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2016 (5) TMI 1024 - ITAT PUNE

2016 (5) TMI 1024 - ITAT PUNE - TMI - Denial of exemption u/s.11 - nature of activities - non-submission of 12A registration certificate - Donation received against management quota seats - Held that:- Since in the instant case nothing has been brought on record that the certificate u/s.80G was not granted to the assessee in the past and since registration u/s.12A is one of the prerequisite for granting of certificate u/s.80G and the 80G certificates produced by the assessee for the past several .....

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for the personal benefit of any of the trustees - Nothing has been brought on record that the donations received from various persons has not been entered the books of the assessee or has been utilized by any of the trustees or their relatives or has been utilized for purposes other than education and since neither any of the donor nor the AO has lodged any complaint before the Government authorities for violation of the Act, therefore, the revenue authorities in our opinion are not justified in .....

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ER R.K. PANDA, AM : The above 2 appeals filed by the assessee are directed against the common order dated 08-01-2014 of the CIT(A)-II, Pune relating to Assessment Years 2008-09 and 2009-10 respectively. Since identical grounds have been taken by the assessee in both the appeals, therefore, these were heard together and are being disposed of by this common order. ITA No.1166/PN/2014 (A.Y. 2008-09) : 2. Facts of the case, in brief, are that the assessee trust filed its return of income for the imp .....

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of the I.T. Act, 1961. The AO noted that the CIT-II, Pune vide letter dated 14-05-2010 has also not granted the approval u/s.80G since the assessee trust has not submitted the certificate of registration u/s.12A of the I.T. Act. In view of the above, the AO issued a show cause notice dated 28-12-2010 asking the assessee to explain as to why exemption u/s.11 should not be denied as the assessee has failed to produce the certificate of registration u/s.12A of the I.T. Act. 3. It was submitted by t .....

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f all past 80G certificates from 1995 onwards were produced before the AO. It was submitted that the earlier certificates are not traceable since the records are very old. It was further submitted that from time to time the AO had issued certificate u/s.197(1) in favour of the society to the effect that the payers were not required to deduct TDS on the payment of rent and interest received by the society. This otherwise proves that the society had satisfied all the conditions for exemption u/s.1 .....

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h of the Tribunal in the case of Phaltan Education Society it was argued that the Tribunal in the said decision has held that non-availability of 12A with the assessee cannot be found fault with when the 80G certificates were given for past so many years. Referring to the decision of the Pune Bench of the Tribunal in the case of Poona Blind Mens Association it was argued that the said trust also could not produce registration certificate u/s.12A. Considering the past records and facts the CCIT d .....

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the assessee is not entitled to exemption u/s.11. Registration u/s.12A is a mandatory requirement. Further the CIT also has not granted the assessee s application for approval u/s.80G since the trust had not submitted the certificate of registration u/s.12A. In view of the above, the AO held that the assessee trust is not eligible for exemption u/s.11 of the I.T. Act. Accordingly, the assessee has to be assessed in the status of an AOP. 6. The AO further noted that the assessee has claimed to ha .....

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eply dated 26-11-2010 replied as under : Copy of list of Trust Fund paid during the year of ₹ 2,29,300/- is enclosed. The amount pertains to amount refunded on account of cancellation of admissions of students, refund of deposits to students take as donation for admission, refund of membership fees, etc. 7. From the above, the AO inferred that the society has taken donations for admissions. He, therefore, asked the assessee to furnish the details of their students who took admission, cours .....

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ons for return in each case. He also asked the assessee to clearly state the details of students in whose cases the donations were returned and the date on which the admissions were cancelled. He also asked the assessee to produce the list of entire corpus donations and its link to admissions if any. In response to the same, the assessee vide letter dated 22-12-2010 provided a list of donations towards corpus fund, summary of which is as under : 1. Donations against management quota Admissions ( .....

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tionally, fellowship of ₹ 1,33,500/- and willingly fund of ₹ 92,484/- has been received which makes total of ₹ 3,07,42,484/- which is exactly the same figure of donations to permanent fund shown in the balance sheet. It was also categorically accepted by the Authorised Representative of the assessee that the society has taken donations of ₹ 3.05 crores for the management seats. The AO noted from the receipt books for the donations that the entire donation of ₹ 3.70 .....

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ted that there are no records with the society to state which admission was cancelled for refund of donation. In view of the above, the AO inferred that the students were admitted in different courses against consideration of the donations/capitation fee collected from them or in the name of others under the guise of corpus donation. Such donations were paid in relation to the admission of students. Under no circumstances such payments could be said to be either voluntary or towards the corpus o .....

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O in view of the definition of Capitation fee as above there need not be a quid-pro-quo for admissions or the admissions need not be for the consideration of and in lieu of the money received. If an impression was created by the management in the minds of the students/parents that admission will not be possible but for the donation, it amounts to capitation fee. There need not be a direct demand and direct payment from the student also. These are in reality nothing but capitation fee, collected .....

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essed as AOP within the meaning of section 164 of the I.T. Act. 11. The assessee replied that the donations are voluntary in nature and no one is forced to give the donation. The entire amount of donation has been received for the noble cause of charity. Every donor has been given receipt for the corpus donation. Entire amount received by way of donation has been deposited in the bank account of the assessee. Further society has allotted 80% of the seats as per the Government regulations and nor .....

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as to any commercial pursuit in the whole process. 12. However, the AO was not satisfied with the explanation given by the assessee. According to him the assessee has not denied to have taken donations for giving admission against management quota and therefore the donations are not voluntary. This is a clear violation of the provisions of section 11(1)(d) and the taking of donations/capitation fee is against public policy or the law of the land. Hence, the activities of the trust are not charit .....

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other than individuals and HUF. 13. Before CIT(A) the assessee made elaborate submissions based on which Ld.CIT(A) called for a remand report from the AO. After considering the remand report of the AO and comment of the assessee to such remand report the Ld.CIT(A) upheld the action of the AO in determining the income of the assessee at ₹ 10,15,45,927/-. 13.1 So far as the denial of exemption u/s.11 in absence of 12A registration certificate is concerned the CIT(A) upheld the action of the .....

