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TMI Blog2013 (10) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 10A on 13.1.2012. The DIT(E) called for information regarding the activities carried on by the assessee and also directed to produce books of account, bills and vouchers for verification. The assessee filed income and expenditure account, Balance Sheet and deprecation statement for the years ending 31.3.2009, 31.3.2010 and 31.3.2011. However, the assessee not furnished receipts and payments account and break-up fees collection like admission fee, tuition fee, etc.. 3. Further in the Income & Expenditure Account for the year ended 31.3.2010, the total fee collection is shown at Rs. 95,98,345. However, in the statement of fee structure furnished by the above society during the proceedings, while indicating the strength under each 'course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,99,549/- has been debited towards Loss on Chit. From such claim, it appears that the above society was also indulging in business activity, utilizing the funds of the society, and under that circumstance, it cannot be allowed registration u/s. 12AA of the Act. 5. Further, during the proceedings, it was noticed that the above society was collecting more than the fee as prescribed for different courses by the concerned university authorities, It may be mentioned that in the letter dated 31-5-2012 issued by the Osmania University, Hyderabad to the Principals of colleges offering under-graduate courses under the jurisdiction of Osmania University while stipulating the fee structure for under graduate courses offered in colleges under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation u/s. 12AA of the Act. 6. Considering the plea of the assessee the DIT(E) observed that there is no merit in such submissions of the above society. The contention that the society collected further amount than the prescribed fee for meeting various expenditure, is not correct. The other contention that the society utilized all the amounts collected from students for their main object of providing education to the students is also not fully correct. As seen from the Income & Expenditure Account for the year ended on 31-3-2009, the excess of income over expenditure is shown at Rs. 27,67,655. Thus, during that year, the society has got surplus i.e., earned profit of Rs. 27,67,655/- from the collections made from students during that year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that there are discrepancies in the accounts of the assessee and the assessee collected excess fee than what is prescribed by the Stage authorities and the assessee cannot be said to be carrying on charitable activities and it is carrying on the activities of education in a commercial manner. 9. We have heard both the parties and perused the material on record. The first question arising for our consideration in this appeal relates to the scope of enquiry by the DIT(E) u/s. 12AA of the Act. We are in agreement with the DR that after insertion of section 12AA w.e.f. 1.4.1997, the DIT(E) is empowered to enquire about the activities of the assessee before passing the order. There may be cases where application is made after the comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;]" 11. So, the object of the education has been declared as of charitable purpose by the Legislature. It was held by the Supreme Court in the case of Addl. CIT v. Surat Art Silk & Cloth Mfrs. Association (121 ITR 1) as under: "It is now well settled as a result of the decision of this Court in Dharmadeepti v. CIT 1978 CTR (SC) 120 : (1978) 114 ITR 454 (SC), that the words 'not involving the carrying on of any activity for profit' qualify or govern only the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds. Further, exemption can be denied if the provisions of section 13 are violated. Therefore, if there is any violation of either section 11 or section 13, then, the profits of such institution would be taxable. Further the fact that, only 75% of the income is to be applied for charitable purposes itself shows that element of profit is not excluded from the definition of charitable purpose for the purpose of sections 11 and 12. Because some profit has been earned by an educational institution registration u/s. 12AA cannot be denied so long as provisions of sections 11, 12 and 12AA are complied with. So long as it is est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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