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2018 (11) TMI 1542
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....T(C) has erred in law and on facts in withdrawing approval under section 10(23C)(vi) and 10(23C)(via) by invoking 14th proviso to section 10(23C)(vi) and 10(23C)(via) of Income tax Act by misinterpreting the true facts of the case. (2) Ld. Pr. CIT (C) was not justified in:- (a) Not differentiating the Donations and Capitation fees, as the capitation fees is charged in advance and is of equal amount for each course whereas the donations are received voluntarily, of different sums and were paid by the Donors even after the admission of the students as per their own convenience, even in installments (identical nature of donations received up to A.Y. 2008-09 were accepted as such in scrutiny assessments up to that year when recorded in regular books of accounts) in withdrawing the approval under section 10 (23C) (vi) and (via) of IT Act. (b) Treating the activities of applicant Trust as not according to condition subject of which it was approved u/s. under section 10(23C) (vi) & 10(23C) (via) of IT Act; (c) Treating the assessee Trust as not carrying its activities as per conditions laid down in 10th proviso to section 10(23C) of IT Act. (d) Treating the additional donations ....
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....e course of search justifying such action as the same being afterthought in order to nullify the effect of order dated 30th June 2017 u/s. 245D(4) of IT Act passed by Hon'ble Income tax Settlement Commission, Addl. Bench-2, New Delhi." Grounds of ITA No. 253/JP/2018 (1) Ld. Pr.CIT(C) has erred in law and on facts in cancelling registration under section 12AA of IT Act by invoking provisions of section 12AA (3) of Income tax Act by misinterpreting the true facts of the case. (2) Ld. Pr. CIT (C) was not justified in:- (a) Not differentiating the Donations and Capitation fees, as the capitation fees is charged in advance and is of equal amount for each course whereas the donations are received voluntarily, of different sums and were paid by the Donors even after the admission of the students as per their own convenience, even in installments (identical nature of donations received up to A.Y. 2008-09 were accepted as such in scrutiny assessments up to that year when recorded in regular books of account) cancelling registration under section 12AA of IT Act by invoking provisions of section 12AA(3) of IT Act. (b) Treating the activities of applicant Trust as not according ....
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....(C) has erred in law and on facts in cancelling registration under section 12AA by invoking provisions of section 12AA(3) of IT Act retrospectively w.e.f. 01.04.2006 without finding any such document or noticing any in-genuine activity of the Trust during the course of search justifying such action as the same being afterthought in order to nullify the effect of order dated 30th June 2017 u/s. 245D(4) of IT Act passed by Hon'ble Income tax Settlement Commission, Addl. Bench-2, New Delhi." 2. In the case of NIMS University, Rajasthan, Jaipur, the appeal has been filed by the assessee against separate impugned orders dated 29/08/2017, refusing the grant of registration U/s. 12AA(1)(b) of the Act; and order dated 19/03/2018 refusing the grant of approval of exemption U/s. 10(23C)(vi) and (via) of the Act by Ld. Commissioner OF Income Tax (Exemptions). 3. In so far as the appeals in the case of Indian Medical Trust are concerned, the facts and issues involved for cancellations of Registration u/s. 12AA (3) and withdrawal of approval u/s 10(23C) are identical and similar finding has been given by the Ld. PCIT, therefore, our finding and reasoning would be applicable to both the ap....
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.... before us, was receipt of unaccounted 'capitation fees' charged by the Trust outside its regular books of account and income and expenditure account for the various assessment years. Though, there were other materials relating to undisclosed investments were found from the possession of the Trustees and persons running the institution in the form of unaccounted cash, jewellery, foreign currency etc., which may not have that direct relevance for the cancellation of approval/registration, albeit it may have some bearing in the hands of the Trustees. The assessee post search proceedings had filed an application before the Income Tax Settlement Commission, wherein it had offered Rs. 1.7 crores on account of unaccounted 'capitation fees', however, after calling for the details and report from the department based on the seized material and post search enquiry, the Settlement Commission had determined the unaccounted receipts in the form of 'capitation fees' at Rs. 22,63,46,000/-, besides quantifying undisclosed investments. Another important fact is that, the assessee Trust had established NIMS Medical College and Hospital in the year 2008 and later on Dental Co....