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in receipt of the income has made an application for registration of the trust or institution on or after 01-06-2007 in the prescribed form and manner to the Commissioner and such trust or institution is registered u/s 12AA. The apex court in the case of UP Forest Corporation & Anr. Vs DCIT (2008) 297 ITR 1 (SC) held that for the purpose of claiming benefit u/s 11(1)(a) registration u/s 12A is a condition precedent. It is also seen that the CIT-II vide letter dated 14-05-2010 has lodged and .....

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aside the matter to the file, CIT. In the given circumstances and facts on record the appellant cannot presume that the eligibility u/s 12A will be available before issuance of certificate u/s 12A as such. The reliance placed by the appellant on the letter of the Hon. CCIT is not decisive in the fact of the present case and the appellant has without considering the legal position as applicable to the case has assumed availability u/s 12A on some analogy. In view of the above fact in the absence .....

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profits and income in such a manner that the maximum rate of tax to be applied. The appellant has stated further that the immediate location of certificate u/s 12A is a matter of records, compliances and the spirit with which the maximum marginal rate is provided is one wherein such an assessee is expected to be treated at a highest point of taxing statute and such treatment is contrary to the appellant's pursuit of engaging in education. 4.1 I have considered the submission made by the appe .....

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u/s 11 has been denied by the Assessing Officer and which has also been upheld while adjudicating ground of appeal No.2 and in such a circumstance the applicability of the taxation at maximum marginal rate is an automatic process under the law and the contention raised by the appellant is not tenable. 4.3 In view of the above fact the ground of appeal No.3 raised by the appellant is dismissed for A.Y. 2008-09. 14. As regards the denial of exemption u/s.11 by the AO for violation of provisions o .....

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een held by the Assessing Officer to have been taken against management quota seats and that the donations were not voluntary and hence were in violation of provisions of sec 11 (1)(d). The Assessing Officer during the assessment proceedings found that the appellant had received total donations of ₹ 3,07,42,484/- during A.Y. 2008-09 and the same had been claimed to be towards corpus of the trust. The details of the donations towards corpus fund is as under: 1. Donations against management .....

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the corpus of the Trust, it was explained vide letter dated 26-11-2010 that the amount of ₹ 2,29,300/- pertained to "amount refunded on account of cancellation of admission of students, refund of deposit to students taken as donation for admission, refund, of membership fees etc", The Assessing Officer on further enquiry found that around 20% out of all sanctioned seats were under management quota and against each seat of management quota, standard donation amounts were mentione .....

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rnish inaccurate facts arid accordingly an affidavit has also been filed. However.jhe same cannot be considered at this stage because the same ought to have been filed during the assessment proceedings before completion of assessment. The Assessing Officer on examination of the receipt books which were produced for verification found the entire donation to have been received in cash and each receipt was below ₹ 20,000/- and there were 3542 donors/receipts. The Assessing Officer has clearly .....

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society to substantiate and furnish the details with respect to the admissions cancelled for refund of donation during the assessment proceedings. However, subsequently had claimed before the Assessing Officer that the refunds were for bonafide personal reasons of the donors, however, the A.O. though has not discussed the issue nor any finding has been given. The appellant in any case has not been able to substantiate the contention raised. Thus. the material brought on record by the Assessing .....

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The appellant has never denied to have taken donations against management qi.ota seats. The appellant had raised various objections including the fact that the Assessing Officer had not carried our proper fact verification and did not consider the denial of nexus between the receipt of the corpus donations and the admission process and, therefore, the matter was referred back to the Assessing Officer for further verification of the issues raised by the appellant. In the remand report dated 28- .....

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f some of the receipts which clearly established the connection/nexus between the donation received by the appellant and the admission granted under the management quota admission. Thus the contention raised by the appellant that the Assessing Officer assumed- nexus between the corpus donations and admission is not found to be true and , tenable in view of the above fact on record which indicate that the Assessing Officer has concluded not on assumption but derived the conclusion from the facts .....

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ation account but it was collected only by way of capitation fee. The assessee treated it on its own as corpus donation and issued receipts as corpus donation and credited it under the corpus donation. The assessing authority rightly held that it is immaterial how the recipient, namely the assessee herein, accounted for the same and issued receipts towards charitable purpose at the time of receipt of the income. Admittedly, it was towards capitation fee. In such circumstances, the assessing auth .....

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ent, Hon Judge has said It must be noted that the nature of quality of the receipt has to be adjusted as at the time of receipt. The subsequent act of the assessee to enter the same under some head on receipt could alter the quality of the receipt. 6.4 The Assessing Officer has also reproduced the definition of the capitation ·fees as found in the. Maharashtra Educational Institution (Prohibition of capitation fee) Act, 1987 which was enacted to prohibit collection of capitation fee for a .....

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r indirectly in excess of the prescribed or, as the case may be approved rates of fees regulated u/s. 4. The Assessing Officer has thus rightly held that the appellant had created an impression in the minds of students/parents that admission will not be possible but for donation, amount to 'capitation fee' which the appellant has collected in the guise of corpus donation. The donation shown to have received as corpus donation do not appear to be voluntary and related to the admission gra .....

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sition that any donations taken for admission and used for cause of the trust does not lead to violation of section 11 being reasonable, but the fact in that case related to acquisition of property and in the said case the trust was registered u/s.12A(a). However, in the present case the facts relate to receipt of donation and the trust is also not registered u/s.12A. The other case laws relied upon by the appellant are on different set of facts and hence the same are not applicable to the prese .....

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ts the Ld.CIT(A) dismissed the ground holding that such issue was never raised before the AO during the assessment proceedings. Further, the assessee has not been able to submit the details in respect of which the said ground of appeal has been raised. Further, by its own admission the assessee has stated that the working of the eligible depreciation on actual cost is incomplete and the assessee has not submitted any such working till date. He accordingly dismissed the ground raised by the asses .....

