TMI Blog2015 (6) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... azette Notification under the provisions of the Gujarat Private Universities Act, 2009, the University cannot run commercially. The ld. DR could not controvert the contention of the ld. Counsel for the assessee that under the identical facts other Universities have been granted registration u/s 12AA by the Revenue. Under these facts, we are of the view that the ld. DIT(E) was not justified in declining the registration to the assessee u/s.12AA of the Income-tax Act, 1961. - Decided in favour of assessee. - ITA No. 1246/Ahd/2014 - - - Dated:- 10-6-2015 - Shri Anil Chaturvedi and Shri Kul Bharat,JJ. For the Petitioner: Smt. Arti N. Shah, AR For the Respondent: Shri Vimalendu Verma, CIT-DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER:- This appeal by the assessee is directed against the order of the Director of Income Tax (Exemption), Ahmedabad dated 03.04.2014 rejecting the application filed by the assessee u/s 12A of the Income-tax Act. 2. In this appeal by the assessee, following grounds were raised:- 1. The learned Director of Income Tax (Exemption), Ahmedabad has erred in passing order giving effect to the order of I.T.A.T. in ITA No.815/Ahd/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting provisions of the State Government and means have to be determined based on economic condition or situation of the students which amply proves that it carries out the object of education and it is not for profit making. 8. The learned Director of Income Tax (Exemption), Ahmedabad has erred in holding that the Appellant was not an individual body but almost absolutely controlled by the sponsoring body though even sponsoring body is also a Charitable Institution registered u/s.12A of the Act, and there cannot be any question of being governed by private individuals. 9. The learned Director of Income Tax (Exemption), Ahmedabad has finally erred in holding that activities and objects of the Appellant are not genuinely charitable. 10. Your appellant reserves the right to add, alter, amend and/or withdraw any of the above Grounds of Appeal. 3. Briefly stated facts are that this is the second round of litigation. In the earlier round, the assessee had challenged the rejection of application for registration of the assessee-trust u/s 12AA by the DIT (Exemptions) before the Tribunal. The Tribunal was pleased to restore back the application of the assessee for f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the necessary enclosures to the Director of Income Tax (Exemption) on 16-08-2012 (Paper Book Page 1 to 41). 4. Thereafter, in response to the queries raised by the Learned DIT, the Appellant had given responses vide letters dated 05-11-2012, 26-11-2012 and 18-02-2013 (Paper Book Page No 42 to 71). However, the said application was rejected by the Hon. DIT(E) vide his order dated 26-02- 2013 stating that in absence of any deed/memorandum of article/ memorandum of association, the application is rejected. 5. Thereafter an appeal was before the Hon Tribunal wherein a written submission was filed on 18-09-2013 (Paper Book Page No 99 to 103). It was pointed out in the said submission that a university in the name of The Ahmedabad University has been established in Gujarat under the Gujarat Private University Act and the details of the same were produced at Paper Book Page No 105 to 111. In the said case the University has been granted registration u/s 12A on 30-03-2010 and has also been approved u/s 10(23C) of the Income Tax Act 1961. The facts of the said university are exactly the same as the Appellant. 6. Further, during the course of hearing a similar universi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further submitted that as per the provisions of Rule 17A of the Income Tax Rules 1962, the application for registration u/s.12A should be submitted in Form No.10A along with copy of instrument creating the Trust. However, it also states that if it is established otherwise than under the instrument, the document evidencing the creation of Trust or establishment of the Institution should be submitted. In the present case, the Institution viz. Rai University is established by the provisions of Gujarat Private Universities Act, 2009 and therefore, there cannot be any separate instrument for the creation of Rai University but none the less the same complies with the provisions of Rule 17A. 3. In support of the above contentions, we would like to place reliance on the following decisions:- (i) CIT Vs O P Jindal Global University (38 taxmann.com 366 ) (P H) which was constituted by the Haryana Private University Act. (ii) CIT vs. Andhra Pradesh State Road Transport Corporation - 159 ITR 1 (SC), which was constituted by Road Transport Corporation Act, 1950 by the State of Andhra Pradesh. (iii)CIT vs. Gujarat Maritime Board - 295 ITR 561 (SC), which was constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA]: 2. Further as per the aforesaid provisions, Rule 17A of the Income Tax Rules 1962, shall be applicable and the application for registration u/s.12A should be submitted in Form No.10A along with copy of instrument creating the Trust. However, it also states that if it is established otherwise than under the instrument, the document evidencing the creation of Trust or establishment of the Institution should be submitted. In the present case, the Institution viz. Rai University is established by the provisions of Gujarat Private Universities Act, 2009 and therefore, there cannot be any separate instrument for the creation of Rai University but none the less the same complies with the provisions of Rule 17A. 3.Thus as per the above, any Trust/Institution who wants to avail exemption u/s 11 12 has to approach the Commissioner u/s 12AA and the procedure for obtaining registration is then stated in section 12AA of the Income Tax Act wherein it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part from that it is also funding the University expenses in the initial years of operation. 