TMI Blog2009 (9) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner, if he finds that the activities are not genuine or not being carried out in accordance with the object of the trust. The need for the enactment had arisen due to belief of some quarter that in the absence of explicit law the Commissioner cannot exercise the power of cancellation of registration. To over-come this hurdle this sub-section is incorporated and now in operation Naturally these powers are conferred with a view to ensure that if once a registration has been granted u/s 12AA, a trust or institution may not take any such liberty of misuse of the registration or the provisions by going haywire rather furthering the objects of the trust or genuinely not pursuing the activities for which it was established. On careful reading section 12AA it was gathered that at this initial-stage there is no scope of any apprehension of mis-utilization of funds or to judge the taxability of income. The scheme of the Act otherwise do not subscribe and allow a trust to take the benefit of the provisions of Section 11 and 12 unless establish the prescribed utilization of the income, even if at all the trust hold the registration in its hands. Therefore at the stage of granting re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed in Section 12AA(3) needs to be satisfied are (a) That activities of the Trust/Institution are not genuine (b) That activities of the Trust are not carried out in accordance with the objects of the Trust/Institution. Thus the findings of the CIT has not to be only conceptual or contextual but should be within the four corners of law so that not surpassing the power, granted in Sub-section (3) of Section 12AA. But unfortunately the fallacy is writ large as gathered on perusing the impugned order. We can hold that the CIT's approach for deciding the eligibility of registration of a Trust should be different from the angle by which an assessment of an income is made by the A.O. We are afraid about the ramification if we approve the action of CIT because in that case it may adversely affect the imparting of education especially when the Revenue has not made out a case that the very purpose creation of the trust was defeated. While dealing with the facts ante, it was found that after exhaustive enquiry few instances; fifteen in nos.; were noticed by the Revenue authorities wherein it was alleged to be the infringement of Capitation Fee Act. But the irony is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12AA(3) Of the I.T. Act, 1961, without appreciating the facts and circumstances of the case as also without considering legal position in respect of cancellation of registration. 2. The ld. CIT(C) erred in not appreciating the provisions of the I.T. Act, 1961, that for the purpose of granting or cancelling the registration under Section 12AA of the Act, the CIT has to satisfy only about the genuineness of the activities of the trust and not the nature of activity by which the income is derived by the Trust, because Section 12AA does not speak anywhere that the CIT shall also examine the nature of income derived by the Trust. 3. The CIT(C) grossly erred in totally ignoring the objections of the appellant that the registration of the Trust could not be cancelled, unless it is established that- (i) the activities of the Trust are not genuine, and/or (ii) the activities of the Trust are not being carried out in accordance with the objects of the Trust. 4. The ld. CIT(C) grossly erred in totally glossing over the other important objection of the appellant that income-Tax Act, 1961, is an independent code and therefore, the provisions of the Maharashtra Educational Inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritable Trusts Institution to have a registration Under Section 12A and in case of cancellation an appeal lies to the Tribunal Under Section 253(1)(a)of the Act. (I) Facts of the case: 3. Facts in brief as emerged from the impugned order of cancellation of Registration dated 31/10/2007 passed Under Section 12AA(3) by Learned Commissioner of Income Tax (Central) were that the Revenue Department has conducted a search action on 20/07/2005 on the Trustees and thereupon a survey action Under Section 133A on the premises of Maharashtra Academy of Engineering and Educational Research (in short MAEER) the appellant Later on, very next month, there was an another survey on 26/08/2005 at the premises of the assessee Some of the documents inventorized and some were impounded Under Section 131(3) by the Act. 3.1 The main allegation of the investigation wing of the IT Department after the search and survey was that the Trust was taking the Donation and Capitation Fees for admission though prohibited under Maharashtra Educational Institutions (Prohibition of Capitation Fees) Act 1987 (hereinafter referred as Prohibition of Capitation Fee Act). 3.2 On the basis of the above infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT commented. 