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2015 (9) TMI 655 - ITAT LUCKNOW

2015 (9) TMI 655 - ITAT LUCKNOW - TMI - Eligibility for registration u/s 12A - whether the society is not being run according to the objects and thus contravenes the provisions of section 12AA(3)? - CIT(A) denied registration - Held that:- When the object clause shows that the education and treatment has to be provided free of cost and the assessee society is charging fees for those facilities, it has to be accepted that the assessee society is not being carrying out its activities as per its ob .....

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pellants : Shri A R Shukla & Shri R B Shukla, Advs For the Respondent : Shri Vivek Mishra, CIT, DR ORDER Per A K Garodia, AM This is assessee's appeal directed against the order passed by learned CIT-II, Lucknow dated 03/09/2012 passed by him u/s 12AA (3) of the Income Tax Act. 2. In this appeal, the assessee has raised the following grounds: "1. BECAUSE the Ld. Commissioner of Income-tax has erred in law and on facts in holding that the imprest account in the name of Dr. C.P Chaudh .....

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ilding was surrendered during survey u/s 133A and tax was paid u/s 115BBC of the Act, therefore, the activities of society are neither genuine nor are being carried out in accordance with the objects of the society. 3. BECAUSE the Ld. Commissioner of Income-tax has erred in law and on facts in holding that the funds of the society with reference to imprest money are used for the benefit of the members of the society, therefore, the activities of society are neither genuine nor are being carried .....

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E the Ld. Commissioner of Income-tax has erred in law and on facts in cancelling u/s 12AA (3) the registration granted u/s 12AA (1) (b) (i) of the Income-tax Act without appreciating the explanation given by the assessee in respect of each and every issue raised in the show cause notice." 3. Learned A.R. of the assessee reiterated the same contentions, which were raised before learned CIT. He also submitted that the amended objects of the society dated 21/09/2002 are available on page No. 1 .....

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nd 153 of the paper book. He submitted that these facts were duly considered by the Tribunal that fees were being charged by the assessee and in spite of this, it was held by the Tribunal that registration cannot be refused to the assessee society. He also submitted that copies of letters from the State Government, determining fee structure of the private medical colleges, engineering colleges etc. are available from pages 142 to 147 of the paper book and it can be seen that the fees being charg .....

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e issue in dispute has been decided by learned CIT against the assessee as per Para 5 of his order, which is reproduced below for the sake of ready reference:- "5. Finally, it was pointed out to the assessee that the society is being run as on commercial venture and is earning profit and is not being run as a charitable organization. The assessee has explained that although the activities of the assessee have resulted in a surplus in A.Y.'s 2007-08 to A.Y. 2009-10, if the amounts capita .....

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ended objects of the society. These objects are amended as on 21/09/2002. Clause 8 of the amended objects reads as follows:- However, on going through the enclosed accounts, it is seen that receipts from students were ₹ 2,17,15,000/- in assessment year 2006-07, ₹ 67,91,250/- in assessment year 2005-06 and ₹ 50,20,000/- in assessment year 2004-05. The receipts in subsequent years are much higher reaching ₹ 6,52,92,104/- in assessment year 2011-12. This proves that the asse .....

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of the Income Tax Act and therefore, the cancelled." 6. We also feel it proper that the relevant provisions of sub section (3) of section 12AA should also be reproduced and hence, the same are reproduced below for the sake of ready reference:- "(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)] ]a .....

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t being carried out in accordance with the objects of the trust or institution, as the case may be, the CIT shall pass an order in writing cancelling the registration of such trust or institution. Hence, we have to examine in the present case as to whether the activities of the assessee society are being carried out in accordance with the objects of the trust or institution. We find that as per the amended objects of the society dated 21/09/2002, available on page 141, out of 12 such objects, cl .....

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se No. 11, the assessee society has to arrange education and training for dental treatment and to provide information in this regard and to make people aware in this regard and all these have to be done free. As per clause 12 of the amended objects, dental treatment has to be done free of charge. Hence, it is seen that the college and hospital both has to be established and run without any charge. It is not relevant in the present dispute as to whether charging fees for education and treatment i .....

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tivities of the assessee society are not being carried out in accordance with the objects of the trust, the CIT shall pass an order in writing cancelling the registration of the assessee society u/s 12AA(3) of the Act. In the facts of the present case, we find no infirmity in the order of CIT. 7. Now we examine the applicability of the Tribunal decision cited by Learned A.R. of the assessee having been rendered in assessee's own case in course of proceedings for granting registration u/s 12A .....

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istration has to be granted to a society u/s 12A but if it is found later on that such activities are not being carried out in accordance with the objects of the trust, such registration granted earlier is liable to be cancelled. Hence, while deciding the issue for granting registration to the assessee society, what has been looked into by the Tribunal is that the activities of the assessee society are genuine. In fact, this was argument of the assessee before the Tribunal that CIT's jurisdi .....

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