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2022 (3) TMI 722 - AT - Income TaxExemption u/s 11 - not granting registration u/s 12A - whether the Objects are charitable or not? - only objection of the ld.Commissioner of Income Tax (Exemption) is that during festivals the premises were used for stalls and rent was earned - HELD THAT:- There is hardly any income from other sources, i.e. rent from stalls. Main income of the appellant is school fee and main expenditure is also towards the running of the schools. The Surplus is maximum 15 % as mentioned by the Commissioner of Income Tax (Exemption) in the order. Hon’ble Supreme Court in the case of Islamic Academy of Education Vs. State of Karnataka[2003 (8) TMI 469 - SUPREME COURT] has observed, “While this Court has not laid down any fixed guidelines as regard fee structure, in my opinion, reasonable surplus should ordinarily vary from 6% to 15%, as such surplus would be utilized for expansion of the system and development of. Education”, Also the Hon’ble Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1979 (11) TMI 1 - SUPREME COURT] has held that “the test of predominant object of the activity is to be seen whether it exists solely for education and not to earn profit”. Thus, in the case of the appellant, the activity is running education which is a charitable activity as defined u/s 2(15) of the Act. The Surplus is in the range of 10-15% .The ld.Commissioner has not alleged that the surplus has been used for non charitable activities. It means surplus has been used for the objects mentioned in the trust deed. After analysing all these facts, we are of the opinion that the appellant trust is eligible for registration u/s 12AA of the Act. Accordingly, the ld.Commissioner of Income Tax (exemption) is directed to grant registration u/s 12AA of the Act, to the applicant. Appeal of assessee allowed.
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