TaxTMI 
TaxTMI 
2016 (10) TMI 419
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....efusing to grant exemption u/s 80G of the Income Tax Act, 1961. 2. The assessee craves to amend, alter and modify any of the grounds of appeal. 3. Necessary cost be allowed to the assessee. 2. Briefly stated the facts are that an application in Form 10A seeking registration under section 12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act) was filed by the assessee trust on 11.08.2015. The ld. CIT issued notice seeking clarification on the activity of the assessee trust and after considering the objects of the Trust gave a finding that the activities of the Trust are neither as per objects nor the accounts are maintained as per the Rajasthan Public Trust Acts, 1959. The ld. Counsel for the assessee has reiterated the s....
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....llege and hospital and to avail the finance, the land was revalued. This has been objected by the CIT stating that it has benefited the trustees and it is not as per the provisions of the Rajasthan Public Trust Act. These objections are irrelevant and not a condition precedent for grant of registration. Once the land is revalued by crediting to the capital fund account of the trust, one fail to understand how it would give benefit to the trustees. The capital fund remains of the trust only. Whether it is credited to the capital fund or the revaluation reserve makes no difference. Further, it is irrelevant on part of CIT to observe that such revaluation can be made only by business undertakings or that a land which is allotted free of cost c....
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....n that the ld. CIT was within his jurisdiction to make enquiry related to the objects of the Trust before granting the registration under section 12AA. The ld. CIT has declined registration by observing as under :- " 7. On examination of the details, it is seen that the trust was allotted land by State Government of Rajasthan for Rs. Nil for running of middle school and dispensary at Village Champapura. It was further mentioned by the applicant that it has revalued the land for Rs. 29.09 crore. It is very interesting to note that the land which was allotted by the State Government for running of particular activities has been revalued by the applicant without obtaining any prior permission from the Government of Rajasthan. It is an import....
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....tion as business undertaking. On further enquiring about the purpose of revaluation of assets the applicant submitted that the trust is to establish medical college and hospital and to avail the finance from bankers, trust has revalued the land and building. This raised another issue that whether the land which has been allotted for middle school or dispensary can be used for running of hospital and medical college or not ? It raises another issue that whether the government land allotted at Rs. Nil can be revalued for raising finance from bank for the purpose for which the land was not allotted. All these issues goes against the applicant. The revaluation of land has given rise to the capital tune of Rs. 31.60 crore which is direct/indirec....
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....ing it. In the present case, the revaluation of land has benefitted the trustees, therefore, the provisions of section 13 are attracted and in view of provisions of section 12AA(4), the trust is not entitled for registration. 10. Further, opening of medical college and hospital is not as per the objects of the trust. From the objects of the trust it can be seen that the trust has no object for opening of medical college and hospital. Thus the whole activity of creating capital in the hands of trustee/settler does not fall within the objects of the trust. In other words the trust is entering into an activity which is not as per the objects of the trust. As the trust is doing the activities not as per the objects it cannot be held as char....