TMI Blog2016 (3) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of charitable which is actually in the nature of trade commerce or business. These sovereign powers of the tax authorities are perpetual which cannot be taken away only by grant of registration under section 12A of the Act. It is also relevant to mention that the grant of registration under section 12A of the Act merely a pre-qualification for claiming exemption under section 11 and other relevant provisions of the Act, which should be granted by recording satisfaction as required under the said provision. Thus we hold that the CIT dismissed application for registration without any justified reason and by considering incorrect and irrelevant facts and the ld. CIT(A) has not brought any adverse finding on record to show that the objects of the Trust are not charitable or non genuine. - Decided in favour of assessee - ITA No. 877/DEL/2014 - - - Dated:- 18-3-2016 - G. D. Agrawal VP And C. M. Garg, JM For the Petitioner : Shri Piyush Kaushik, Adv For the Respondent : Shri Munish Kumar, CIT DR ORDER Per C M Garg, JM 1. This appeal by the applicant trust has been filed against the order of the CIT, Dehradun dated 17.10.2013 by which the application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for refusing to grant registration under section 12A of the Act viz. first that the education should be given free of cost to some needy students and second the assessee is expending and increasing its receipts therefore not entitled for registration. The Ld Counsel of the assessee vehemently pointed out that as per amended provision of section 2(15) of the Act the expression charitable purpose includes relief to the poor, education, yoga, medical relief, preservation of environment monuments and advancement of other object of the general public utility and these independent terms used by the legislation have independent meaning and education per-se is charitable purpose. The Ld Counsel of the assessee has placed reliance on the decision of ITAT Delhi in the case of Shavak Shiksha Simiti Vs CIT 104 TTJ 127 (Delhi) and submitted that there is no dispute that education per-se as a charitable purpose just like relief to poor or medical relief. 4. The Ld Counsel further placing reliance on the decisions of Hon'ble Supreme Court in the case of Addl. CIT VS. Surat Art Silk Cloth Manufactures Association [1980 121 ITR I (SC), Aditanar Educational Institution Vs. Addl. CIT [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd perusal of the impugned order and relevant record we note that the CIT(E) has not brought out any allegation to show that the receipt/income of the assessee's trust was not used for the educational purposes and the same was used for other purposes beyond the objectives of the applicant trust. It is also pertinent to note that the reasons recorded by the CIT(E) that the education should be given free of cost to some needy students and applicant is expending and increasing its receipts is not a criteria or relevant fact for gathering satisfaction as required under section 12A of the Act for grant of registration under said provision. The CIT has relied on the decision of Hon'ble Uttarakhand High Court in the case of CIT VS Queens Educational Society reported as 177 Taxman 321 but we respectfully note that this decision has been reversed by Hon'ble Supreme Court in the case of Queen Educational Society VS CIT (Supra) wherein their lordship held that when the surpluses of a educational institution has been used for educational purposes then it should be held that the educational institution exists solely for educational purposes. We may pointed out that merely because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is clear, therefore, that the Uttarakhand High Court has erred by quoting a non-existent passage from an applicable judgment, namely, Aditanar and quoting a portion of a property tax judgment which expressly stated at rulings arising out of the Income Tax Act would not be applicable. Quite apart from this, it also went on to further quote from a portion of the said property tax judgment which was rendered in the context of whether an educational society is supported wholly or in part by voluntary contributions, something which is completely foreign to Section 10(23C) (iiiad). The final conclusion that if a surplus is made by an educational society and ploughed back to construct its own premises would fall foul of section 10(23C) is to ignore the language of the Sec 'on and to ignore the tests laid down in the Surat Art Silk Cloth case, Aditanar case and the American Hotel and Lodging case. It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit. In fact, in S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income Tax, (1998) 2 SCC 584, this Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritsar Bench, Amritsar (hereinafter referred to as the Tribunal ) which has allowed the appeal of the society and has set aside the order passed by the CIT and directed that registration applied for by the appellant under Section 12AA of the Act be granted. The present appeal is directed against the said order and the following questions of law have been formulated by the revenue:- 1. Whether, in the facts and circumstances of the case, the Id. ITA T was right in law to restrict the powers of the CIT for making the enquiries u/s 12AA(a) of the Act despite the fact that the said section provides that the CIT can make such enquiries as he may deem necessary in this behalf. 2. Whether, in the facts and circumstances of the case the Id. ITAT was right in law in granting registration to the assessee Trust when no work of relief to the poor in the field of education was done as per definition of Charitable Purposes provided u/s 2(15) of the Act. 4. The Tribunal while allowing the appeal has noticed at Memorandum of Association and the objects of the society was to do charitable work, projects and activities relating to education which have not been considered while de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity and the enquiry regarding genuineness of the activities cannot be stretched beyond this. 7. In view of above facts and circumstances, it would be clear that respondent society which was admittedly running a Polytechnic 90llege and the activities were interwoven for furthering the projects and activities pertaining to education, the Tribunal rightly directed that registration should be granted to the respondent- society with the rider that the same could always be cancelled if it came to the notice of the CIT that the society was not carrying on the activities as per its objects. The Commissioner while processing the application under Section' 12AA of the Act was not to act as an Assessing Authority and thus, the Tribunal has rightly allowed the appeal filed by the society In the facts and circumstances of the present case. Accordingly, no substantial question of law as contended in the present appeal arises for determination by this Court and the order dated 31.3.2010 passed by the Tribunal is upheld. Consequently, the appeal is dismissed. 8. Similarly, Hon'ble Delhi High Court in the case of CIT Vs O.P.Jindal Global University, I.T.A. No. 190/2011 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of assessee the AO is fully empowered to examine and verify these facts that whether the assessee/applicant has applied its receipts towards its charitable objects and the AO is also empowered to verify as to whether the applicant assessee is conducting any activity in the name of charitable which is actually in the nature of trade commerce or business. These sovereign powers of the tax authorities are perpetual which cannot be taken away only by grant of registration under section 12A of the Act. It is also relevant to mention that the grant of registration under section 12A of the Act merely a pre-qualification for claiming exemption under section 11 and other relevant provisions of the Act, which should be granted by recording satisfaction as required under the said provision. 11. Finally, we hold that the CIT dismissed application for registration without any justified reason and by considering incorrect and irrelevant facts and the ld. CIT(A) has not brought any adverse finding on record to show that he objects of the Trust are not charitable or non genuine. At the same time, we note that the applicant successfully established that it was created with charitable objects a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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