TMI Blog2013 (11) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... in carrying on of commercial activities. The order passed by the CIT was cancelled – CIT was directed to grant registration to the Society on verifying the original document of establishment of the assessee Trust - Shri Sain Ji Dharmarth Trust v.. CIT [2006 (1) TMI 455 - ITAT DELHI] and 'St. Don Bosco Educational Society v. CIT [2003 (12) TMI 306 - ITAT LUCKNOW ] and CIT vs. Surya Educational & Charitable Trust [2011 (10) TMI 47 - PUNJAB AND HARYANA HIGH COURT] - at the stage of granting or refusing registration, CIT was not required to examine as to what amount should form corpus of trust, in what manner accounts were maintained and what should appear in balance sheet - mere charging of high fees was not no ground of refusing registration, where the CIT had not doubted the objects and genuineness of the assessee's activities - u/s 12AA of the Act, the CIT was only to examine the genuineness of the objects of the Trust and not the application of income for charitable purpose, which can be examined at the stage when the Trust files its return. Disallowance of Deduction u/s 80 (G) - The matter of grant of exemption u/s 80(G) of the Act becomes consequential - Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, observing as follows:- "4. The definition of 'Charitable Purpose' as given in the Income Tax Act, 1961 is reproduced below:- "Charitable purpose includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places of objects of artistic or historic interest,] and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: The applicant's reply does not satisfy the very essence of charity which is necessary for earning the status of being charitable as is required in view of section 2(15) read with section 12AA of the Income Tax Act, 1961. The provisions of sec 11 and 12 do not envisage that a charit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandates that aided schools as well as non-aided schools would provide free education to at least 25% students (in case of non-aided school these students are to be from weaker sections and disadvantaged group). The aided and non-aided schools are defined as per Section 2(n)(iii) and 2(n)(iv) of this act, respectively which are reproduced as under: Aided School, "A school receiving aid or grants to meet whole of parts or its expenses from the appropriate Govt. or the local authority." Non-Aided School, "An unaided school not receiving any kind of aid or grants to meet its expenses from the appropriate Government or the local authority." 7. Since the society has applied for registration u/s 12AA, and is seeking tax exemption u/s 10(23C) which may indirectly aiding the society for running its school. Therefore, this case should be covered u/s 2(n)(ii) i.e. aided school. In any case, there is no argument against treating it as case of non-aided private school covered u/s 2(n)(iv). Now, by way of its judgment on 12.04.2012, in the case of Un-aided private schools of Rajasthan Vs. UO! others (writ petition (C) No. 95 of 2010), Hon'ble Supreme Court upheld constitutional valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate schools of Rajasthan Vs. UOI others (writ petition (C) No. 95 of 2010)(ibid) are applicable here. Consequently, neither aims/objects and terms of memorandum are of the charitable nature, nor are there activities which may be put to a test of genuineness. With the result, the request of the applicant trust for registration u/s 12AA of the Income Tax Act cannot be acceded to and the application in form 10A is, therefore, rejected accordingly u/s 12AA(I)(b)(ii) of the Income Tax Act, 1961." 4. Aggrieved, the assessee has preferred this appeal. 5. Before us, the ld. counsel for the assessee has contended that the ld. CIT has erred in rejecting the application filed by the assessee by making the observations as contained in the order under appeal; that the ld. CIT has wrongly observed that the assessee Society does not satisfy the essence of charity; that the ld. CIT has erred in making reference to the provisions of Sections 11 and 12 of the Act; that the ld. CIT has failed to consider that the aims and objectives and activities of the assessee Society are entirely inline with the requirements of Section 2 (15) of the Act; that the order under appeal does not contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', even if it incidentally involves the carrying on of commercial activities; and that though the assessee remained unable to produce the original document of its establishment before the ld. CIT (the same has been now produced before us), the CIT may now verify the same and grant registration to the assessee. The ld. counsel for the assessee has sought to place reliance on the following case laws:- (i) Shri Sain Ji Dharmarth Trust v.. CIT [2006] 8 SOT 446 (Delhi); (ii) 'St. Don Bosco Educational Society v. CIT [2004] 90 ITD 477 (Luck.); (iii) CIT vs. Surya Educational Charitable Trust , (2011) 203 Taxman 53 (P H); (iv) Baba Gandha Singh Education Trust vs. CIT , (2011) 138 TTJ (Chd) (UO) 1; (v) 'Reliable Educational Alliance Society v. CIT' [2009] 126 TTJ 407 (Delhi); and (vi) Dream Land Educational Trust vs. CIT , (2007) 109 TTJ (Asr)850. 6. The Ld. DR, on the other hand, has strongly supported the impugned order. It has been contended that though the Ld. CIT specifically asked for the original document of the assessee Society, it was not produced and only its amended Constitution and Memorandum and Byelaws were produced; that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts return. 11. In 'Baba Gandha Singh Education Trust (supra), it has been held that merely because the assessee has generated surplus income after meeting expenditure on its educational activities, such activity cannot be regarded as 'education, trade and commerce in the name of education' so as to invite cancellation of registration; and that education is a charitable purpose in itself. While rendering this decision, the ld. Chandigarh Bench of the Tribunal took into consideration 'Aeronautical Engineering and Educational Society', 26 DTR (UK) 193 (relied on by the ld. CIT), wherein, it was held that mere imparting education for primary purpose of earning profits cannot be said to be a charitable activity. The Chandigarh Bench of the Tribunal held, following 'Pinegrove International Charitable trust v. UOI Ors. , 230 CTR (P H) 477 (rendered by the Hon'ble jurisdictional High Court so far as regards the present assessee also), that merely because an institution has earned profits, it would not be a deciding factor to conclude that such an educational institution exists for profit and that merely because profits have resulted from the activity of imparting education, it would no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
