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TMI Blog2012 (2) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... The respondent No.1 in the impugned order has pointed out discrepancies with regard to sale of buses, vehicles maintenance, maintenance of furniture and sale of furniture/fixed assets. It appears that these discrepancies have been culled out on the basis of the records/accounts which were produced by the petitioner during the course of proceedings u/s 10(23C) (vi) of the Act. The final analysis and reasoning of the respondent No.1 in the impugned order reads:- "I have carefully considered the submissions and other clarifications offered by the applicant. The discrepancies, both procedural and factual, as discussed above go to show that the applicant has debited bogus and exaggerated expenses. Accounts have not been maintained in a proper and transparent manner which is becoming of a pubic charitable institution. The huge diversion of funds on the ground of repairs and maintenance and the curious case of buying back the same old vehicles sold at an earlier date lead to situation where funds are being applied for non-educational purposes. The materials on record clearly lead to a reasonable conclusion that the funds collected from the students and others have not been applied solel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the third proviso, the PA has to ascertain while judging the genuineness of the activities of the applicant institution as to whether the applicant applies its income wholly and exclusively to the objects for which it is constituted/established. Under the twelfth proviso, the PA is required to examine cases where an applicant does not apply its income during the year of receipt and accumulates it but makes payment therefrom to any trust or institution registered under section 12AA or to any fund or trust or institution or university or other educational institution and to that extent the proviso states that such payment shall not be treated as application of income to the objects for which such trust or fund or educational institution is established. The idea underlying the twelfth proviso is to provide guidance to the PA as to the meaning of the words "application of income to the objects for which the institution is established". Therefore, the twelfth proviso is the matter of detail. The most relevant proviso for deciding this appeal is the thirteenth proviso. Under that proviso, the circumstances are given under which the PA is empowered to withdraw the approval earlier grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting Income to be utilized/applied for imparting education in India. While making such stipulations, the PA has to examine the activities in India which the applicant has undertaken in its Constitution, MoUs. and Agreement with Government of India/National Council. In this case, broadly the activities undertaken by the appellant are - conducting classical education by providing course materials, designing courses, conducting exams, granting diplomas, supervising exams, all under the terms of an Agreement entered into with Institutions of the Government of India. Similarly, the PA may grant approvals on such terms and conditions as it deems fit in case where the Institute applies for initial approval for the first time. The PA must give an opportunity to the applicant-institute to comply with the monitoring conditions which have been stipulated for the first time by the third proviso. Therefore, cases where earlier the applicant has obtained exemption(s), as in this case, need not be re-opened on the ground that the third proviso has not been complied with. However, after grant of approval, if it is brought to the notice of the PA that conditions on which approval was given are br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent No.1 for rejecting the application for registration under Section 10(23C)(vi) of the Act. It is clear that the respondent No.1 has not taken consideration of the ratio and observations of the Supreme Court in American Hotel and Lodging Association Education Institute (supra). In terms of the said decision, the respondent No.1 as the prescribed authority is required to examine various aspects and thereafter issue directions/stipulations and impose conditions. On violation of the said conditions and stipulations, it is open to the prescribed authority to cancel the registration. The distinction between assessment proceedings and proceeding under Section 10(23C)(vi) has been explained and elucidated by the Supreme Court. With regard to the past conduct, and allegations, learned counsel for the petitioner has submitted that regular assessment proceedings were conducted u/s 143(3) of the Act for the assessment year 2008-09 and vide order dated 09.09.2010, return filed by the assessee declaring NIL annual income was accepted. No addition has been made. It is noticed that this order was passed five months after the impugned order of respondent No.1 dated 29.04.2010. Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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