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2016 (2) TMI 375 - ITAT CHENNAI

2016 (2) TMI 375 - ITAT CHENNAI - TMI - Non-granting of registration u/s 12AA - main object of the assessee is to provide resources for advanced education for peoplewho deserve it - Held that:- The purpose of a trust or institution is relief of the poor, education or medical relief, the requirement of the definition of ‘charitable purpose’ would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institu .....

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annot be exempted from taxation. However, such institution can claim exemption u/ss 11 & 12 of the Act if it involves charitable activities.

After complying the requirement of sec. 11 of the Act, if there is any violation either in sec. 11 or 13, profit of such institution would be taxable because some profit has been earned by the institution, registration u/s 12AA cannot be denied so long as provisions of sections 11, 12 & 12 of the Act are complied with. So long as it is establish .....

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tration u/s 12AA would not be relevant by itself for claiming exemption u/s 11 of the Act. The objects of the trust and its genuineness have to be examined by the DIT(E) while granting registration u/s 12AA of the Act.

In view of the above discussion, the DIT(E) is directed to grant registration u/s 12AA of the Act to the assessee-trust. - Decided in favour of assessee - I.T.A.No.2007/Mds/2015 - Dated:- 8-1-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD .....

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e DIT(E), limitation for passing order u/s 12AA(2) of the Act expired on 31.3.2015, however, in view of the judgment of the jurisdictional High Court in the case of CIT vs Sheela Christian Charitable Trust, 354 ITR 478, the CIT is empowered to pass order even after that date as the date mentioned in 12AA(2) of the Act is only directory and not mandatory. Accordingly, he passed order on 29.6.2015. Regarding granting or registration u/s 12AA of the Act, the DIT(E) was of the opinion that the objec .....

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cost. To analyse and identify the inbuilt skill of every individual and to bring them out prosperously by shaping it. 3. According to the DIT(E), the above clauses permit the assessee to engage in commercial activities which will not be covered under the definition of charitable purpose as per sec. 2(15) of the Act. For this purpose, he relied on the judgment of Kerala High Court in the case of Ideal Publication Trust vs CIT 305 ITR 143, judgment of the Delhi High Court in the case of Daulat Ram .....

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and a very small amount towards study material for students and the assessee has not furnished the details to whom the expenditure was incurred. Accordingly, he rejected the application of the assessee for registration u/s 12AA of the Act. Against this, the assessee is in appeal before us. 4. We have heard both the parties and perused the material on record. The question for consideration is with regard to the scope of enquiry by the DIT(E) u/s 12AA of the Act. With effect from 1.4.1997, the CIT .....

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limited to ascertain only whether the objects are charitable or not. Now, coming to the case of the assessee, the assessee made an application for registration u/s 12AA of the Act on 8.9.2014. The DIT(E) has to see whether the activities are under the purview of sec. 2(15) of the Act. Sec. 2(15) of the Act reads as follows: "Charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservat .....

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ature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;]" 5. The object of the assessee-trust as per the trust deed filed before us is as follows: 1. To provide resources for Advanced Education for people who deserve it. 2. To develop Rural Society Economically and socially. 3. .....

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acility for commuting to school to the poor and needy persons in rural areas. 10. To promote Vocational education in rural areas. 11. To do such other acts as are conducive to the attainment of the above objects or any of them. 12.To motivate and facilitate training and education to develop physical, mental and emotional aspect of the rural poor. 13. To be supportive to poor people in building up their own shelter, clothing and their own sanitation facilities. The main object of the assessee is .....

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or institution is relief of the poor, education or medical relief, the requirement of the definition of charitable purpose would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution. At this stage, it is also pertinent to note that the clause not involving carrying any activities of profit were omitted from this definition by the Legislature by Finance Act 1993 with effect from 1st April 1983. .....

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