TMI Blog2015 (8) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... law. CIT contention that the assessee had been earning huge profits year after year which showed that it was not running for the purpose of charity does not justify the refusal of registration as profit earning per se has no reflection on the genuineness of the activities of the Trust. In fact it is not the earning of surplus which is relevant but its utilization for non charitable purposes which effects the genuineness of the activities of the Trust. The Supreme Court in Queens Educational Society Vs. CIT [2015 (3) TMI 619 - SUPREME COURT ] has stated that mere surplus does not mean that the institution is existing for making profit. The predominant object test must be applied. - Decided in favour of assessee. - ITA No. 878/Chd/2014 - - - Dated:- 26-8-2015 - Bhavnesh Saini (Judicial Member) And Annapurna Mehrotra (Accountant Member) For the Appellant : Rajiv Saldi For the Respondent : Manjit Singh ORDER Annapurna Mehrotra (Accountant Member) This appeal has been filed by the assessee against the order of the Ld. CIT, Patiala dt. 18/09/2014 under section 12AA of the Income Tax Act, 1961, rejecting the application of the assesse under section 12A(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. 3. That the Ld. CIT Patiala under misconception of facts presumed that the appellant is running a coaching centre which is factually wrong as the Ld. CIT Patiala in his order u/s 12AA has clearly mentioned that the assessee is running B.Sc. Nursing, A.N.M Nursing G.N.M. Nursing College. 4. That the Ld. CIT Patiala has wrongly stated the trust is running for profit only and applied the Hon'ble Uttrakhand High Court reported in 315 ITR page 428 which has already been over ruled by the Hon'ble Jurisdictional High Court in the case of Pinegrow International Charitable Trust and other V/s Union of India 327 ITR page 73 (Paper book). So merely because there is a profit will not render itself ineligible for registration. 5. That the Ld. CIT Patiala has wrongly held that the interest on FDRs is not shown as such maintenance of books is not correct. Whereas no interest was received but there was accrued interest only which was not utilized but remained in the bank as such could not be included in the income expenditure statement. 6. That the receipt of interest on FDRs is not includable in the receipt of education Institution as the annual receipt of Educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered under section 2(15) of the Income Tax Act. The AR further pleaded that despite the fact that there are several objects of the trust but from the very beginning there was no activity other than education, as such there was no application of income of trust till date for any purpose other than education. The AR stated that the CIT had picked up only one object out of the several objects in its trust deed, emphasized upon the same and thereby held the activity of the trust to be non charitable. He stated that coaching may have been stated to be one of the object for which the trust was established but the fact is that the trust has been conducting no activity other than education and therefore it is a charitable trust as per the definition provided under section 2(15) of the Income Tax Act, 1961. The AR stated that the CIT had erred by treating it as a coaching centre. 6. The AR pleaded that merely because it did not show interest on FDRs in its annual receipts, it did not tantamount to non-maintenance of correct books resulting to refusal of registration. The AR stated that in fact no interest was received and the interest only accrued on FDRs . He stated that the same was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the institution, whose objects do not run contrary to public policy and are, in fact, related to charitable purposes, the Ld. CIT is again empowered to make enquiries as he thinks fit. In case the activities are not genuine and they are not being carried out in accordance with the objects of the trust/society or the institution, or course, the registration can again be refused. 9.2 In the present case, one of the reasons for rejecting the application of the assesee for granting registration under section 12AA that has been stated by the Ld. CIT is that the aims and objects of the trust include running of coaching centre which cannot be said to be in the nature of providing education and hence is not charitable. 9.3 A perusal of the Trust Deed of the assesse Trust, filed at Page 19 of the Paper Book, reveals that the assessee trust was established on 28/08/1998 with the following aims and objectives: a) To establish a Guru Nanak Museum and a Research University/Centre to study the ancient Literature at Chandigarh and at other cities of Punjab and outside Punjab and other States of India. b) To promote education amont rural people by establishing the Colleges, Professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those judgments have not been rendered in the context of grant of registration u/s 12AA. In fact those decisions deal only with the issue of grant of exemption u/s 4(3)(i) of the 1922 Act. 9.5 In this case on facts we are convinced that the objects are in the field of education and merely because one of the objects is relating to coaching which has not been pursued so far does not make the objects non-charitable. 9.6 Therefore we do not find any infirmity in these objects as charitable objects. 10. The Ld. CIT has also refused registration u/s 12AA for the reason that since the assesse had not shown interest on FDR's as part of its receipts, so as to avail exemption u/s 10(23C)(iiiad) by showing its total receipts to be below ₹ 1.00 Crores. The accounts of the assessee were not maintained correctly and therefore the activity and affairs of the assessee were not genuine. 11. As stated above, while granting or refusing registration to a Trust the Ld. CIT is only required to examine whether the objects of the Trust were for charitable purpose and whether the activities of the Trust were genuine. The finding of the Ld. CIT that the accounts of the assesse were not co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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