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2018 (3) TMI 809

e as to whether the objects are charitable in nature, and also to see whether the activities are genuine or not. Examination of the genuineness of the activities would mean to see that the activities are not by way of camouflage or bogus or artificial and whether these are in accordance with the objects of the institution. The scope of such enquiry does not extend beyond that point. - The registration granted by the Commissioner does not extend any exemption to an institution under section 11, except to the fact that such registration is mandatory for claiming exemption under section 11. Meaning thereby, exemption under section 11 can be availed of by institutions which are genuinely engaged in ‘charitable activities’. However, benefit of section 11 is subject to application of income for charitable activities and the Assessing Officer is well entitled to see whether such application has been done and the other conditions of section 11 have been complied. - The registration under section 12AA is only fait accompli to the objects of the institution [‘ACIT vs. Surat City Gymkhana’, (2008 (4) TMI 16 - SUPREME COURT)]. The activities of an institution, though genuine at the t .....

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#8377; 3,90,45,107/-, ₹ 4,20,03,995/- and ₹ 5,22,62,020/- respectively in the FYs mentioned above. Clearly a substantial amount is being levied as fee on commercial basis without providing any element of charity to the Society. In spite of the fact that huge sum is being levied as fee over past years none of the debit heads directly relate to any objects set forth in the memorandum of the society. Huge profits is being made via running an educational institute on commercial lines and channelizing the profits earned for augmenting the business without giving any element of charity to the public at large. It is worth noting that the gross receipts of the applicant for each of past three is well above the ceiling of ₹ 1 Crore and since receipts upto only ₹ 1 Crore are covered u/s 10(23C)(iiiad), it was expected of the applicant to have filed the ITRs in time and remitted the due taxes to the government but till date no tax has been paid and no ITR has been filed by the applicant which again places a question mark on the so claimed pious intentions of the applicant. Any institute that claims to exist for charitable or philanthropic purposes is expected to have i .....

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aid expenses were actually incurred by the society but unfortunately the applicant failed to prove the same. This clearly establishes that the activities as claimed to be carried out are not genuine and it that case the applicant fails to pass the test mandated by law for formation of satisfaction mandated by law for according registration. In addition to that no photograph or any other corroborating evidence has been provided by the applicant for any charitable initiatives/programmes. Merely declaring a set of lofty ideals with pious intentions is not enough for according the said recognition. It is only when acts of charity are established by cogent evidences like vouchers and production of books that an institution can be awarded the recognition of pursuing genuine charitable activities. The fact that needs consideration here is that despite providing ample opportunities the applicant has not been able to show case even a single voucher with respect to any activity as claimed to be carried out in addition to that the applicant society has not provided books of accounts despite ample opportunities being tendered. The consistent failure on the part of the applicant to bypass the p .....

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nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof in the case of a trust for charitable purposes or a charitable institution if the trust or institution is created for the benefit of any particular religious community or caste. From the above mentioned object it is quite clear that the applicant society is primarily involved in benefitting a set of distinguished individuals belonging to the Agrawal community. The proof of burden lay on applicant society to prove that the beneficiaries of its pursuits was general public and not a set of distinguished individuals belonging to Agrawal community but the applicant failed to prove the same. The applicant has declared that its focus lies on a set of people not distinguishable from a specified set of individuals and this is where the provisions of section 13(1)(b) get attracted for the applicant. The important thing to note here is that the aforestated object has catered to the benefit of a distinguished set of individuals belonging to the Agrawal community and not the general public at large. This act of the applicant society stands in .....

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nce of charity. Charity is soul of the expression charitable purpose . Mere declaration of objects is not sufficient for according registration u/s 12A(1) of the Income-tax Act, 1961. Genuineness of the activities of the society is an essential ingredient for formation of satisfaction mandated by law. The applicant society has failed to prove the genuineness of the activities which it claims to be carrying out. In light of the above facts, the applicant has not made a case for granting registration u/s 12A(1) of the Income tax Act, 1961. 7. Reliance is also placed on the Hon ble Delhi High Court s judgment in the case of Kirti Chandra Tarawati Charitable Society vs. DIT (Exemption) 232 ITR 11 in which it was held that there is no obligation on the CIT to grant registration merely by looking at the instrument creating the Society and shutting eyes on the actual activities carried out by it. On the perusal of Society s Memorandum it is seen that there are several objects. However, failure on the part of the applicant to corroborate them with satisfactory evidences places fatal allegation on genuineness of the activities of the applicant. It clearly proves that the applicant has done .....

