TaxTMI 
TaxTMI 
2023 (2) TMI 1365
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....ces of the case and in the law, the CIT(Exemptions) has grossly erred in denying registration to the assessee trust u/s 12AA of the Income tax act, 1961 on the grounds herein below: a) That the shifting of present provision u/s 10(23C)(vi) to section 12A(a) of the Act is not permissible as per Law. b) That the corpus donation received from trustees is not for specific purpose. c) That the salaries and wages paid to the teaching staff are not as per minimum wages act. d) That the assessee trust earned huge surplus, which is not redeployed into education purpose. 4. That on the facts and circumstances of the case, the order of the Ld. CIT (Exemptions) is bad in law as CIT Exemptions is required to see the objects of the trust and genuineness of the activities and not required to examine the other extraneous considerations. 5. That the appellant craves to leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all of the above grounds are without prejudice to each other." 3. Condonation of delay of two days in filing the instant appeal is requested to be condoned with the support of ....
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....that there is an addition of fixed assets to the tune of Rs. 99,51,418/- during the F.Y. 2015-16. Also, the applicant society is having surpluses are consistently in the range of 35 to 40% of the receipts. In order to verify the claims of the applicant society, the following additional queries were asked vide e-mail to [email protected] on 21.09.2018 requesting them to submit the details on 23.09.2018. 6. (i) Please provide the Source of financing of fixed assets of nearly a crore in F. Y. 2015-16. (ii) Please provide details/evidence of corpus fund addition during F.Y. 2016- 17 to the tune of Rs. 20.90 lakhs. (iii) Please provide details/evidence including purpose behind sundry creditors existing in F.Y. 2015-16 to the tune of Rs. 49.79 lakhs. (iv) How did the applicant subscribe to the essential condition as existing not for profit during F.Y. 2014-15, 2015-16 & 2016-17 during which the surpluses are consistently seen in the range of 35-40% of the receipts? Please explain the same. (v) Please provide the bank statements for the last three years. (vi) Please provide the consolidated of the trust inclusive of the....
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....and objects of the applicant have not changed to warrant a change in the code of exemption that has a completely different set of conditions. This contention of the applicant is certainly not acceptable. 8. Further, on perusal of the Balance sheet as on 31.03.2017 it was observed that the applicant trust is showing Rs. 20.90 lakhs/- as corpus fund. To verify the claim, the applicant trust was asked to submit the documentary proof vide e-mail dated 21.09.2018. In response to the same the applicant submitted the list of trustees who have contributed fund towards corpus funds without any documentary evidences. Mere giving the list of persons can't confirm that it was a corpus donation. There is no evidence of any specific direction of the same being given as corpus donation. Without any specific direction & evidences for treating the fund as corpus, tire receipts of Rs. 20.90 lakhs/- should have been reflected as income in the Income & Expenditure Account and don't fall under the ambit of section ll(l)(d) i.e. "income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution". 9. ....
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....rsity Vs ACIT in Civil appeal Nos. 4361-4366 of 2016 where the Hon'ble High Court held to be the permissible reasonable surplus at 6% to 15% of the gross receipt. In the present case the applicant spciety has net surplus @ 44.56%, 37.85% and 34.64% during F.Y. 2014-15,2015-16 & 2016-17 respectively as shown in table above. The fact of the case also reveals that the surpluses have not been redeployed into education. 11. In view of above discussions, it is clear that the applicant trusts intent is to generate excessive surpluses much beyond what has been held as reasonable. Also, without any specific direction & evidences for treating the fund as corpus, the receipts of Rs. 20.90 lakhs/- was treated as corpus by the applicant trust. The same should have been reflected as income in the Income & Expenditure Account in the absence of it assuming the character of corpus funds. Non- furshing of bank statements for three years' despite being specifically asked for further hinders examination of the applicant's claims about its finances. In view of all of the above, no satisfaction about the genuineness of activities can be recorded in the case. The application for registration....
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....n the sense that they are in line with the objects of the Trust. The only requirement for granting the registration is that the object of the society should be charitable in nature and its activities were genuine. The Hon'ble Supreme Court in the case of M/s Anand Social and Educational Trust v/s CIT in Civil Appeal No.5437-5438/ 2012 vide order dated 19.02.2020 has laid down the basic principles for allowability of basic registration. 2. While passing the order for rejecting the application for grant of registration filed by the assessee trust, the Ld. CIT(E), Chandigarh had pointed out:- (i) The Ld. CIT(E) observation on that since the assessee was availing exemption u/s 10(23C)(iiiad) of the Act should have applied registration u/s 10(23C)(vi) of the Act. The observation of the Ld. CIT is not as per law as the assessee was availing exemption u/s 10(23C)(iiiad) because the receipts of the Trust are less than one crore. The assessee trust forecast that the receipts of the trust will cross one crore and accordingly applied for registration u/s 12AA of the Act. There is no bar in the provisions of the Act which debars the institution to apply for regis....
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....17 and 2017-18 is factually incorrect whereas the net surplus generated by the assessee trust is negative in all the assessment years referred in the order. Even under the provisions of section 11, the surplus upto 15% of the total receipts is allowable. Copies of the Balance sheet are annexed herewith page No.14 to 35 of Paper book. 3. The Ld. CIT(E) has not pointed out any adversely on the object and activities of the Trust. The Ld. CIT(E) has to satisfy while granting the registration u/s 12AA of the Act that the objects of the assessee Trust are charitable in nature and the activities are genuine. The objects of the Trust are educational and are covered under the definition of section 2(15) of the Income tax Act, 1961. The Hon'ble Supreme Court in the case of M/s Anand Social and Educational Trust v/s CIT in Civil appeal No.5437-5438/2012 vide order dated 19/02/2020 has laid down the basic principles for allowability of registration. Since the assessee Trust has fulfilled all the requisite conditions as laid down under the said provisions of the Act, it is prayed that the Ld. CIT(E) may kindly be directed to allow registration under Section 12AA of the Income tax A....