TaxTMI 
TaxTMI 
2026 (7) TMI 504
X X X X Extracts X X X X
X X X X Extracts X X X X
....opment and meeting the entire value chain's requirements of appropriately trained manpower in quantity and quality on a sustained and evolving basis and to promote a skill development plan and maintain skill inventory and coordinate participation of social partners, employers in the private sector, training providers, professional societies and NGOs/ civil society groups in the process of skill development, to identify the skill development needs, review international trends and identify skill gaps and technology, to promote undertaking the task of educational and vocational skill upgrade and impart any of the Education program/Courses for Under-Graduation/ Post-Graduation level & or certificate/ Advance certificate level and to implement for Government/ Semi Government/Corporation or autonomous bodies skill development/ Vocational Training in India & at International level with or without Government funding and to organize, recognize and establish or acquire, run and sponsor institution to provide instructions, teaching and training in higher education, to create higher levels of intellectual abilities, make provision for the research advancement and dissemination, to institut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e engaged in non-charitable activities which were admitted by the trustee/director of the assessee in his statement and also filed an affidavit reconfirming the same. Accordingly, it was noticed that the assessee had been consistently violating the provisions of the Income Tax Act as well as the conditions of the registration making itself liable for cancellation of its registrations granted u/s. 12AA and 12A(1)(ac)(i) r.w.s 12AB of the Act as applicable to the respective years. 6. The Ld. Pr.CIT(C) noted that the Assessing Officer i.e. ITO(Exemption), Ward-2, Pune had submitted a proposal to the CIT(Exemption), Pune for cancellation of registration granted to the assessee which was duly endorsed by the Addl. 1. CIT(Exemptions) Range, Pune vide letter no. Pn/Addl. CIT(Exemp)/12AA/630 dated 28.08.2024. Subsequently, upon centralization of the case to the charge of DCIT, Central Circle-2(2), Pune, a proposal for cancellation of the registration of the assessee was transferred to the Ld. Pr.CIT(C) vide letter no. Pn/CIT(E)/centralization/YAS/2024-25/3101, dated 31.12.2024 by the office of the CIT(E), Pune. 7. The Ld. Pr.CIT(C) on going through the same observed that there have b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st. Further, the activities carried out by the assessee are not found to be charitable in nature. 10. The first objection of the Ld. Pr.CIT(C) is that the assessee is engaged in siphoning of money on account of sham transactions which are not genuine activities and are also not in accordance with its stated objects. The Ld. Pr.CIT(C) noted that during the course of survey action, suspicious financial transactions for mobilizing manpower with M/s. HUF India Pvt. Ltd. (hereinafter may be referred as to HUF) had been found which is a subsidiary of Germany based company named HUF HULSBECK & FURST GMBH & CO. KG. The company-HUF is engaged in manufacturing of remote-controlled access and authentication of cars & automobiles. It has a manufacturing plant at Chakan, Pune. During the course of survey action, it was noticed that between F.Y. 2017-18 and 2020-21, the assessee had received substantial sums amounting to Rs. 13.12 crore from HUF. However, the assessee had no such transactions with this party from December, 2020 onwards. Shri Vishwesh Kulkarni, Chairman and MD of the assessee was questioned about these transactions while recording his statement on oath. In reply, he stated tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....98,868/- Total 2,12,80,701/- 12. He noted that during the survey action it was found that the assessee had received total payment of Rs. 13,12,20,437/- against which only Rs. 2,12,80,701/- was towards supply of manpower/trainees during the F.Y. 2016-17 to 2020-21. This clearly establishes that payments received over and above of Rs. 2,12,80,701/- were against bogus bills raised by the assessee. Shri Yogesh Ramdas Labade also submitted a copy of email dated 26.08.2020 informing discontinuation of business association with HUF. Further, during the course of survey action, statement of Shri Rajnikant Shivaji Khandebharat was also recorded u/s. 131 of the Act. Shri Rajnikant Shivaji Khandebharat is an ex-employee of the assessee, who was caught by staff of HUF India Pvt. Ltd. with bogus invoices in the year 2020 which led to the expose of the scam and revealed the engagement of the assessee in raising fake invoices. Shri Rajnikant Shivaji Khandebharat was working as field officer who was removed by the assessee after exposure of the scam. Shri Rajnikant Shivaji Khandebharat explained the modus operandi of the assessee with HUF and submitted copy of fake bills raised by YAS as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7/426 ITR 340 (SC) where the Hon'ble Court held that: "9. Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable, the Commissioner is entitled to refuse and in fact, bound to refuse such registration" 14. He accordingly held that since the activities of the assessee are found to be not genuine and also not being carried out in accordance with the objects of the trust therefore it has violated the provisions of section 12AA(3) of the Act making itself liable for cancellation of registration granted u/s. 12AA of the Act. 15. The next objection of the Ld. Pr.CIT(C) is that the assessee has not applied its income wholly and exclusi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y has given loans and advances to the directors and their concerns. 19. The Ld. Pr.CIT(C) observed from the financial statements of the assessee that it has advanced huge amount of loans to various concerns of Yashashwi Group including proprietary and partnership concerns of Shri Vishwesh Prabhakar Kulkarni. The assessee in its audit report submitted before the Registrar of Companies (ROC) has shown loans & advances given by it to the proprietary concerns of the director and also to the other related concerns. However, disclosures made by the assessee before the Income-tax department in its statutory audit report filed in Form-10B does not show any such transaction with the related parties and categorically mentioned "NO" such transaction. According to the Ld. Pr.CIT(C), providing loans and advances by the assessee to its related concerns/parties during financial year 2017-18 till the date of survey action which were either accumulated by claiming exemption u/s. 11 of the IT Act, 1961 or borrowed by the assessee by taking loans shows that the assessee has diverted its funds to the specified persons and their concerns for their business activities which does not align with the st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pair and maintenance of the building owned by the directors and/or related concern are booked by YAS. The Ld. Pr.CIT(C) observed that during the survey it was noticed that Yashaswi House, Lane No. 15, Prabhat Road, Pune-04 was being used as corporate office of Yashaswi Group to manage and control the business activities of all the concerns of the Group. However, renovation, repair & maintenance charges were booked in the hands of the assessee only. Shri Vishwesh Kulkarni in his statement recorded during the course of his survey had stated that Yashaswi House is owned by him and is being used for business activities of the assessee without charging any rent. Therefore, whatever recurring expenses of the building incurred had been booked in the hands of the assessee. The Ld. Pr.CIT(C) further noted that the assessee had also booked renovation expenses of building owned by a trust named Yashaswi Education Society at Pimpri Chinchwad, Pune which is registered under The Bombay Trust Act, 1950. Shri Vishwesh Kulkarni and his family members are the trustees/settlers of the trust Yashaswi Education Society, which is engaged into running and managing of a college under the name and title of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n its books of account as part of its total income received from charitable activities. According to the tripartite agreement executed between Maharashtra State Institute of Hotel Management and Catering Technology (MSIHMCT) as first party, Maharashtra State Board of Technical Education (MSBTE) as second party and Yashaswi Academy for Skills (YAS) as third party, and they mutually agreed to impart on the job training to aspirants in the field of Hotel Management, Bakery & Food production, etc. wherein roles and responsibilities of the assessee were very much defined. He noted from the agreement that it was assessee's responsibility to generate revenue from the infrastructure of the MSIHMCT by deciding competitive rates. 25. The Ld. Pr.CIT(C) noted that during the survey action, it was found that the rates charged by the assessee were at market rates and/or higher than the market rates. The said restaurant was run like any other restaurant of the market. No facility by way of discount/concession was offered by the assessee to students/trainees. The said restaurant was accessible to all. From the details of staff working at the restaurants gathered during the course of survey ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....throughout the year and subsequent payments mainly with narration "Being Stipend paid". During the survey action, Shri Vishwesh Kulkarni was asked while recording his statement to explain the utilization of the cash as the same was not the petty cash expenses. However, Shri Vishwesh Kulkarni didn't give satisfactory explanation by just saying that it had been advised by the auditor to pass such entry. During the course of survey action, cash of Rs. 84,96,900/- was also found physically in the cabin of Shri Vishwesh Kulkarni whereas as per the trial balance of the assessee, cash in hand position was of Rs. 2,91,92,817/ -. On being questioned, he stated in his statement that he would submit the reconciliation after going through the books of accounts. Further, during the post survey, the assessee submitted a reconciliation in respect of cash found physically and cash as per its books of accounts. 28. However no documentary evidence submitted by the assessee to prove the genuineness of such huge cash payments as stipend. He noted that under the NAPS, NATS and other such schemes, the apprentice's stipend was payable by way of electronic mode directly to the apprentice's ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(C) the said activities carried out by the assessee are no longer said to be genuine and in accordance with its objects. He, therefore, held that the assessee has made specified violation of the law as per section 12AB (4) of the Act and therefore, its registration u/s. 12AB r.w.s 12A(1)(ac) is liable for cancellation. 30. The next objection of the Ld. Pr.CIT(C) is that the activities carried out by the assessee are not charitable in nature. He noted that the assessee is incorporated under the Companies Act 2013 on 20.03.2014 as 'Not for Profit Organization". The assessee-YAS holds registration under Sec 12AA/12AB of Income Tax Act 1961 and also having 80G registration. The company on the strength of its registration has regularly been claiming exemption u/s. 11 & 12 of the IT Act in its ITR by showing that it is engaged into charitable activity i.e. Education. However, in result of the survey findings, it was noticed that the assessee is mainly working as manpower supplier as well as Facilitator/Third-Party-Aggregator (TPA)/Agent for industry partners to implement government sponsored skill development schemes mainly NEEM, NAPS, etc. 31. The Ld. Pr.CIT(C) noted that dur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction, Shri Vishwesh Kulkarni was questioned to explain as to how the above role of the assessee comes under the domain of charitable activities. In reply, Shri Vishwesh Kulkarni admitted that activities of the assessee are similar to its other profit-making concerns viz. Reliable Industrial Services (Partnership Firm), Yashaswi Manpower Services (Prop. Concern), which are engaged in supplying of manpower, Shri Vishwesh Kulkarni also intended to surrender 12A/12AA registration certificate of the assessee in absence of any charitable activity. 33. In addition to the above, during the post-survey verification, it was further found from the incriminating impounded data back-up that there were folders in the name of "Business Associates". In the said folders, there were various copies of agreements executed by the assessee for implementation of NEEM and NAPS Schemes with third parties. 34. The Ld. Pr.CIT(C) further noted that Shri Vishwesh Kulkarni submitted an affidavit voluntarily offering to surrender the registration granted to Yashaswi Academy for Skills u/s. 124(1)(ac)(i) of the Income-tax Act, 1961 with immediate effect valid from A.Y. 2022-23. Further, during the post-sur....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sinter Metal Pvt. Ltd. raised by the assessee, he noted that the assessee had raised various bills in the name of services provided to M/s. GKN Sinter Metal Pvt. Ltd. which are not in accordance with its approved objects. He therefore held that the activities carried out by the assessee are beyond its objects and commercial in nature. To maximize its profits the said activities are neither relating to the assessee's objects nor being incidental to the attainment of its objects. 37. In view of the various violations and non-charitable activities carried on by the assessee, the Ld. Pr.CIT(C) issued a show cause notice asking the assessee to explain as to why the registration granted u/s. 12AA should not be cancelled. Rejecting the various explanations given by the assessee and relying on various decisions the Ld. Pr.CIT(C) cancelled the registration granted u/s. 12AA by observing as under: 10. In view of the above narrated facts and replied of the assessee submitted time to time, it is to summarized that the assessee is not engaged into charitable activities. The assessee has misused its charitable status by acting as conduit for HUF to evade the tax on account of fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12. I am, therefore, of the considered opinion that there are repeated occurrences of violation as specified u/s. 12AA(3)&(4) of the Act as well as section 12AB(4) of the Act. The activities of the assessee trust cannot be held genuine as there is found to be diversion of income of the assessee trust for purposes other than the Objects of the trust. All these violations clearly come within the ambit of provisions of section 12AA(3) and 12AA(4) and clauses (a), (b), (e) of Explanation below section 12AB(4) of the Act, as applicable for the respective years. Hence, I find it appropriate to cancel the registration u/s. 12A granted on 21.06.2016 and consequent registration u/s. 12AB r.w.s. 12A(1)(ac)(i) of the Act dated 28.05.2021. 