TMI Blog2015 (1) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... retation of the statute. As held by the Apex Court in American Hotel & Lodging Association Educational Institute (2008 (5) TMI 17 - SUPREME COURT OF INDIA) the character of the recipient of the income must have the character of educational institution is to be determined irrespective of the profits. In view of the above we reverse the order of the CIT and direct it to grant registration u/s 12A of the Act. - Decided in favour of assessee - ITA No. 5970/Del/2012 - - - Dated:- 16-1-2015 - SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER For The Appellant : Piyush Kaushik, Adv For The Respondent : Ramesh Chandra, CIT DR ORDER PER A. T. VARKEY, JUDICIAL MEMBER This appeal arises from an orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurring sizable expenditure on advertisement publicity, and on capital expenditure and so the activities of the assessee society is commercial in nature and not charitable. He also stated from the analysis of figures reproduced in the order of CIT itself, it is abundantly clear that the quantum of capital expenditure and expenditure on advertisement and publicity incurred by assessee society varies between 5% to 7% of total receipts which can only be said to be miniscule amount. The year wise percentage of capital expenditure and expenditure on advertisement and publicity to total receipts is as follows:- Assessment Year Percentage of capital expenditure to total receipts Percentage of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or religious activity. Any enquiry of the nature would amount to putting the cart before the hours. At this stage only the genuineness of the objects has to be tasted and not the activities, which have not commenced. The enquiry of the Commissioner of Income Tax at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under section 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. 5. Following the above precedent, it is clear that enquiry at the stage of registration has to be conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the previous year for the purposes of determining the tax liability; it only entitles the assessee to claim such exemption, which otherwise cannot be claimed in the absence of registration. The enquiry by CIT is restricted at the time of 'registration to the activities, which are genuine. Genuineness of the activities of the trust or the institution has to be seen keep in mind the object thereof which means the Commissioner shall satisfy himself to the fact that the activities are genuine and in consonance with the object of the trust or the Institution. In other words it was held that after establishing and running a school set out as object of the society, given in the bylaws, he has to be satisfied that the Society has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the financial year. 8. Applying the foregoing ratio, it is evident that the relevant determinative factor for conferring registration is the object of the society and the quantum of profits/ surplus is an irrelevant factor. In the present case, admittedly and undisputedly appellant society is imparting education. And education per-se is a charitable object u/s 2(15) of the Act. The basis of impugned action to regard the society as commercial at the stage of registration on the basis of expenditure incurred on advertisement and publicity is unwarranted and against the settled interpretation of the statute. Before concluding we also take notice that the ld CIT has relied on the judgment of Hon ble High Court of Uttarakhand in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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