TaxTMI 
TaxTMI 
2018 (10) TMI 55
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.... in the business of education on commercial basis with a profit motive without providing any element of charity to the public at large. Books of accounts and vouchers were not produced. On the basis of aforementioned objections, the Ld. CIT(E), rejected assessee's applicationby observing as under: 5. I have considered the material available on record. The applicant society has not been able to produce books of accounts, Bank statement and vouchers in respect of expenses claimed by the applicant for verification of objects and activities of the trust. On perusal of material available on record, it is seen that the applicant society is not carrying out any activities of charitable nature. In light of facts that the applicant society could not produce the books of accounts and vouchers, the genuineness of activities could not be verified. As per provisions of section 12AA(1)(b) of the Act, two factors namely the objects of charitable purpose and genuineness of activities has to be proved before granting of the registration. However, the applicant failed to prove the same. Hence, the applicant society has not made a case for granting the registration u/s 12AA(1)(b). 6. In the case ....
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....r registration u/s 12AA that the material required for formation of the satisfaction mandated by the Act is unavailable and therefore, it is held that by learned CIT that the assessee has failed to fulfill the conditions for grant of registration u/s 12A of the Act. Similarly, in his order for rejecting the claim of the assessee for registration u/s 80G, he has given a finding that the assessee has failed to fulfill the conditions for approval u/s 80G of the Act. Hence, we do not find any justification to interference in the order of learned CIT". 9. The law requires a conjunctive test whereby objects of the applicant society have to be charitable and genuineness of charitable activities should be established for registration of application u/s 12A. Mere recital of objects or activities with cogent or corroborative evidence is not sufficient by themselves to enable a registering authority to arrive at the satisfaction mandated by law. In the instant case, only part rely has been filed and the documents on record do not suffice to establish the genuineness of activities. As such the findings of fact regarding its charitable activities or rather lack thereof arrived at on the bas....
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.... electricity expenses, printing and stationery expense, legal expenses, Misc. expenses, stationery and postage, school function expense, staff salary and conveyance, sports day expense, though the expenses are minimal but the expenses are towards running of Society under which the College is being operated. It was submitted by the Ld. A.R that the Ld. CIT was not justified in taking objection against the minimal amount of Bank Interest of Rs. 457/-, FD Interest of Rs. 4,075/- and Rent received of Rs. 93,079/- earned by the Society, which income, undisputedly has been the source of meeting expenses directed towards the attainment of the main object of the Society. With regard to the objection raised by the Ld.CIT(E ) that no fee is found credited in Income & Expenditure Account of the Society, it was submitted that very nominal fees is charged from the students which is deposited in Bank Account operated under the directions of Director of Inspectors School, Agra (Government of UP). The accountsare subject to audit by the office of the Auditor General, Allahabad and no amount can be used by Society. 5. It was further submitted that the Ld. CIT(E) was wrong in proceeding ex-parte an....
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....ords with specific consideration to the objects of the Society and case laws cited by the parties. Careful perusal of the objects reveals that the objects of the Society primarily are of imparting education to all the classes of the Society. The order impugned is absolutely silent in respect of this material aspect of the matter. The law is fairly well settled that while granting Registration the Ld CIT is entitled to conduct enquiry and get himself satisfied with the objects stated in the memorandum of objects, at this stage any enquiry with regard to the source of income or application thereof is beyond the scope of enquiry contemplated under the Act as per by the law evolved. Guidance in this regard can be derived from the jurisdictional High Court Judgements in the case of Fifth Generation Education Society Vs CIT in (1990) 185 ITR 634 (All) wherein the Hon'ble Allahabad High Court has held that: "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 17A and whether Form 10A has been properly filled up. He may....
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....e trust alone. The objections raised by the Commissioner pertain to matters that may be examined at the stage of assessment. At that stage, if the assessee were to be found to have actually engaged in any noncharitable activity, the benefit of exemption may be denied at that stage in the manner provided by the Act. 13. It is an undisputed fact that the Society is running and maintaining a school upto Intermediate classes and is affiliated by the Government of U.P. Hon'ble Karnataka High Court in the case of CIT vs. A.S. Kupparaju Brothers Charitable Foundation Trust reported in (2012) 69 DTR 315, has held that once it is admitted that in pursuance of the trust deed and in terms of the objects set out therein, schools and colleges are being run and educational institution are being run, nothing more requires to be established to show that the trust in question is a genuine trust. The Hon'ble Court held as under: "The certificate of registration is only an enabling provision to claim exemption. Bymerely granting a certificate income is not exempted. That is only a first stage toclaim exemption. The Commissioner of Appeals should not have confused these twoaspects and seems to thin....
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....later. Theapplication has to be made by a person in receipt of income of the trust. Thus whiledealing with the application for registration the CIT has to examine whether theapplication is made in accordance with s. 12A r/w r. 17A and whether Form No.10Ahas been properly filled up. He may also examine whether objects of the trust arecharitable or not. Sec. 12AA nowhere provides that CIT while considering theapplication for registration is also required to examine whether the income derived bythe trust is being spent for charitable purposes or the trust is earning profit. Thelanguage employed by the legislature in s. 12AA only requires that activities of thetrust or institution must be genuine which should be in consonance with the object ofthe trust. At this stage, the CIT is not required to examine the application of income.All that he may examine is whether the application is made in accordance with therequirements of s. 12A r/w r. 17A and whether Form No.10A has been properly filledup. He has also to see whether the objects of the trust are charitable or not. Ourview funds support from the Division Bench decision of the Allahabad High Courtrendered in the case of Red Rose School....
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....eligious trust - Registration procedure - Assessment year 2010-11 - Whether while examining application seeking registration under section 12AA, manner of application of funds of trust do not fall within purview of Commissioner; Commissioner should only satisfy himself about genuineness of aims and objects of trust/institution and genuineness of its activities as enumerated in clause (b) of sub-section (1) of section 12AA - Held, yes" 17. The observation of the Ld.CIT(E) that books of accounts and vouchers had not been produced does not empowers the CIT(E ) to reject the application as rightly contended by the Ld. A.R by relying on the order in the case of 'Vidyadayani Shiksha Samiti Vs CIT (Exemptions)'Lucknow wherein while addressing the identical objection raised by the Ld. CIT(E), Lucknow the ITAT held as under: 16. Now, coming to the powers of the Commissioner as to whether whilegranting registration u/s 12A he is required to examine the books of account etc. or he is only to satisfy himself regarding the objects of the trust and genuineness of the activities of the trust, we find various courts have held that while granting registration u/s 12A the ld. CIT is required to s....