13. In view of the above facts and the legal position as discussed above and after taking into consideration the submission of the assessee, it is held that the activities of the assessee trust are not genuine and there are diversions of income for the purposes other than that of the assessee trust. The activities carried out by the assessee are also found not charitable in nature. As the evidences and material discussed in detail in this order ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... after 31.03.2021 and hence, the order passed by the learned CIT(C) is invalid in law and the same may be declared null and void. 6] The order passed by the learned Pr. CIT(C) dated 29.09.2025 be declared null and void since the show cause notices issued dated 10.02.2025 and 13.08.2025 were invalid in law. 7] The learned Pr. CIT(C) erred in holding that the assessee was not engaged in charitable activities and thus, the registration granted u/s. 12AA and 12AB was required to be cancelled. 8] The learned Pr. CIT(C) erred in holding that- a. The assessee company was mainly engaged as a Third Party Aggregator (TPA) / Facilitator / Agent for mobilizing the candidates and other procedural work w.r.t. implementation of the Apprenticeship Programs with a core intent to receive professional service charges and hence, such activities could not be said to be charitable in nature as laid down in section 2(15) of the Act. b. The assessee was engaged in subcontracting of its work under NEEM, NAPS, etc. which resulted in violation of its agreements executed with the concerned Government Departments and also the conditions on which the assessee company....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oretical training to the trainees and hence, it is not justified on his part to hold that the assessee was not engaged in providing education. 13] The learned CIT(C) erred in holding that the assessee had indulged in sham transaction by raising fake invoices in the name of HUF India Pvt. Ltd. with an intention to siphon off the funds by claiming bogus expenses and the said activity could not be said to be charitable in nature u/s. 2(15) of the Act. 14] The learned Pr. CIT(C) further erred in holding that the assessee had carried out non genuine and illegal activity of money laundering which could not be considered as charitable in nature and therefore, the registration granted was required to be cancelled. 15] The learned Pr. CIT(C) erred in holding that the activities carried out by the assessee were not genuine and the same were not carried out in accordance with the objects of the Institution and therefore, the registration granted was required to be cancelled. 16] The learned Pr. CIT(C) failed to appreciate that the transactions carried out by the assessee with HUF India Pvt. Ltd. were under external pressure and misrepresentation of facts an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the concerned employees was commensurate with the work carried out by them for the assessee and hence, simply because they may have provided their services to other concerns of related persons did not imply that the assessee had provided benefit in violation of the provisions of section 13(1)(c). 24] The learned Pr. CIT further erred in holding that the assessee had diverted its funds to the specified persons and their concerns by not charging interest on the loans given which was not in accordance with the objects of the assessee company and hence, the registration granted was required to be cancelled on this ground. 25] The learned Pr. CIT further erred in holding that the assessee had paid salary to Mrs. Shobha Kulkarni and Ms. Abhilasha Kulkarni which was unreasonable / bogus and thereby had provided benefits to the related persons and accordingly, the provisions of section 12AA(3) and 12AA(4) were attracted as well as was clauses (a) and (e) to explanation of section 12AB(4) were attracted and therefore, the registration granted to the assessee was required to be cancelled. 26] The learned Pr. CIT(C) further erred in holding that the assessee had inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id ground. 34] The learned Pr. CIT(C) failed to appreciate that the hotel activity carried out by the assessee was in furtherance to the objects of the trust and accordingly, there was no reason to cancel the registration on the ground that the said activity was carried out on commercial basis. 35] The learned Pr. CIT(C) erred in holding that the assessee had incurred expenditure on non genuine activity by showing the same as stipend paid in cash and therefore, the assessee had committed a specified violation as per section 12AB(4) and therefore, the registration granted was required to be cancelled. 36] The learned Pr. CIT(C) failed to appreciate that the assessee had paid stipend in cash to some of the trainees and the expenditure incurred was genuine and hence, the assessee had not committed any specified violation of law and accordingly, the cancellation of registration on the said ground was not justified. 37] The learned Pr. CIT(C) further erred in relying upon the affidavit of Shri Vishwesh Kulkarni wherein he had admitted that the assessee was not engaged in charitable activities without appreciating that the said affidavit was incorrectl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same and submitted that no order cancelling the registration shall be passed after the expiry of 6 months calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner calling for document or information or for making any enquiry under clause (i) of sub-section (4). 42. Referring to clause (i) of sub-section (4) of section 12AB he submitted that as per the said provision the Principal Commissioner shall call for such documents or information from the Trust or Institution or make such enquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation. 43. He submitted that when survey was conducted on the assessee on 06.03.2024 it is logical that there would be some reason with the department for conducting the survey. Further, the survey action was conducted by the ITO(E), Ward 2, Pune which otherwise means that the Ld. CIT(E) has given the approval to conduct the survey. He submitted that the purpose of survey would be to make enquiry with regard to various issues. Referring to the order passed by the Ld. Pr. CIT(C) he submitted that the order mentions instances of specified viol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gistration was passed on 29.09.2025. The assessee has not disputed the dates or service of notice. Thus, the order passed by the Ld. Pr.CIT(C), Pune was well within the time allowed by the section 12AB(5). 46. So far as the argument of the Ld. Counsel for the assessee that the action of survey u/s. 133A or the date of proposal sent by the CIT (Exemption), Pune for cancellation (i.e. 28.08.2024) should be considered as the date for the notice u/s. 12AB(4)(i) is concerned, he drew the attention of the Bench to the provisions of section 12AB(5) and submitted that there is no ambiguity regarding trigger for the limitation period given in section 12AB(5). It is the first notice sent by the PCIT/CIT under 12AB(4)(i). He submitted that the date of survey u/s. 133A cannot be substituted in place for notice u/s. 12AB(4)(i) for deciding the limitation period prescribed in section 12AB(5). He submitted that survey u/s. 133A is placed in chapter XIII related to Income tax Authorities whereas section 11, 12 and 13 of the Act for trusts etc is a self-contained separate code in itself. He submitted that the main intention behind survey u/s. 133A is information gathering and operates in entirel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specific violation committed by the assessee company and therefore, the period of six months should be calculated from the quarter ending March, 2024 and the order should have been passed within a period of six months from the quarter ending March, 2024 is incorrect. Since in the instant case the Ld. Pr.CIT(C) has issued the first show cause notice on 10.02.2025, therefore the six months period shall be calculated from the end of the quarter ending March, 2025. Since the order cancelling registration has been passed on 29.09.2025, therefore, the same is not barred by limitation. Accordingly, the ground of appeal No. 1 by the assessee is dismissed. 48. Grounds of appeal No. 2 and 3 by the assessee relate to the order passed by the Ld. PCIT as without jurisdiction. 49. The Ld. Counsel for the assessee submitted that the proposal for cancellation was submitted by the ITO(E), Ward 2, Pune to the CIT(E) vide letter dated 26.08.2024. Thereafter, the CIT(E) transferred the proposal for cancellation to the Ld. Pr. CIT(C) vide letter 31.03.2024. Referring to the CBDT notification dated 22.10.2014 he submitted that the competent authority for granting and cancelling registration was th....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. 12AA and u/s. 12AB, which is vested with the Principal Commissioner/Commissioner of Income Tax (Exemption) vide CBDT Notification, is incorrect and based on partial reading of and exclusive reliance on only one notification of CBDT i.e. CBDT notification No. 52/2014 dated 22.10.2014. He submitted that in order to get the complete picture we need to have conjointly read three CBDT Notifications issued under section 120 of the Act in respect of the jurisdiction of the income tax authorities and relevant provisions of the Act, particularly sections 120 and 127 of the Income Tax Act should be read conjointly. He drew the attention of the Bench to the following CBDT Notifications: Notifications Subject Date 1 CBDT No. 52/2014* Jurisdiction of CIT (Exemptions) 22.10.2014 2 CBDT No. 50/2014 Jurisdiction of PCIT 22.10.2014 3 CBDT No. 70/2014 Jurisdiction of PCIT (Central) Note * - (along with Corrigendum Notification No. 65/2014 dated 13.11.2014) 52. He submitted that the CBDT notification explains the jurisdiction of CIT(Exemptions) all over India. As per the CBDT Notification No. 52/2014 (Annexure-1), Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such cases or classes of cases or such persons or classes of persons, assigned to Assessing Officers subordinate to them, under section 127 of the said Act, from the date of publication of the notification. Therefore, once a case has been transferred by order u/s. 127 (in common parlance "Centralized") with the AO of the Central Circle subordinate to the PCIT(Central), then the PCIT(Central) shall have jurisdiction over that case. 56. The Ld. CIT-DR submitted that once a case is transferred u/s. 127 to the AO subordinate to PCIT(C), then he shall exercise powers and perform the functions as stipulated in the Income-tax Act, 1961 in respect of such cases. Since the case of the assessee was transferred from ITO (Exemptions), Ward-2, Pune to DCIT, Central Circle-2(2), Pune vide order u/s. 127 dated 19.1.2024 who is subordinate to PCIT, (Central), Pune, therefore, in view of CBDT notification the PCIT(C) shall exercise powers and perform the functions as stipulated in the Income-tax Act, 1961 in respect of such cases which will include power to cancel registration under section 12AB. Hence, the contention of the assessee that the Ld. Pr.CIT(C), Pune does not have power to cancel reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....CIT(C) is null and void. We do not find any merit in the above argument of the Ld. Counsel for the assessee. We find merit in the argument of the Ld. CIT-DR that the contention of the assessee is based on partial reading of and exclusive reliance on only one notification of CBDT i.e. CBDT notification No. 52/2014 dated 22.10.2014. However, the CBDT subsequently has issued two other notifications i.e. CBDT Notification No. 50/2014 dated 22.10.2014 giving jurisdiction to the Pr.CIT(C) and the CBDT Notification No. 70/2014 which gives jurisdiction to the Ld. Pr.CIT(C) all over India. As per the CBDT Notification No. 52/2014, the Commissioner of Income-tax (Exemption), Pune exercises jurisdiction over all cases of persons in the territorial area of state of Maharashtra excluding Mumbai & Navi Mumbai claiming exemption under section 10, 11, 12, 13A & 13B of the Income-tax Act, 1961 and assessed or assessable by an Income-tax authority at serial numbers 225 to 227 and 236 to 241 (to be read as 236 to 250 as per Corrigendum Notification No. 65/2014 dated 13.11.2014) specified in the CBDT No. 50/2014 (Annexure-2) dated the 22.10.2014. Subsequently the CBDT has also issued another notifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x Act, 1961, shall be under the jurisdiction of CIT(Exemptions), Delhi and CCIT of Delhi, (Exemptions) and AOs subordinate to them. 32. However, once the jurisdiction is assigned to an assessing officer of Central Charge vide order under section 127(2) of the Income Tax Act, the entire jurisdiction over the case is transferred to the assessing officer of the Central Charge and its superior officers like Joint Commissioner, Principal Commissioner and the Chief Commissioner or the Director General of Income Tax. The clause (b) of the Notification no. 70/2014 dated 13.11.2014, reproduced above, with absolute clarity, emphasizes this as under: "(b) directs that the Director General of Income-tax or the Chief Commissioner of Income-tax specified in column (2) of the said Schedules or the Principal Commissioner/Commissioner of Income tax specified in column (4) of the said Schedules or Joint Commissioners of Income-tax subordinate to them, shall exercise powers and perform the functions as stipulated in the said Act in respect of such cases or classes of cases or such persons or classes of persons, assigned to Assessing Officers subordinate to them, under section 127 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which have been assigned to the Assessing Officers subordinate to Principal Commissioner of Income-tax (Central), under section 127 of the Act. 3. Therefore, by virtue of provisions of clause (b) of the notification no. 70/2014, S.O. 2915(E) dated 13.11.2014, the PCIT(C) has been empowered to perform/exercise powers and functions stipulated in the Act in respect of such cases or classes of cases or such persons or classes of persons, which were assigned to AO subordinate to him, under section 127 of the Act." We are thus of the considered and firm view that a harmonious and constructive interpretation of Notification no. 70/2014 and the CBDT directive dated 19.01.2024 would show that the Pr.CIT(Central) assumes the power and indeed obligated to perform all the functions as stipulated in the Act, over the assessee once an order u/s. 127 is issued transferring the jurisdiction to AOs subordinate to him. 35. Now that the issue of assumption of jurisdiction by the Pr.CIT(Central) is out of the way, we dwell on the decision relied upon by the assessee on this issue. The assessee has heavily relied on the decision of coordinate Bench of ITAT in the case of Aga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase for cancelling the registration granted u/s. 12AA was valid and legally permissible. The ground no. 1 and 2 are dismissed. 