TMI Blog2013 (5) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Science. (b) To provide means of moral, physical, intellectual and spiritual advancement of men and for that purpose to: 1. To provide assistance to schools and colleges and other educational institutions; 2. Undertake, sponsor, aid projects and research; 3. Establish Libraries; 4. Open vocational training centres and other hobby centres as a means of training men; 5. Support or manage similar institutions; 6. Open Boarding houses; 7. And to do all such other things and acts as may be necessary, incidental, and/or ancillary to the attainment of the said objects. (c) To use the funds/property of the Foundation only for the objectives of the Foundation. 3. The Hon`ble Delhi High Court in the case of Director of Income Tax vs. Shri Ram Education Foundation reported in 262 ITR 164 Delhi held that the assessee foundation was providing financial assistance to educational institutions and comes within the scope of Other Educational Institutions as specified in S.10(22) and is entitled to benefit of S.10(22) of the act. Since its inception, the assessee has claimed exemption u/s 10(22) And u/s. 10(23C) (iiiad), as an institution existing solely for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The charitable activities have to be carried regularly, continuously without any favour to any particular class, caste, religion, colour, creed of society. (iii) There is no rule provided in the MOA w.r.t. allocation of functions and duties of different office bearers. Also there is no rule for membership of society. The members have no admission fee, or periodic subscription prescribed to become member of the society. Further the activities are not regular in nature in as much as only one cheque is issued in favour of one college at the year end. (iv) There is a clear violation of sec.11(5) in the MOA which has a provision to invest in shares/deposits of DCM Ltd. And upon dissolution the surplus is to be uitlised as per the decision of the members of the society. (v) It will not be out of context that the society had been claiming benefit u/s 10(23C) (iiiad) and showing income at Rs. NIL after claiming benefit u/s 10(23C) of the Act, though the foundation was not notified u/s 10(23C) of the Income Tax Act. 6. Aggrieved the assessee is in appeal before us. The LD. Counsel for the assessee Mr. Satyam Sethi submitted that the scope and powers for grant of registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction and it need not be confined to any particular year and that conclusions may be made on broad based enquiries. She relied on the decision of the Delhi High Court in the case of Kanahyalal Punj Charitable Trust vs. DIT(E) reported in 297 ITR 66. She argued that the there is no constant or continous charitable activity undertaken by the foundation as this is case where a yearly donation is given. She also relied on the judgement of Chandrika Education Trust vs. CIT (Ker) reported in 139 CTR 96 and submitted that as a portion of income is used for the investment purpose the registration is rightly denied. In reply the Ld. Counsel for the assessee reiterated his contention that the issue whether there is a violation of S.11 (5) of the Act or not is the domain of the AO at the time of the assessment and certain clauses in the bill were never acted upon, hence the question of disallowance does not arise. 9. Rival contentions heard. On a careful consideration of the material on record and case laws cited, we hold as follows. 10. Clause 8 of the rules and regulations of the foundation which is at page 6 reads as follows:- Clause 8: The Trusteees shall invest any funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hool (2007) 212 CTR 394 (Allahabad) where it is held as follows:- Sec.12AA, read with section 12A, of the Income Tax Act, 1961 - Charitable or religious trust - Registration procedure - Whether registration u/s 12AA does not necessarily entitle assessee to get income excluded from income of previous year for purpose of determination of tax liability, but it only entitles assessee to claim such exemption, which otherwise could not be claimed in absence of registration Held, yes - Whether if trust or institution is not registered u/s 12AA, it would not be able to claim any exemption or exclusion of its income from total income of PY, even if such income is otherwise liable to be excluded under any of clauses of section 11 or section 12 - Held, yes - Whether while considering application of a trust or institution for registration u/s 12AA, Commissioner is required only to see that activities of said trust/institution are genuine and in consonance with its objects; section 12AA does not speak anywhere that Commissioner, while considering application for registration, shall also see that income derived by trust or institution is either not being spent for charitable purpose or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to reject registration, if on facts, there is no violation. 13. Coming to the issue that the assessee does not carry on activities on its own and it only gives funds to one institution to the extent of the deficit, and hence the institution is not carrying on education is no more res integra in view of the decision of Hon`ble Delhi High Court in assessee's own case for the AY 1992-93 and 1994-95. 14. On the argument that the MOA does not provide for allocation of functions and duties of office bearers, we are of the considered opinion that this is not a ground on which registration can be denied u/s.12AA of the Act. The allocation of functions is an internal regulation and does not in any way affect the objects of the concern. Coming to the observation that amounts of the society to the extent of ₹ 85 Laks have been invested in a concern SRF Ltd. in which the founder members have substantial interest, as fixed deposits in violation of sec.11(5), it is an issue which arose during the AY 2006-07 to 2008-09. These FDs have been withdrawn and deposits were made in HDFC Bank Ltd. In the current year nor in subsequent years there is any such violation. In the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X
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