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education. 2. The learned CIT(A)-Il, Pune erred in law and on facts in upholding AO s contention that the appellant is not eligible to claim exemption u/s 11 of the ITA, 1961 in the absence of 12A Registration certificate. The learned CIT(A)-II, Pune ought to have considered the genuine and bonafide cause of education for which the appellant exists for past many years; and; the presence of 80G Certificates granted to the appellant for the past many years till 31/03/2009. 3. The learned CIT(A)-I .....

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ceived by the trust on the analogy that the said donations are not in keeping with the law. 5. Alternatively and without prejudice, the learned CIT(A)-II, Pune erred in not calculating depreciation at commercial rates and w.r.t. the original cost of acquisition of the fixed assets. 6. The appellant craves leave to add/ modify /alter / delete all / any of the grounds of appeal. 17. The assessee has also taken the following additional ground : 7. Alternatively & without prejudice to Grounds 1 .....

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ng registration u/s.80G since last so many years which was getting renewed from time to time. During the impugned assessment year the AO denied the exemption u/s.11 on the ground that 12A certificate was not produced and the assessee is collecting capitation fee in the guise of corpus donation from various persons for giving admission. He submitted that the AO has issued summons and examined 21 donors who have denied to have made any donation for admission. Referring to page 187 of the paper boo .....

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Counsel for the assessee drew the attention of the Bench to order passed by the CIT-I, Pune dated 23-04-2004 under Rule 11AA granting benefit of deduction u/s.80G for the above trust for the period from 01-04-2003 to 31-03-2006. Referring to page 190 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to order passed under section 11AA(4) by the CIT-II, Pune on 04-12-2007 granting exemption u/s.80G to the trust from 01-04-2006 to 31-03-2009. Referring to pages 191 .....

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2-2013 w.e.f, 01- 04-2013. Referring to page 237 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to order dated 30- 09-2015 passed u/s.10(23C)(vi) of the I.T. Act, by the CCIT, Pune granting approval u/s.10(23C)(vi) to the assessee trust. 18.1 Referring to page 197 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed by CCIT to the CIT in case of the Poona Blind Men s Association wherein he has directed to t .....

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or issuing duplicate certificate since the certificate of registration u/s.12A said to have been issued to the assessee trust in the past is not traceable with the assessee nor the order is traceable with the department. 19. Referring to the decision of the Pune Bench of the Tribunal in the case of Phaltan Education Society Vs. CIT reported in Pune Chartered Accountants Society Journal for April 2009 he submitted that the Tribunal in the said decision has held that when the trust was granted all .....

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the CIT(A) was not justified in denying the exemption u/s.11 when the assessee trust was granted 80G benefits in the past so many years. He submitted that 80G benefit is not available unless registration u/s.12AA is there. 20. So far as denial of exemption u/s.11 due to acceptance of capitation fee in the guise of donation for giving admission is concerned the Ld. Counsel for the assessee referred to pages 153 to 156 of the paper book and drew the attention of the Bench to the affidavit of the .....

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en sold, auctioned, charged commercially. It was clarified that the donations are voluntarily given by the donors to the society and they are fully accounted for. Referring to to the letter addressed by the assessee trust to the AO vide letter dated 30-12-2010 a copy of which is placed at pages 88 to 90 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the following : 2. CORPUS DONATIONS : Following are the facts about donations accepted by the trust. A) The .....

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s per the government regulations and norms whereas, 20% seats, are free as per government norms, which are referred to as MANAGEMENT QUOTA. C) The fees for all seats, whether 80% government quota or 20% management quota, are same in quantum. However, considering the compelling expenses on infrastructure such as LAB, HOSTEL BUILDING, etc. the trust solicits donations for the noble cause. Kindly peruse the audited accounts as per which, large CAPEX exists for College Building during all these year .....

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t in the whole process. 21. Referring to the statements of some of the donors recorded by the AO during the course of assessment proceedings, copies of which are placed at pages 157 to 171 of the paper book the Ld. Counsel for the assessee submitted that none of the donors has stated that donations have been given for getting admission. Referring to page 227 of the paper book the Ld. Counsel for the assessee submitted that the admission as per chart in order u/s.143(3) varies from 1% to 17%. It .....

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the assessee trust as a quid-pro-quo in lieu of getting admission in the institutions set up by the assessee trust. Referring to page 121 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the refund donation to permanent fund which was as per Board Resolution and specific request by the concerned donors. Further, the donations have been refunded by cheque. He submitted that no complaint has been lodged u/s.5 of the Maharastra Educational Institutions (Prohibi .....

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Socio Cultural and Educational Trust reported in 336 ITR 694 he submitted that the Hon ble High Court in the said decision has held that merely because the assessee is an institution which is running professional courses, it could not have been presumed that the amount of donation received to an extent of ₹ 28.30 lakhs was in violation of the Prohibition of Capitation Fee Act, 1984 and/ or attributable to allotment of seats. Further, the sum of ₹ 14,36,500/- which was shown as corpus .....

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to show that the assessee's trust was charging any capitation fee. There is no admission of the respondenttrust on record. The so-called verbal admission during the course of assessment proceedings by the managing director of the trust cannot be relied upon. Neither it can be presumed from mere assumptions that BDS seats are allotted after payment of capitation fee in the absence of any material. Even otherwise, the Assessing Officer has not found any irregularity in the accounts of the tru .....

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ble Public Trust reported in 48 SOT 281. 25. The Ld. Counsel for the assessee submitted that even if the assessee has received capitation fees, if the same is applied for charitable purposes, then the same is not taxable. For the above proposition he relied on the following decisions : 1. ACIT Vs. M/s.Padanilam Welfare Trust - ITA No.1766 to 1772/Madras/2011 order dated 19-06-2012 for A.Yrs. 2002-03 to 2008-09 2. Sadvidya Educational Institution Vs. Addl.CIT reported in (2014) 39 CCH 178 (Bang.) .....