6. Our contention is further supported by the following judgements (copy enclosed): (1) Director of Income Tax Vs Garden City Educational Trust (330 ITR 480)(Karn)(HC): Wherein it has been held that manner of application of funds and as to whether assesses can claim benefit of exemption in terms of section 11 and 12 are questions which have to be examined by Assessing Officer at stage when it is urged and not by Commissioner while considering application for registration u/s 12A. (2) Hardayal Charitable Educational Trust Vs CIT (355 ITR 534 (AII)(HC): Wherein it is held that enquiry of Commissioner at such preliminary stage should be restricted to genuineness of objects and not activities, unless such activities have commenced. (3) Swargiya Jagannath Jatteshwar Shikshan Sanstha Vs CIT : (31 taxmann.com 321)(Nag)(Trib): Wherein it is held while granting registration to a charitable Trust, Commissioner has to examine genuineness of objects and activities of the Trust and application of income for charitable purposes which can be examined at a stage when the Trust fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat trusts have amalgamation clause in the deed which shows that despite the Bombay public trust act trustees do dissolve and merge trusts in any other trusts not having similar objects Deed should have a no-profit clause and dissolution clause- following judgement are quoted to support the importance of dissolution clause Mohanlal Kanjibhai Pansara Education Charitable Trust - [2013] 36 taxmann.com 338 (Rajkot - Tfib.)/[2013] 59 SOT 169 (Rajkot -Trib.) - Section 12AA, of the Income-tax Act, 1961 - Charitable or religious trust - Registration procedure [Scope of provision] - Assessee-trust applied for registration under section 12AA - A perusal of trust deed submitted by assessee showed that activities proposed to be carried out were not charitable in nature - Neither there was any clause in trust deed imposing legal obligation on assessee to hold income for charitable purposes nor element of private gain excluded - Moreover, there was no provision in trust deed to ensure that properties of trust upon dissolution would be transferred to another trust having similar object - Whether in view of above, assessee-trust could not be treated as a charitable trust entitled fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee at or before the time of the dissolution or, in default, by the High Court of Judicature that has or may acquire jurisdiction in the matter. The income or property of the assessee were thus liable to be applied solely and exclusively for the promotion of the objects set out in the memorandum and no part of such income, or property could be distributed amongst the members in any form or under any guise or utilised for their benefit either during the operational existence of the assessee or on its winding up and dissolution. 3. In the case of Jammu Development Authority 52 SOT 153 ITAT Amritsar in para 7.6 stated as under:- Also as per clause 53 of the Jammu Kashmir Development Act, on dissolution of all properties and funds to vest in the Government and for the purpose of realizing properties, the function of the Authority shall be discharged by the Government. We concur with the views of the Ld. CIT on transfer of the properties, funds and dues and liabilities etc. will vest in the Govt. There is no restriction, how the same arc to be utilized by the Government. There are other objects like sale and purchase, which makes the Authority a commercial organ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solutely controlled by the Sponsoring Body with respect to appointments as well as funds. In view of the above, the application u/s 12A is rejected as the activities and objects of the trust cannot be said to be genuinely charitable. 8. From the above finding of Ld. DIT(E), it is evident that the ld. DIT(E) is concerned about the assets of the University in the event of dissolution and what would be the fate of the assets created in the event of dissolution of University. Under the identical facts, the Hon ble High Court of Punjab Haryana in the case of CIT vs. O.P. Jindal Global University (supra), was pleased to decide the issue in favour of the assessee. 9. In the instant case, in case of dissolution of University, property would go to sponsoring body that itself is registered under section 12AA of the Act, subjected to the relevant provisions of the Act. Undisputedly, the education is included into the definition of charitable purpose as per Section 2(15) of the Act. It is settled position of law that at the time of registration u/s 12AA of the Act, the DIT(E) has to satisfy with regard to the genuineness of activities of the Trust. In our considered view, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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