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2017 (10) TMI 828 - AT - Income TaxCancelling registration of society u/s 12AA - assessee has borrowed some amount from the bank and given the same for purchase of the land through bearer cheques amounts to utilization of the fund for non educational purposes - contention of the CIT that it is necessary that assessee should charge fees or exempt fees to the poor students or charge fees at the concessional rate, then only it can be said that it is existing for the charitable purposes - Held that:- We do not find that assessee is not engaged in the educational activities as merely charging of the fees does not make it existing for the purposes of the profit. This fact is also fortified for the reason that assessee has earned very meager amount of sum and which is also not alleged to have been applied for non-educational purposes. The assessee is running an educational institute but that does not mean that assessee must run it for free. Further it is also not alleged that the fees charged by the assessee is exorbitant and the primary motive of the assessee is to earn the profit. If the assessee does not charge the fees from student then it would not be possible for trust to carry on its activities for which it is established as the excess would not be available for ploughing back for development of the educational facility for the students. Hence, we do not find that the order of the Ld. CIT in cancelling the registration to the trust is sustainable. Further, merely because of the reason that assessee has borrowed some amount from the bank and given the same for purchase of the land through bearer cheques amounts to utilization of the fund for non educational purposes. It is an application of the fund for the objects of the trust. It is not the case of the revenue that the above loans given by the assessee are for altogether different purposes. We do not approve of such finding of CIT-A for the reason as assessee is carrying on educational activity, section 2 (15) does not also prescribe such condition, the assessee does not derive any profit looking at the excess of income or expenditure which is also meager, and All the fees charged by the assessee are for attainment of the ultimate object of the assessee of educational activities. In view of the above facts we direct the Ld. CIT to restore the registration granted to the assessee trust under section 12A A of the income tax act. - Decided in favour of assessee.
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