37. We are fortified in our view that the PrCIT(Central)'s assumption of jurisdiction for cancellation of registration is legally valid by the recent decision of ITAT, Delhi Bench in the case of Legal Initiative for Forest and Environment (Life Trust) in S.A. 129/Del/2024 arising out of ITA no. 3241/Del/2023 dated 09.08.2024. The Coordinate Delhi Bench in the case of Legal Initiative(supra) held as under: "9.6. On a careful perusal of the three case laws relied by the assessee, it is seen that the above three case laws have not considered the said Board Notification No. 70/2014 dated 13.11.2014. In fact, the Delhi Tribunal in the case of Aggarwal Vidya Pracharni Sabha v PCIT (Central) Gurgaon (supra) para no. 14.5 of its order had specifically mentioned that when a query was made to the CIT-DR to produce any further notification by virtue of which the power exercised by the PCIT u/s. 12AB(4) of the ACT which had come into effect from 01.04.2021 would also be exercised or that further jurisdiction u/s. 12AB of the Act could be transferr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....64. The Ld. Counsel for the assessee submitted that the Ld. Pr.CIT(C) in the instant case has passed the order cancelling the registration u/s. 12AA(3) and 12AA(4) and 12AB(4). In the said order he has stated that the registration granted to the assessee u/s. 12AA vide order dated 21.06.2016 which was valid upto assessment year 2021-22 is cancelled u/s. 12AA(3) r.w.s 12AA(4). He has further stated that the registration granted u/s. 12AB r.w.s. 12A(1)(ac)(i) is cancelled u/s. 12AB(4). 65. Referring to the first show cause notice dated 10.02.2025 he drew the attention of the Bench to para 6 of the notice where the Ld. Pr.CIT(C) has asked the assessee to explain as to why the registration granted under 12AA should not be cancelled u/s. 12AA(3). Referring to pages 50 to 64 of the Paper Book, he drew the attention of the Bench to the second show cause notice dated 13.08.2025 where in para 4 of the said notice (page 64), the Ld. Pr. CIT(C) has asked the assessee to explain as to why the registration granted u/s. 12AA should not be cancelled u/s. 12AA(3). 66. Referring to the provisions of section 12AA(5) he submitted that the said section provides that nothing contained u/s. 12AA s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the respective years. 70. Referring to the decision of the Hon'ble Supreme Court in the case of Isthmian Steamship Lines reported in 20 ITR 572 (SC), he submitted that the Hon'ble Supreme Court in the said decision has held that it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. He submitted that the above decision is authority for the proposition that the subject of matter is pertaining to the previous years, however, the law to be applied is that in force in the respective assessment years, unless otherwise stated or implied. He submitted that there are number of decisions where it has been held that the law in force in the assessment to be applied accordingly in respect the relevant assessment years unless otherwise provided expressly. He submitted that the Ld. Pr.CIT(C) has also emphasised that the amendment made by replacing the section 12AB in place of 12AA of the Act w.e.f 01.04.2021 does not give wavier to the assessee from violating the provisions applicable for those years. He has also pointed out that the stipulated conditions in the secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which has been obtained at any time under section 12A. It also been held that power under section 12AA(3) can be exercised by Commissioner in respect of a trust registered prior to 01.06.2010 and mere fact that a part of requisites for action under section 12AA(3) is drawn from time prior to 2010 would not make any difference. He submitted that the Tribunal in the case of M.M Patel did not consider this binding decision of the Hon'ble Bombay High Court and therefore, it is not a binding precedent. 74. Referring to the decision of the Hon'ble Madras High Court in the case of Vellore Institute of Technology vs CIT reported in [2021] 436 ITR 483 (Madras) he submitted that the Hon'ble High Court has reiterated this position. In this case also registration granted to the assessee under section 12A was cancelled vide order dated 13.03.2008 made under section 12AA(3). The assessee challenged reasons furnished for cancellation of registration on ground that section 12AA(3) was amended by Finance Act, 2010 with effect from 01.06.2010 and same could not be invoked for purpose of cancellation of registration made prior to 01.06.2010 retrospectively. However, the Hon'ble Hig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re different is not borne out by facts. 77. Referring to the decision of the Hon'ble Supreme Court in the case of ITO vs. Vikram Sujitkumar Bhatia reported in [2023] 453 ITR 417 (SC), he submitted that the Hon'ble Supreme Court in the said decision has held that amendment by substitution has the effect of wiping the earlier provision from the statute book and replacing it with the amended provision as if the unamended provision never existed. Thus, the new section 12 AB(4) was substituted for older section 12AB(4) and would retrospectively applicable along with the concept of specified violation. The Ld.CIT-DR thereafter drew the attention of the Bench to the following written submissions: "6.3 It is important to note that section 12AA(3), original section 12AB(4) and substituted section 12AB(4) are similarly worded and are triggered when CIT is satisfied that "the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution". Ld. PCIT has correctly noted that provisions of section 12AA(3) and 12AB(4) rws clauses (a) and (c) of Explanation are similar and the activities of the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the taxpayer's opponent, in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority's order of assessment is not strictly an arbitral Tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the taxpayer's appeal, even though the appeal itself has been mooted only wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation. 12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall- .... (2) .... (3) .... (4) ... (5) Nothing contained in this section shall apply on or after the 1st day of April, 2021." 80. We find merit in the argument of the Ld. Counsel for the assessee that after insertion of sub-section (5) of section 12AA the Ld. Pr.CIT(C) has no power to cancel the registration to the assessee by resorting to the provisions of section 12AA(3) and 12AA(4) of the Act. Therefore, once he has no power to pass an order under these sections, the order passed by him is bad in law. 81. We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of M.M. Patel Charitable Trust vs. PCIT reported in 172 taxmann.com 316. We find the Tribunal after considering the arguments advanced by both the sides at para 18 of the order has observed as under: "18. The second limb of contention raised by the assessee challenging the powers available in sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the clear, categorical and unambiguous wording of the provisions of section 12AA(5) of the Act that "nothing contained in this section shall apply on or after 01.04.2021". We, therefore, hold that the show cause notice issued u/s. 12AA(3) and 12AA(4) of the Act and the consequential order passed cancelling the registration u/s. 12AA(3) and 12AA(4) are not in accordance with law and are liable to be quashed. The grounds raised by the assessee on this issue are accordingly allowed. 83. Grounds of appeal No. 13 to 17 relate to the transactions with HUF India Pvt. Ltd. 84. The Ld. Counsel for the assessee referring to the order of the Ld. Pr.CIT(C) submitted that according to the Ld. Pr.CIT(C), the assessee had received substantial amount from M/s. HUF India Pvt. Ltd. (HUF), an Indian subsidiary of the German company HUF HULSBECK & FURST GMBH & CO. KG from the financial year 2016-17 till December, 2020. The assessee had received funds through sham invoices raised on HUF and the funds so received were subsequently paid as professional fees / consultancy charges /rent, etc. to the entities provides by Shri Sunil Garg, M.D. of HUF. The Ld. Pr.CIT(C) has held that the assessee was e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Patel Charitable Trust vs. PCIT reported in 172 taxmann.com 316 (Pune - Trib.). 87. The Ld. Counsel for the assessee submitted that the alleged transaction with HUF were upto December, 2020. The amendment in section 12AB(4) providing for specified violation has been introduced with effect from 01.04.2022 and therefore, any alleged violation before that date cannot be the basis for cancellation of registration u/s. 12AB(4). He reiterated that since "specified violations" were introduced in section 12AB(4) only with effect from 1-4-2022 and prior to that date there existed no statutory framework defining, recognising or classifying any act or omission as a specified violation, therefore, the Ld. PCIT was not justified in cancelling the registration on account of alleged violation of provisions of section 12AA(3). For the above proposition, he relied on the following decisions: i) M.M. Patel Charitable Trust vs. PCIT reported in 172 taxmann.com 316 (Pune - Trib.) ii) Ram Saran Das Kishori Lal Charitable Trust vs. CIT reported in 180 taxmann.com 546 (Delhi - Trib.) iii) Richmond Educational Society vs. DCIT vide ITA No. 4779/Del/2025 88. So far as the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rification it was found that the assessee had made payments to Mr. Sunil Garg, Mr. Nikhil Agarwal and their family members & business concerns on account of professional fee/consultancy charges/rent etc. As per the submission of the assessee it had made payment of Rs. 15,65,65,766/- to Shri Sunil Garg and his related entities between F.Y. 2016-17 and 2019-20 on account of professional fees/consultancy charges/rents, etc. These payments recorded in the books of the assessee were not made for any service rendered to the assessee company but were part of scam/conspiracy in which the assessee company was a willing accomplice. He submitted that the assessee company raised fake bills for supplying the NEEM trainees to the HUF India Limited and received the payments from HUF India Ltd. The assessee company also booked bogus expenses on account of professional fee/consultancy charges/rent etc. Thus, the assessee company cooked its books of accounts and application of income and the expenditure claimed by the assessee on the charitable activities was in fact fake. 90. He submitted that the Income Tax Act empowers the Commissioner to withdraw the registration granted w/s 12AA/12AB if he i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ashtra Industrial Services. Thus, it is clear that the assessee-company and its promoter director were hand-in-glove with Shri Sunil Garg & others in carrying out a financial fraud and money laundering activity. 93. So far as the argument of the Ld. Counsel for the assessee that the activities of the assessee-company does not fall under the umbrella of money laundering activities and the FIR does not name the assessee company is concerned, he submitted that these contentions are not acceptable. He submitted that section 3 of the Prevention of Money Laundering Act (PMLA), 2002 defines the offence of money laundering. It states that anyone who directly or indirectly attempts to indulge, knowingly assists, knowingly is a party, or is actually involved in any process or activity connected to the proceeds of crime and projects or claims it as untainted property is guilty of money laundering. Hence, it cannot be said that the assessee-company was not engaged in the financial fraud. 94. So far as the argument of the Ld. Counsel for the assessee that there is absence of name of the assessee company in FIR is concerned, he submitted that the FIR does not name the company as accused bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ried out by the assessee comes under the preview of money laundering, which do not fall within the conceptual framework of charity as envisaged under the Income Tax Act and also within the objects of the assessee as described in its Memorandum of Association (MOA). 97. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs Batanagar Education reported in (2021) 436 ITR 501 (SC) he submitted that the Hon'ble Supreme Court in the said decision has clearly stated that cancellation of registration is justified if there is misuse of the status of the trust for financial fraud or illegal activities. 98. So far as the argument of the Ld. Counsel for the assessee that no action u/s. 12AA(3) or 12AB(4) can be taken in respect of AY 17-18 to AY 2021-22 is concerned, he submitted that the action of the Ld. Pr.CIT(C) in cancelling the registration u/s. 12AA(3) r.w.s. 12AA(4) is as per law and in the line of decision of the Hon'ble Supreme Court in the case of Isthmian Steamship Lines (supra). He submitted that the provisions of section 12AA(3), original section 12AB(4) and substituted section 12AB(4) are similar and applicable to the egregious violations....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Pr.CIT(C) has no power u/s. 12AA(5) to issue any such show cause notices on or after 01.04.2021. It is also his submission that the amendment in section 12AB(4) which provides for specified violation has been introduced w.e.f. 01.04.2022 and since the transactions with HUF were entered into upto December, 2020, therefore, any alleged violation before that date cannot be the basis for cancellation of registration u/s. 12AB(4). 103. We find some force in the above arguments of the Ld. Counsel for the assessee. We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of M.M. Patel Charitable Trust vs. PCIT (supra) wherein the Tribunal at para 19 of the order has observed as under: "19. Now we take up the third limb where it has been contended by the ld. Counsel for the assessee that in the show cause notice dated 21.07.2023 the ld. PCIT has referred to 'specified violation' committed by the assessee by virtue of which the assessee trust has not applied its income wholly and exclusively for the purpose for which it is established but using it directly or indirectly for the benefits of its trustees and other members of the tru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prior to 01.04.2022. The Revenue cannot dispute that the provisions for 'specified violations' are inserted in sub-section (4) of section 12AB w.e.f. 01.04.2022. Now, the 'specified violations' enumerated in section 12AB(4) recognise the specific nature and scope of violation giving rise to penal consequences of cancellation of registration. The first and foremost we would like to observe is that when the consequences are of the nature of withdrawing a recognition or cancellation of registration, the same can have a catastrophic effect on the existence of an institution and its activities. Thus, the provisions of the law have to be strictly interpreted and complied with. 19.1 As we take into consideration provisions and scope of 12AB(4) of the Act, we find that it refers to the powers granted for an action subsequent to grant of registration or provisional registration of a trust under section 12AA of the Act, and if, 'subsequently', specified violations are discovered, then, the competent authority is entitled to initiate an action by following a procedure enshrined in clauses (i) to (iv) of sub-section (4) of section 12AB of the Act. 19.