3.4 As per the Learned Commissioner there was a reference of entitlement of five times fees as prescribed Under Section 2(a) r.w.s. 4 of Prohibition Act. In para 6 4 Ld. Commissioner has accepted that the Trust can charge five times of the fees for Management quota, but in his opinion donations and fees should not be clubbed for the purpose of finding the violation of those sections of Prohibition Act According to Ld. Commissioner the Fees is to be accounted in Income Account and the donation in Balance Sheet. It was concluded that a separate treatment is to be given to both of them so could not be clubbed together. It was emphasized that the receipts of donations have to be examined separately in accordance of Section 3(2) of Prohibition Act. 3.5 Thereafter in the impugned order the Ld. Commissioner has devoted rest of the paragraphs in respect of the nature of donations received by the assessee. His basic objection was that the. evidences collected have shown that the donations were not voluntarily made. On the other hand one of the stand of the assess was that it was guardians who decide how to make the payment, either part as fees or part as the donations, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of tuition fees, taking donations in contravention of Section 3(2) of the Maharashtra Educational Institutions (Prohibition of Capitation Tee) Act 1987, not issuing receipts against money paid for admission, possession of undisclosed money, evasion of Stamp Duty, which are all illegal acts. The conduct of the assessee in several aspects is clearly illegal. What is illegal cannot be genuine in view of the discussion in paras above. I have therefore no hesitation in cancelling the Registration Under Section 12AA(3) of me I.T. Act, 1961. 4. In that manner it was concluded that issuance of receipt Under Section 80 G; that collection of donation in contravention of Section 3(2) of Maharashtra Educational Institution (Prohibition of Capitation Fee) Act 1987; that non-issuance of receipt of money paid for admission; that evasion of stamp duty were all illegal act done by the assessee, therefore not entitled for registration. Against the cancellation this appellant is now in appeal before us. 5. Within the parameters of the facts as narrated hereinabove an intention was expressed by both the sides to proceed the hearing of this appeal within the narrow compasse of the facts ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord only those arguments covering the merits of the case and the applicability of provisions of Section 12AA(1) of I.T. Act. Since this sub-section speaks about the object of the trust hence Learned A.R has drawn our attention on the aims and objects of the trust which is a long list incorporated in the written submission furnished by him Since it is a long list therefore we are not supposed to load this judgment by narrating all of them however the principal object of this trust is to impart education by running several educational institutions in different streams of education. It's objective is to promote and develop Engineering education, Science education. Medical education Management education and Finance education etc. There was also a general clause that the trust shall do all such other activity which will be in the interest of the development of the education and beneficial for the public welfare at large Learned A.R. has described the history of this institution that appellant is a public charitable trust running a number of educational institutions including medical engineering, management and other professional colleges. It was registered as a public charitable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned A.R. has mentioned that a survey was conducted however no incriminating material was found. Nothing was detected which can be said to be objectionable so as to demonstrate that the functioning was not philanthropic in nature or the activities are not towards fulfillment of the objects of the trust. However, a show cause notice was issued by Learned Commissioner proposing cancellation of registration He has read before us few of the replies and written submissions given to Learned Commissioner and in brief explained that there was no infringement of Anti Capitation fee Act. The donations, if any, received have also been duly recorded in the books of account as also duly affirmed by the donors by furnishing confirmation letters. The main allegation on the institution was that it had violated the provisions of the capitation fee act and because of that violation trust was held as not genuine. In the case of the Appellant, admittedly, the activities of the Appellant are to establish educational institutions and to impart education in various fields. This fact was never disputed rather it was proved beyond doubt on the Strength of various evidences placed on record. Further, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions filed. The Appellant trust has never charged more than five times of the normal fees to such students. (b) It is the case of the Appellant that the donations received by it are not connected With the receipt of fees by it and the same are required to be ignored However assuming, while denying, such donations are required to be counted as part of the fees, even the position would be that wherever the students have (allegedly) arranged for the donations that amounts is also counted as in lieu of fees the aggregate has never exceeded the permitted limit of five times the normal fees. This is in accordance with the provisions of the Anti Capitation Fee Act. The Respondent has admitted the fact that the Appellant trust is entitled to charge five times the normal fee in respect of the students admitted under management/discretionary quota. In this regard it is significant to note the observation of Respondent in the impugned order at para 6.4 relevant portion of which is reproduced as under- 6.4 Therefore, the stand of the appellant on this score is accepted that it can charge five times the fee in cases of admission in the Management Quota. However, I do not agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of the Anti Capitation Fee Act. (d) Without prejudice it is submitted that Section 3(2) of the said act permits soliciting donation from benevolent donors for development and expansion of the educational activities of the trusts. This is over and above the limits permitted Under Section 3(1). In the case of the