TMI Blog2014 (7) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... to grant exemption u/s 10 (23C)(vi) and grant of registration u/s 12A is different and merely because the exemption u/s 10 (23C)(vi) is declined, it does not amount the refusal of registration u/s 12AA or in case if the registration has been granted, it may be cancelled on that ground - For the cancellation of registration, the requirements, as provided under sub-section (3) of Section 12AA, are to be fulfilled - the refusal of the exemption u/s 10 (23C)(vi) may be relevant for the purposes of cancellation of registration, but to arrive to the conclusion that the activities of the trust or the institution are not genuine or are not being carried out in accordance with the objects of the trust or the institution, finding in this regard is necessary, based on the relevant material – thus, the matter is to be remitted back to the CIT for fresh adjudication – Decided in favour of Revenue. - Income Tax Appeal No. - 417 of 2010 - - - Dated:- 3-7-2014 - Hon'ble Rajes Kumar And Hon'ble Shashi Kant,JJ. For the Appellant : A. N. Mahajan/Ssc,D. Awasthi For the Respondent : Siddharth Pathak, Kunal Ravi Singh, Manjari Singh ORDER (Delivered by Hon'ble Rajes K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correct position is that the society is not running/managing any school/educational institution as no receipts and expenditure have been reflected in the consolidated accounts regarding the running of school in the name of ST. Patrik's Junior High School, Huthat, Muradabad nor independent accounts of the school have been submitted. Further, as is apparent from the reply of the applicant, the society to which the contributions have been made by the applicant society does not exist solely for educational purposes as it has other objects in the memorandum of association (as submitted by the counsel himself) and amounts have been spent on those objects. Three of the objects out of eleven are quoted below as examples; 4(a) To take over, manage, administer, carry on, conduct educational, medical and charitable institutions, works and activities at present conducted and carried on in India by the Congregation of Roman Catholic Nuns (hereinafter referred to as the said Congregation ) with or without all or any of the properties, rights, assets and liabilities belonging or attaching there to as the Executive Body of the Society may deem fit. 4(d) To take over, establish, endow, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , contribution to others etc, which also fortifies the fact that the funds of the applicant society are not being used/utilized solely for educational purposes. 9.2 Further, it has been mentioned by the counsel, in his reply, that the 'Sisters of Our lady of Providence' society is looking after the lands and building of the applicant society. The counsel failed to explain as to what he meant by the term 'looking after'. This again goes to show that the assets of the applicant society are being managed by another society. 10. Thus from the above discussions it is crystal clear that society has, in more ways than one, contravened the provisions of the Society Registration Act; that the funds of the society and the school managed by the society have been contributed to another society which has, in turn, spent it on purposes other than educational. In view of the order passed by the Chief Commissioner of Income Tax, Allahabad, the exemption under Section 10(23C)(vi), the material available on record, the Commissioner of Income Tax issued notice to the assessee under Section 12AA(3) of the Act as to why the registration under Section 12A of the Act be not canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the assessee, that some of the portions of the order u/s 10(23C)(vi) in verbatum have been incorporated but learned CIT has independently applied his mind to those findings and then reached the necessary conclusion. It is true that the proceedings u/s 10(23C) and section 12AA are independent but the considerations under both the provisions are almost similar. Therefore, the facts and findings u/s 10(23C) have bearing in regard to the proceedings u/s 12AA. Therefore, in my opinion, this objection of learned counsel for the assessee is not sustainable. On merits, I find considerable force in the arguments of learned counsel for the assessee that merely because amounts were spent on repairs and maintenance of places of worship, religious functions, maintenance of preasts/ preachers/ other religious functionaries etc. and on construction and maintenance of Churches, it cannot be held that the society does not exist solely for charitable purposes, in view of the decision of Hon'ble Allahabad High Court in the case of Ewing Christian College Society Vs. CCIT [2009] 318 ITR 160 (Alld.) wherein it has been held as under: Having analyzed the provisions to section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA of the Act reads as follows: Section 12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of Section 12A, shall--- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he--- (I) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant: Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (1) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een recorded with regard to the satisfaction that the activities of the present respondent are not genuine or are not being carried out in accordance with the objects of the trust or the institution. The criteria to grant exemption under Section 10 (23C)(vi) and grant of registration under Section 12A is different and merely because the exemption under Section 10 (23C)(vi) is declined, it does not amount the refusal of registration under Section 12AA or in case if the registration has been granted, it may be cancelled on that ground. For the cancellation of registration, the requirements, as provided under sub-section (3) of Section 12AA, are to be fulfilled. It is true that the refusal of the exemption under Section 10 (23C)(vi) may be relevant for the purposes of cancellation of registration, but to arrive to the conclusion that the activities of the trust or the institution are not genuine or are not being carried out in accordance with the objects of the trust or the institution, finding in this regard is necessary, based on the relevant material. In view of the above, we are of the considered opinion that the matter requires consideration afresh by the Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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