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TMI Blog2012 (11) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust Deed without prior approval of the department. For the above reasons, the DIT(E) wanted to cancel the registration already granted to the assessee u/s 12A of the Act. Accordingly, the DIT(E) issued a show cause notice. 3. One of the complaints in the show cause notice was that the Assessee was paying commission to persons who solicit students to join the Assessee's institution for studies. In reply to the above allegation in the show cause notice, the assessee submitted that the assessee paid commission to several persons who brought students from across the country for studying in the assessee's institution. The assessee submitted that the payment of such consideration will not in any way affect the charitable objective of education, which the assessee was pursuing. The assessee also pointed out that the payment in question which is being called commission was in fact reimbursement of expenses incurred by the recipient for traveling different part of the country and educate people the benefits of getting education from the assessee's institution which has good infrastructure facilities. 4. Another complaint in the show cause notice was that the assessee was generating surp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee further submitted that it was originally granted registration after due satisfaction that the assessee trust was established for charitable purpose and that there was no change whatsoever. The assesseee also pointed out u/s 12AA(3) of the Act, 1961, registration already granted can be cancelled only if activities of the assessee are shown to be not genuine or are not being carried out in accordance with the objects of the trust. The assessee pointed out that neither of the above conditions existed in the case of the assessee warranting invocation of provisions of sec.12AA(3) of the IT Act. The assessee submitted that generating surplus does not in any way make the assessee non-charitable. The assessee also pointed out that the eleemosynary element is not essential element of charity. It was submitted that it is not a necessary element in a charitable purpose that it should provide something for nothing or for less than it costs or for less than the ordinary price. It was submitted that surplus generated, if it is held for charitable purpose and applied for charitable purpose of the assesse, and then the Assessee has to be considered as existing for a charitable purpose. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the purchase of BMW Car was not warranted and that every paise collected should be of best use and not for individual comforts. The DIT(E) also gave findings with regard to violation of sec.13(1) (c ) of the Act, because the salary paid to Smt.Geetha Nagpal and Shri Suresh Nagpal of the trust were excessive and unreasonable. 12. With regard to the amendment of trust deed, the DIT(E) was of the view that the assessee ought to have informed the department and ought to have got their permission, before carrying out amendment to the trust deed. In this regard, the learned DIT(E) referred o the decision of the Hon'ble Allahabad High Court in the case of Allahabad Agricultural Institute v. Union of India [2007] 163 Taxman 67 wherein it was held where the objectives of the trust on the basis of which the registration was originally granted or acted after such grant of registration whereby the very nature of institution changes its character, the revocation of registration granted by invoking sec. 12AA(3) of the Act was valid. Following the aforesaid decision, the DIT(E) was of the view that the assessee had altered its objectives without intimation to the department and even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order is liable to set aside. 17. Apart from the above, we also agree with the submission on behalf of the Appellant that the objects of the appellant even after the amendment of the trust deed continue to be charitable. The amendment is a mere power conferred on the Trust or other institution. It has to be shown on facts that any amendment to the objects clause has resulted in the trust or institution becoming non charitable in character. There is no such finding in the impugned order and even on this ground the impugned order is liable to be set aside. The decision of the Hon'ble Allahabad High Court in our view is not applicable to the facts of the present case. As rightly contended on behalf of the Appellant in that case there was a drastic change of objects. The Hon'ble High Court has specifically noted the failure of the assessee in that case to show that the altered objects and the original objects were the same and that they were charitable. The ratio laid down in the said case has to be read in the context of the above facts of the said case. In the case of the Appellant the objects continue to be the same even after amendment of the trust deed and therefore the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 12AA(3) it was not open to the revenue to review its earlier registration granted u/s 12A of the Act. We are also of the view that the complaint with regard to violation of sec. 13(1)(c) of the Act are not relevant for the purpose of the proceedings u/s 12AA(3) of the Act and as rightly submitted by the learned counsel for the Assessee before us, it was open to the AO to examine any such violation in the assessment proceedings for the relevant assessment year of the assessee. 19. We are also of the view that the other reasons given by the DIT(E) in the order u/s 12AA(3) of the Act, do not make out any case, which can show the activities of the assessee are not genuine or that the activities of the assessee are not being carried out in accordance with the objects of the trust or institution. The fact that the Assessee was paying commission to persons who solicit students for studying in the Assessee's institution cannot lead to the conclusion that the Assessee is not imparting education. Similarly purchase of a BMW car, borrowing of loans from Sindhi Financiers, non-maintenance of regular books of accounts, violations of provisions of Sec.13(1)( c) of the Act in as much as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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