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Vs. M/s. Pentafour Software Employees Welfare Foundation reported in 2008-ITS-3221 wherein it has been held that all the receipts of an assessee cannot be deemed to be income of the assessee for the purpose of income tax. Only those receipts which bear the nature of income can be made exigible to tax. The definition of the word income as given u/s.2(24) is inclusive and is not exhaustive. Donations towards corpus are not falling within the ambit of the definition of income. This is a capital rec .....

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AA of the I.T. Act. However, in the order dated 27-03-2015 passed u/s.143(3) r.w.s.147, the AO, after considering the reply given by the assessee has dropped the 147 proceedings and accepted the returned income at NIL. A copy of the same is placed at page 233 to 236 of the paper book. 28. The Ld. Counsel for the assessee in another alternate contention submitted that the first proviso to section 12A also applies to the assessee. He submitted that according to the said provision where an applicat .....

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reasons. 29. Referring to the decision of Hon ble Gujarat High Court in the case of CIT Vs. Mayur Foundation reported in 274 ITR 562 he submitted that the Hon ble High Court in the said decision has held that proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee. If this be so, it follows that the assessment cannot be said to be complete and is pending till the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect t .....

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Society vide ITA No.1480/PN/2014 order dated 13-07-2015 for A.Y. 2008-09 submitted that the same is decided in favour of the assessee. He accordingly submitted that the order of the CIT(A) be set aside and the grounds raised by the assessee be allowed. 31. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A). He submitted that there is a direct linkage between donation and admission. Even some of the donors are seeking refund. The AO as well .....

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is one of the pre-requisite for getting 80G deduction certificate. 33. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the trust is running various educational institutes. It filed its return of income declaring total income at Nil. The income and expenditure account furnished by the assessee shows s .....

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held the action of the AO which has already been reproduced in the preceding paragraphs. 34. It is the submission of the Ld. Counsel for the assessee that since the assessee trust was granted deduction u/s.80G in the past so many years and has never claimed exemption u/s.10(23C), therefore, merely because the assessee could not submit the12A registration certificate cannot be a ground to deny benefit of deduction u/s.11 since without such certificate, the department could not have and would not .....

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ees and no complaint has been filed either by any of the donor or the AO himself before the competent authority for violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. It is also the alternate claim of the Ld. Counsel for the assessee that the assessee trust is entitled for exemption u/s.10(23C)(iiiab) since the assessee is existing solely for educational purposes and substantially financed by the Government. 35. We find merit in the above arguments o .....

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ted fact that the assessee trust was getting approval u/s.80G from time to time in the past. From the various orders placed in the paper book we find that exemption u/s.80G of the I.T. Act was granted to the assessee trust vide order dated 31- 01-1998 for the period 01-04-1995 to 31-03-2000. The said order bearing No.Pn-165/T-44/95-96 dated 31-07-1995 is placed at page 187 of the paper book. Similarly from the order of the CIT granting exemption u/s.80G of the Act vide order No. Pn/T-II/80- G/P/ .....

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./12A/80G/23/33/2007-08 dated 04-12-2007 has granted benefit of section 80G to the assessee trust for the period from 01-04-2006 to 31-03-2009. We find for denial of exemption u/s.80G by the CIT for want of production of certificate u/s.12A the assessee filed an appeal before the Tribunal and the Tribunal vide ITA No.915/PN/2010 order dated 30-12-2011 restored the matter to the file of the CIT directing him to examine the issue. We find the CIT-II, Pune vide order No. PN/CIT-II/HQ/80G/PESCS/2014 .....

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iation has directed the concerned CITs under his jurisdiction that in deserving cases the production of certification u/s.12A may not be pressed for. The relevant order of the CCIT is reproduced as under : To The Commissioner of Income Tax-I/II/V, Pune Sir, Sub : Grant of renewal of exemption u/s.80G - Reg. Kindly refer to the above. 02. In this matter, I am directed to inform that this office has received a petition from The Poona Blind Men s Association, Pune a renowned organization of Pune, w .....

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facts of the case, it is seen that since the organization is receiving exemption u/s.80G continuously for last 54 years and one of the document required to be submitted for grant of continuance of 80G(5)(vi) is copy of registration granted u/s.12A, it is obvious that the said organization actually holds registration u/s.12A and the fact holds ground that it is registered u/s.12A and the same is presently not traceable, as stated by the applicant. 04. In view of the facts of this case, I am direc .....

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tted fact that the assessee trust has been granted deduction u/s.80G for last so many years. Granting of registration u/s.12A is one of the prerequisite for getting exemption u/s.80G. Unless such 12A certificate has been granted earlier by the department the assessee society could not have been granted deduction u/s.80G. Merely because the assessee trust has misplaced or lost the 12A registration certificate, the same in our opinion cannot be a ground to deny the benefit u/s.11 of the Act to the .....

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Gujarat High Court in the case of Adivasi Kheti Vikas Yojana (Supra) has directed the department to decide the application of the petitioner for issuing duplicate certificate within a fortnight by observing as under : 2. Heard the learned counsels for the parties. The short issue raised by the petitioner claiming to be a public charitable trust is that it applied for registration under the provisions of the Income-tax Act, 1961 under section 12A on 11-1-1989. Another trust, namely, Adivasi Prag .....

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hey have filed returns of their income for the assessment years 1991- 92 to 1994-95 and claimed exemption under sections 11 to 13 of the Act and which have been accepted by the revenue. However, for the assessment year 1995-96, the ITO demanded production of the certificate of registration under section 12A. As the same is not traceable, the petitioner has applied for issue of duplicate certificate. However, no response has been received from the revenue. 3. The learned counsel for the revenue u .....

