TMI Blog2016 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... authority and upheld by the appellate authority for rejection of registration to the appellant Trust cannot be sustained. The authorities could have examined only the genuineness of the Trust and its activities. They did not have material to hold that the Trust was either not genuine or its activities were not what was professed in the deed of Trust. Resultantly, in the light of the above findings, the impugned order is set aside. The respondent Commissioner of Income Tax is directed to grant registration as requested by the appellant Trust in terms of Section 12A of the Act. - Decided in favour of assessee - Income Tax Appeal. No. 17 of 2015 - - - Dated:- 11-2-2016 - Thottathil B. Radhakrishnan And Anu Sivaraman, JJ. For the Petitioner : Sri. Premjit Nagendran For the Respondent : Sri. P. K. R. Menon, Sr. Counsel, GOI ( Taxes) JUDGMENT Anu Sivaraman, J. The challenge in this appeal under Section 260A of the Income Tax Act is against the order of the Income Tax Appellate Tribunal rejecting the appeal preferred against the order of the Commissioner of Income Tax refusing to register a Trust under Section 12AA of the Income Tax Act (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed unethical methods used by the Trust for collection of funds especially from prospective employees and students. It was therefore deduced that the activities of the Trust are purely commercial in nature. It was also stated in the order that imparting education per se cannot be termed as a charitable purpose unless it has a public character. Thus, finding that no charitable activities have been carried out by the Trust, the Commissioner of Income Tax rejected the application for registration yet again. This was taken in appeal by the Trust which has resulted in the impugned order. The appellate authority also found that the assessee Trust had collected money from various persons on the assurance of employment and admission for medical education. On the ground that the objective of registration under Section 12AA of the Act and exemption under Sections 11 and 12 is to encourage non governmental organizations to establish educational institutions and to run the same in a charitable manner and relying on precedents, the Tribunal rejected the appeal. 3. Heard Sri. Arshad Hidayathullah, learned Senior Counsel appearing for the appellant and Sri.P.K.Ravindranatha Menon, learned Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n's case (supra) specifically held that clause 15 of Section 2 of the Income Tax Act provides that charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. It is stated that it is well settled as a result of the decision of the apex court in Dharmadeepti v. Commissioner of Income Tax, Kerala [(1978) 114 ITR 454] that the words not involving the carrying on of any activity for profit qualify or govern only the last head of charitable purpose and not the earlier three heads. It has therefore been held that where the purpose of a Trust 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 carrying out the primary purpose of the Trust. The learned counsel also relied on the decision of the Delhi High Court in Income Tax v. Foundation of Ophthalmic Optometry Research Education Centre [(2013)355 ITR 361] to contend that while examining an application under Section 12AA(1)(b) read with Section 12A, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gic and reason that the genuineness of the activities of the Trust and its objects should be looked into at the stage of grant of registration itself. The learned senior counsel would contend that registration was refused to the Trust on the basis of a survey conducted in its premises and the sworn statement of its Managing Trustee admitting to collection of huge amounts as deposits from intending employees to find funds for the institution as well as collection of capitation fee from four intending NRI students even before recognition was granted for its medical college. It is contended that such an institution was evidently engaging in education only as a commercial activity and there is no element of charity involved in the instant case. Going by the provisions of Section 12AA of the Act, it is clear that what has been conducted was an inspection as to the objects of the Trust and into the genuineness of its activities. The registering authority was not satisfied about the objects of the Trust or about the genuineness of its activities and had therefore passed an order refusing to register the Trust or institution. In appeal, the Appellate Tribunal had examined the contentions r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute charitable purpose even if it incidentally involves carrying on of commercial activities. Though a contra view is taken by a division bench of this Court in Dawn Educational Charitable Trust's case (supra) as well as the Uttarkhand High Court in Commissioner of Income-Tax v. National Institute of Aeronautical Engineering Educational Society [(2009)315 ITR 428], we are of the view that the actual functioning of the Trust can be a relevant consideration only at a later stage. 9. Sections 12A and 12AA of the Act read as under: 12A. Conditions for applicability of Sections 11 and 12. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries 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 given a reasonable opportunity of being heard. (1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day. (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts could be adjusted towards the tuition fees payable by the students under the NRI quota. It is further stated that even with regard to amounts collected from employees, the same were voluntary deposits made by employees and no action had been taken by any authority against the Trust, since there was no compulsion or illegality in the matter. 12. It is clear that taxing statutes are liable to be interpreted strictly. The court cannot supply or detract from the provisions contained in the statute. Where the provisions of the Act are clear, courts have no power to examine the purpose behind the enactment. The projected futility and inconvenience that may arise out of the application of a provision of law cannot, in a taxing statute, be a ground to deny a benefit which is evident from a plain reading of the statute. 13. Going by the provisions of Sections 12A and 12AA of the Income Tax Act, we hold that the grounds raised by the registering authority and upheld by the appellate authority for rejection of registration to the appellant Trust cannot be sustained. The authorities could have examined only the genuineness of the Trust and its activities. They did not have material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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