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....of the trustees and one of the main trustees, Dr. B.S. Tomar has been stated to be keeping trail of such capitation fees. In response to the show case notice by the ld. Pr. CIT, the assessee submitted that, firstly, it is in the nature of 'voluntary donations' received from the parents/students and up to assessment year 2008-09 all these donations were duly recorded in the regular books of account, which were subjected to scrutiny u/s 143(3) and the same were accepted by the Assessing Officer; and secondly, from A.Y. 2009-10 onwards though such voluntary contributions were not recorded but assessment were completed u/s 143(3). However, the ld. Pr.CIT noted that from the A.Y. 2009-10 onwards, the capitation fees which has been treated as voluntarily donations by the assessee were collected in cash by the trustees and have neither been recorded in the regular books of account nor has been disclosed in the audited financial statements. Though, the assessments have been completed U/s 143(3) of the Act, but the issue of capitation fees/voluntary donation bases on such seized material were never scrutinized, because assessments were made on the basis of entries made in the regula....
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....pitation fees was granted which only goes to show that it was not voluntarily at all but was thrust upon the parents/guardians of the students and were taken forcefully. Further the assessee's Trust was following a 'package system' in which the students were given fixed packages of capitation fee, hostel fee and admission fee and this he held that it clearly goes to prove that the students were required to compulsorily pay the capitation fee to receive their degrees. Ld. PCIT has also demolished the assessee's contention that the major part of such voluntary donation has been applied in construction of new educational building on the ground that, firstly, there is no evidence for application of capitation fees in the construction of educational building which has been found during the course of search proceedings; and secondly, on the contrary there were various documents which shows the use of voluntary donation/capitation fees for personal purposes, such as foreign travel by the trustees, investment in benami property by the children of the trustee and investment in a Real Estate Company. He has also referred to certain observations of the Settlement Commission an....
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....ts offered by the assessee before the ITSC and the amount added by the ITSC were unaccounted receipts not found recorded in the books of the Trust and therefore, it was clear cut violation of 10th proviso. Thus, he concluded that in view of clear-cut violation of provisions of Section 10(23C)(vi)&(vi) of the Act i.e., 10th proviso and 14th proviso whereby the assessee's activities has been found to be non-genuine, the approval granted to assessee Trust needs to be withdrawn. 8. Another important issue which has been raised by Ld. PCIT is on account of expenditure being incurred in 'News India Channel', by the Trust which was not as per the objectives of the Trust. The ld. Pr.CIT has noted that the assessee Trust was operating a news channel namely, "News India" at NIMS University and has two more offices at Ranchi and Patna. The assessee's claim was that the News India Channel was established in accordance with its objectives, because it was running courses for diploma in TV and film production after 2013. However, the Ld. PCIT observed that the assessee could not give any single audio/video CD containing transmission of education related material on the News India....
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....ths. The total of these amounts has been written as '18.9', which was deduced by the department as Rs. 18.9 lacs. Similar noting was there regarding cash payment to Dr. Thomas for Rs. 95,000+80,000. All these revealed that payments were made to the doctors in cash to the tune of Rs. 20.65 lacs. Similarly, noting is appearing at page No. 66 for the payment made to the various doctors, the details of which has been noted by him in para 6.1 of the impugned order which aggregated to Rs. 6.25 lacs. From these seized documents, the ld. Pr.CIT concluded that the Trust was incurring expenditure in cash from its unaccounted receipts and this fact too has been accepted by the ITSC in para 16.15 of the order. 10. After giving detail reasoning, he thus concluded that the approval granted to the assessee Trust U/s 10(23C) (vi) & (via) of the Act is to be withdrawn after invoking the 14th proviso to its Section w.e.f. from 01/4/2006. The final conclusion of the ld. Pr. CIT in para 7 reads as under: - "7. In view of the facts stated above especially forcing students/parents to give unaccounted donations in lieu of admission, enriching the trustees from such unaccounted capitation fee, ....