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the respondents are directed to decide the application of the petitioner for issuing duplicate certificate within a fortnight If it is found that by any inadvertence no order actually has been made on the application dated 11-1-1989, the same may now be considered and decided in accordance with law, also within this period. 38. Since in the instant case nothing has been brought on record that the certificate u/s.80G was not granted to the assessee in the past and since registration u/s.12A is on .....

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tion 11 is due to violation of provisions of section 11(1)(d) since the assessee according to the AO has received donation of ₹ 3,05,16,500/- for A.Y. 2008-09 for giving admission against management quota seats and that the donations are not voluntary and hence were in violation of provisions of section 11(1)(d). It is the submission of the Ld. Counsel for the assessee that the trust is not being run on commercial lines. The submission of Ld. Counsel for the assessee that the money collect .....

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on of Capitation Fee) Act, 1987. The AO has also not complained to the Government authorities for violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. 40. We find a somewhat similar issue had come up before this Bench of the Tribunal in the case of Deccan Education Society Vs. ACIT vide ITA No.1480/PN/2014 for A.Y. 2008-09. We find the Tribunal vide order dated 13-07-2015 (to which both of us are parties) has decided the issue in favour of the assessee .....

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to the Government of Maharashtra for taking any action for violation of The Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. None of the persons who have deposed against the assessee by stating that they had given donation for the purpose of getting admission has complained to the Government for any such violation by the society. It is also to be noted that those persons have filled up the requisite proforma stating that they have given donation to the assessee vo .....

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t of such donation has been siphoned off for the benefit of any of the trustees or related persons. Nothing has been brought on record that any student has been denied admission for not giving donation. Merely because some of the donors stated that they have given the donation for admission the same in our opinion will not disentitle the society from getting exemption which is existing solely for educational purposes and which is otherwise entitled to the exemption. 67. We find a somewhat simila .....

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ted on the ground that the assessee trust did not satisfy the essential conditions for exemption under section 10(23C). For the assessment year 2010-11 and onwards, the assessee was granted approval under section 10(23C)(vi). On a writ petition the single judge allowed the writ petition by setting aside the order passed by the Chief Commissioner under section 10(23C) and directed the authority to decide afresh the proceedings for the assessment year 2008-09 and onwards till the assessment year 2 .....

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on account of the defect in the admission procedure, assessee ceased to exist solely for educational purposes or it existed for the purposes of profit. Further, it was not the case of the Revenue that the students who were admitted were not imparted education in the college in which they were admitted or the admissions granted were fake or non-existent or that the income generated by admitting the students was not used for the purpose of the assessee. The emphasis on the part of the Chief Commi .....

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d spirit, but violation could not lead to its losing the character as an entity existing solely for the purpose of education. Therefore, there, was no interference with the order of the single judge. 68. We find the Pune Bench of the Tribunal in the case of Shikshana Prasaraka Mandali Vs. CIT Central Pune vide ITA Nos.1348 and 1349/PN/2010 order dated 27-03-2014 (where one of us - Accountant Member is a party) while dealing with denial of registration u/s.12A for violation of The Maharashtra Edu .....

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00 students in various fields. The trust was granted registration earlier u/s.12A. However, the Ld.CIT cancelled the registration granted earlier on the ground that the objects of the assessee trust are not genuine since the assessee trust is collecting huge donation from students for admission to the various institutes run by it in violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fe) Act, 1987. The collection of such donations according to him is illegal and ther .....

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first issue on which the Ld.CIT has cancelled the registration u/s.12A, i.e. the assessee society is collecting huge donation from students for admission to various institutes which is in clear violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987, we find there is no such complain before the Government of Maharashtra or AICTE or any other Government Department either by the Income Tax Department or by any of the student/parents stating that the assesse .....

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ta Seats it has collected donation from 9 students and such donation is within the permissible limit prescribed by the Government of Maharashtra and that all such receipts are reflected in the accounts could not be controverted by the Ld. Departmental Representative. 8.4. . . . . . . . . . . . . 8.5 . . . . . . . . . . . . 8.6 . . . . . . . . . . . . 8.7 We find the Hon ble Delhi High Court in the case of Shanti Devi Progressive Education Society (Supra) has observed as under : "26. We have .....

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bank for the purpose of creating additional infrastructure/schools and the three sets of amounts have been addressed only towards the object of creating additional infrastructure and easing the liability of the assessee towards the interest burden of loan repayment. What is pertinent to be taken note of is that there is no finding or allegation of any diversion of these funds for the purpose other than carrying on educational activity. There is no diversion of funds to the individual members or .....

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hat if an institution has to expand, additional infrastructure has to be created, quality education has to be imparted, all these activities require funds. There may be an original corpus of the Society but thereafter the corpus for such activity can be created only through voluntary donations either from any philanthropist or through collection of funds in the process of admission. We are not concerned with the morality of the issue while deciding whether exemption has to be granted. Personal p .....

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es as it seems to suggest that merely because funds were in a private bank, there may have been divergence of funds to the members of the Society. Similarly, the factum of construction being carried out by Ahluwalia Construction Co. (P) Ltd., stated to be a family concern of the President, was not material as there was no allegation of any inflated cost of construction or unreasonable profits being derived from the same by third parties as a mode of divergence of funds." 8.8 We find the Pun .....

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efore the Mumbai Bench of the Tribunal in the case of Ramarao Adik Education Society (supra) wherein the Commissioner of income-tax was considering cancellation of registration on the basis of the plea that the assessee was accepting capitation fee/donations. Following discussion by our co-ordinate Bench is relevant: "48. Now the question is the legal consequence of the assessee accepting capitation fees / donations from students seeking admission to various courses offered by the Instituti .....

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the Commissioner in his order itself that the moneys collected by the Assessee-Trust by way of capitation fees / donations are used for the purpose of not only by the Assessee-Trust but also for other Institutions of similar nature It is to be seen that application of funds for the charitable activities of another eligible Institution amounts to application of funds for charitable purposes. The law has made it very clear that the charitable activities may be carried out directly by an eligible I .....