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... i.e., before 01.04.2021 and the fourth allegation is of fraudulent means wherein it is alleged that despite the registration of the trust was cancelled in 2008 and which was upheld by the ITAT, the assessee continued to file ITR-7 claiming exemption by quoting old registration number. Now, this fourth 'anomaly' cannot be considered to be falling into any of the clauses defining specified violations in the Explanation attached to sub-section (4) of section 12AB of the Act. 22. However, as the impugned order of cancellation of registration is considered, we find that in para 3.7 the competent authority makes specific reference to the class of 'specified violation' attracted and for which the assessee is being penalised by cancellation of registration and for convenience, we reproduce para 3.7 and 3.7.1, below :- "3.7 Specified Violation: 3.7.1 Next it is argued that no specified violation as per section 12AB has occurred. This plea is not accepted, for the following reasons: (i) It is amply clear from discussion in Para-3.3 to 3.4.1 supra the property of trust has been applied, other than for the objects of the trust. Thus assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case, the exercise of power u/s. 12AB(4) of the Act seems to also not have been done in accordance with law. As what comes up further is that, if at all, PCIT, Gurgaon was acting under clause (a) to Section 12AB(4), then, before issuing the notice dated 08.09.2022, itself the ld. PCIT, Gurgaon should have first formed his opinion that the assessee had committed one or more of a 'specified violation'. However, as we go through the relevant part of the impugned order we find that the ld.PCIT has not mentioned as to which amongst the various specified violations mentioned in Explanation attached to sub-section (4) of section 12AB were attracted so as to show cause the assessee under sub-section (4) of section 12AB of the Act and ask for information by notice dated notice dated 08.09.2022." 24.1 This decision in Aggarwal Vidya Pracharni Sabha (supra), has been challenged by the department before Hon'ble Punjab and Haryana High Court vide ITA-122-2024(O&M) and we find that the appeal is admitted vide order dated 12.12.2024, to examine three questions which are other than, aforesaid conclusion drawn by the co-ordinate bench. As for convenience the order dated 12.12.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een contemplated under 12AB is the new procedure introduced, where the word 'subsequently', since has been intentionally made in the Sub Section, it means, after the registration is undertaken within the meaning of Section 12AB, then only, if any punitive action by way of cancellation of registration is to be undertaken by the revenue." 25.1 Thus it is only after the registration is undertaken within the meaning of Section 12AB, then only, if any punitive action by way of cancellation of registration is to be undertaken by the revenue same can be u/s. 12AB of the Act, meaning there by that the 'specified violations' should be subsequent to the new regime coming into effect. 26. That being the case, we are of the considered view that the notice dated 14.03.2024 itself was defective and did not vest powers to cancel the registration for any alleged 'specified violation' and that too retrospectively. The aforesaid discussion also establishes that the 'specified violations' allegedly pertained to a period prior to 01.04.2022 thereby provisions of section 12AB(4) of the Act could not have been invoked. Thus, we are inclined to hold that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utions are real, ongoing and bonafide. Hence we hold that the invocation of first limb of Clause (e) of Explanation to Section 12AB(4) of the Act on the ground that activities of the Assessee Society are not genuine is wholly misconceived. 9.10. Now coming to the second limb of Clause (e) of Explanation to Section 12AB(4) of the Act namely that the activities are not being carried out in accordance with the conditions subject to which registration was granted, we find that the predominant object of the Assessee Society is imparting education and the said activity is continued to be carried on by the Society. There is not even an allegation or whisper or finding in the order of the Learned PCIT that the Assessee Society has deviated from its stated objects. Hence the essential statutory requirement of noncompliance with registration conditions is wholly absent in the facts of the instant case. The various conditions stipulated on the Assessee Society while granting registration are listed in Form No. 10AC and we find that none of the conditions stipulated therein have been alleged, much less established, to have been violated in the impugned proceedings. The said conditions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....drastic power of cancellation of registration could be attracted only when the very substratum of the Assessee Society's functioning is shown to be unreal or a mere façade. He even quoted certain illustrations in this regard, namely, where the principal object of a society is imparting education, but it is established as a matter of fact that the society is not engaged in educational activities at all and is, in substance, applying its income predominantly for medical activities, cancellation of registration may justifiably follow as the activities of the society therein were not carried out in consonance with the conditions with which registration was originally granted to it. Similarly, if a trust registered with the stated object of imparting education is, in reality, carrying on activities primarily in the nature of relief to the poor or other charitable purposes unrelated to education, the registration may be liable to be withdrawn. In the instant case before us, the activities carried out by the Assessee Society of imparting education is not even doubted by the revenue at any point in time. The conditions with which registration under section 12AB of the Act was or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Learned AR submitted that Ms. Jasmine Gandhi was appointed as the Director of Academics and drew our attention to the appointment letter dated 2-9-2020 which is enclosed in pages 207-212 of the paper book. He submitted that Ms. Jasmine Gandhi had undertaken a systemic academic review of Noida campuses of the Assessee Society's schools resulting in structured improvement plans covering curriculum, mentoring and quality systems and had even given a report in this regard which is enclosed in pages 186-189 of the paper book. With regard to Meerut school assessment and closure, she had conducted a feasibility study of the Meerut school and recommended closure for non-viability. The report given by her in this regard is enclosed in pages 175-178 of the paper book. The allegation levelled on her that she had not visited the school is factually incorrect as entries in the registers maintained at the gate of the school premises of the Assessee Society show repeated in-person visits by Ms. Gandhi to both the campuses during the relevant period. The evidences in this regard are enclosed in pages 193-203 of the paper book. The allegation that Ms. Jasmine Gandhi had not visited the schoo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his purpose, he submitted that the Learned PCIT need not resort to cancel the registration of the Assessee retrospectively. Further, he submitted that the screenshots of WhatsApp chats merely depict a rough estimate / calculation relating to the tiles and labour charges and they do not constitute any evidence of procurement, billing or payment made by the Assessee Society. There is absolutely no relationship nexus brought on record by the revenue in this regard and during the period to which the chats allegedly relate, neither Mr. Paramjit Gandhi nor Mr. Samit Bajaj had any role, engagement, authority or association with the Assessee Society. The Learned AR submitted that this seized document was seized from the premises of the Trustee of the Assessee Society during his search in his individual capacity. Absolutely there was no cash trail found either in the search or brought on record with evidence by the revenue in this regard. C. Advance of Rs. 20 crores to Mr Paramjit Gandhi - The Assessee paid Rs. 20 crores advance to Mr. Paramjit Gandhi for purchase of school infrastructure located at Noida Sector-41 and Noida Sector-135. The Learned AR submitted that there was a lan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The revenue contended that the Assessee Society made certain payments / receipts in cash outside the books of accounts not recorded in the financial statements. This was alleged on the basis of diaries marked BK-6 and BK-7 found and seized during the search from the custody of Shri Puneet Kumar who is an employee of the Assessee Society. The Learned AR submitted that the Learned AO had made addition under section 69C and section 69A of the Act for assessment years 2022-23 and 2023-24 in this regard. He submitted that the entries in diary pertain to the employee's father's transport business and the same has got absolutely no link with the transactions of Assessee Society at all. The affidavit of employee was also filed on record owning up the entire seized document confirming the entire transactions that it pertains to his father's transport business and not linked with the Assessee Society. However, the same was not accepted by the Learned AO and additions made in the hands of the Assessee Society for the same. Further, the Learned AR submitted that the aforesaid transactions were not recorded in the books of accounts of the Assessee Society and accordingly not claimed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reported in 178 ITD 338 (Mum Trib). The relevant operative portion of the said order of the Tribunal is reproduced below :- "11. In the present case, the case sought to be made out by the Commissioner is that the violation carried out by the assessee would lead to denial of exemption u/s. 11 & 13 of the Act and, therefore, the pre- requisite of section 12AA(3) of the Act is satisfied. In para 9 of the impugned order, the Commissioner records that the violation of section 11 & 13 of the Act would result in forfeiture of exemption not only for the year in which such transactions occur but also for the years when such arrangement continues to be in force. In our considered opinion, such an approach of the Commissioner is quiet misdirected and is inconsistent with the legal position on the subject contemplated u/s. 12AA(3) of the Act so as to cancel registration already granted. We may add here that we are not shutting out the case of the Revenue to examine whether or not there has been a violation of section 13 of the Act, but we are only trying to say that the same is not relevant for the purpose of cancellation of registration u/s. 12AA(3) of the Act. Of course, such matte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of section 12AA(3) of the Act. At this stage, we may observe that the insertion of section 12AA(4) of the Act by the Finance Act, 2014 w.e.f. 01.10.2014 also cannot be lost sight of as our subsequent discussion would show. As noted earlier, sub-section (4) of section 12AA has expanded the situation for cancellation of registration by the Commissioner. In fact, the situation sought to be covered by section 12AA(4) of the Act revolves around the manner in which activities are carried out, including a case where the income or property of the trust is applied for specific persons like author of trust, trustees, etc; or investment of funds in prohibited modes, etc. The aforesaid are areas, which are contained in section 13 of the Act, which disentitles an assessee from the exemptions contained in section 11 and 12 of the Act. In other words, violation of section 13 of the Act is also sought to be covered by the Legislature by insertion of sub-section (4) to section 12AA of the Act as a ground for cancellation of registration. So however, the said provision is effective from 01.10.2014. Pertinently, we are dealing with the impugned order of the Commissioner dated 28th March 2014 and, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 13(1)(c) of the Act also. This was rendered to clarify the tax position as the legislature was very clear with regard to grant of exemption under section 11 of the Act in the event of violation of provisions of section 13(1)(d) of the Act, wherein only such part of the violation would be denied exemption under section 11 of the Act and not the complete denial of exemption under section 11 of the Act. There were some confusion that was created with regard to denial of exemption under section 11 of the Act in the event of violation of provisions of section 13(1)(c) of the Act. Hence the CBDT came out with the aforesaid Circular No. 387 dated 6-7-1984 clarifying the tax position by treating violations of section 13(1)(c) at par with section 13(1)(d) of the Act while determining the claim of exemption under section 11 of the Act. For the sake of convenience, the relevant portion of the CBDT Circular No. 387 dated 6-7-1984 is reproduced below :- "28.6 It may be noted that new sub-section (1A) inserted in section 161 of the Income-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of private....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f such violations with their true nature and gravity, ensuring that cancellation of registration is not resorted to mechanically and is replaced by proportionate tax consequences wherever appropriate. This paved way for introduction of provisions of section 115BBI of the Act in the statute and section 12AB(4) of the Act together with its Explanation. 12.3. We find that the earlier framework under section 12AA(4) of the Act stood modified pursuant to the amendments brought in section 13(1)(c) of the Act by the Finance Act 2022, whereby a violation of section 13(1) of the Act, no longer results in cancellation or withdrawal of registration and the statutory framework consequence is confined to denial of exemption only to the extent of the income so diverted. Prior to the amendments introduced by the Finance Act 2022, the Act contemplated cancellation or withdrawal of registration of a trust in cases where violations of section 13(1) of the Act were alleged. However, the legislature has consciously altered this position by introducing a clear statutory distinction between violations warranting denial of exemption and violations warranting cancellation of registration. Post-am....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied once the registration is cancelled. Hence we are convinced that violations of section 13(1) of the Act are to be dealt with at the assessment stage only by denial of exemption to the extent of income so applied / diverted while the registration and charitable character of the trust are intended to remain undisturbed. This understanding of ours is even made very clear from the Memorandum Explaining the Provisions in the Finance Bill 2022 which clearly evidences the legislative intent to rationalise the law by restricting the consequence of such violations to taxation of the specified income at a special rate, and not by withdrawing registration. For the sake of convenience, the relevant portion of the Memorandum to Finance Bill 2022 is reproduced below :- "Rationalisation of the provision of Charitable Trust and Institutions Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or any trust or institution registered u/s. 12AA or 12AB of the Act is exempt subject....