in agreement have said that the activities ought to be in fulfilment of the objects for which a trust is created. Sentiments should be in line with the purpose for which the trust is created. The purpose should be philanthropic....
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....ion 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 registration. The objects and activities should be philanthropic and not against the public interest must be for the benefit at large instead for the benefit of particular individual or group of individuals. 11.4 In the recent past sub-s. (3) was inserted in s. 12AA w.e.f. 1st Oct., 2004 which gives power of cancellation of registration to the CIT, if he finds that the activities are not genuine or not being carried out in accordance with the object of the trust. The need for the enactment had arisen due to belief of some quarter that in the absence of explicit law the CIT cannot exercise the power of cancellation of registration. To overcome this hurdle this sub-section is incorporated and now in operation. Naturally these powers are conferred with a view to ensure that if once a r....
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....emption 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 stage where the CIT shall restrict the enquiries as to whether the trust is actually and whole heartedly performing all the duties and activities for which it was created. On careful reading of this section it was gathered that at this initial stage there is no scope of any apprehension of misutilization of funds or to judge the taxability income. The scheme of the Act otherwise does not subscribe and allow a trust to take the benefit of the provisions of ss. 11 and 12 unless it establishes the prescribed utilization of the income, even if, at all the trust holds the registration in its hands. Therefore at the stage of granting registration the CIT is not expected to bother himself about the other provisions of the Act and supposed to confine himself to the procedure of registration....
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....ction 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 cancellation of registration ? Answer is obvious no. 11.8 While reading the precedents cited from the side of the appellant we come across a decision of a respected Co-ordinate Bench Tribunal, Kolkata pronounced in the case of Kalinga Institute of Industrial Technology (supra) and have found that almost on identical situation, as in the present appeal, it was held that consequence upon a search while the assessment proceedings are pending a cancellation of registration by invoking s. 12AA(3) is a premature action on the part of CIT, because it is expected from him to take precaution to let the assessment get completed, if possible expeditiously, instead of rushing to cancel the registration which shall effect and interrupt the other proceedings under the Act and so prematurely punish a person w....
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...., 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 services to trade, commerce or business. What is termed as consent fees is in fact fees accompanying the application for obtaining consent (i.e., permission) of the assessee Board to set up a new unit. It cannot be anybody's case that the processing of applications by itself has s commercial motive, or that fees for processing of applications is a fees collected for rendering of service of pollution control which is undisputed sole object of the assessee trust. Similarly, fees for testing charges and licence fees are not also towards rendering of any services of pollution control either. These are not the services with a profit motive but essentially only to recoup the cost of getting the samples tested or processing of licences. In any event, these activities, if these can be at all be construed ....
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....erdict 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 the Revenue that the assessee was not imparting education. As we know the term education means to teach subjects to students for the development of his mind and also to equip students to deal with reality. The training process is either theoretical or practical but student has to be taught the essentials of the selected subjects so as to develop his skill and knowledge for the subjects studied by him. The appellant institute, admittedly, fulfils the requirements of imparting formal education by a systematic teaching and instructions. Since the question about the imparting of education has not been doubted or challenged by the Revenue therefore. In our considered opinion the impugned order passed by the respondent is unsustainable in law. Strange enough there is nothing on record to prove sightlessly that....
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....e 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 morality as touched by the learned CIT is appreciable. Every vigilant and law abiding citizen has to be fair in his conduct and should refrain from immoral activities. But existing blue laws are derived from the numerous extremely rigorous laws designed to regulate morals and conduct. These laws are enacted in such a fashion that if implemented correctly and efficiently then there is no scapegoat for an offender. We are tempted to write an idiomatic language due to the sensitivity of the issue, that a CIT cannot be allowed to hold a baton of morality in his hand to hit an immoral; but the statute has given him a flexible stick for inflicting tax on defaulter; that includes a trust or educational institution. The gist is that if the CIT had an information of some wrongful means of earning fees in the form of a donatio....
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....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; then comes within the clutches of that Act but definitely not under s. 12AA(3) provisions. The third aspect is, that the donation plus fees do not exceed the prescribed limit of Anti Capitation Fee Act i.e., five times the normal fees; further that no evidence of misutilization other than the prescribed activity then no action can be suggested under s. 12AA(3). The assessee's case falls under the third category. With the result, totality of the circumstances thus warrants, in the light of the foregoing discussion, not to endorse the view of the learned CIT; consequence there upon reverse those findings. The order of cancellation of registration is hereby revoked. Grounds allowed." 8.10 In view of the above cited decisions, we hold that the finding given by the Ld.CIT that the assessee was ....