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....e assessee trust. Therefore, the registration of the assessee trust u/s 12AA(1)(b)(i) is hereby cancelled by invoking section 12AA (3) of the Income tax Act, 1961 with effect from 01/04/2006." Argument placed by the Ld. A.R. of the assessee: 12. Before us, Ld. Counsel for the assessee Shri G.M. Mehta after reiterating the entire facts and background of the case submitted that the various allegations made by the ld. Pr. CIT, in the impugned order cannot be sustained so as to cancel the approval/registration from retrospective effect. One of the main allegation of the ld. Pr.CIT was that the assessee has received capitation fees in cash, the same is not correct appreciation of facts, because these were purely in the nature of 'voluntary donations' received from the parents/students and such voluntariness is borne by the fact that, firstly, it has not been received by all the students but from very few students as highlighted in the Annexure-2 of the impugned order; secondly, there is no fixed amount charged and in fact the amount varies from student to student; and lastly, the so called capitation fee was not received at the time of admission which generally is a feature ....
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....ould not show from the material on record that there has been diversion of funds by the assessee Trust to the trustees and it was used for the personal purposes as alleged in the impugned order. He pointed out that the addition made on account of foreign travel expenses, unaccounted investments, jewellery etc. in the hands of the trustees and relatives have been subject matter of scrutiny assessment U/s 153A of the Act in their hands and no adverse inference has been drawn and all the additions have been deleted. Thus, the observations of the ld. Pr.CIT that the Trust's fund has been misused are wholly divorced from the facts. The entire adverse inference based on so called alleged capitation fees received in cash, he submitted that though may not have been recorded in the books of account but the same has been fully utilized for the objects and activities of the Trust and therefore, no adverse inference whatsoever could have been drawn. Mere mentioning of 'capitation fees' at some places in the seized document does not make that the whole payment received by the assessee was not voluntary donation and there is no proof with the department that the donations were not by....
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....round that the cut-off specified in the proviso to section 2(15) of the Act has exceeded in a particular year and without there being any change in the nature of activities of the institution, then cancellation of registration without justifiable reasons cause additional hardship to the assessee. Therefore, keeping the spirit of the said circular, he prayed that cancellation of the registration of charitable institution granted U/s 12AA of the Act is not warranted just because of proviso to Section 2(15) of the Act comes into play. 15. Lastly, he submitted that the registration granted earlier could not be cancelled with retrospective effect especially in the case of assessee, when no show cause notice or opportunity was given by the ld. Pr. CIT that he is withdrawing the registration/approval w.e.f. 01/4/2006. In support of his contention that registration cannot be withdrawn from retrospective date, he strongly relied upon the judgment of Hon'ble Allahabad High Court in the case of ACIT Vs. Agra Development Authority (2018) 302 CTR (All) 308; CIT Vs. Manav Vikas Avam Sewa Sansthan (2011) 336 ITR 250 (All); and ITAT Mumbai Bench decision in the case of the South Indian Educat....
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....ivities are not genuine, then the statute provides power to rescind or cancel the approval/registration granted earlier to the Trust. Here in this case, both the charges have been framed against the assessee Trust and especially on non-genuineness of the activities of the assessee Trust. He then tried to impress upon as to what kind of activities of any Trust or Institution can be reckoned to be non-genuine. These are, according to him are as under: - * activities are not legal as it has caused some infringement of law. * accounts are not properly maintained or the receipts are not accounted for in the books of account. * the trust/society is not registered with competent authority. * it has caused some misrepresentation of facts before any authority. * it has encroached public property. * it has given undue benefits to the trustees or office bearers. * it is selling education. * it is doing commercial activities Herein in this case, he submitted that such kind of non-genuine activities are clearly borne out from the material on record and therefore, such non-genuine activities entails cancellation of registration and that to be from retrospective date. Here the re....
