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2018 (5) TMI 234 - AT - Income TaxDenying the assessee registration u/s. 12AA - Incomes not included in total income - inflation of costs - Held that:- Charge of hefty fees undermines and violates the very basis or notion of charity, excluding those placed at the lower end of the societal strata. That apart, the assessee, by its constitution, is a non-profit society. The reasonableness afore-stated, however, is to be considered with reference to the cost of providing education, quality of which is to be maintained. The school is affiliated to the Punjab Board, running on CBSE pattern. There is nothing to suggest of the costs being inflated, as we not often, see, with a view to disclose a reasonable profit! A surplus, by itself, which in fact is essential, would not render the society as not a non-profit society, even as, given its mandate as a non-profit body, it may well be contained, if not restricted further, from the level of 20% to 25% (of the gross receipt) which obtains for f.ys. 2014-15 & 2015-16, being only the second and third years of its operation. This is as the total fees (cost to the students) could be reduced by as much, while still meeting the cost, which would only stabilize in future. All the receipts and expenses being accounted, with the accounts being audited, we find no basis for drawing any adverse inference from the deposit of cash in bank post 08.11.2016. The facts are required to be seen in perspective, which we find has not been by the competent authority. We only consider it proper that the matter is restored back to the file of ld. CIT(E). We have already noted two aspects on which we find the assessee to have not furnished a satisfactory explanation, and which impinge directly on the acceptance or otherwise - being germane to the parameters laid down for the purpose, of the assessee’s application u/s. 12A. The assessee, as assured by the ld. AR before us, shall clarify on those aspects before the ld. CIT(E), with a view to satisfy him thereon. It needs to be appreciated that it is, under law, the competent authority which is to be satisfied about the objects of the society as well as the genuineness of its’ activities. Assessee’s appeal is allowed for statistical purposes.
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