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ordingly, the registration sought by the applicant u/s 12A(1) of the Income tax Act, 1961 is hereby rejected. 3. The ld. CIT(E) has observed that only part reply was filed by the assessee before him. In this connection, letter / notice dated 12.08.2017 had been sent to the assessee, raising specific queries. A Copy of this notice is contained at APB 6-7. It reads as under: Sl. No. Description 1. Photocopy of PAN card and evidence of filing return of income for last three years. 2. A declaration that no part of the income of the Society ensures, directly or indirectly to the benefit of any person specified in Section 13(1)(c) of the Act and that no part of the income or property of the Society was ever used or applied for the benefit of any person specified in section 13(1)(c) of the Act , duly signed by Authorized Signatory. 3. A note specifying the main area of your charitable/religious activities and a projection/plan of the main charitable/religious activities to be undertaken in next two years. 4. Please attach a No Objection Certificate from the owner of the premises along with proof of his ownership or owned by the Society 5. Please attach certified copy of annual accounts si .....

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ation certificate under section 12A/10(23C) of the Act . 20. Please produce copy of bank statement/pass book as on date 21. Please produce all relevant papers/documents/registers/ books of accounts, bill/vouchers in original for verification. 22. Name of Society/Trust/Section 8 company, where any of your Member/Trustee is in that Society/Trust/Section 8 company with its PAN and copy of 12A/80G/10(23C), if any. 23. Please explain whether any funds have been set apart/accumulated during last 3 years for any specific object of the trust as required under provisions of section 11(2) of the Act , if so please details thereof. 4. A perusal of the above reply shows that the assessee duly responded to all the twenty three queries raised by the ld. CIT(E). Even as per the impugned order, no other question was raised. Thus, the ld. CIT(E) is wrong in observing that only a part reply was filed, without mentioning as how it was so and as to which query remained unanswered. 5. The ld. CIT(E) has observed that the assessee did not file ITRs till the date of passing of the impugned order, i.e., 19.09.2017. However, as at APB 18, 20 and 21, the assessee has filed acknowledgement evidencing E-filin .....

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being against the record. 9. On merits, the CIT(E) has referred to one of the objects of the assessee, i.e., Sarv Sadharan Mei Our Vishestaya Agrawal Samaj Mei Upyukt Shiksha Ka Prachar Karna . He has interpreted this object to mean as for the benefit of a set of distinguished individuals belonging to the Agrawal Community. This conclusion is evidently wrong, as the object itself starts with the words Sarv Sadharan , which expression undeniably translates to mean general public . Read as a whole, this object is specifically directed towards the public in general, while it includes the Agrawal Community. Moreover, a perusal of the above details filed makes it clear that no expenditure was incurred by the assessee for the benefit of the Agrawal Community. There has, thus, not been any discrimination in the imparting of education as per the objects of the assessee. Moreover, no query in this regard was ever raised and the material placed on record by the assessee has not been taken into consideration by the ld. CIT(E). As such, this objection of the ld. CIT(E) is not sustainable as being based on no evidence brought on record to support it. 10. In the above facts, the case laws relied .....

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, the eligibility for claiming exemption ought to be tested on the touchstone of the provisions of section 13. In the instant case, it being established that the respondent-trust is a public charitable and religious trust eligible for claiming exemption under Section 11, it becomes relevant to test it on the anvil of Section 13. X X X 49. In the present case, the objects of the respondent-trust are based on religious tenets under Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent-trust would clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of Section 13(1)(b) of the Act. 14. In the case of Shri Dhakad Samaj (supra), the ratio decidendi was that the requirements of section 11 were not met. The concluding paragraph of the order reads as under :- In the application of the appellant, before the Commissioner of Income-tax, the .....

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Thus, the restriction with regard to activity in the nature of trade, commerce or business is restricted to only advancement of other object of general public utility and not with regard to any other activity, i.e., relief to poor , education , yoga , etc. This view has been specifically reiterated by the Board by issuing Circular no. 11/2008 dated 19.12.2008. In para 2.1 of the Circular it has been stated that where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute charitable purpose even if it incidentally involves carrying on of commercial activities. The objects of appellant being educational, they thus evidence the fact that it is existing for charitable purposes only. 16. The following decisions are eloquent on the issue and have rightly been relied on by the assessee: (i) CIT vs. Red Rose School , (2007) 212 CTR (All) 394. (ii) Kanchan Singh Bhuli Devi Shiksha Prasar Samiti vs. CIT , (2013) 143 ITD 343 (Lucknow). (iii) Pinegrove International Charitable Trust vs. Union of India , (2010) 327 ITR 73 (P & H) (iv) Queen s Educational Society vs. CIT , (2015) 372 ITR 669 (SC). (v) City Montessori School (Regd.) vs. U .....

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