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....39;ble Supreme Court in the case of TMA Pai Foundation Vs. State of Karnataka (2002) 8SCC 481. He further submitted that a distinction has to be drawn between the donation towards corpus and the donation for earmarked purpose. Referring to the judgment of Hon'ble Supreme Court in the case of Municipal Corporation of Delhi Vs. Children Book Trust (1992) 63 Taxman 385 he pointed out that the Hon'ble Court has held that term 'voluntary contribution' towards the corpus fund must satisfy twin tests viz., (i) it should be voluntary without any quid pro quo; and (ii) with a specific direction towards corpus fund of the trust. Beneficiary's contribution could not be called as voluntary contributions, as there would be some consideration for the contribution in the form of certain benefits being direct or indirect. He submitted that similar view has been expressed by the Hon'ble Karnataka High Court on similar set of facts in the case of DIT v. Ramakrishna Sewa Trust [2013] 357 ITR 731 (Kar.) wherein following observations have been made: "the capital of an assessee; a capital of a society, a capital of a trust; a capital of an institution. Therefore, if voluntary ....
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....that there is clear cut noting in the handwriting of the trustees wherein cash payments had been made to the doctors which shows that the assessee has incurred unexplained expenditure outside the books, because in the regular books of account only cheques payment have been reflected. If the payments have been made in cash then there must be cash earnings which are nothing but coming from capitation fees received in cash. For this reason, also it can be held that the assessee's activities were not genuine. 20. Lastly, coming to the issue whether registration/approval can be cancelled from a retrospective date, ld. DR submitted that here in this case, registration was granted in the year 2000, whereas the same has been cancelled only w.e.f. 2006-07 which are based on documentary evidences found. Thus, cancellation is not from the date of inception but from the date when the documentary evidences/material has been found that the assessee's activities are not genuine and it has been receiving huge capitation fees. He also referred to the relevant provisions of Section 12AA (3) and also the 14th proviso to Section 10(23C) of the Act that the Act itself provides that the cancell....
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....that the assessee Trust has been receiving 'capitation fee' in a very systematic and organized manner from various students right from the A.Y. 2006-07 till the date of search. The quantification of the 'capitation fee' which could be unearthed from the search and post search enquiry were quantified to 650 students as tabulated by the department which is also forming part of the impugned order marked as "Annexure-A". In the said annexure, detail analysis of unaccounted capitation fee received by the assessee Trust has been given which highlights the details of seized annexure number, page number, financial year to which capitation fees pertain, date of fees received, name of the student, name of the father/relative of the student, professional courses opted by the student, address, mobile number, courses, amount received in lacs, and the name of the trustee in whose handwriting it has been written and other details. These entire capitation fees have been received in cash and it an undisputed fact that from the assessment years 2009-10 onwards, such capitation fees have neither been recorded in the books of account nor have they been disclosed in the audited financia....
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....or the proceedings before us only in the context of the stand taken by the applicant that these donations being voluntary contributions should be treated as 'corpus donations' which are to be treated as exempt. Sec 11(1)(d) of the Income-Tax Act provides that income in the form of voluntary contributions are not be included in the total income of a Trust. However, Sec. 11(1)(d) lays down another condition: such voluntary contributions are not to be treated as exempt unless the donor gives a specific direction that they shall form a part of the corpus of the trust or Institution. It is seen that in none of the 638 donations received by the applicant there is any declaration by the donor that the amount is to be form a part of the corpus of the applicant trust. In view of this none of this donations can be treated as 'corpus donations' exempt under sec. 11(1)(d) and all these are to be treated as ordinary receipts which shall form a part of applicant's income and taxed subject to the conditions relating to application of income for the objective of the Trust. In view of this we are of the view that whether the donations were 'voluntary' or 'involuntary....