Appellant, thought alt the donations have been made voluntarily, even if they are clubbed with the fees the aggregate does not exceed the five times limit prescribed Under Section 3(1) of the said act. The donations received from the donors are voluntary and do not fall within the purview of the prohibited donations under proviso to Section 3(2), which prohibits reservation of seats against donations received other than those covered Under Section 3(1) of the said Act. It is an admitted position that the amounts collected from the students referred by the Respondent has not exceeded give times the normal fees and hence the case of the Appellant does not fall within the mischief of sees 3(1) and 3(2) read with Section 2(a) of the Anti Capitation Fee Act. It is humbly submitted that the Appellant has always issued the receipts for all the Fees/Higher Tuition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to from where the donor brings the money. The donor is liable to explain the source of the donation in his assessment. In particular, he is bound to explain the source while claiming deduction Under Section 80G. If the donation is given by one person and the certificate is issued to another person then both of them would lose the benefit of Section 80G of the Act. The allegation of the Respondent that there would be reverse loss or that there would be prejudice to the Revenue Department is baseless. (h) The next allegation is that the Appellant has not made available the particulars of donations charged to students other then the 15 students identified by the Department. It is submitted that the department conducted survey actions Under Section 133A of the Act on two occasions i.e. one on 20/07/2005 and 26/08/2005 and have extensively searched the premises of the Appellant trust and have verified the documents, records etc. maintained by the Appellant. It is, there fore, submitted that the assumption of the Respondent that the Appellant was blocking the investigation is preposterous. (i) The next allegation is that the Appellant had received heavy donations in cash year aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returns of Income have been filed on the basis of such audited accounts year after year and the same have been accepted by the A.O. The Appellant, therefore, submits that this allegation is based on surmises and conjectures. Further the receipt books maintained by the Appellant trust are subject to internal controls by the management and no receipt book have been misused as wrongly presumed by the Respondent. It is therefore, submitted that this cannot be a basis for concluding that the activities of the Appellant trust are not genuine. (l) The next allegation is that the Appellant has generated unaccounted money and utilized the same for purchase of property at Kelgaon by making on money payment of Rs. 69 lakhs. It is submitted that the Appellant trust has issued proper receipts for all the amounts received by it either by way of fees, donations or otherwise. The income of the Appellant trust has been exempted from income tax Under Section 10(23C) or Under Sections 11 and 12 of the Act. There is no good reason for making or keeping unaccounted money with the Appellant. Since the income of the Appellant was exempted, it is unreasonable to believe that the Appellant might have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parkar/Shankar K. Jalgaar have also raised few legal aspect of this issue His first plank of argument in this regard was that in the case of charitable institution it is irrelevant to examine the source of income and the only area in which the Revenue Department is to probe is the application of the income In support case laws cited are: (1) Trustees of Vanita Vishram v. CIT 280 ITR 345 (Bom) (2) CIT v. A.M.M. Arunachalam Ed. Society 243 ITR 229 (Mad.) (3) CIT v. V Shri Narayan Chandrika Trust 212 ITR 456 (Ker.) (4) CIT v. Kshatriya Girls School 245 IXR 170 (Mad.) 7.3 Learned A.R. S/Shri Sanrabh N. Soparkar 7 Shankar K. jalgaar have also argued that Learned Commissioner should have confined his decision on the provisions of I.T. Act and should not have passed his decision for cancellation of registration on beach of some other statute In support of this contention case laws cited are: (1) Dr. T.A. Qureshi v. CIT 287 ITR 547 (SC) (2) Rama Rao Adik Trust ITA 5742/Mum/207 (3) CIT v. Red Rose School 163 Taxmann 19 (4) Punjab Fruit v. CIT 149 ITR 42 (Del.) (5) DCIT v. Cosmopolitan Ed. Soc. 244 ITR 494 (Raj.) (6) Lancer Army School Soc. v. ACIT 90 TTJ 102 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pitation Fee Act. Learned CIT D.R. has placed vehement reliance on the notices issued by Learned Commissioner and few letter followed thereafter. He has drawn our attention on some of the instances wherein the guardians have taken loan to make the donations to this institute which according to Learned D.R was against the normal human behaviour Further he has also drawn our attention on some of the factual findings about the non-availability of the donors. Therefore, he has argued that receiving of the donations for granting admission was against the intent of Prohibition of Capitation Fee Act and such an activity of the trust cannot be said to be a genuine activity He has also mentioned that the assessee has made all attempts to hide the identity of the donors He has advanced the arguments by mentioning that if the nature of those donations was claimed to be noting but admission fees then the assessee should not have given a certificate Under Section 80G of I.T. Act and if it was a donation then assessee was not entitled to accept the same because of the proviso to Section 2 of Prohibition of Capitation Fee. An another argument has also been placed on the basis of a decision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as noted in the impugned cancellation order were referred. 