TMI Blog2018 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... f Vidyadayani [2017 (12) TMI 1251 - ITAT DELHI], we set aside the order of the ld. CIT(E) and direct him to grant registration u/s 12AA(1) of the Act. - Decided in favour of assessee. - ITA No. 5617/DEL/2016 - - - Dated:- 30-1-2018 - SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Piyush Kaushik, Adv. For The Revenue : Smt. Aparna Karan, CIT-DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, This appeal filed by the assessee is directed against the order dated 21.07.2016 of Commissioner of Income Tax (Exemptions), Lucknow passed u/s 12AA(1)(b)(ii) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short]. 2. The assessee has raised the following grounds of appeal : 1. That the ld. CIT(E) erred in law and on facts in rejecting the application u/s 12AA(1)(b)(ii) of the Act. 2. That the assessee wants to appear personally on the date fixed for hearing. But he could not get the reservation in the train to Lucknow from Moradabad. Therefore, he could not appear on the date fixed for hearing to produce the required details and documents. Therefore, rejection of application u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r formation of the satisfaction mandated by the assessee is not available and accordingly the assessee failed to fulfill the conditions for grant of registration u/s 12A of the Act. Further, the ld. CIT observed that the assessee has failed to provide sufficient material to corroborate the charitable nature of the objects and genuineness of the activities. Accordingly, he rejected the claim of the assessee. 7. The ld. counsel for the assessee argued that at the stage of granting of registration u/s 12AA of the Act, the ld. CIT is not supposed to examine the application of income but he has to examine only the objects of the society whether the same are charitable or not. In the present case, the assessee has not carried out any charitable activity even till today as per the copies of the balance sheet placed on record in the paper book and, therefore, there is no question of any genuineness of the activity or satisfaction of the ld. CIT with regard to the activities referred to by the ld. CIT(E) 8. As regards the application of income, it is the duty of the Assessing Officer on year to year basis to examine the same. The ld. counsel for the assessee relied on a catena of deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant . 12. From a bare reading of the above provisions of the Act contained in section 12AA(1) of the Act, it is evident that the CIT has to examine the objects of the trust or institution and the genuineness of the activities. Since in the present case there is no activity carried out by the assessee, therefore, there is no question of genuineness and satisfaction of the ld. CIT. Accordingly, the said conditions of section 12AA(1) of the Act become infructuous. The only condition left is satisfying about the objects of the trust or institution which have been reproduced in the present case. The ld. CIT(E) has not brought an iota of evidence to prove that the said objects of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e verified. Relying on various decisions, the ld. CIT rejected the claim of registration sought by the society u/s 12A(1) of the I.T. Act. It is the submission of the ld. counsel for the assessee that at the time of granting of registration the ld. CIT is required only to examine the objects of the trust and is not required to examine the books of account of the trust and it is only during the claim of exemption u/s 11 the Assessing Officer will examine the same and allow or disallow the same as the case may be. It is also his submission that since the assessee trust is imparting education by running various schools and colleges, therefore, it is doing charitable activities as according to him education per se is charitable activity. 13. We find merit in the above submission of the ld. counsel for the assessee. So far as whether education per se is charitable or not, we find the Delhi Bench 9 ITA No.309/Del/2016 of the Tribunal in the case of Shavak Shiksha Samiti (supra) at para 3 has observed as under :- 3. We have considered the facts of the case and rival submissions. Section 2(15) defines the term 'charitable purpose' in an inclusive manner and includes within its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreover as held by the Apex Court in American Hotel Lodging Association Educational Institute (supra) 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. 10 ITA No.309/Del/2016 15. The various other decisions relied on by the ld. counsel for the assessee in the Paper Book also supports the view that education per se is a charitable activity. 16. Now, coming to the powers of the Commissioner as to whether while granting registration u/s 12A he is required to examine the books of account etc. or he is only to satisfy himself regarding the objects of the trust and genuineness of the activities of the trust, we find various courts have held that while granting registration u/s 12A the ld. CIT is required to see only the objects of the assessee trust/society and not to examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration. He is only requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to examine the application of income. 4. The order impugned does not say that the objects of the society are not charitable in nature ; it merely says that they are general in nature. Just because they are general, they do not cease to be charitable. The Commissioner has also observed that no activity has been carried on by the society. It is also not the requirement of Section 12A of the Act. Nor has Section 80Gany relevance at this stage. The impugned order cannot, therefore, be sustained and it is quashed. 18. We find the Hon ble Karnataka High Court in the case of A.S. Kupparaji Brothers Charitable Foundation Trust (supra) has observed as under :- 12 ITA No.309/Del/2016 The certificate of registration is only an enabling provision to claim exemption. By merely granting a certificate income is not exempted. That is only a first stage to claim exemption. The Commissioner of Appeals should not have confused these two aspects and seems to think as the trustees and his family members are treating the property as their own and misutilising the property it is not a genuine trust. When once it is admitted that in pursuance of the trust deed and in terms of the objects set out there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage employed by the legislature in s. 12AA only requires that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the CIT is not required to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of s. 12A r/w r. 17A and whether Form No.10A has been properly filled up. He has also to see whether the objects of the trust are charitable or not. Our view funds support from the Division Bench decision of the Allahabad High Court rendered in the case of Red Rose School (supra) and the decisions in the case of New Life in Christ Evangelistic Association (supra), Fifth Generation Education Society (supra) and Shantagauri Ramniklal Trust (supra). 13 ITA No.309/Del/2016 9. In the backdrop of aforesaid legal position facts of the case may be seen. Admittedly the application submitted by the respondent was in consonance with the procedural requirement prescribed in this regard. From the trust deed which was filed before the CIT the objects of the trust could be ascertained. From perusal of cl. (3) of the trust deed we find that the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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