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eep and maintain books of account and other documents in such form and manner and at such place, as may be prescribed. c) These amendments will take effect from 1st April, 2023 and will accordingly apply to the assessment year 2023-24 and subsequent assessment years. [Clauses 4 and 6] 3.2 Penalty for passing on unreasonable benefits to trustee or specified persons a) Under section 13 of the Act, trusts or institution under the second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. In order to discourage such misuse of the funds of the trust or institution by specified persons, it is proposed to insert a new section 271AAE in the Act to provide for penalty on trusts or institution under both the regimes which is equal to amount of income applied by such trust or institution for the benefit of specified person where the violation is noticed for the first time during any previous year and twice the amount of such income where the violation is notice again in any subsequent year. The proposed section seeks to operate without prejudice to any other provision of chapter XXI. Thus, if any penalty....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of clause (ac) of sub-section (1) of section 12A provide that application for the trusts or institution under the second regime shall be made to the principal Commissioner or Commissioner. The provisional registrations or provisional approval or re- registrations or approvals in certain cases, under these clauses, are granted in an automated manner and the respective rules have been amended accordingly. It is essential to ensure that non-genuine trusts or institutions do not get exemption provided by these provisions. ii) Differences in the provisions related to reference for the cancellation of trusts under the both the regimes: Provisions of sub-section (3) of section 143 provide that no order under this sub-section shall be made, denying the benefits of clause (23C) of section 10, unless the Assessing Officer has intimated the Central Government or prescribed authority the contravention of the provisions of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 and approval granted to such trust or institution has been rescinded. There is no such provision in cases of trusts or institutions under second regime. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iv) forward a copy of the order under clause (ii) or (iii), as the case may be, to the Assessing Officer and such trust or institution (II) The term "specified violation" is proposed to be defined by inserting an Explanation to sub-section (4) of section 12AB of the Act to mean the following violation :- a) where any income of the trust or institution under the second regime has been applied other than for the objects for which it is established; or b) the trust of institution under the second regime has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or c) the trust or the institution under the second regime has applied any part of its income from the property held under a trust for private religious purposes which does not enure for the benefit of the public; or d) the trust or institution under the second regime established for charitable purpose created or established after the commencement of this Act, has applied any part of its income....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r any hospital or other medical institution or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence of any specified violation; ii. pass an order in writing cancelling the approval of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, on or before the specified date, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years if he is satisfied that one or more specified violation has taken place; iii. pass an order in writing refusing to cancel the approval of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, on or before the specified date, if he is not satisfied about the occurrence of one or more specified violations; iv. forward a copy of the order under clause (ii) or (iii), as the case may be, to the Assessing Officer and such fund or trust or institution or any university or other educational institution or any hospital or other medical institution; V) It is also proposed to insert an Explan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is proposed to insert another proviso in sub-section (3) of section 143 of the Act providing that where the Assessing Officer is satisfied that any trust or institution under first or second regime has committed any specified violation, as defined in the Explanation 2 to fifteenth proviso to clause (23C) of section 10 or Explanation to sub-section (4) of section 12AB, as the case may be, he shall, (a) send a reference to the Principal Commissioner or Commissioner to withdraw the approval or registration, as the case may be; and (b) no order making an assessment of the total income or loss of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution shall be made by him without giving effect to the order passed by the Principal Commissioner or Commissioner under clause (ii) or (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or (iii) of sub-section (4) of section 12AB Consequentially, it is also proposed to amend the provisions of clause (iii) of Explanation to section 153 by deleting the reference to trusts or institution under the first regime and to in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shall be taxed in the 5th year itself iv) In order to bring consistency in the two regimes, the following are proposed :- A. It is proposed to amend the provisions of sub-section (3) of section 11 of the Act to provide that any income referred to in sub-section (2) which is not utilised for the purpose for which it is so accumulated or set apart shall be deemed to be the income of such person of the previous year being the last previous year of the period, for which the income is accumulated or set apart under clause (a) of sub-section (2) of section 11, but not utilised for the purpose for which it is so accumulated or set apart. B. It is proposed to insert Explanation 3 to the third proviso to clause (23C) of section 10 of the Act to provide that for the purposes of determining the amount of application under this proviso, where eighty-five per cent of the income referred to in clause (a) of the third proviso, is not applied, wholly and exclusively to the objects for which the trust or institution under the first regime is established, during the previous year but is accumulated or set apart, either in whole or in part, for application to such objects, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for which the income is accumulated or set apart under sub-clause (a) of clause (iii) of the proposed Explanation 3, but not utilised for the purpose for which it is so accumulated or set apart. (E) It is proposed to insert an Explanation (Explanation 5) to third proviso to clause (23C) of section 10 of the Act to enable the Assessing Officer to allow trusts or institutions under the first regime in circumstances beyond their control to apply such accumulated income for such other purpose in India as is specified in the application by such person subsequent to fulfilment of specified conditions. These other purposes are required to be in conformity with the objects for which the trust or institution under the first regime is established. If it is done, the provisions of Explanation 4 to third proviso to clause (23C) of section 10 shall apply as if the purpose specified by such person in the application under this Explanation were a purpose specified in the notice given to the Assessing Officer under clause (a) of the proposed Explanation 3 of the third proviso to clause (23C) of section 10. (F) It is proposed to insert a proviso to proposed Explanation 5 to third....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion is converted into a noncharitable organisation or gets merged with a non-charitable organisation or a charitable organisation with dissimilar objects or does not transfer the assets to another charitable organisation. Accordingly, a new Chapter XII- EB consisting of Sections 115TD, 115TE and 115TF was inserted in the Act. ii) The provisions of the Chapter XII-EB have been made applicable to only the trusts or institutions under the second regime. However, the provisions are not applicable to any trust or institution under the first regime iii) Hence, it is proposed to amend the provisions of section 115TD, 115TE and 115TF of the Act to make them applicable to any trust or institution under the first regime as well. iv) These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 31, 32 and 33] 4.4 Filing of return by person claiming exemption under clause (23C) of section 10 of the Act i) According to clause (ba) of sub-section (1) of section 12A of the Act, If a trust or institution under the second regime does not fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de that where the provisions of sub-section (8) are applicable to any trust or institution under the second regime or such trust or institution violates the conditions prescribed under clause (b) or clause (ba) of sub- section (1) of section 12A, its income chargeable to tax shall be computed after allowing deduction for the expenditure (other than capital expenditure) incurred in India, for the objects of the trust or institution, subject to fulfilment of the following conditions, namely :- a) such expenditure is not from the corpus standing to the credit of such trust or institution as on the last day of the financial year immediately preceding the previous year relevant to the assessment year for which the income is being computed; b) such expenditure is not from any loan or borrowing; c) claim of depreciation is not in respect of an asset, acquisition of which has been claimed as application of income in the same or any other previous year; and d) such expenditure is not in the form of any contribution or donation to any person. (b) It is also proposed to insert an Explanation to sub-section (10) to section 13 of the Act to provide t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the purposes of computing income chargeable to tax under twenty second proviso, no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee under any other provision of the Act. These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. [Clauses 4 and 8] 5.2 Taxation of certain income of the trusts or institutions under both the regimes at special rate Following incomes of the trusts or institutions are chargeable to tax, under different provisions of the Act :- (a) The trusts or institutions under the first or second regime are required not to pass on any unreasonable benefit to the trustee or any other specified person. For the trusts or institutions under the second regime, clause (c) of sub-section (1) of section 13 of the Act provides that the entire exemption shall be denied to the trust irrespective of the amount of benefit passed on. For trusts or institutions under the first regime similar provisions is proposed by way of insertion of twentieth proviso to clause (23C) of section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for special provision to ensure that the income applied in violation is taxed at special rate without deduction. Accordingly, in order to rationalise the provisions, the following amendments are proposed :- (a) It is proposed to amend clause (c) of sub-section (1) of section 13 of the Act to provide that only that part of income which has been applied in violation to the provisions of the said clause shall be liable to be included in total income. (b) It is also proposed to insert twenty first proviso in clause (23C) of section 10 to specifically provide that where the income of any trust under the first regime, or any part of the such income or property, has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall be deemed to be income of such person of the previous year in which it is so applied. The provisions of sub-section (2), (4) and (6) of section 13 of the Act shall also apply to it. (c) It is proposed to amend clause (d) of sub-section (1) of section 13 of the Act to provide that only the that part of income which has been invested in violat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income under clause (c) of sub-section (1) of section 11. (vi) These amendments will take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years. (Clauses 4, 8, 28) 12.5. We find that Clauses (a) and (b) of Section 13(1) of the Act have been in pari materia to Clauses (c) and (d) of Explanation to Section 12AB(4) of the Act evidencing a conscious legislative alignment between the two provisions. As stated earlier, the Clauses (c) and (d) of Section 13(1) of the Act have not been brought in Explanation to Section 12AB(4) of the Act which defines 'specified violation'. Hence the legislative intent is very clear that any violation of provisions of sections 13(1)(c) or 13(1)(d) of the Act would not fall within the ambit of 'specified violation' as defined in Explanation to Section 12AB(4) of the Act. 12.6. Thus we have no hesitation to hold that there was no specified violation committed by the Assessee Society in the instant case and hence the action of the Learned PCIT in cancelling the registration of Assessee Society under section 12AB of the Act is bad in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vey it was noticed that there were total 102 employees working in the office premises out of which 93 employees were on the pay rolls of the assessee. He submitted that without any evidence and only on the basis of presumption the Ld. Pr. CIT(C) held that all the 93 employees are also working for other group entities. Therefore, in absence of any such evidence the allegation of the Ld. Pr. CIT(C) that it has benefitted to the directors or their concerns by booking salary expenses of employees by the assessee trust who are working in other concerns is not correct. 112. So far as the reference to the statement of Smt. Kamini More, HR is concerned, he submitted that Smt. Kamini More was on the pay roll of M/s. Reliable Industrial Services, which is a partnership firm wherein Shri Vishwesh Kulkarni is a partner. Referring to pages 455 to 469 of the Paper Book, he drew the attention of the Bench to the submissions dated 02.09.2025 and submitted that the salary of Mrs. More was borne by another entity while she was also working for the assessee and there is no reimbursement of her salary cost. Further, all the 93 employees are substantively engaged in the activities of the assessee co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... u/s. 12AA of the Act. Therefore, the assessee has not violated the provisions of section 13(1)(c) by incurring expenses on account of repairs and maintenance of another charitable trust. 116. The Ld. Counsel for the assessee submitted that Shri Vishwesh Kulkarni and his son Shri Abhishek Kulkarni, who are full-time engaged in the activities of the assessee, have not charged any salary or remuneration. The turnover of the assessee for the year ended 31.03.2024 was Rs. 9,89,03,57,353/ -. Referring to the order of the Ld. Pr.CIT(C), he submitted that the Ld. Pr.CIT(C) has mentioned regarding the violation of provisions of section 13(1)(c). However, he has not mentioned a single word regarding no remuneration being charged by Shri Vishwesh Kulkarni and Shri Abhishek Kulkarni for looking after the day-to-day activities of the assessee trust. Similarly, no rent has been charged for the use of office premises which is owned by Shri Vishwesh Kulkarni. Further, no quantification of the alleged benefit has been done, therefore, the Ld. Pr.CIT(C) is not justified in cancelling the registration on account of alleged violation of provisions of section 13(1)(c). 