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....tion' by the assessee has not been recorded in the books of account at all and which fact has also been admitted by the assessee trust right from the A.Y. 2009-10. The reason given by the assessee for not recording these cash fees/voluntary donation /capitation fees before the authorities below and also before us is that, the head of the accounts department has left the job after assessment year 2008-09 and therefore, these amounts could not be recorded in the regular books of account for all the subsequent years. Such a reasoning and the argument ostensibly cannot appeal to the conscience of any court, because if the assessee has recorded all other receipts which are running into hundred of crores of rupees in the regular books of account then to say that these cash fees/voluntary donations could not been recorded due to the lack of head of accounts is very vague and lame excuse. One of the reason for not recording such huge cash fees in the books of account, perhaps could be due to the fact that by this time, various courts including the Hon'ble Supreme Court have come out very heavily against the private educational institutions especially the private medical colleges fo....
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....lacks element of voluntariness. The donation has element of free will and there cannot be any fixed amount and here in this case it has been brought on record by the department that once this amount is given then only 'no dues certificate' has been issued to the students by the trustees. Thus, under no circumstances, such a cash fees can be held to be given voluntarily or is in the nature of voluntary donation. It is undoubtedly in the nature of enforced fee charged over and above the regular fees by the assessee trust through its trustees which has neither any sanction of law nor has been recorded in the books of account. 25. This issue of charging of 'capitation fee' by private Medical Colleges and other educational institutions has received judicial frown and admonition not only by the various Hon'ble High Courts but also by the Hon'ble Supreme Court and that to be by the Constitutional Bench on several occasions. Providing education for various levels to the citizens is one of the paramount goals of a welfare state and is regarded as the fundamental duty of the State to provide the education to its citizens. Rather the Constitution of India has enshrine....
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....e (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government [or is approved by the prescribed authority, as the case may be,] or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that- (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not- (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution- (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, it may, at any time after giving a reasonable opportunity of showing ca....
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....;capitation fee' can be held to be genuine or not; or whether it is for the purpose of education. One of the main contentions raised by the assessee was that all such cash fees received, though not recorded in the books has been fully utilized in the construction of college/hospital buildings and being used for expanding the infrastructure and therefore, no adverse inference can be drawn regarding non-genuineness. Such an argument is delusive and flawed, firstly for the reason that it is purely based on hypothesis as no evidence or material has been brought on record or has been found during the course of search that these cash fees has been utilized for the purpose of construction of building or applied for charitable purposes; and secondly, such illicit charging of fees enforced upon the students cannot be genuine education activity. If the assessee is receiving huge unaccounted cash fees, which are not recorded in the books of account and neither its application has been recorded then there cannot be any presumption that such cash received deemed to have been applied for charitable purposes. At no stage assessee could substantiate such utilization of unaccounted receipts wit....
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....nt, and that is that inasmuch as the occupation of education is, in a sense, regarded as charitable, the government can provide regulations that will ensure excellence in education, while forbidding the charging of capitation fee and profiteering by the institution. Since the object of setting up an educational institution is by definition "charitable", it is clear that an educational institution cannot charge such a fee as is not required for the purpose of fulfilling that object. To put it differently, in the establishment of an educational institution, the object should not be to make a profit, inasmuch as education is essentially charitable in nature. There can, however, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the institution." [Emphasis in bold is ours] 28. Thus, the law as its stands is very clear that the educational institution cannot charge capitation fees and are not permitted to charge any such fee. Strong contempt and obloquy have been expressed by the Supreme Court of Land that the capitation fee and profiteering by the educational institution defeats the nobl....
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.... the books, we find from perusal of the seized documents that the revenue has not been able to properly correlate or establish that such payments have been made outside the books or such cash has actually been made. In any case, even it is treated as some adverse material, however, we are not dwelling upon this aspect as we have already held on two counts that the assessee's activities are not genuine and therefore, we are not adjudicating this allegation of the Revenue. 31. Another moot question here in this case is, whether such an approval u/s 10(23C) or registration U/S 12AA granted earlier can be withdrawn from a retrospective date; and if the answer is yes, then what would be the relevant date/period from which such cancellation be made effective. In so far as the withdrawal of approval/notification U/s 10(23C) is concerned, we have already observed in the foregoing paragraphs that there is no such provision which specifically provides that withdrawal cannot be made from retrospective date as the statutes provides that the authorities have the power to withdraw the approval once it is found that the activities of the Trust or institution are not carried out in accordance....