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be regarding the application of the income of the trust for the specified purposes, which only entitles the assessee to claim exemption. The Court observed that for arriving at such satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application the trust has received income from its property, then find out how the said income has been expended, and whether it can be said that the income is util .....

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nd the character of the activities carried out by an assessee and not the colour and nature of the sources out of which necessary funds were collected by the assessee. In other words, the source of funds is not an important ingredient in assessing the character of the activities carried on by a Charitable Institution. The Allahabad High Court in the case of CIT Vs. Red Rose School [163 Taxmann 19] has held that educational activities carried on by a Society are for charitable purposes and not ag .....

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gistration." On the basis of the aforesaid decision of the Tribunal, which has been rendered after considering the judgments of the Hon'ble Karnataka High Court in the case 11 of Sanjevamma Hanumanthe Gowda Charitable Trust (supra) and that of the Allahabad High Court in the case of CIT v Red Rose School 163 Taxmann 19 (AIL), it is quite clear that the objection raised by the Commissioner with regard to the receipt of capitation fee/donations are factors to be considered at the time of .....

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Act. We, therefore, deem it fit and proper to set aside the order of the Commissioner and restore the matter back to his file to be examined afresh strictly in terms of the scope of the enquiry envisaged under section 12AA(1) of the Act. 8.9 We find the Pune Bench of the Tribunal in the case of Maharashtra Academy of Engineering & Educational Research (MAEER) Vs. CIT reported in (2010) 133 TTJ (Pune) 706 while adjudicating cancellation of registration u/s.12AA for taking donation and capitat .....

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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 s. 12AA(3) was retrospective or prospective in nature. Rather we can make an observation that this issue stood answered by Co-ordinate Benches. We want to express that earlier to this section there was no guidelines in the statute for refusal of registration, therefore it was considered eminent to introduce in the statute the said proce .....

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the present case the objects are to undertake, to run and to improve the educational institution for imparting education in divergent fields; deliberated upon ante. 11.2 In any case we have to examine the purpose of enactment of ss. 12A, 12AA and 12AA(3), viz-a-viz ss. 11 and 12. While reading several case laws as cited supra an important point of view of the Hon'ble Courts have come to our notice that mere registration under s. 12AA would not by itself be a ground for exclusion of such an .....

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seek, rather obtain, a registration under s. 12AA if such trust intends to have the benefits of the exemption as prescribed under ss. 11 and 12 of the Act. It is not the other way round that the benefit of ss. 11 and 12 shall be automatic once the registration is granted. Thus the outcome is that these provisions make it clear that if the trust is not registered under s. 12AA it would not be able to claim any exemption or exclusion of its income from the total income of the previous year, even i .....

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atute, 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 CIT is conferred with the .....

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. 1st Oct., 2004 which gives power of cancellation of registration to the CIT, 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 CIT cannot exercise the power of cancellation of registration. To overcome this hurdle this sub-section is incorporated and now in operation. Naturally these powers are conferred with a view to en .....

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ly laid down the procedure of registration and this section nowhere speaks that while considering the application of registration, the CIT shall also look into the procedure of earning of income and sources from where receipts are derived. The argument was, it also does not speak anywhere that while considering the registration the CIT shall also see the manner in which the receipts or the income is being spent by the trust. To our humble understanding of various related provisions, the power of .....

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that the objects as also the activities should not be prima facie against the basic structure for which beneficial law is made and also be not in conflict with the general public utility. Naturally an institution if established 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 .....

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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 CIT shall restrict the enquiries as to whether the trust is actually and whole heartedly performing all the duties and activities for which it was created. On .....

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bother himself about the other provisions of the Act and supposed to confine himself to the procedure of registration as laid down therein. For this view, we draw support from the order of the respected Co-ordinate Bench Tribunal, New Delhi pronounced in the case of Aggarwal Mitra Mandal Trust vs. Director of IT (Exemption) (supra), a portion reproduced below (p. 186 of paper book) : "............In this situation, if the registration applied for under s. 12A is not granted to it for viola .....

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contrary, the phraseology of s. 13, as already discussed, makes it explicitly clear that the said provisions become operative or relevant only at the stage of assessment when the AO is required to examine the claim of the assessee for benefits under s. 11 or s. 12 while computing the total income of the assessee of the relevant previous year. The application of s. 13 thus falls within the exclusive domain of the AO and the provisions contained therein can be invoked by him while framing the ass .....

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on. Strange enough there is no finding recorded by the learned CIT 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 .....

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edents cited from the side of the appellant we come across a decision of a respected Co-ordinate Bench Tribunal, Kolkata pronounced in the case of Kalinga Institute of Industrial Technology (supra) and have found that almost on identical situation, as in the present appeal, it was held that consequence upon a search while the assessment proceedings are pending a cancellation of registration by invoking s. 12AA(3) is a premature action on the part of CIT, because it is expected from him to take p .....

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CIT (ITA No. 61/Asr/2006 order dt. 1st Sept., 2006) (supra); cited in support of the argument that firstly the CIT has been vested with the powers vide s. 12AA(3), inserted w.e.f. 1st Oct., 2004, to enquire about the genuineness of the activities of a trust and to satisfy himself that such activities are being carried out in accordance with the objects of the trust. Secondly in case of dissatisfaction he is empowered to cancel the already granted registration. Thirdly in case it is found that th .....

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thin these parameters. But the basic question is that before stepping towards the cancellation of registration the heavy burden is on the learned CIT to conclusively demonstrate that all had gone haywire i.e., objects are meant for personal benefits; that engaged in immoral activities 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 t .....

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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 CIT's stand that the income earned by assessee as licence fees, consent fees and testing charges are receipts in consideration of ren .....

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testing charges and licence fees are not also towards rendering of any services of pollution control either. These are not the services with a profit motive but essentially only to recoup the cost of getting the samples tested or processing of licences. In any event, these activities, if these can be at all be construed as rendering of services, these are wholly subservient to the public utility objective of pollution control, and, it cannot be anyone's case that even though the State Pollu .....