117. Referring to the prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctions that only to that extent resulting in violation would not be eligible for exemption u/s. 11. He accordingly submitted that in view of the amendment to section 13(1)(c)/13(1)(d) and in view of the decisions of the Hon'ble Bombay High Court cited (supra) where it has been held that the income to the extent of violation would not be entitled for exemption u/s. 11, the question of cancelling the registration on the ground of alleged violation of section 13(1)(c)/13(1)(d) does not arise. Therefore, the order of the Ld. Pr.CIT(C) cancelling the registration u/s. 12AB(4) is not correct. 121. So far as the argument of the Ld. CIT-DR that if there is a minor violation of the provisions of section 13(1)(c), in that event registration granted u/s. 12AA should not be cancelled but when there is major violation of the provisions of section 13(1)(c), the registration granted u/s. 12AA should be cancelled is concerned, he submitted that as per section 12AB(4) there is no such provision which provides that registration should not be cancelled for a minor violation of the provisions of section 13(1)(c). Once there is no such provision differentiating between minor/major violations of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at case the assessee society had made an application for granting registration u/s. 12AA of the Act. The Ld. CIT refused the registration on the ground that survey action was conducted on the assessee wherein it was found that 4 ladies, being family members of the management committee, were being paid salary without rendering any services. It was accordingly held by the Tribunal that members of the management committee had siphoned off or misappropriated the income of the society and thus, the activity of the society cannot be termed as genuine and the society in the garb of charitable activity was engaged in enriching its members. He submitted that the above decision is distinguishable and not applicable to its case since firstly, the assessee is genuinely carrying out educational activities. Secondly, none of the directors of the assessee have siphoned off or misappropriated the income of the assessee company. He submitted that in the present case the alleged violation of the provisions of Section 13(1)(c) has not been quantified. Therefore, the decisions relied on by the Ld. CIT-DR in the case of Corbett Education Society (supra) is not applicable. 124. So far as the decision....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 127. The Ld. CIT-DR drew the attention of the Bench to the personal expenses of Shri Abhishek Kulkarni and submitted that the assessee company has been making payments for the transactions made by the Director Shri Abhishek Kulkarni. It was noticed that the above transactions are personal and luxurious in nature and have no connection with the activities of the assessee. He drew the attention of the Bench to the year-wise payments made to Shri Abhishesh Kulkarni by the assessee according to which the total amount from financial year 2017-18 to 2022-23 is Rs. 12,00,57,628/ -. 128. So far as the argument of the Ld. Counsel for the assessee that these are reimbursement for expenses made by Shri Abhishek for activities of company and no salary paid to him is concerned, he submitted that the same is not acceptable in view of the facts and circumstances of the case. He submitted that most of the payments were made for transactions such as hotel bill, purchase of i-phones, expensive leather bags, hair brush, lego, etc are day to day lifestyle expenses made by Shri Abhishek Kulkarni. Therefore, claiming reimbursement of the said personal expenses of its director as its "application....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Group. However, he received salary from assessee-company only. Further, from the survey findings and admission of Shri Vishwesh Kulkarni and other key persons it was noticed that liabilities of the employees' cost of related concerns/concerns of the specified persons have been booked in hands of assessee. Therefore, the Ld. Pr.CIT(C) has rightly held that bearing the cost of those employees working to the extent for the other concerns are not the application of the assessee's income towards its charitable objects and therefore, there is violation of provisions of 12AA(3) & (4) of the Act as well as 12AB(4) of the Act making the assessee liable for cancellation of its registration granted u/s. 12AA and 12A(1)(ac) r.w.s 12AB of the Act. 132. So far as the loans and advances to Directors and their concerns are concerned, he submitted that the Ld. Pr.CIT(C) has noted that the assessee had advanced huge amount of loans to various concerns of Yashashwi Group including proprietary and partnership concerns of Shri Vishvesh Prabhakar Kulkarni and to the Director Shri Abhishek Kulkarni without any interest or any collateral. The total amount of such loans & advances by the end ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. 135. So far as the repairs and maintenance of buildings not owned by the assessee-company are concerned, he submitted that the assessee has claimed expenses under the head 'Repair & Maintenance of building' of Rs. 67,94,795/- and Rs. 7,37,38,213/- for F.Y. 2022-23 and 2023-24, respectively. Similarly, it claimed expenses under the head 'Repair & Maintenance Others' of Rs. 1,20,07,183/- and Rs. 1,05,73,368/- for F.Y. 2022-23 and 2023-24, respectively. He submitted that the assessee does not own any building and it had carried out repair and maintenance of Yashaswi House, Lane No. 15, Prabhat Road, Pune-04 which was being used as its corporate office. 136. So far as the argument of the Ld. Counsel for the assessee that there is nothing wrong in paying for its maintenance since the assessee does not pay any rent to corporate office is concerned, he submitted that the above contention is not acceptable as Yashaswi House is not occupied exclusively by the assessee- company but there are dozen more group companies/ entities operating from Yashaswi House. Therefore, incurring of such huge expenses in the hands of the assessee is not justified. Further, huge expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r issue but the violations have been found throughout the periods since its registration. He submitted that the intent behind the violations is very much evident to use the assessee's tax exempted status as money minting machine to provide benefits to the related persons & their concerns. He submitted that the assessee has provided benefits to the specified persons & their related concerns and also claimed those expenses in its hands showing as its application of income towards the objects. The said application of funds has not been made towards its day-to-day activities as per the stated objects and therefore, the claims of the said applications are not in accordance with objects of the trust for which it has been granted registration. 140. So far as the amendment made to section 13(1)(c) of the Act by the Finance Act 2022 wherein it has now been mandated that in case of benefit extended to specified persons referred to section 13(3) of the Act either directly or indirectly, then only such part of the income so diverted would be subjected to tax in the hands of the trust and to that extent, the exemption under section 11 of the Act would be denied, while the charitable char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to clause (23C) of section 10 of the Act. (b) It is mandatory for any trust or institution under the first regime, to keep their funds in the specified modes. Third proviso of clause (23C) of section 10 of the Act specifically provides that the funds of such trusts or institutions shall be maintained in these specified modes. For the trusts or institutions under the second regime, clause (d) of sub-section (1) of section 13 of the Act provides that the exemption shall be denied to the trust irrespective of the amount of investment in non-specified modes. (c) Further, the trusts or institutions under both the regimes are required to apply at least 85% of their income during the year. Where the trust is not able to apply 85% of the income, it may accumulate such income for maximum 5 years. Sub-section (3) of section 11 of the Act specifically provides for the trusts or institutions under the second regime that such accumulated income, which could not be applied within the period of accumulation (maximum 5 years), shall be deemed to be the income of the trust. Similarly, for the trusts or institutions under the second regime, there is a specific provision under claus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f registration. 145. Referring to the following decisions which have been relied on by the Ld. Pr.CIT(C) he submitted that the assessee trust has not simply violated the provisions of section 13(1)(c) but, in fact, has misused its tax exempt charitable status for purposes which are alien to its objects: a. Commissioner of Income-tax (Exemptions), Kolkata v. Batanagar Education And Research Trust [2021] 129 taxmann.com 30 (SC) b. Dr. Bhim Rao Ambedkar Educational Society vs. Commissioner of Income-tax, (Exemptions) [2017] 88 taxmann.com 524 (Allahabad) c. CIT vs. Jagannath Gupta Family Trust reported in [2019] 411 ITR 235 (SC) d. Sh. Gurudwara Sahib Parbhandhan Committee vs Commissioner of Income- tax (Exemptions) [2023] 150 taxmann.com 181 (Amritsar Trib.) 146. He accordingly submitted that the cancellation of registration by the Ld. Pr.CIT(C) was as per law. 147. The Ld. CIT-DR next argued that during the course of survey it was noticed from the cashbook that there were withdrawals of cash throughout the year and subsequent payments mainly with narration "Being Stipend paid". The assessee could not produce any evidence to substantiate t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the course of assessment proceedings and the registration cannot be cancelled for alleged violation of provisions of section 13(1)(c) in view of our discussion in subsequent paragraphs. 150. So far as the salary of employees booked in the hands of the assessee who were also working for group concerns is concerned, we find the Ld. Pr.CIT(C) presumed that all the 93 employees out of 102 employees are also working for other group entities without any evidence brought on record. Further, the statement of Smt. Kamini More in our opinion cannot be accepted since she was on the pay roll of M/s. Reliable Industrial Services, which is a partnership firm wherein Shri Vishwesh Kulkarni is a partner and she was not in the pay roll of the assessee company. 151. So far as the repairs and maintenance expenses incurred for Yashaswi House which is around 15000 sq. ft. is concerned, we find the assessee without paying any rent has incurred repairs and maintenance expenses to keep the office in good condition and therefore, cannot be held as a violation of provisions of section 13(1)(c). So far as the expenses incurred towards repairs and maintenance of building belonging to Yashaswi Educatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e bills for M/s HUF India Private Limited (HUF) amounting to Rs. 13,09,15,144/- for F.Y. 2017-18 to 2020-21 with the intent of siphoning of funds and to evade taxes. The said activity of YAS is against the intention of creation of the trust -YAS. 3.3.2 During the survey action, it was found that YAS had made payment to Sunil Garg, MD & Nikhil Agarwal, CFO of HUF and their family members/business concerns on account of professional fee/ consultancy charges/rent etc. However, no justification or documents have been provided by the YAS during the survey proceedings or post survey proceedings. Therefore, these transactions have been found to be bogus/ non-genuine and used for routing the fund by inflating expenses for the benefit of individuals. 3.3.3 Further during the post survey action, it was found that the assessee was claiming bogus expenses and also that the funds/ income of the assessee was used for meeting the expenses of its related concerns and accordingly, the assessee has violated provisions of section 13(1)(c) r.w.s 13(3) of the Act as well as section 12AA(3) & (4) by claiming non-genuine expenses." 154. Similarly, he has also reproduced the provision....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income thereof, if for any period during the previous year- (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983; or (iii) any shares in a company, other than- 155. We find the Ld. Pr.CIT(C) in his order has observed as under: (iv). In view of the aforesaid discussion, the assessee's contentions on the above said issues are found to be devoid of merit and hence, not acceptable. The expenses incurred by Shri Abhishek Kulkarni claimed to be made for the assessee, which have later on reimbursed by it are not aligned with the stated objects of the assessee and therefore, claiming those expenses as the assessee's application of income are not in accordance with its objects. Further, the assessee's action by giv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of provisions of section 13(1)(c) or 13(1)(d) does not fall within the ambit of specified violation as defined in Explanation to section 12AB(4) of the Act. We find the Delhi Bench of the Tribunal in the case of Richmond Educational Society vs. DCIT (supra) while deciding an identical issue has held that the violation of section 13(1)(c) or 13(1)(d) does not fall within the ambit of specified violation as defined in Explanation to section 12AB(4). The relevant observations of the Tribunal have already been reproduced in the preceding paragraphs. 158. We find the Bangalore Bench of the Tribunal in the case of M/s. Islamic Academy of Education vs. PCIT(Central), Bengaluru (supra) has held that the amended section 12AB(4) does not consider a violation of section 13(1)(c) and 13(1)(d) as specified violation. Accordingly it was held that the registration cannot be cancelled on the ground that the assessee had violated the provisions of section 13(1)(c) or 13(1)(d). 159. We find the Hon'ble Bombay High Court in the case of Commissioner of Income-tax (Exemption) v/s. Maharashtra Academy of Engineering and Educational Research reported in (2024) 161 taxmann.com 290 (Bom) ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or the institution under the second regime has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1) of section 12AB, and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality or (g) the application referred to in clause (ac) of sub-section (1) of section 12A contains false or incorrect information" 163. Therefore, as per definition of specified violation, violation of provisions of section 13(1)(c) and 13(1)(d) does not come within its ambit and therefore, the cancellation of registration by the Ld. Pr.CIT(C) in our opinion is not justified. 