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2017 (11) TMI 1128 - AT - Income TaxGrant of registration under section 12AA(1)(b)(ii) rejected - diversion of general funds towards corpus - income derived by trust is being misused or that there is some apprehension that the same would not be used in proper manner - assessee-trust has not got its account audited and that it has not filed its return of income for the preceding years - Held that:- We find no action has been taken by the Revenue despite knowing the fact, if any, that the assessee-trust had surplus income before allowing the exemption under sections 11 and 12 of the Income-tax Act. We find the hon'ble Punjab and Haryana High Court in the case of Shri Sai Darbar Charitable Trust (Dharamshala)(2017 (4) TMI 123 - PUNJAB AND HARYANA HIGH COURT) has held that non-filing of returns by a trust in earlier years cannot be a ground for denying registration and the activities of the assessee-trust cannot be said to be non genuine. Since the activities of the assessee-trust are admittedly for imparting education, therefore, it cannot be said that non-filing of returns for the preceding years on not getting the accounts audited disentitles the assessee from being granted registration. Assessee trust is running like a private limited entity - all the trustees are family members - Held that:- We find the Ahmedabad Bench of the Tribunal in the case of Jupiter Medical Research Centre Trust (2009 (8) TMI 1150 - ITAT AHMEDABAD) following the decision of case of Deoki Nandan v. Murlidhar [1956 (10) TMI 35 - SUPREME COURT OF INDIA] has held that merely because all trustees are family members, it does not mean that the trust is not a public trust and therefore registration granted under section 12AA cannot be withdrawn. The objection of the learned Commissioner of Income-tax that the society is a private limited concern and therefore there can be misuse of power by the president and the society is susceptible to use for purpose other than charitable ones has no basis. Activities of the societies are profit motive and non-charitable in nature - Held that:- we find it is an admitted fact that the society is imparting education. While imparting education, the assessee-trust is charging fees from the students. The issue has already been decided by the hon'ble Supreme Court in the case of Queen's Educational Society (2015 (3) TMI 619 - SUPREME COURT). It has been held therein that where a surplus was made by educational institution which was ploughed back for educational purposes, the said institution was held to be existed solely for educational purpose and not for purpose of profit. So far as the objection of the learned Commissioner of Income- tax that the confirmations filed for corpus donations cannot be said to be directions from the donors as envisaged under section 11(1)(d) is concerned, the same in our opinion can be taken care of by the Assessing Officer at the time of assessment and this cannot be a ground for denying the registration under section 12AA of the Income-tax Act. The various other objections by the learned Commissioner of Income-tax for denying grant of registration under section 12AA in our opinion are not justified at this stage - Decided in favour of assessee.
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