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n the CIT is satisfied that (a) the activities of the trust or the institution are not 'genuine'; or (b) the activities of the assessee are not being carried out in accordance with the objects of the trust or the institution. There cannot be any other legally sustainable reason for cancelling or withdrawing the registration granted under s. 12AA. By no stretch of logic, the activities of the assessee can be said to be not genuine and the assessee is admittedly pursuing the objects for wh .....

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arned CIT has extensively referred to as to why the assessee is not eligible for exemption under s. 11 as the activities of the assessee cannot be said to be for 'charitable purposes' defined under s. 2(15), but then this aspect of the matter is relevant for the assessment proceedings and not in the context of exercise of CIT's powers under s. 12AA(3). The impugned order passed by the learned CIT is thus vitiated in law on this count as well. 20. For the detailed reasons set out abov .....

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ty of s. 12A of the Act. 11.11 As far as the objective of the appellant is concerned this is not the case of the Revenue that the assessee was not imparting education. As we know the term education means to teach subjects to students for the development of his mind and also to equip students to deal with reality. The training process is either theoretical or practical but student has to be taught the essentials of the selected subjects so as to develop his skill and knowledge for the subjects st .....

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hus the Revenue Department has hopelessly failed to establish that there was any illegal activity or infringement of any law so that to doubt the genuineness of the activities. If it was so then it can be held that the allegations of the Revenue as discussed above, remained unsupported thus deserves our dismissal. 11.12 Based upon the facts of this case, we now sum up above discussion; the sine qua non for cancellation of registration are two conditions prescribed in s. 12AA(3) needs to be satis .....

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he 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 AO. We are afraid about the ramification if we approve the action of learned 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 for creation of the trust was defeated. Rather we wonder that what purpose does it serve to Revenue by cancel .....

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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 AO 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 CIT to enter in .....

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plemented correctly and efficiently then there is no scapegoat for an offender. We are tempted to write an idiomatic language due to the sensitivity of the issue, that a CIT cannot be allowed to hold a baton of morality in his hand to hit an immoral; but the statute has given him a flexible stick for inflicting tax on defaulter; that includes a trust or educational institution. The gist is that if the CIT had an information of some wrongful means of earning fees in the form of a donation or the .....

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nder law. However presently the situation is that the Revenue has not said about any immoral activity of the appellant or the collection of fees was by wrongful means; hence deregistration sans our approval. Nevertheless the list of fifteen cases, as highlighted by learned CIT, lack desired positive finding as it was left blank on the excuse that even the other authorities could not lay their hands on alleged defaults so it was also difficult for the Revenue authorities to trace the correct posi .....

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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 learned CIT so as to even vaguely demonstrate that the activities of the appellant were not genuine or .....

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n institution must bear the consequence of cancellation of registration since ipso facto infringed s. 12AA(3) condition. Second aspect is, that though the donations received are meant to fulfill the objects but together with fees have infringed Anti Capitation Prohibition Act; then comes within the clutches of that Act but definitely not under s. 12AA(3) provisions. The third aspect is, that the donation plus fees do not exceed the prescribed limit of Anti Capitation Fee Act i.e., five times the .....

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ed decisions, we hold that the finding given by the Ld.CIT that the assessee was collecting huge donation for admission of students to various institutes run by it in violation of provisions of Maharashtra Educational institutions (Prohibition of Capitation Fee) Act, 1987 for which the activities of the assessee trust are illegal and therefore the activities are not genuine is not correct. Further, the conclusion of the Ld. CIT that the institutes are being run on commercial lines with profit mo .....

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law. In this view of the matter, we hold that the Ld. CIT is not justified in cancelling the registration u/s.12A of the I.T. Act, 1961. We accordingly set-aside the order of the Ld.CIT and direct him to grant registration u/s.12A of the Income Tax Act. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed. 69. Although the above decision was rendered in the context of denial of registration u/s.12A of the I.T. Act we find the issue there was also denial of .....

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CIT while deciding an identical issue where assessee trust was collecting voluntary contributions, donations against building fund, development fund against admissions under Management Quota for which exemption u/s.11 was denied by the Assessing Officer has held as under (Head Notes) : Charitable or religious trust-Exemption u/s 11-Assessee-trust was a registered Society and ran several educational institutions in city of Mysore starting from nursery to PUC-Assessee trust was also registered u/s .....

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in assessee's premises and certain books and documents containing details of student wise donations collected by way of DDs and donation receipt books for admissions given during FYs 2005-06 and 2006-07 relating to fees and alleged donations collected from students who got admissions into the schools/college run by the assessee were impounded and statement of secretary of assessee was also recorded-AO observed that assessee was collecting voluntary contributions/building fund/development fun .....

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sued receipts acknowledging said amount towards building fund and made requisite entries in the books and deposited same in the bank, requirement of section 11(l)(d) is fulfilled- Assessee was running several Schools starting from nursery to PUC and said fact has been endorsed by AO-No question of assessee collecting 'capitation fees' in guise of 'building fund or development fee-Further voluntary contributions received were for the specific purpose of 'building fund or developme .....

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were in violation of the norms subscribed by the State Government, the application of the funds were towards the objects of the assessee trust and as such, there was no violation of s.13 of the Act as ascribed by the Revenue, The assessee had obtained the signatures of the parents of the successful students in preprinted letters without giving the details of amounts' donated, date of contributions etc., but contained the donors' names and their addresses. However, the assessing authority .....

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nds-Violation of Prohibition of Capitation Fees Act cannot be a ground to take away the registration of a charitable organization-Capitation fee per se is not in the nature of illegal income-There is nothing to show in the seized materials that the assessee had made any profit out of the activities carried on by it and any portion of that profit has been enjoyed by any of the trustees or the relatives. Surplus funds of the assessee-trust year to year have been used only for the purposes of furth .....