8.1 Few legal aspects have also been pressed upon by Learned Commissioner (DR) in his arguments that if an authority has jurisdiction and power to grant a registration then the cancellation of the same is inherent in those powers. Powers of cancellation so vested to the CIT by the legislature were with the intention to examine whether a trust carries its activities in accordance with its object for which established. In case if not found genuine the result ought to be cancellation of registration. He has also clarified at this juncture that since the issue of retrospective effect and legality of the provisions of Section 12AA(3) has not been contested therefore, there was no necessity left of any deliberation on the issue retrospective applicability of Section 12AA(3) as far as this appeal is concerned He has elaborated that this section was introduced to curb the mischief and also to advance the remedy. It is impossible to believe that Hon'ble Parliament had an intention to allow a trust to conduct its affairs in any manner they like to conduct once a registration is granted Under Section 12A(a) of I.T. Act. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urses fee was charged on commercial lines. The CIT made a reliance on Sole Trustee Lok Sikshana Trust 101 ITR 234 to say that the assessee's activities had no nexus with education Thereupon the registration already granted Under Section 12A(a) was withdrawn On appeal to ITAT the assessee's appeal was dismissed holding that the objects of the assessee were not charitable and the registration could be withdrawn retrospectively. (IV) Case laws cited: 9. (i) Sanjeevamma Hanumanthe Gowda Charitable Trust v. DIT 285 ITR 327 (Kar): This decision of the Hon'ble Karanataka High Court speaks about the scope of Section 12AA and held that the Revenue authorities have to decide the question of registration within the scope of the mandatory provisions of IT Act. The Hon'ble Court has categorically commented that sufficient safeguard is provided under the Act for cancellation of registration obtained by the assessee in the event of misusing the provisions. The authorities have to satisfy themselves about the genuineness of the activities and to examine how the income derived from the trust properly is applied to charitable purposes. The Hon'ble Court is abundantly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary donations. The Commissioner of Income Tax has not carried out any investigations in this matter. If he has relied on the reports of any other authorities, the Commissioner has not referred to those reports or materials in his order to show what was the inquiries made by them to come to a conclusion that what has been collected by the Assessee-Trust from the students were in fact capitation fees/involuntary donations. The respected co-ordinate bench has summarized the scope-of Section 12AA(3) so held that this section deal with the cancellation of registration only on two grounds i.e. the activities of the trust are genuine activities and not being carried out with the object of earning profit In that manner, the appeal was allowed in favour of the assessee. (iii) CIT v. Red Rose School 163 Taxmann 19 (Allahabad): The question berate the Hon'ble Court was that if trust or institution is not registered Under Section 12AA, the trust would not be able to claim any exemption or exclusion of its income from total income of the previous year even if such income is otherwise liable to exclude under any of clauses of Section 11 or Section 12 of I.T. Act The observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted to it for a violation of an another Section 13(1)(b) however it is ultimately found that the assessee trust actually accomplish the objects meant for the benefit of a public at large, the trust would be deprived of any benefit which otherwise were available to it Under Section 11 and 12. It was emphatically said that certainly it is pot the legislative intention as reflected in the scheme lard down in Section 11, 12, 12A, 12AA and Section 13 of IT Act. Once the genuineness of the activity and the nature of its object being charitable are not in doubt then there was no occasion for refusal of registration. (V) Acharya Sewa Nivas Uttaranchal v. CIT 13 SOT 54 (Del.): The observation of the respected Delhi bench is that Under Section 12AA the jurisdiction of the Commissioner is confined to Satisfy himself about the objects of the trust and genuineness of the activities and for this purpose, he is authorized to make such enquiries, as he may deem fit. If the Commissioner had not taken any objection about the nature of charitable object or activity then in the absence of any contrary findings Commissioner cannot proceed to cancel the registration in respect of some other gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phasis is not on whether the income was derived from the educational institution, or hospital itself, but on the purpose for which the institution, trust or society was existing and utilizing the income. unquote. The purpose of citing this decision was to stress upon the point that the institution can have several resources of income but the purpose behind the earning of income must be for the utilization towards object of the institution. (viii) CIT v. Kshatriya Girls Schools Managing Board 245 ITR 170 (Mad): In this judgment the ratio laid down was that the object of the trust ought not to be earning the profit however income from properties should be towards fulfillment of the objects and also to be utilized to implement