TaxTMI 
TaxTMI 
2017 (8) TMI 1327
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....ct) on 18.04.2016. The ld. CIT(Exemptions), Kolkata stated that if the dissolution of the university as enumerated under section 45 of the Neotia University Act, 2014 was not proper for the reason that the university decides to dissolve itself, then the State Government will have full discretion to decide how and to whom the accumulation of income/funds are to be distributed. He held that registration u/s 12AA of the Act cannot be granted with such dissolution clause. He further relied on the section 115TD(1)(c) of the Act and held that dissolution clause in the assessee's constitution is in contradiction to this section. Thereafter he relied on the decision of Hon'ble Jammu & Kashmir High Court in the case of Jammu Development Authority vs CIT order dated 07.11.2013 in ITA NO.264 of 2012, for the proposition that "even on dissolution or winding up by not having any restriction on application of asset for charitable purpose, the objects of the assessee cannot be said to be charitable in nature". Thus he rejected the applications for registration u/s 12AA of the Act and consequently request for recognition u/s 80G of the Act. Aggrieved the assessee is in appeal bef....
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....rs of the ld. CIT(Exemptions) for registration he relied on the following case laws : a) Allahabad High Court in the case of Fifth Generation Education Society vs CIT 185 ITR 634 b) Hon'ble Punjab & Haryana High Court in the case of CIT vs Surya Education and Charitable Trust (2013) 355 ITR 280 (P&H) c) Sanjeevamma Hanumanthe Gowda Charitable Trust vs Director of Income Tax (Exemption) (2006) 285 ITR 327 (Karn.) He distinguished the decision of the Hon'ble Jammu and Kashmir High Court in the case or Jammu Development Authority vs CIT (supra) and submitted that the ld. CIT(Exemptions) has wrongly placed reliance on the same. 6. The ld. DR, on the other hand, relied on the order of ld. CIT(Exemption), Kolkata and submitted that the assessee university on dissolution has not laid down the procedure of distribution or transfer of its assets. He referred to section 12AA of the Act and submitted that the ld. CIT(Exemption) has to be satisfied about the genuineness of the activities of the institution and then only grant registration. He pointed out that when the mode of distribution of assets for dissolution is not laid down in the constitutio....
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....year from the date of the creation of the trust or the establishment of the institution, whichever is later. It has to be made by the person in receipt of the income of the trust. 3. It is evident that at this stage, the Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17 A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not At this stage, it is not proper to examine the application of income. 8. Similarly, the Hon'ble Punjab & Haryana High Court in the case o/CIT Vs. Surya Education and Charitable Trust, (2013) 355 ITR 280 (P&H) held as follows : " Therefore, the provisions of Sections 11, 12 or Section 10(23C) of the Act, deal with the income of a Trust or of the Institution and the circumstances as to when such income is to be excluded for computing the total income, but the basis of such benefit is the registration under Section 12AA of the Act. Unless a Trust or Institution is registered under Section 12AA of the Act, such Trust or Ins....
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....r view registration cannot be denied on the ground that there is no clause prescribing that as dissolution of the institution, the income and assets of the assessee shall be transferred to another similar institution which is registered under section 12AA of the Act. 11. The ld. Counsel for the assessee relied on the decision of ITAT Mumbai 'E 'Bench of the tribunal in the case of Tara Educational and Charitable Trust vs DIT(Exemptions) in ITA NO.1247/Mum/2013 dated 14.07.2014 where in at para 4 it is held as follows :- " 4. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the application filed by the assessee U/S 12A of the Act has been rejected by the Id. DIT (Exemptions) mainly on the ground that the relevant Trust Deed does not contain the so-called "dissolution clause". As per the provisions of section 11 & 12 of the Act, income derived from property held for charitable or religious purposes and income of Trusts or Institutions from contributions are exempt from tax provided such Trusts or Institutions are registered U/S 12A of the Act. The procedure for registration u/s ....
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....ed. Accordingly, grounds raised by the assessee are allowed." No contrary decision was brought to our notice by the ld. DR. 13. Respectfully following the proposition of law laid down by the Coordinate Bench of the Tribunal in the cases referred to above we hold that the order of ld. CIT(Exemptions) was an error in rejecting the application of the assessee for registration u/s 12AA of the Act. 14. Coming to the decision of the ITAT, Amritsar in the case of Jammu Development Authority 52 SOT 153 which was upheld by the Hon'ble Jammu and Kashmir High Court , we find that the decision for rejecting the registration was based on the reason that, the authority was established with a profit motive and hence hit by section 2(15) of the Act read with the first and second proviso. The proposition at paras 7.6 and 7.7 of the order are as follows :- "7.6. Also, at the same time, section IO(20A) which related to income of and Authority constituted in India by or under any law enacted for the purpose of dealing with and satisfying the need for housin....
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....on, how the same are to be utilized by the Government. There are other objects like sale and purchase, which makes the Authority a commercial organization. Therefore, in the facts and circumstances of the case, even on dissolution or winding up by not having any restriction on application of asset for charitable purpose, the objects pursued by the assessee cannot be said to be a charitable in nature. 7.7 As regards the reliance on the decisions of various courts of law by the Ld. CIT, most of the decisions have been dealt by the Tribunal in the case of M/s. Jalandhar Development Authority vs. ITO (supra). In the facts and circumstances of the present case, we concur with the views of the Id. CIT that Jammu Development Authority is an Authority established with the motive of profit constituted under the Jammu & Kashmir Development Act, 1970 and that the activities of such Authority are hit by section 2(15) of the Act read with first and second proviso and are not in line with the objects of the AuthoritylTrust so far as the activities relating to purchase and sale of properties, as mentioned hereinabove. Hence, the activities are....