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estigation into the sources of 72. We find the Hon ble Supreme Court in the case of M/s. Queen s Educational Society vs. CIT vide Civil Appeal No.5167/2008 order dated 16-03-2015 has approved the decision of the Hon ble Punjab and Haryana High Court in the case of Pine Grove International Charitable Trust Vs. Union of India reported in 327 ITR 73 has observed as under : 23. The Punjab and Haryana High Court, by the impugned judgment dated 29th January, 2010 expressed its dissatisfaction with the .....

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The third proviso to Section 10(23C)(vi) is not applicable to the cases falling within the purview of Section 10(23C)(iiiad). Secondly, the judgment rendered by the Uttarkhand High Court runs contrary to the provisions of Section 10(23C)(vi) of the Act including the provisos thereunder. Section 10(23C)(vi) of the Act is equivalent to the provisions of Section 10(22) existing earlier, which were introduced with effect from 1st April, 1999 and it ignores the speech of the Finance Minister made be .....

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of Children Book Trust (supra), it lost sight of the amendment which had been carried out with effect from 1st April, 1999 leading to the introduction of the provisions of Section 10(23C) of the Act. Lastly, that view is not consistent with the law laid down by Hon'ble the Supreme Court in American Hotel and Lodging Association Educational Institute (surpa). It then summed up its conclusions as follows: 8.13 From the aforesaid discussion, the following principles of law can be summed up:- ( .....

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The provisions of Section 10(23C)(vi) of the Act are analogous to the erstwhile Section 10(22) of the Act, as has been laid down by Hon'ble the Supreme Court in the case of American Hotel and Lodging Association (supra). To decide the entitlement of an institution for exemption under Section 10(23C)(vi) of the Act, the test of predominant object of the activity has to be applied by posing the question whether it exists solely for education and not to earn profit [See 5-Judges Constitution B .....

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titution, the prescribed authority can grant approval subject to such terms and conditions as it may deems fit provided that they are not in conflict with the provisions of the Act. The parameters of earning profit beyond 15% and its investment wholly for educational purposes may be expressly stipulated as per the statutory requirement. Thereafter the Assessing Authority may ensure compliance of those conditions. The cases where exemption has been granted earlier and the assessments are complete .....

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is entitled to exemption and would not constitute part of the total income. (4) The educational institutions, which are registered as a Society, would continue to retain their character as such and would be eligible to apply for exemption under Section 10(23C)(vi) of the Act. [See para 8.7 of the judgment-Aditanar Educational Institution case (supra)] (5) Where more than 15% of income of an educational institution is accumulated on or after 1st April, 2002, the period of accumulation of the amou .....

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Allahabad High Court rendered in the case of City Montessori School (supra) lays down the correct law. And finally held: 8.15 As a sequel to the aforesaid discussion, these petitions are allowed and the impugned orders passed by the Chief Commissioner of Income Tax withdrawing the exemption granted under Section 10(23C)(iv) of the Act are hereby quashed. However, the revenue is at liberty to pass any fresh orders, if such a necessity is felt after taking into consideration the various propositi .....

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Punjab and Haryana High Court view, following the judgments of this Court in the Surat Art Silk Manufacturers Association Case and Aditanar Educational Institution case as follows: …..The fact that the Petitioner has a surplus of income over expenditure for the three years in question, cannot by any stretch of logical reasoning lead to the conclusion that the Petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that the Petitioner exists for profi .....

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rovement of infrastructure. With the advancement of technology, no college or institution can afford to remain stagnant. The Income-tax Act 1961 does not condition the grant of an exemption under Section 10(23C) on the requirement that a college must maintain the status-quo, as it were, in regard to its knowledge based infrastructure. Nor for that matter is an educational institution prohibited from upgrading its infrastructure on educational facilities save on the pain of losing the benefit of .....

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sively to deny exemptions. So long as the institution exists solely for educational purposes and not for profit, the test is met. 25. We approve the judgments of the Punjab and Haryana, Delhi and Bombay High Courts. Since we have set aside the judgment of the Uttarakhand High Court and since the Chief CIT s orders cancelling exemption which were set aside by the Punjab and Haryana High Court were passed almost solely upon the law declared by the Uttarakhand High Court, it is clear that these ord .....

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asten to add that the 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditi .....

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ected donations from only 1217 students out of which only 23 persons had admitted to have given donations for admission. We find out of the above 23 persons only 6 were available for cross examination. We find the relatives or parents of the students have filled up the declaration stating that they have given voluntary donations to the institutions, even some of them claimed deduction u/s.80G also. Nothing has been brought on record that any such amount of donation has not been accounted for in .....

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r violation of the Act. Assessments of the trust have been completed in the past accepting the exemption u/s.10(23C) of the Act. Therefore, we find no reason to deviate in absence of any evidence brought on record for denying the exemption claimed u/s.10(23C) for the year. So far as the decision relied on by Ld. Departmental Representative is concerned, the same in our opinion is not applicable to the facts of the present case which was in context of section 10(23C)(iiiad). In view of our reason .....

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neither any of the donor nor the AO has lodged any complaint before the Government authorities for violation of the Act, therefore, the revenue authorities in our opinion are not justified in denying the exemption u/s.11 of the I.T. Act to the assessee on the ground of violation of provisions of section 11(1)(d) of the I.T. Act. We accordingly set aside the order of the CIT(A) and direct the AO to allow the claim of exemption u/s.11 of the I.T. Act. Grounds raised by the assessee are accordingly .....

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lant. The learned CIT(A)-II and the learned AO ought to have appreciated that the appellant is a bonafide Charitable Trust solely engaged in education. 2. The learned CIT(A)-II, Pune erred in law and on facts in upholding AO's contention that the appellant is not eligible to claim exemption u/s 11 of the ITA, 1961 in the absence of 12A Registration certificate. The learned CIT(A)-II, Pune ought to have considered the genuine and bonafide cause of education for which the appellant exists for .....

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