TMI Blog2016 (6) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of u/s 12A with effect from the date when the application was filed by the assessee. The AO is at liberty under the law to examine the aspect of application of income solely for the purpose of education and also to examine that the assessee is carrying out the activity of education only and AO is also permitted to examine compliance of other provisions of the law in this regard and accordingly he may decide about the granting of benefit of exemption at the time of assessment in different years - Decided in favour of assessee - ITA No. 412/Mum/2013 - - - Dated:- 24-6-2016 - Shri Amit Shukla, Judicial Member And Shri Ashwani Taneja, Accountant Member For the Appellant : Shri Madhur Agarwal (AR) For the Respondent : Shri Goli Sriniwas Rao (CITDR) ORDER Per Ashwani Taneja (Accountant Member) This appeal has been filed by the Assessee against the order passed by the Director of Income Tax (Exemption) Mumbai dated 29.11.2012, u/s 12AA(1)(b)((ii) r.w. section 12A of the Act, on the following grounds: 1.The learned Director of Income-tax (Exemptions), Mumbai (DIT) erred in passing an order under section 12AA read with section 12A rejecting appellant&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls (including pre-primary schools), colleges, and educational and vocational training institutes in India. 3.1. The assessee trust filed an application u/s 12A in form No.10A dated 29.05.2012 with the Director of Income Tax (Exemption)-Mumbai for the purpose of seeking registration u/s 12A. It is noted that the aforesaid trust deed was duly registered with the Charity Commissioner of Mumbai on 17.05.2012. The Ld. DIT rejected the application for grant of registration on following two reasons: (i). The assessee is running the pre-school which is stage prior to normal schooling, and therefore, its activities cannot be treated as falling within the gamut of Education as per section 2(15) of the Act. The justification given by the Ld. DIT is that as compared to formal education imparted in course of normal schooling, pre-schooling is a kind of informal education which is not recognized or regulated by the State Government/Education Board/ BMC. (ii). The assessee trust is charging fees for issue of prospects, additional fees on account of supply of School Kit, admissions fees etc. and on the basis of the same Ld. DIT concluded that assessee trust was engaged in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case it was beyond the jurisdiction of Ld. DIT to examine these facts at this stage. It would be domain of the AO to examine whether the receipts from education activity have been applied solely in the activity of education or not. In case the AO is not satisfied, then the legislature has provided all the powers to the AO to deny the benefit of exemption at the time of assessment also. Thus, the Ld. DIT has gone wrong as per law and facts while denying benefit of registration to the assessee and his order may be reversed and registration should be granted. 3.6. Per contra, Ld. DR relied upon the order of Ld. DIT as well as cases relied upon by Ld DIT in his order. 3.7. We have gone through the facts of this case and evidences brought before us and we do not agree with either of the reasons given by the Ld. DIT for refusing the benefit of registration to the assessee trust, in view of our observations and discussion made in following paras . 3.8. Whether Pre-School would fall in the term education as envisaged u/s 2(15): We have gone through the reasoning given by the Ld. DIT and we find that the view adopted by him is not only contrary to law and facts, but we also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities. It is not necessary that there should be holding of regular classes or wholesome educational activities to be only eligible to be called educational activities eligible for benefits under section 11 and 12. As per our understanding, the term education is of wide scope and amplitude, especially in the context of section 2(15). In this fast evolving society, the term education has assumed greater role and significance, then ever. Education has got pivotal role in evolution of a society. Therefore, keeping this crucial aspect in mind, the legislature in its wisdom had decided to place this activity within the definition clause of the term charitable purpose , as per section 2(15) of the Income-tax Act, wherein it has been specifically mentioned that the term charitable purpose includes . education . Thus, the very activity of education itself has been included within the meaning of the term charitable purpose . It may further be seen that activity of imparting education has been specifically included in the definition, thus showing that the intention of the legislature, very clearly, is to promote education, which is further fortified by the fact that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrying out of the activity of education itself is a charitable purpose, then at the stage of granting registration u/s 12A, Ld. DIT is required to examine only the genuineness of the activities of the trust. Thus, the DIT may examine at this stage that activities of the trust are as per the objects contained in the trust deed or its memorandum. He is neither permitted nor obliged under the law, to go beyond that at the stage of registration. 3.11. The second aspect to be examined is whether the amount received or income earned by the assessee from carrying out of the education activities are applied solely for the purpose of education or not. But, since the registration is granted at the very inception of an institution, therefore the law has not put this duty upon the shoulders of the Ld. CIT/DIT. This obligation has been put by the legislature upon the shoulders of the AO who shall examine these facts at the stage of assessment of the trust and in case he is not satisfied with this aspect and find that the income of the trust has been applied for activities which are not permitted under the law, and the same has not been applied for the activities for which registration has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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