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2013 (6) TMI 330 - ITAT MUMBAIApplication for registration u/s 12A / 12AA rejected - whether there is binding legal obligation under the terms of the Trust deed on the trustees to apply the income / Trust funds solely for charitable purposes? - Held that:- It is undisputed fact that the assessee-trust filed an application for registration u/s 12AA on 21.3.2012. The Trust was constituted by indenture of Trust Deed dated 29.12.2011 and it was registered with the Charity Commissioner, Mumbai on 20.3.2012. It is also an undisputed fact that the Trust has not applied or appropriated its funds of its objects till date. Thus, it is premature to decide or conclude on the question of application or appropriation of funds for the trust as the trust has not yet established any such academic or educational institutions or necessary infrastructure. Therefore, the question of exceeding of the aggregate receipts of 25 lakhs in violation of the provisions of the second proviso to section 2(15) does not arise. As such, it is settled law that the denial of registration u/s 12AA is not proper when the trust is yet to start its educational activities. The DIT(E) should cross these legal hurdles before he resorts to the denial. When the assessee-trust has have reported any receipts from the educational activities, i.e. objects of the trust, it is premature to conclude on the commercial nature of the educational activities of the trust. Also perusing the assessee's letter dated 27.9.2012, wherein there is a prayer from the assessee for "an opportunity of personal hearing" for sorting out the issues raised by the DIT (E). Assessee has not got invitation of the DIT(E) in this regard. To conclude in the context of the provisions of section 2(15), the expression 'education' should be understood as formal education by way of formal school or colleges or universities etc. The 'commercial centres' are not be treated on par with such formally established educational methods/systems. Also as to how the amended provisions of the second proviso to section 2(15) were not considered in NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY case [2009 (7) TMI 94 - UTTARAKHAND HIGH COURT] and how the amended provisions differ substantially. DIT(E) denied registration sole on the ground of extended and inclusive object of "tutorial or coaching classes". Therefore, in principle, the said denial of registration at this phase of the trust activities is not proper. Education has different shades and all kinds of education are not covered by the provisions of section 2(15). As on date, there is neither institution nor any coaching classes conducted by the assessee as stated by the Managing Trustee at Bar. These facts were not properly communicated by the assessee to the DIT (E), probably for this purpose, the assessee wanted an opportunity of being heard by the DIT (E) before decision taken against the assessee by the rejection of registration u/s 12AA. Accordingly, the grounds raised in the appeal are set aside to the DIT (E) for examining the issues afresh - appeal of the assessee is allowed for statistical purposes.
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