TMI Blog2013 (3) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... rt that at the stage of registration only genuineness of the activities of the society, are required to be gone through. Thus as Commissioner has nowhere doubted the genuineness of the activities. Merely because the assessee society has taken over the furniture and fixtures of existing school, would not to alter the situation. It is wrongly observed that particulars regarding lease of land were not furnished when the lease deed itself was filed before him. He has further wrongly observed that lease rent was only Rs. 15,000 pa whereas same is shown at Rs. 15,000 pm for the first 10 years then Rs. 22,500 for the next 10 years and Rs. 30,000 for the llast 10 years. The contention of the revenue that after the lapse of lease period of 30 years, the building etc. would revert black to the lessor who is closely related to the General Secretary of the Society, would not make difference as at best, it can be construed a benefit which can be construed to have been passed on to a relation etc. in violation of various conditions in S 13(1)(d) of the Act. But this part cannot be examined at the time of granting registration and can be examined only while giving exemption u/s 11. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in this regard were not furnished. In this background the Ld. Commissioner declined to grant the registration. 4. Before us, the ld. counsel of the assessee submitted that education has been held to be a charitable purpose by Hon'ble Punjab Haryana High Court in case of Pinegrove International Charitable Trust V. Union of India and others, 327 ITR 73 (P H). He further submitted that the Ld. Commissioner has wrongly observed that the particulars of lease of land were not furnished and lease rent was Rs. 15,000 pa. The fact is that lease deed copy of which is placed at page 16 to 29 of paper book, was furnished before the Ld. Commissioner which contains all the particulars of land which has been taken on lease by the society. Further the lease amount was Rs. 15,000 3pm as is clearly mentioned at page 3 of the lease deed for the first 10 years and Rs. 22,500 for the next 10 years and then Rs. 30,000 for the last 10 years. He further submitted that it would not make any difference whether the assessee has taken over the students as well as the furniture and fixtures from another school, Saint Carmel School, Giani Zail Singh Nagar, Ropar because the assessee is still doing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther educational institution in the prescribed form and manner. The prescribed authority is then to approve such university or other educational institution and in that regard may call for such documents including audited annual accounts to satisfy himself about the genuineness of the activities of such university or other educational institution. The exemption could be granted for a period not exceeding three assessment years. At the initial stage when the application for exemption is filed by an educational institution the scope of inquiry is restricted only to ascertaining the genuineness of the activities of such an institution. Such an inquiry may even extend to examination of the accounts of the institution, application of its income to the object and purposes of education and other cognate aspects. Once on the basis of the genuineness of the activities of an educational institution approval is granted for exemption the monitoring provisions would come into play and the Assessing Officer has to examine whether the conditions on which the exemption was given, have been fulfilled or not. On the educational institution actually exists for educational purposes is educational in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies its income for the achievement of its object. The words "applies its income" mean "to put to use" or "to turn to use' or "to make use" or "to put to practical use". In clause 11 of Form 56D of the Rules it is mentioned that the amount of income of an university or educational institution that has been or deemed to have been utilized wholly and exclusively for its objects shall have the meaning assigned to it in sections (1) and (1A) of section 11. Both on principle and precedents the capital expenditure is to be deducted from the gross income of the educational institutions. Had it been the intention of the Legislature to exclude capital expenditure while applying the income of the institution under the third 9 to section 10(23C)(vi) the proviso would have contained an express embargo against such exclusion. The determination of the existence of educational institution solely for educational purposes is required to be done on the basis of its objects including the utilisation of its income in accordance with the conditions laid down in the third proviso to section 10(23C)(vi) of the Act. Merely because there are surplus in the hands of the educational institution that would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to be gone through. We find that the Ld. Commissioner has nowhere doubted the genuineness of the activities. Merely because the assessee society has taken over the furniture and fixtures of existing school, would not to alter the situation. It is wrongly observed that particulars regarding lease of land were not furnished when the lease deed itself was filed before him. He has further wrongly observed that lease rent was only Rs. 15,000 pa whereas same is shown at Rs. 15,000 pm for the first 10 years then Rs. 22,500 for the next 10 years and Rs. 30,000 for the llast 10 years. 8. The contention of the ld. DR for the revenue that after the lapse of lease period of 30 years, the building etc. would revert black to the lessor who is closely related to the General Secretary of the Society, would not make difference. This is because, at best, it can be construed a benefit which can be construed to have been passed on to a relation etc. in violation of various conditions in S 13(1)(d) of the Act. But this part cannot be examined at the time of granting registration and can be examined only while giving exemption u/s 11. Therefore, we are of the opinion that registration has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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