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....ound not being carried out in accordance with objects. If non-genuineness is not found from an earlier date but from the present date then cancellation cannot be made from back date, however if the trust or institution based on any material or information is found to be carrying non-genuine activity from the earlier period then from that period registration can be cancelled. The date from when the non-genuineness is found is the decisive and determinative factor. There are set of judgments as cited by the Ld. DR like U.P. Distillers Association (supra); Sri Vidyaranya Sewa Sangha (supra); and Novodaya Education Trust (supra), wherein the courts have held that the cancellation can be made from the retrospective date. However, there are other set of judgments which has been relied upon by the ld. counsel wherein the courts have held that the registration cannot be cancelled from the date of inception. Here in this case, we have held that the non-genuineness of the activities of the assessee Trust has been found from A.Y. 2009-10 when the assessee had received huge capitation fee in cash which has not been recorded in the books of account and from this date onwards i.e. A.Y. 2009-10, ....
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....ucation Trust v. Union of India (supra) wherein it has been held that withdrawal can be made from retrospective date if the evidence and material has been found about the non-genuineness of the activities of the Trust. Similarly, the Hon'ble Delhi High Court in the case of U.P. Distillers Association (supra) have opined that the cancellation of registration on that particular case can relate back from the date of introduction of Section 12AA (3) of the Act w.e.f. 01/10/2004. Since in this case, the cancellation has not been done from the date of granting of registration, albeit we have held that such a cancellation or withdrawal of approval should be done from A.Y. 2009-10 onwards, because there are specific material and evidences to show that the assessee's activities from that period has been non-genuine. Accordingly, on the facts and circumstances of the case, we hold that the ld. Pr.CIT was justified in cancelling the registration U/s 12AA and also withdrawing the approval U/s 10(23C) of the Act, but with a rider that such cancellation/withdrawal would be from the A.Y. 2009-10 onwards and not from the earlier years. Accordingly, both the appeals of the assessee are dism....
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....s with it, did not charge any rent or other expenses for city office and always provided voluntary services without charging any remuneration. (b) Common application made for the purpose of approval under section 10(23C) (vi) and for 10 (23C) (via) of IT Act. (c) TV channel, which is being run by an independent company by the name M/s. Omega TV Media Pvt. Ltd. with different PAN. (d) Refusal of registration under section 12AA/10(23C) of IT Act to the Applicant University." 35. The aforesaid appeals have been filed by the NIMS University, Rajasthan, Jaipur against the refusal of grant of registration U/s 12AA of the Act and refuse to grant approval for notification U/s 10(23C) (vi) & (via) of the Act. The facts and the reasoning given by the ld. CIT(E) to deny the same are exactly same, therefore, our finding would be applicable for both the appeals. 36. As discussed in the earlier appeals, the assessee Trust had set up its own private University under the aegis of NIMS University, Rajasthan, Jaipur. Such University was enacted by the 'NIMS University Rajasthan Act, 2008' by the Legislature of the Rajasthan which got ascent from the Hon'ble Governor on 29/03/2008....