164. So far as the argument of the Ld. CIT-DR that if there is a minor violation of the provisions of section 13(1)(c), in that event registration granted u/s. 12AA should not be cancelled but when there is major violation of the provisions of section 13(1)(c), the registra....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Hon'ble Supreme Court set aside the matter to the file of CIT(E) for fresh adjudication. Therefore, the said decision is also not applicable to the facts of the present case. The various other decisions relied on by the Ld. CIT-DR are also distinguishable and not applicable to the facts of the present case. In view of the above discussion and respectfully following the decisions cited (supra), we hold that the Ld. Pr.CIT(C) is not justified in cancelling the registration on the basis of the alleged violation of provisions of section 13(1)(c) or 13(1)(d) of the Act as the same does not come within the ambit of specified violation as defined u/s. 12AB(4) of the Act. The grounds raised by the assessee on this issue vide grounds of appeal No. 18 to 31 are accordingly allowed. 167. Grounds of appeal Nos. 32 to 34 relate to the allegation of the Ld. Pr.CIT(C) that the assessee is running a hotel / restaurant in the guise of skill development and hence it is a commercial activity which is not in accordance with the objects of the assessee. 168. The Ld. Counsel for the assessee submitted that the Ld. Pr.CIT(C) has not appreciated the facts correctly while holding that the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C) referring that MSBTE vide letter dated 01.03.2024 has directed the assessee to stop running hotel/restaurant is concerned, he submitted that during the course of hearing no such query was raised by the Ld. Pr. CIT(C) regarding this letter. Referring to page 62 of the order where a copy of the letter is placed, he submitted that the said letter refers to MOU dated 14.03.2023 entered into by the assessee with MSBTE for providing skill training at Government Polytechnic, Pune, Maharashtra. The Ld. Counsel for the assessee filed a copy of the MOU and submitted that this MOU is totally different vis-a-vis the MOU entered into on 14.08.2018 between the MSIHMCT, MSBTE and the assessee. He clarified that as per the MOU dated 14.03.2023, MSBTE has appointed the assessee for operating MSBTE's skill development center at Government Polytechnic, Pune which is also located in Model Colony, Pune. As per the said MOU, the assessee was to run various skill courses relating to electronic hardware and ITES sector. Further, the assessee was also permitted to conduct additional training program for which necessary capital and recurring expenditure was to be incurred by the assessee. Accordingly....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the main objects of the assessee. It is his allegation that the financials of the assessee indicate that the core intention of the assessee was to generate revenue from hotel rooms, banquets and related infrastructure as well as restaurants in the guise of skill development which is not its main objects for which he cancelled the registration. It is the submission of the Ld. Counsel for the assessee that an MOU has been entered into with MSIHMCT and MSBTE which are the Government of Maharashtra undertakings and as per MOU 75% of the surplus was to be paid to those two entities and the balance 25% could be retained by the assessee. Further, deficit, if any, was entirely to the account of the assessee. It is his submission that for assessment years 2019-20 to 2021-22, there is deficit and for financial years 2022-23 and 2023-24, there is meagre surplus out of which 75% would be paid to those two entities. Accordingly it is his submission that the Ld. Pr.CIT(C) is not justified in holding that the assessee is running a hotel / restaurant on commercial lines. 173. We find some force in the above arguments of the Ld. Counsel for the assessee. A perusal of the details furnished in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the assessee that the activities of the assessee were in furtherance to its charitable objects and the assessee has not committed any violation so as to give power to the Ld. Pr.CIT(C) to cancel the registration. The grounds of appeal No. 32 to 34 raised by the assessee are accordingly allowed. 175. Grounds of appeal No. 35 and 36 relate to the allegation regarding payment of stipend in cash. 176. The Ld. Counsel for the assessee referring to para 7.4 of the order of the Ld. Pr.CIT(C) submitted that according to the Ld. Pr.CIT(C) the assessee has paid stipend in cash to certain trainees in violation of the guidelines issued by NAPS and has not submitted any documents to prove the genuineness of the payments made. He accordingly held that the assessee has committed specified violation by making payment of stipend in cash for which he has cancelled the registration on this ground. He submitted that most of these trainees come from rural backgrounds and they require cash for their day-to-day needs for which the assessee has made payments to some of the trainees. The assessee had also submitted sample details of the trainees to whom such stipend was paid in cash. He submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld that the assessee has paid stipend to certain trainees which is in violation of the guidelines issued by National Apprenticeship Promotion Scheme (NAPS) and the assessee could not substantiate with evidence to his satisfaction towards the genuineness of the payments. It is the submission of the Ld. Counsel for the assessee that the stipend in cash has been paid to some of the trainees who come from rural background and who require cash for their day-to-day needs. It is his submission that the assessee has submitted cash vouchers but the allegation of the Ld. Pr.CIT(C) is that the assessee did not submit copies of agreements, application forms etc of such trainees to prove the genuineness of the cash payments for which the Ld. Pr.CIT(C) has cancelled the registration. It is his submission that the trainees to whom such stipend is paid are partly covered under NAPS and partly under NEEM and for payment of stipend to the students coming under NEEM, there is no prohibition that stipend cannot be paid in cash. It is also his submission that the payment of cash to the trainees may be procedural lapse and the concerned department can take action. However, no action has been taken by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... least five years or the parent company under which a Section 25 Company / Section 8 of Company Act, 2013 or Relevant Act as amended from time to time, is formed to meet the objective of NEEM shall be in the business of training for at least five years." 183. He submitted that the Apprenticeship Act, 1961 was in force for last several years. However, the number of apprentices undergoing training under the said Act was very minuscule considering the total work force. Accordingly, NAPS was introduced by the Ministry of Skill Development and Entrepreneurship (MSDE) in order to encourage industry partners to undertake apprenticeship programs. Further, the Apprenticeship Act, 1961 was amended in the year 2014 by inserting sub-section 8(2) which enabled several employers to join together either themselves or through an agency approved by the Apprenticeship Advisor for and provide apprenticeship training to the apprentice under them in accordance with the guidelines issued by the government. Accordingly, the NAPS was launched on 19.08.2016 to provide financial support to establishments undertaking apprentice programs. He submitted that to support MSMEs and other establishments, a facil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee for undertaking training in the NEEM/NAPS schemes. 186. So far as the allegation of the Ld. Pr.CIT(C) that the role of the assessee was only to mobilize the candidates and help in compliances is concerned, he submitted that the said allegation of the Ld. Pr. CIT(C) is not correct. He submitted that initially the assessee has to identify a particular candidate and understand his educational qualifications. Considering the educational qualifications of a particular candidate, the assessee decides under which job role the said candidate can be deployed for on-the-job training. The assessee thereafter enters into a contract with the eligible candidate and the industry partner and the said contract is to be approved by the Apprenticeship Advisor. Referring to pages 140 to 159 of the Paper Book he drew the attention of the Bench to some of the sample copies of the apprenticeship contracts entered into by the assessee. 187. He submitted that as per the NAPS guidelines, basic training is an essential component of apprenticeship training for those candidates who have not undergone any institutional training/skilled training before taking up on-the-job training. He submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oretical training to be undertaken by the trainee is also mentioned in the curriculum. He submitted that as per requirement of the industry partners, the assessee has also developed certain curriculums which are approved by NSDC and which are available on the website of NSDC and they can be used by any other industry partner. Referring to pages 178 to 214 of the paper book, he drew the attention of the Bench to the copies of the curriculum prepared by assessee and duly approved by NSDC. 190. The Ld. Counsel for the assessee submitted that the assessee has entered into agreements with industry partners. Referring to page 231 of the paper book he drew the attention of the Bench to an agreement entered into by the assessee with Hilti Manufacturing India Pvt. Ltd. where it is clearly mentioned in para 1 that Hilti Manufacturing is willing to deploy the services of the assessee for the purposes of implementation of NAPS. In para 4 of the agreement, obligations of TPA i.e., the assessee have been mentioned. Referring to para 4.4 of the said agreement, he submitted that it is clearly stated that the assessee shall impart theoretical training as per the curriculum according to job role ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment of each apprentice and shares assessment reports with the concerned industry and apprentice to understand their academic performance. He submitted that the assessee has also submitted attendance and training programs of conducting the training which are given on page 229 of the Paper Book and the photographs on pages 386 to 390 of the Paper Book. 194. In respect of agreements entered into, for providing training under NEEM contracts, the Ld. Counsel for the assessee referred to the copies of the agreements placed at pages 322 to 380 of the Paper Book and submitted that the assessee shall impart necessary training to the students. Subsequently once the trainee concerned completes his theoretical as well as on-the-job training, the said candidate has to undergo final assessment conducted by respective sector skill council. Thereafter, the certificate is issued by NSDC certifying him to have cleared the assessment for the respective job role confirming to National Skills Qualification Framework. He drew the attention of the Bench to the sample copies of the certificates placed on pages 381 to 385 of the Paper Book and submitted that in the certificates, the name of the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... trainees. For the services rendered by the assessee, it receives separate payment from the industry partners on which GST is charged. Thus, the issue involved before Hon'ble Maharashtra Authority for Advance Ruling was totally different. Accordingly, the reliance placed on the said order by the Ld. Pr. CIT(C) is not correct. 199. So far as the allegation of Ld. Pr. CIT(C) that the assessee has subcontracted certain activities to the Business Associates is concerned, he submitted that the assessee has more than 50000 students/trainees and is operating in more than 14 states wherein it has branches/offices. For effective implementation of the scheme, the assessee has appointed business associates whose main role is to mobilise the students/trainees and oversee the fact that the stipend is paid to them. He submitted that it is not possible for the assessee to mobilise the trainees from all over the country. Accordingly, the assessee has taken the help of these business associates. However, the basic training as well as theoretical training is provided by the assessee only. 200. So far as the allegation of the Ld. Pr.CIT(C) that the assessee by subcontracting part of the act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e objects of the assessee is concerned, he submitted that providing contractual labour or salary benchmarking services aligns with the objects of the assessee of skill development. He submitted that the practical training provided to the trainees in collaboration with the industrial partners is an essential component of skill development. The placement of skilled candidates in industries is a natural extension of skill development program ensuring trained individuals secure meaningful employment. He accordingly submitted that the above activities are in furtherance of the objects, therefore, the L.d. Pr. CIT(C) is not justified in holding that the same are not charitable in nature. 203. The Ld. Counsel for the assessee submitted that as per provisions of section 11(4A), the business income of a trust is exempt from tax if the business is incidental to the attainment of the objectives of the trust. Referring to the decision of Hon'ble Supreme Court in the case of Thanthi Trust [247 ITR 785] he submitted that the Hon'ble Supreme Court in the said decision has held that a business, whose income is utilised by the trust or the institution for the purposes of achieving of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e submitted that the basis of alleged surrender of the registration granted was that the Learn and Earn Scheme was discontinued which contributed more than 60% of the revenue. He submitted that the assessee society had never carried out the said scheme. Thus, the basis of surrender was totally incorrect since, the assessee was carrying out activities under NEEM and NAPS scheme and not under Learn and Earn Scheme. Hence, the reason given for alleged surrender of the registration certificate was totally incorrect. In fact, the Ld. Pr. CIT(C) on pages 73 to 76 has accepted this fact. He has accepted that the assessee was not carrying out Learn and Earn Scheme and there was no change in the nature of the activities of the assessee carried out prior to F. Y. 2021-22. He has also stated that the major revenue of the assessee is under NEEM and NAPS scheme and the assessee did not run any training program named Learn and Earn. 207. The Ld. Counsel for the assessee submitted that there is no provision under the law to surrender a registration certificate. The registration granted u/s. 12AA/12AB can be cancelled only as per the provisions of section 12AB(4). Simply because under incorrect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee company is creating a pool of skilled workers to further enhance growth and development of the country and therefore, the said activity of the assessee is a charitable activity falling within the definition of education u/s. 2(15) of the Act. 210. So far as the decision of the Hon'ble Kerala High Court in the case of Annadan Trust reported in 96 taxmann.com 207 (Kerala) relied on by the Ld. CIT- DR is concerned, he submitted that in that case, the assessee was implementing welfare schemes of various state governments, i.e., supplying food to poor street children on funds earmarked and disbursed by the government. Hon'ble High Court held that the assessee was an implementing agency, and it cannot be said to be carrying out charitable activity. Hon'ble High Court held that a welfare measure of the state implemented with the state funds was claimed as charity by the implementing agency who received consideration for such implementation. Accordingly, it was held that no charitable activity was carried out by the assessee. He submitted that in the instant case, the assessee is not implementing any scheme which is funded either by the State Government or by the Cent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... skill development activity but only carrying out work of Facilitator/Aggregator who acts as mobilizer and middlemen between apprentices and the industry partners. 