the activities for which the trust is established. (ix) Dr. T.A. Qureshi v. CIT 287 ITR 547 (SC): This is one of the extreme case of immoral activity carried out by a Doctor. Facts have revealed that Doctor though the medical practitioner was in the business of drugs. He has claimed a deduction of the drugs seized as a business loss. The Hon'ble Court has made a stringent remark that it was disgraceful for a Doctor to indulge in activities ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arities were noticed but the Tribunal has held that quote. It was true that some mistakes or irregularities were committed by MVSR or the society in maintaining its accounts but these discrepancies did not lead to any evasion of tax The money misappropriated by MVSR had been recompensed Had the institution not existed for educational purposes, it would not have been granted exemption under Section 10(22) in subsequent years when MVSR had little or no role to play. It could at worst be a case of misappropriation by one of its functionaries, to which the society was never a party or sanctioning authority and, therefore, for this misappropriation which, as aforesaid, was later recovered too, the society should not be deprived of the benefit of Section 10(22). It was running the college for a noble cause imparting technical education to about 1200 students and enriching the nation by adding about 300 engineers every year. Therefore, the benefit available under Section 10(22) was not to be denied to the assessee unquote. (xii) Kalirera Institute v. CIT 113 TTJ 906: The Commissioner has proposed the cancellation of registration on the basis of findings of the search and seizur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause (b) of Sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be he shall pass an order in writing cancelling the registration of such trust or institution. (VI) Conclusion: 11. In the recent past the question of interpretation of newly inserted Section 12AA (with effect from 01/04/1997) has always been perennial teaser not only to the trust or institutions-but also to the Revenue Department as also faced by the judiciary. To get the answer we have heard both the sides at length, carefully perused the impugned order and also several correspondences filed in the compilation in the light of the case laws cited. 11.1 The Law now introduced is to streamline the Procedure for Registration and by saying so we do not want to enter into the controversy whether the applicability of Section 12AA(3) was retrospective or prospective in nature Rather we can make an observation that this issue stood answered by coordinate benches. We want to express that earlier to this section there was no guidelin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the issue in hand. The purpose of framing the Conditions for applicability of Sections 11 and 12 i.e. Section 12A and framing the rules of Procedure for registration i.e. Section 12AA is basically meant to open the door to a trust to enter in to the frame-work of the provisions of the statute, in a way, an entitlement to enter into a room where the eligibility of exemptions is kept for adjudication Thus in a case of refusal of registration, the trust would even not be allowed to enter the room to seek a claim of such exclusion of a receipt from the total income. In simple words; in case of no registration a Trust is debarred by law to claim exemption. This is the first step to climb to the level where the exemptions are placed. At this first step the Commissioner is conferred with the powers to call for such documents and information in order to satisfy-himself about the genuineness of the activities and also to enquire that those genuine activities are as per the objects of the trust for which it is seeking registration. The objects and activities should be philanthropic and not against the public interest must be for the benefit at large instead for the benefit of particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed to carry out an illegal activity or activities are causing any type of nuisance not in the interest of the public at large should definitely lead to cancellation of registration. Therefore, this is the first requisite of the statute to mandate for the registration and in the absence of such registration disentitlement of exemption. So what is explicit is that though an institution may be doing charitable activities as prescribed but in the absence of registration can not be entitled for the exemptions or benefits of Section 11 and 12 of the Act. It is also explicit that Registration ipsofacto do not necessarily entitle an institution to get the receipts excluded from the income or exemption be granted automatically by just showing the registration certificate to the revenue authorities. In no way the registration certificate is a license to do any type of activity and to get away from the ambits of the tax An institution has to follow the norms as laid down in other related sections for availing prescribed benefits. 