TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 343
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.... to prove that the activities of the trust are not genuine or those are not being carried out in accordance with the objects of the trust, in the backdrop of the fact that the appellant trust has been delivering education to thousands of students in various streams of learning and continues to have affiliations with Savitribai Phule University Pune, Medical Council of India, AICTE etc. 3. On the facts and in the circumstances of the case and without prejudice to the above grounds the PCIT erred in overlooking the fact that, even if for sake of argument it was admitted that the appellant trust accepted capitation fees, the same shall amount to violation of Maharashtra Education Institution (Prohibition of Acceptance of Capitation Fee) Act 1987, and that appropriate action might be taken under the relevant Act but the same in no way is a ground for cancellation of registration of the appellant trust u/s 12AA(3) of the Income Tax Act, 1961. 4. On the facts and in the circumstances of the case reliance of PCIT on the decision of Vodithala Education Society - 20 SOT 353 is misplaced in as much as the PCIT erroneously holds that collecting of donation cannot be regarded as charitable....
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....pitation fees outside the books of account and based on this information, the Ld. Commissioner drawn the opinion that the appellant trust had not carried on genuine activities for which the appellant society was formed, accordingly cancelled the registration on 09.10.2007. However, on appeal before the Tribunal vide order dated 19.09.2008, registration was restored on the ground that under the provisions of sub-section (3) of section 12AA, as it then stood, the Commissioner had no power to cancel the registration of trust or institution granted u/s 12A of the Act. As on today, we were told that the appeal preferred by the Department against this Tribunal's order is pending disposal before the Hon'ble Bombay High Court. 5. While matter stood thus, by Finance Act, 2010, provisions of section 12AA(3) of the Act have been amended w.e.f. 01.06.2010 empowering the Principal Commissioner or Commissioner of Income Tax on being satisfied that the activities of the trust or institution are not genuine or are not being carried out in accordance with the object of the trust, to cancel the registration of such trust, which had obtained registration, at any time u/s 12A of the Act. Based on ame....
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....dicating that the appellant trust had collected capitation fees in cash for granting admissions to various courses under the Management quota in the educational institutions run by it. Further, such donation and capitation fee were not accounted as part of the income of appellant trust but was being siphoned off by the founders of the trust for their personal enrichment. Considering this evidence, an opportunity was given vide show cause notice dated 14.02.2014 dropping the cancellation of registration of trust. In response to the show cause notice, the appellant had submitted that the proceedings should be kept in abeyance or dropped till the disposal of SLP by the Hon'ble Supreme Court. Finally, another opportunity was given vide letter dated 12.01.2018 proposing to cancel the registration of the appellant trust w.e.f. financial year 2007-08. In response to the same, it was submitted that the assessee appeared and requested the ld. Pr. Commissioner to consider the written submissions filed vide letter dated 29.01.2018 and submissions dated 02.05.2014. The gist of submissions made before the Ld. Commissioner are as under: (i) Categorically denied the allegation that the appe....
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....he ld. PCIT has no jurisdiction to cancel the registration of appellant trust u/s 12A retrospectively from financial year 2007-08 in view of the fact that the amendment to section 12AA(3) empowering the PCIT to cancel the registration granted u/s 12A is brought into effect only from 01.06.2010. Finally, it is submitted that on the doctrine of laches, order passed by PCIT is bad in law for the reason that though the proceedings for cancellation of registration were started in 2011 ultimately culminated into order during the year 2018. Finally, he submitted that the order passed u/s 12AA(3) cannot have retrospective effect, is effective only from date of such order which is in the present case is 09.05.2018, placing reliance on the judgment of Hon'ble Madras High Court in Auro Lab vs. ITO (2019) 411 ITR 308 (Mad). 10. On the other hand, ld. CIT-DR submits that the basis of impugned order i.ee. CIT(A)'s order has been upheld by this Tribunal vide order dated 01.04.2022 in ITA Nos.44 to 50, 54 to 59 & 1654/PUN/2017 for A.Ys. 2008-09 to 2014-15. Therefore, he submits that in view of the decision of Hon'ble Madras High Court in the case of Vellore Institute of Technology vs. CIT (2021) ....
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....he objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of section 12A. 12. It is relevant to our purpose, sub-section (3) to section 12AA was inserted by Finance (No.2) Act, 2004 with effect from 01.10.2004. Later, by Finance Act, 2010 and w.e.f. 01.06.2010, the words "or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)" were inserted in sub-section 3 of section 12AA of the Act. Thus, after such amendment, section 12AA(3) reads as under: "12AA. (1) ..... (2) ..... (3) Wher....
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....for the benefit of persons managing the appellant society and, therefore, it can be safely concluded that the appellant society was formed for the purpose of personal gain, it cannot be said to be an association formed with the object of charitable purpose as held by the PRIVY COUNCIL in the case of All India Spinners' Association v. CIT [1944] 12 ITR 482 reiterated by the Hon'ble Supreme Court in the case of DIT v. Bharat Diamond Bourse [2003] 126 Taxman 365/259 ITR 280 wherein, the Hon'ble Apex Court held that when specified person in the present case, President of the appellant society because of the position as a trustee, misuses his powers by lending himself or taking away the income or the funds of the trust, then it tantamount to breach of the trust indicating that the trust was formed for a personal gain and, therefore, it cannot be said that the objects of the appellant society are charitable and, therefore, the income of the appellant trust does not qualify for exemption u/s 11 of the Act." 15. The findings of ld. CIT(A) have been upheld by this Tribunal in assessment proceedings. In view of concurrent findings of Tribunal and CIT(A), the Ld. PCIT was justifi....