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2018 (11) TMI 1542 - ITAT JAIPURCancellation of registration U/s. 12AA(1)(b) - withdrawing the approval granted to the assessee trust U/s. 10(23C)(vi) and (via) - unaccounted capitation fee - Held that:- NIMS University, Rajasthan, Jaipur has been notified by an enactment passed by the Legislature of Rajasthan. The said university was enacted to provide higher education in various fields. The sponsoring body of the University was Indian Medical Trust. Thereafter in the Gazette Notification, Schedule-1 provided that the University will have 60.67 acres of land comprising of various khasras numbers in village Jugalpura, Teshil- Amber, district-Jaipur. The said schedule also enlists various buildings, academic facilities and various kinds of degrees run by the said University. In an enquiry conducted by the CIT (E), it was found that certain 'Khasra' number as mentioned in the Government Notification for the allotment of land to the University was not in the ownership of the Indian Medical Trust or NIMS University. Solely on this ground, he has refused to grant registration. No where he has discussed the “objects” for which the said University is running; nor there is any whisper about the genuineness of the activities qua the objects. It is well settled position of law that at the time of granting registration u/s 12AA, CIT(E) is required to examine the 'objects' of the Trust or institution as to whether they are for the charitable purposes or not and also to see the genuineness of the activities qua the objects. If certain 'Khasra' numbers as notified by the Government has not been acquired or is not owned by the Indian Medical Trust or by the NIMS University and it is standing on some different land bearing different 'Khasra' numbers, but that does not mean that its activities are not genuine or is not carrying out charitable activities. Even if there is some technical breach or violation of the Notification pertaining to land that the said University is not standing on a particular 'Khasra' notified, then that would be a subject matter of issue of dispute with State authorities and not the Income Tax Department. What is required to be seen in terms of Section 12AA is, only the 'objects' and the genuineness of the activities. Accordingly, the reasons given by the CIT (E) for refusing the registration cannot be upheld. Since the objects and the genuineness of the activities have not been examined, therefore, we are remitting the issue of grant of registration back to the file of the CIT(E), who shall examine the 'objects' of the institution whether they are for educational or charitable purposes or not; and whether its activities are being carried out in accordance with such objects including the genuineness of the activities qua that 'objects'. With this direction, the entire matter is restored back to the CIT (E) who shall decide and examine the issue of registration u/s 12AA afresh and in accordance with law after giving due and effective opportunity of hearing to the assessee to substantiate its case. Accordingly, the appeal relating to refusal of registration U/s 12AA of the Act is allowed for statistical purposes only. In so far as the issue of material found during the course of search in the case of Indian Medical Trust that it was receiving unaccounted capitation fee, the same was applicable till the date of search and that to be in the case of Indian Medical Trust for which we have already given our finding while deciding the case of the Indian Medical Trust. However, the same charge or allegation cannot be imported in the case of NIMS University also until and unless there is some incriminating material or any kind of enquiry has been conducted leading to any adverse inference, for instance, receiving of unaccounted capitation fee is still continuing or is permeating in the subsequent years also, that is, from the date when NIMS University has taken over by entire assets and liabilities of the Trust and also the educational activities. The issue of grant of approval u/s 10(23C) needs to be examined afresh. On the issue of running of a news channel also, the issue needs to be examined under the scope of 3rd proviso to Section 10(23C) (vi) & (via) and Section 11(5). CIT (E) shall examine this aspect also without getting prejudice with the finding given in the appeals of the Indian Medical Trust as decided above for the reason that here the activities of the NIMS University had only started after 01/10/2016 when all the assets and liabilities of the Indian Medical Trust has been transferred to NIMS University by way of an agreement between the Indian Medical Trust and NIMS University. The genuineness of the agreement whereby entire assets and liabilities have been transferred from the Indian Medical Trust to NIMS University also can be examined whether it is in accordance with relevant provisions of law and there is actual transfer of assets and liability or it is mere paper entry or is just a façade. The issue of approval U/s 10(23C) is also remanded back to the file of the ld. CIT(E) to be examined denovo and afresh and in accordance with law after examining the objects and genuineness of the activities - Appeal of the assessee allowed for statistical purposes only.
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