11.6 Procedure of registration is a first step and a preliminary stage where the Commissioner shall restrict the enquiries as to whether the trust is actually a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucational nature of the Institution. In fact, the objects of the institution as declared in the trust deed, which are extracted earlier, does reflect that all are philanthropic or benevolent in nature, precisely for the purpose of imparting education Strange enough there is no finding recorded by the Ld. Commissioner contrary to this fact. Be that as it may, the real and the only substantial objection for refusal of registration was that the institution has collected donations thus adopted some wrong means of collection of fees. But whether at this preliminary stage he had the right to draw an adverse inference so as to refuse registration or alternatively confine himself to the enquiry about the objects and the activities of the trust as per the limits of the jurisdiction of Section 12AA of the Act Rather this is also not the case of the Ld. Commissioner that the institution is doing some other activity of earning profit other than the activity of running educational institutions. The established factual position is that the institution is not doing in any other activity except running educational institutions, in such circumstances, can we uphold the action of cancellation of reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or that there is no element of public benefit In the present appeal none of the above criteria for rejection of registration was in existence, however mainly confined to the finding that by charging donation the Trust has infringed the rules of Prohibition of Capitation Fee Act. 11.10 Before we part with it is worth to cite an another latest decision pronounced by respected co ordinate Bench of Chandigarh in the case of Himachal Pradesh Environment Protection and Pollution Control Board bearing ITA No. 74/Chd/2009 wherein the worth noting observations were as follows: 17. On a perusal of these objectives, as sanctioned by the statute, it is obvious that the activities performed by the assessee trust are regulatory functions for the public good, and any collection for fees or charges, in the course of discharging these regulatory functions, cannot be viewed as a consideration of rendering these services of pollution control measures. We are unable to see any substance in learned commissioner's stand that the income earned by assessee as licence fees, consent fees and testing charges are receipts in consideration of rendering the services to trade, commerce or business. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, the withdrawal of registration granted under Section 12AA cannot be sustained in law. Learned Commissioner has extensively referred to as to why the assessee is not eligible for exemption under Section 11 as the activities of the assessee cannot be said to be for 'charitable purposes' defined under Section 2(15), but then this aspect of the matter is relevant for the assessment proceedings and not in the context of exercise of Commissioner's powers under Section 12AA(3). The impugned order passed by the learned Commissioner is thus vitiated in law on this count as well. 20. For the detailed reasons set out above, we quash the order of the learned Commissioner and hold that the learned Commissioner did not have any good reasons, sustainable in law, to withdraw the registration. The impugned order is accordingly set aside. On reading the above verdict it is gathered that if the objects as permissible in the eyes of law are carried out legally and the object of advancement of education as also the object of general public utility are carried out with due sincerity then the claim of registration is within the ambiguity of Section 12A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose creation of the trust was defeated. Rather we wonder that what purpose does it serve to Revenue by cancelling a registration if the activities are in public interest because in case of any breach of the laws the same is subject to tax under Section 11 and 12 of I.T. Act. These two provisions and few other provisions are competent enough to tackle firmly a defaulter of philanthropic application of income or funds of the trust. The other adverse side of cancellation is that on refusal of registration the entire receipts shall be subject to assessment without granting benefit of Section 11 and Section 12 of I.T. Act to assess income which do not form part of total income though the factual position could be that major part might have been devoted towards achieving the objects i.e. imparting education, as in this case, but the A.O. shall be automatically forbidden to grant advantage of exemption consequent upon the cancellation as is mandatory in statute; relevant section already reproduced ante. The outcome of the deliberation made in detail hereinabove is that percurian opinion is to debar the Commissioner to enter into the area of investigation of source of income and also ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the defined Management Quota. Thereupon there was a circumvent in the approach of the LD. CIT that the amount of donation be considered together with the fees to find out the violation of prohibition of Capitation Fee Act But on facts that too did not stand the test of those provisions since admittedly did not exceed the prescribed limit. 11.14 Facts of this appeal are peculiar, as already discussed in above paras in detail and thereupon can comment that prima facie no case was made out by the Ld. Commissioner so as to even vaguely demonstrate that the activities of the appellant were not genuine or activity of imparting of education, for which the trust Was-created, were not carried out. Even the Ld. Commissioner has failed to establish that any part of the income/receipt of the Trust was in any manner mis-utilized by the Trustees for their personal benefit i.e. not in fulfillment of the object of the Trust Otherwise also there are three ways to look at this problem. One is, that the donations are raised but not utilized for achieving the objects i.e. towards imparting education; then such an institution must bear the consequence of cancellation of registration since ipso-fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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