TMI Blog2013 (10) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 established that income of the assessee society has been applied for the purpose of education in terms of section 11(2) and there is no violation of section 13, the assessee would be entitled to enjoy the benefit of registration u/s. 12AA of the Act – Reliance has been placed upon the case of M/s. Saivani Educational Society, Hyderabad [2013 (10) TMI 824 - ITAT HYDERABAD].- Appeal allowed – Decided in favor of Assessee. - ITA. No. 899/Hyd/2013 - - - Dated:- 27-9-2013 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Shri S. Rama Rao (A.R.) For the Respondent : Shri Ch. Gopinath (CIT/D.R.) ORDER Per Smt. Asha Vijayaraghavan, J.M. 1. This appeal is filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, and thereafter pass appropriate speaking orders thereon, while disposing afresh the application of the assessee under section 10A for registration under section 12A of the Act, as directed by us in the preceding para." 3. The DIT(E) pursuant to the order of the ITAT, requested the Authorised Representative to appear before him. The A.R. filed written submissions vide letter dated 21.02.2013 and statement of unsecured loans as on 31.3.2011. 4. The DIT(E) after considering the submissions made by the learned A.R. observed that in the earlier order passed in the case of the society it was mentioned that the assessee society has not clarified as to how the fees etc., charged by the educational institutions was as per the rules and regulations approved by the concerned Government Authority. It was further observed in the said letter dated 21.2.2013 filed during the proceedings before the DIT(E) that it is mentioned that the society is running high- school under the name and style of M/s. Pragathi Nagar Educational Society, Hyderabad and that there are no approvals from the Government Authority for charging fees from the students. The DIT(E) held that this submission of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he school for modernized develop the school towards expansion/ extension/to setup large equipment by taking financial assistance/loans from banks/financial institutions. Also it is further mentioned that the members may borrow any sum/sums from any person, bank, financial Institutions for carrying out the objects of the society. 10. The DIT(E) concluded that there is no reference to making contribution for chit/investment in chit and under these circumstances and when such act on part of the assessee in making investment in chits, is not as per the objects of the society, the request of the assessee society for grant of registration u/s 12A of the Act is to be rejected. 11. Aggrieved, the assessee has filed appeal before us. Learned Counsel, appearing on behalf of the assessee, Shri Rama Rao submitted that the DIT(E) cannot step into the shoes of DEO. Therefore, the learned Counsel submitted that the fact that fees structure is fixed by the governing body and approved by the DEO does not in any way contribute to the grant of registration under section 12AA to the Society. Similarly, whether the education has been provided free of cost to 120 students is also not relevant for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 12 and 13 of the Act, which are operative and relevant, in the course of assessment proceedings. The provisions of section 12A and 12AA are material and relevant, for the purpose of granting registration u/s 12AA of the Act. Needless to say that it is well settled legal proposition that the registration proceedings u/s 12A read with section 12AA of the Act are not to be confused with the assessment proceedings wherein the provisions of section 11, 12 and 13 of the Act are applicable. The provisions of section 12A and 12AA of the Act confer jurisdiction, on the CIT, for grant of registration or otherwise. The CIT is not competent, to invoke the provisions of section 11, 12 and 13 of the Act intended for the exercise of jurisdiction by the Assessing Officer, for the purpose of declining registration u/s 12AA of the Act. The registration proceedings and assessment proceedings are independent and different proceedings, covered by different and independent provisions of the Act, with different legislative intent. 7. The learned CIT has not brought on record any material, to prove that the activities of the appellant society are not carried out in pursuance of the stated objects. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in Dharmadeepti vs. 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 last head of charitable purpose and not the earlier three heads. Where, therefore, the purpose of a trust or institution is relief of the poor, education or medical relief, the requirement of the definition of 'charitable purpose' would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution." 12. At this stage it is also pertinent to note that the clause "not involving carrying any activities of profit" were omitted from this definition by the Legislature by Finance Act, 1983 w.e.f. 1st April, 1983. Therefore, after such omission, the element of profit cannot be excluded from the definition "charitable purposes". u/s. 2(15) of the Act. 13. The above view is also supported by the Legislative intent disclosed in section 10(22) wherein it has been clearly provided that income of any educational institute cannot be exempted unconditionally if such institution also exists for deriving of profit. According to ..... 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