TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 969
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....lusively dedicated for the purpose of trust without even a single rupee distribution on account of profits to its members clearly entitling the assessee trust for registration in accordance with the decision of Hon'ble Supreme Court in the case of American Hotel & Lodging Educational Institute Vs CBDT 301 ITR 86 SC & other decisions, inter-alia, from Hon'ble Supreme Court." 2. We have heard arguments of both the sides and carefully perused the relevant materials placed before us on record. The Ld counsel of the assessee submitted that the assessee trust has been incorporated with the main objective of providing education, enter-alia, to provide education in respect of B.Ed. course under object No. 1 of the trust deed para 4 and as per vide para 5 of the trust deed it is specifically provided that the money of the trust shall be used in accordance with the provisions of the Act and the entire receipts/income shall be dedicated for the objectives of the trust as mentioned in para 4 of the trust deed. The Ld Counsel further pointed out that as per para 17 of the trust deed it is also provide that the property of the trust shall not be used for the private benefit of any trust....
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....on carries on activity of education primarily for educating persons the fact that it does makes a surplus does not lead to a conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. Reversing the decision of Uttarakhand High Court it has been held by Supreme Court in this decision that when a surplus is ploughed back for educational purposes the educational institution exists solely for educational purposes and not for the purposes of profit. 5. Replying to the above the Ld DR supported the impugned order and submitted that in the case of National Institute of Aeronautical Engineering Educational Society Vs. CIT (2009) 184 Taxman 264 (Uttarakhand) it was observed that charity' is the soul of the expression "charitable purpose" as defined in section 2(15) of the I.T.Act. Mere trade or commerce in the name of education cannot be said to be a charitable. No other argument was submitted by the Ld DR. 6. Placing rejoinder to the above submissions of the revenue the Ld Counsel again placed his reliance on the recent decision of Hon'ble Apex Court in the case of Queens Educational Society Vs CIT (Supra) and s....
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....12AA deals with the procedure for registration which inter alia provides that on an application filed by assessee, the Commissioner of Income Tax will make certain queries as he may deem necessary in this respect and after getting satisfied about the objects of the society/institution and the genuineness of activities, he shall pass an order in writing registering the institution or on non satisfaction, refusing the registration thereof as the case may be. However, before passing order for refusal of registration, the assessee will be provided reasonable opportunity of being heard. Therefore, from the above provision of law, we find that at the time of registration u/s 12AA, the Commissioner is only required to examine the objects of the society / institution as well as genuineness of activities of the assessee and if he finds that the objects of the society are charitable, and the activities as stated in the object clause of the society are being carried out, then he is bound to grant registration u/s 12AA of the Act. Hon'ble High Court of Uttarakhand as relied upon by Ld. D.R. in the case of CIT VS National Institute of Aeronautics and Education 181 Taxman 205 has held that w....
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....r they are genuine and in consonance with the objects of the trust or institution and where education is being imparted as per the rules and the factum of the establishment and running of schools is not disputed, the same was a genuine activity and the enquiry regarding genuineness of the activities cannot be stretched beyond this. The relevant findings of Punjab and Haryana High Court are reproduced as under: "2. The respondent-society applied for registration under Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as "the. Act") on 31.3.2009. The said application was declined by the Commissioner of Income Tax, Bathinda (for short "the CIT") vide order dated 25.9.2009. The CIT came to', the conclusion after examining the income and expenditure and the balance sheet for the period ending on 31.3.2006, 31.03.2007 and 31.3.2008 that the society had received donations and the capacity of donors and genuineness of transactions have not been explained. The CIT while noticing that society was running a Polytechnic College further took into consideration that the society was earning profits for the last two year and had claimed exemption under Section 10(23C) of the A....
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....ctions 11 and 13 of the Act and give such treatment to those societies as warranted by the facts of the case. The power of the revenue authorities to cancel registration under Section 12AA (3) of the Act was also taken into consideration on the ground that same can be resorted to if the Commissioner is satisfied that the activity of such society or institution are not genuine or are not being carried out in accordance with the objects of the society/institution. 5. The power of the CIT regarding the scope of Section 12AA of the Act has been considered by this Court in the order dated 5.10.2011 passed in CIT Vs. Surya Educational & Charitable Trust [2011] 203 Taxman 53/15 taxmann.com 123 (Punj. & Har.) and it has been held that Section 12AA of the Act, requires satisfaction in respect of the genuineness of the activities of the Trust, which includes the activities which the Trust was undertaking at present and also which it may contemplate to undertake. The insertion of Sub Section 3 to section 12AA of the Act regarding the powers of the Commissioner to cancel the registration if the activities of the trust are not carried out in accordance with such objects was also noticed. 6. T....
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....pages 124-126 and moreover the object clause as placed in paper book pages 3-14 suggests that assessee is running school for educational purposes. The argument of Ld. D.R. that original constitution needs to be examined with respect to objects clause does not hold much force as A.O. in assessment orders of earlier years (as placed in paper book pages 124-126) has noted that society was running a school. In view of above facts and circumstances and in view of the judgements as noted above, we direct the Commissioner to allow registration u/s 12AA of the Act. The A.O. during assessment proceedings will however be entitled to examine the books of accounts of assessee with a view to examine any violation of the Act and can disallow exemption u/s 11 if anything adverse is found. 10. In view of above, appeal filed by assessee is allowed." 9. On the basis of forgoing discussion we reach to a fortified conclusion that the CIT dismissed application of the assessee for grant of registration under section 12A of the Act by recording incorrect and irrelevant facts and circumstances and the assessee successfully established that it was created for the charitable purposes including education a....