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....668, 396, 397, 398 & 520 of Village Jugalpura, Tehsil- Amer. Shobha Nagar, Distt.- Jaipur (Rajasthan). During verification of the same, following discrepancies have been notice. 1.1 The Khasara No. 152 (Khata Sankhya-32) pertains to Goverdhan S/o Ghasi Ram, Cast - Meena. 1.2 Khasara No. 514 (Khata Sankhya- 169) pertains to Public Works Departments. 1.3 Khasara No. 515 (Khata Sankhya- 02) pertains to Agarwal Farms Pvt. Ltd. Registered office Raja Raoji ka Khurra, Ramganj Bazar, Jaipur Director Sh. Girish Chandra S/o Hari Prasad, Part 14 F 35 Ghiya Marg, Bani Park, Jaipur, M/s Bholaram & Sons investment Pvt. Ltd. Through Director Shri Vinod Kashera Post- Panitola Aasam part 1/2. 1.4 Khasra No. 516 (Khata Sankhya -01) pertains to Government of Rajasthan. Khasra No. 518 (Khata Sankhya-165) pertains to Jaipur Development Authority, Jaipur. 1.5 Khasra No. 528 (Khata Sankhya-165) pertains to Jaipur Development Authority, Jaipur. 1.6 Khasra No. 531 & 532 (Khata Sankhya - 165) pertains to Jaipur Development Authority, Jaipur. 1.7 Khasra No. 519 (Khata Sankhya - 1) pertains to Indian Medical Trust Registered Office 4 Govin.d Marg, Adarsh Nagar, Jaipur through Trustee Smt. Rajes....
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....ine activity. As the activities of transfer to assets for creation of university does not seems to be genuine, it is not a fit case for registration u/s 12AA of the Act. 12. In the light of the above facts the application seeking registration u/s 12AA is hereby rejected and filed." 38. On the same reasoning also, approval U/s 10(23C) has been refused by the ld. CIT (E) by holding as under: - "Thus from 1.10.2016 the applicant took over all the assets and liabilities of X 1MT alongwith all of its activities. Therefore, it becomes imperative to examine the genuineness of activities of 1MT. It is also worthwhile to mention here that the in the case of M/s Indian Medical Trust, Jaipur, which is the sponsoring body the applicant, a search operation u/s 132(1) of the I.T. Act was carried out on 30.10.2014. During the search proceedings -unaccounted cash, jewellery, foreign currency and various incriminating documents were found and seized. After examining the documents and various evidences collected during the course of search, and considering assessee's submissions the approval granted to the trust u/s 10(23C)(vi) and 10(23C)(via) has been withdrawn by the Pr.CIT(Central), Jai....
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....in the case of CIT v. Maharaja Sawai Mansingh ji Museum Trust (1988) 169 1TR 379(Raj.) wherein it was held that It is amply clear from a bare reading of sec. 10(22) that the "educational institutions" must exist "solely" for educational purposes. "Solely" means exclusively and not primarily. The emphasis in sec. 10(22) is on word "solely." Section 10(22) has been inherited by section 10(23C) and decisions applicable on erstwhile sec. 10(22) holds good for the present section of 10(23C). 9. In light of the discussions as held herein earlier paras of this order, the application filed by the applicant for grant of approval of exemption u/s 10(23C)(vi)& (via) of the Income Tax Act is hereby rejected." 39. Before us, the ld. counsel for the assessee has submitted that only ground taken for rejecting the application of the assessee U/s 12AA is that, some of the land as per the Government Notification was neither in the ownership of the Indian Medical Trust nor could be transferred to NIMS University, Rajasthan. It has not been doubted that the University has been carrying out various educational activities and is running a hospital. He further submitted that what is required to be see....
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....o examine the 'objects' of the Trust or institution as to whether they are for the charitable purposes or not and also to see the genuineness of the activities qua the objects. If certain 'Khasra' numbers as notified by the Government has not been acquired or is not owned by the Indian Medical Trust or by the NIMS University and it is standing on some different land bearing different 'Khasra' numbers, but that does not mean that its activities are not genuine or is not carrying out charitable activities. Even if there is some technical breach or violation of the Notification pertaining to land that the said University is not standing on a particular 'Khasra' notified, then that would be a subject matter of issue of dispute with State authorities and not the Income Tax Department. What is required to be seen in terms of Section 12AA is, only the 'objects' and the genuineness of the activities. Accordingly, the reasons given by the ld. CIT (E) for refusing the registration cannot be upheld. Since the objects and the genuineness of the activities have not been examined, therefore, we are remitting the issue of grant of registration back to the f....