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2015 (5) TMI 363 - PUNJAB & HARYANA HIGH COURT

2015 (5) TMI 363 - PUNJAB & HARYANA HIGH COURT - [2015] 378 ITR 685 (P&H) - Registration u/s 12AA to society denied - ITAT allowing the appeal of the assessee especially when the family run trust did not submit details of assets and properties that they possessed as well as the treatment given to the assets of an old school being taken over by them - Whether the ITAT was right in not upholding the findings of CIT u/s 12AA (1)(b)(ii) considering that assessee had failed to comply with provision u .....

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r the activities of the Society did not qualify in the nature of charity and the finding had been based on suspicion and conjectures. The additional information being asked for, as such, was never controverted. It was not contended that the information had been supplied but was not taken into consideration.

Commissioner has to satisfy himself of the objects of the trust and the genuineness of the activities and after giving an opportunity of being heard to the trust or the institutio .....

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evious year of the person in receipt of the income.

These aspects have not been taken into consideration by the Tribunal which has placed heavy reliance upon the judgment of Pinegrove International Charitable Trust Vs. Union of India & others [2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] which has now been upheld by the Apex Court in the case of M/s Queen's Educational Society (2015 (3) TMI 619 - SUPREME COURT). However, it is also to be noted that in Commissioner of Income .....

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same cannot be doubted when the basis is of non-supply of information. In such circumstances, it would be appropriate that the Commissioner undertakes the exercise afresh, on the basis of the application which has already been filed, keeping in view the material which can be produced by the respondent-assessee.

Accordingly, the order of the Tribunal dated 19.02.2013 is set aside with a direction to the Commissioner to decide the application, filed under Section 12AA, afresh.- Decided .....

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d/2012 dated 19.02.2013 (Annexure A-2). Vide the said order, the appeal of the respondent-Society has been allowed by the Tribunal and a direction has been issued to the Commissioner to grant registration to the Society under Section 12AA of the Act. 2. The two questions of law, on which the appeal is admitted, read as under: "1. Whether on facts and in the circumstances of the case and in law the learned ITAT was correct in allowing the appeal of the assessee especially when the family run .....

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egistrar of the Societies on 19.04.2005. It applied for registration under Section 12AA of the Act, in form No.10A on 16.03.2012. The Commissioner, vide order dated 28.09.2012 (Annexure A-1), rejected the application by coming to the conclusion that the Society had not proved its case whether the activities were being run in a charitable manner and that the Society was not created wholly and exclusively for charitable purposes. The reasons which prevailed with the Commissioner was that fresh evi .....

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ding like the number and measurement of rooms constructed on the land etc., had not been furnished. The terms of the lease was also taken into consideration pertaining to the annual lease and the fact that the Society had also taken name of another school namely, St. Carmel School, Giani Zail Singh Nagar, Ropar, along with students, furniture and fixtures. It was noticed that the building details were not furnished as such of the liability created and the expenditure incurred on the creation of .....

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t the Society was earning profits and had nothing to do with charity and had no visible plans and having not been satisfied with the objects and genuineness of the society and keeping in view the definition of charitable purpose under Section 2(15), registration was denied. As noticed, the Tribunal, vide the impugned order dated 19.02.2013, has allowed the appeal and directed that registration be granted to the Society. 4. Counsel for the Revenue has, accordingly, contended that once relevant ma .....

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Counsel for the assessee, on the other hand, vehemently assailed the order of the Commissioner and submitted that the order was based on the judgment of the Supreme Court in MCD Vs. Children Book Trust 1992 (3) SCC 390. In a later judgment of the Supreme Court in M/s Queen's Educational Society Vs. Commissioner of Income Tax 2015 (3) TMI 619, it had been specifically held that the earlier judgment of the Apex Court was dealing with the property tax provisions and therefore, could not have be .....

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ociety. In appeal, the assessee had only raised the issue as to whether the order of the Commissioner is arbitrary and unjustified and whether the activities of the Society did not qualify in the nature of charity and the finding had been based on suspicion and conjectures. The additional information being asked for, as such, was never controverted. It was not contended that the information had been supplied but was not taken into consideration. Under Section 12AA, the procedure for registration .....

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as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been giv .....

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ranting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.] [(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and .....

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perusal of the above section would go on to show that the Commissioner has to satisfy himself of the objects of the trust and the genuineness of the activities and after giving an opportunity of being heard to the trust or the institution, a refusal can be made to register the trust. Thus, the section gives power to the Commissioner to look into the genuineness of the activities of the trust and to satisfy himself about its activities. Under Section 12A, the provisions of Sections 11 & 12 sh .....

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missioner has to keep in mind that it is not to act as an Assessing Authority while deciding the application under Section 12AA and the enquiry regarding the genuineness of the activities of imparting education with a charitable purpose is to be kept in mind. The objects of the trust, thus, have to be taken into consideration. Section 2(15) defines charitable purpose and the same includes relief in education and advancement of any other object of general public utility. In case the utility is ca .....

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ovided 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:] [Provided further that the first proviso shall not apply if the .....

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oted that a Division Bench of this Court in Commissioner of Income Tax Vs. Surya Educational & Charitable Trust [2013] 355 ITR 280, subsequently, held that the principles laid down for excluding income under Section 10(23C) are not applicable while considering the application for registration under Section 12AA. It was also further held that the genuineness of the objects of the trust are to be taken into consideration. Relevant observations read as under: "On the other hand, Section 10 .....

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the Act. Unless a Trust or Institution is registered under Section 12AA of the Act, such Trust or Institution shall not be entitled to exclude from its total income, deductions or contributions or from other sources. Therefore, the principles laid down for excluding the income from consideration under Section 10(22) now 10(23)(C) or Sections 11 and 12 are not applicable while considering the application for registration under Section 12AA of the Act. The application for registration is required .....

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