213. Relying on various decisions, he submitted that the Ld. Pr.CIT(C) has correctly held that the assessee was not engaged in charitable activities. Finally, the Ld. CIT-DR while concluding his arguments drew the attention of the Bench to the following written submissions: "In view of the above discussion, it is seen that the assessee is not engaged into charitable activities. The assessee has misused its charitable status by acting as conduit for HUF to evade the tax on account of fake/bogus training expenses and further siphoning off the fund of HUF to the accounts of its related persons and their concerns. The assessee has also misappropriated its income/fund by giving loan to its directors and their concerns, reimbursing personal expenses of its director, incurring repair & maintenance cost of the building and premises owned by its director & by the other trust, giving unreasonable salary to relatives of its director, paying salary of employees working for other group concerns, etc. As such, the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the entire value chains requirements of appropriately trained manpower. We find the assessee had undertaken skill development under NEEM which is promoted by All India Council for Technical Education (AICTE). The assessee was appointed as a facilitator under the NEEM scheme vide letter dated 12.10.2015 issued by AICTE, copy of which is placed on pages 317 to 318 of the Paper Book. As per the guidelines issued by the AICTE, to be eligible for appointment as a facilitator, it is mentioned that the said facilitator should be in the business of training for a period of at least five years. The said guidelines issued by AICTE are placed at pages 307 to 316 of the Paper Book. We find para 3.2 of the guidelines issued by AICTE read as under: "3.2 NEEM Facilitator shall be in the business of training for at least five years or the parent company under which a Section 25 Company/Section 8 of Company Act, 2013 or Relevant Act as amended from time to time, is formed to meet the objective of NEEM shall be in the business of training for at least five years." 217. We find the assessee entered into an MOU with the Ministry of Skill Development and Entrepreneurship (MSDE), copy of whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NEEM / NAPS. 218. From the various details furnished in the paper book, we find that the faculty prepares a monthly training calendar in consultation with the concerned HR official and shares the same with the industrial partner as well as the apprentices. The assessee also maintains attendance of training programs, some of the details are placed at pages 222 to 226 of the Paper Book. 219. So far as the observation of the Ld. Pr.CIT(C) that the assessee is not involved in carrying out education and the role of the assessee was to mobilise the candidates and to help in compliances is concerned, we find the assessee is conducting training either through online mechanism or at the premises of the industrial partners. It has entered into agreements with industrial partners wherein the responsibility of providing theoretical training is that of the assessee. 220. So far as the order passed by Maharashtra Authority for Advance Ruling, copy of which is placed at pages 732 to 743 of the Paper Book which is referred by the Ld. Pr.CIT(C) is concerned, we find the assessee has approached the said authority for the limited purpose to ascertain whether GST was applicable on the reimbur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....placement of skilled candidates in industries is a natural extension of skill development program ensuring trained individuals secure meaningful employment. 223. We find as per provisions of section 11(4A) the business income of a trust is exempt from tax if the business is incidental to the attainment of the objectives of the trust. The Hon'ble Supreme Court in the case of Thanthi Trust reported in 247 ITR 785 (SC) has held that a business whose income is utilised by the trust or the institution for the purposes of achieving of the object of the trust or institution is a business which is incidental to the attainment of the objectives of the trust or institution. 224. We find the Hon'ble Madras High Court in the case of Janakiammal Ayyandar Trust reported in 277 ITR 274 (Mad) has upheld the decision of the Tribunal holding that the income of the assessee has been employed to achieve its charitable objects and therefore the assessee is entitled to exemption u/s. 11 of the Act. The Hon'ble High Court while holding so has also relied on the decision of the Hon'ble Supreme Court in the case of Thanthi Trust (supra). We, therefore, find merit in the argument of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p. concern of Shri Vishwesh Kulkarni) started 'Learn & Earn' in association with Yashwantrao Chavan Open University (YCOU). Similarly, it was found that Yashaswi Institute for Skill Development, Pune which is also another Proprietary concern of Shri Vishwesh Kulkarni, was approved by the Maharashtra Govt.'s GR dtd. 23.04.2013 to run the Scheme "Learn & Earn" in association with The Maharashtra State Board of Technical Education (MSBTE) for the academic year 2013-14. Thus, it was found that the assessee was not running any such training program named as "Learn & Earn" approved by the government authority as claimed by Shri Vishwesh Kulkarni in his statement on oath. It is significant to mention here that the assessee in its many of the agreements executed with industry partners have introduced itself as running "Learn & Earn Scheme". 226. Therefore, the rationale given for alleged surrender of the registration was totally incorrect since the assessee has never carried out any training program under Learn and Earn Scheme. We, therefore, are of the considered opinion that the registration granted u/s. 12AA/12AB cannot be cancelled on account of incorrect appreciation of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n and advancement of any other object of general public utility. The assessee explained that it is a registered trust of the National Skill Development Corporation (NSDC) acting as an approved training partner under the National Skill Development Programme of Ministry of Skill Development and Entrepreneurship, Govt. of India, in order to encourage, promote and facilitate skill development, impactful employability, entrepreneurship skill and competency and create mechanism/ structure for information "outreach", for generating awareness about the prospects which would open up on acquiring specific skills. The assessee submitted the copy of agreement dated 24.09.2024 with NSDC. The ld CIT(E) noted that as per the said agreement with the NSDC agreement, the assessee is a mere service provider for providing training services to NSDC for consideration of payment of 10% on actual expenses as compensation. The assessee submitted before the ld CIT(E) that 10% management fee collected is only to recover the operation cost incurred by the assessee trust. It is not profit driven fee charges but only reimbursement to sustain the trust's activities, ensuring efficient execution of its object....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ital status, father's name, mother's name, domicile state, mobile number and permanent address. No expenditures were incurred by the assessee for the year ended 31.03.2023 and 31.03.2024 by the trust. The provisional balance sheet of the assessee trust as on 31.12.2024 was placed on record which are enclosed in pages 101 to 103 of the Paper Book, wherein it can be seen that a sum of Rs. 56,73,335/- has been spent on activities carried out by it. The assessee submitted the complete details together with the bills, vouchers and photographs in respect of activities carried out by it. The details of training sessions conducted at the Skill India Training Centre at various locations together with the respective candidates undergoing training of the assessee trust were filed. The bills and vouchers raised by M/s. Edujobs Academy Pvt. Ltd in relation to the training activity carried out were enclosed on sample basis before the ld CIT(E). The assessee gave the details of its operating skill training at 5 centers in Odisha wherein, training is being provided to candidates in the below mentioned job roles :- i. IT Help desk . ii. F&B steward iii. Graphic de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been generated Tribunal upheld order of Assessing Officer on ground that activity of assessee was in nature of 'advancement of any other object of general public utility' and proviso to section 2(15) got attracted. It was noted that assessee trust was formed for purpose of undertaking charitable activities through education for empowerment of underprivileged, poor and women, viz., vocational training and skill development and surplus that had been generated had been deposited back into account of trust and had not been utilised for non-educational purposes Whether since activity that assessee was indulged in included systematic instructions or training which involved process of teaching and learning, it could not be stated that activities offered by assessee were not 'education' under section 2(15)-Held, yes - Whether, further, mere generation of surplus would not be a ground to deny exemption to assessee when surplus so generated was used solely for educational purposes only Held, yes - Whether, therefore, activity of assessee was 'education' under section 2(15) and, accordingly, assessee was entitled for exemption under section 11 - Held, yes [Paras 14, 15....
X X X X Extracts X X X X
X X X X Extracts X X X X
....activity as observed above, falls within the purview and scope of charitable purpose. It is not be case of the CIT(E) that the major or main activity of the appellant trust is towards commerce or business. The receipt of income, in our view, is in the course of carrying out of Educational activity of the assessee. 6. The third objection raised by the Ld. CIT(E) is that the appellant could not corroborate the receipts towards the corpus funds from the members of the trust with bank entries. In our view, this cannot be ground for rejection of the application us 12A of the Act. The appellant has shown the receipts towards its corpus funds from the members of the trust and the same has been duly recorded in the books of account. It makes no difference if the receipts were received in cash or through banking channel. Moreover, whether the receipts are towards corpus funds or for application is to be seen at the time of assessment. " 12. The Kerala High Court in Annadan Trust case (supra) has held as under: "6 ......... However, when a particular institution, as in the above case, is involved in implementation of welfare schemes of the Government, we cannot fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amendment was made in Section 12AA(3) of the Act by the Finance Act of 2010 empowering the Commissioner to cancel the registration granted under Section 12A of the Act where it reaches to a conclusion that the activities of the such trust are not genuine and not being carried out in accordance with the objects of the trust or institution. The power was, therefore, not available as on the day when the CIT cancelled the registration i.e. on 02.03.2010. 17. XXXXXXXX 18. Thus, we find that the facts were almost similar to the facts of the present case as in the aforesaid case Industrial Infrastructure Development Corporation (Gwalior) M.P. Limited's case (supra), the Commission had cancelled the registration under Section 12A of the Act dated 13.04.1991 by its order dated 29.04.2002 and on 29.04.2002 the Commissioner was not empowered to cancel such registration. In view thereof, the questions of law no. 1, 3 and 4 are answered in favour of the assessee on the basis of judgment in Commissioner of Income-Tax, Gwalior (supra). " 14. In view of above, the law as laid down by the Supreme Court requires to be applied and the view expressed by the Kerala High C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... membership fees, and other related activities, which according to the AO are in the nature of trade, commerce or business. The ld.CIT(A), however, has held that the activities of the assessee constitute "education" and accordingly allowed exemption u/s. 11 of the Act. 15. In order to adjudicate the issue, it is necessary to consider the ratio laid down by the Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority (2022) 449 ITR 1 (SC). The Hon'ble Apex Court has comprehensively interpreted the scope of section 2(15) and the applicability of its proviso. It has been held that the proviso to section 2(15) is attracted primarily in cases falling under the residuary limb of "general public utility" where the activities are carried out in the nature of trade, commerce or business. At the same time, the Hon'ble Court has clarified that the determination is fact-specific and has to be undertaken on a year-to-year basis, having regard to the nature of receipts and whether the charges are on cost basis or involve significant mark-up. 16. The Hon'ble Supreme Court has further emphasiz....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rogrammes cannot, in isolation, lead to the conclusion that the proviso to section 2(15) is attracted. Further, we find merit in the submissions of the ld.AR with regard to the applicability of the judgment of the Hon'ble Supreme Court in the case of ACIT (Exemption) v. Ahmedabad Urban Development Authority [2022] 449 ITR 1 (SC). In this regard, para 172 of the said judgment states as under: "172. Yet another manner of looking at the definition together with sections 10(23) and 11 is that for achieving a general public utility object, if the charity involves itself in activities, that entail charging amounts only at cost or marginal mark up over cost, and also derive some profits, the prohibition against carrying on business or service related to business is not attracted - if quantum of such profits do not exceed 20% of its overall receipts." 20. Applying the above ratio to the facts of the present case, we note from the material placed on record, including the financial statements for the impugned year that the assessee had incurred deficits in several years. This clearly indicates that the activities were not driven by a profit motive. 21. We also ....