TMI Blog2018 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... he trust deed and in terms of the objects set out therein, schools and colleges are being run and educational institution are being run, nothing more requires to be established to show that the trust in question is a genuine trust. The registration under section 12AA is only fait accompli to the objects of the institution. The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be life time guarantee that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. Various findings as demonstrated by the Ld Counsel too were recorded in total ignorance of facts available on records. - Decided in favour of assessee - ITA No.406/Agra/2018 - - - Dated:- 27-9-2018 - Shri A.D. Jain, Judicial Member And Shri Dr. Mitha Lal Meena, Accountant Member For the Appellant : Shri Prem Gul, CA For the Respondent : Shri Rajshri Dwivedi, CIT D.R. ORDER PER DR. MITHA LAL MEENA, A.M.; This appeal by assessee is filed against the order dated 10.05.2018 passed by the Ld. CIT(Exemption) Lucknow, rejecting its application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial available on record it is found that the applicant is doing a pretence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, I do not find the case fit for grant of registration u/s 12A(1) of the Income tax Act, 1961. 12. Accordingly, the registration sought by the applicant u/s 12A(1) of the Income tax Act, 1961 is hereby rejected. 3. The Ld. A.R of the assessee submitted that various findings recorded in the impugned order are wrong, opposed to the facts and material on record and that observations made therein are based on conjectures, surmises, without due consideration of the facts of the case and having regard to relevant considerations for grant of registration under section 12AA of the Act and therefore, according to him the impugned order is unsustainable both on facts and in law. Drawing our attention to the submission made before Ld. CIT(E) it was submitted by the Ld. A.R that the undisputed facts of the case are that the appellant is Society, engaged in running and maintenance of Fateh Chand Inter College, Tota Ka Tal, Lohamandi Road, Agra. The School was started in the year 1919 and got recognition of High School in the year 1948 and, subsequently got recognition for Intermediate classes in the year 1954 by the State Government of U.P. The College is fully aided by the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the same has not been shown in the Income Expenditure Account of the Society. The Ld. A.R stated that again the Ld. CIT(E) went wrong in rejecting the application on this ground. Ld. A.R invited attention to Letter dated 15.05.2018by which it was submitted before the Ld. CIT(E) that the college is aided by the Government of U.P and no fee is charged by the Society. Very nominal fee is charged by the College which is deposited in Bank Account of College operated under the directions of Director of Inspector of Schools which is a Department of the State of U.P. The Bank Account and affairs are subjected to Audit by the Auditor General, Allahabad and the funds are not available at the discretion of the Society. He also submitted that allegation of charging huge fee is based on total misreading of the evidences as brought on records by the Society before Ld. CIT(E) wherein vide PBP-61 it was shown that the School Fee for students studying in Class9th and 10th is ₹ 443/- annually and from students studying in Classes 11th and 12th it was ₹ 501/- in the year 2017-18. 7. Replying to objection raised by the Ld. CIT(E) that no books of accounts were produced before Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther not being spent for charitable purpose or such institution is earning profit. The language used in the section only requires that activities of the trust or the institution must be genuine, which accordingly would mean that they are in consonance with the objects of the trust/institution, and are not mere camouflage but are real, pure and sincere and not against the proposed objects. The profit earning or misuse of the income derived by charitable institution from its charitable activities may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. [Para 34] 11. Similar view was reiterated by the Jurisdictional High Court in the case of CIT Vs Babu Ram Education Society (2018) 96 taxmann.com 606 (Allahabad) wherein at the instance of the Department order passed by the Agra Bench of the ITAT was put up for judicial scrutiny before the Hon ble Allahabad High Court. The Hon ble Court held as under: Section 12A of the Income-tax Act, 1961 - Charitable or religious trust - Registration of (General) - Whether registration of trust does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tothe registration under section 12AA of the Act. As set out above, even if theregistration is granted, the exemption from the provisions of the Income Tax Act inparticular sections 11 and 12 are not automatic. It is only when the assessee satisfiesthe requirement of section 13, he would be eligible for exemption. That is a matter tobe gone into by the Assessing Authority in respect of the returns filed every year and ifaccording to them there is misappropriation of funds and it is hit by section 13 of theAct, certainly, they can deny the benefit of exemption. But that is not a ground todeny the registration in the instant case under Section 12AA, when admittedly thetrust has been established to run schools and colleges for imparting education, whichis a charitable purpose. In that view of the matter, we do not see any merit in thisappeal. The substantial question of law framed in this appeal is answered in favourof the assessee and against the revenue. Accordingly, the appeal is dismissed. 14. Hon ble Madhya Pradesh High Court in the case of CIT vs. D.P.R. Charitable Trust reported in (2011) 61 DTR 410, held in the said decision that while considering the application u/s 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained. From perusal of cl.(3) of the trust deed we find that the objects of the trust are charitable in nature andare in tune with s. 2(15) of the Act and, therefore, the Tribunal rightly opined that theorder of the CIT rejecting the application under s. 12A was unjustified. 15. The Hon ble Kerala High Court in the case of Sree Anjaneya Medical Trust vs. CIT reported in (2016) 382 ITR 399, has held that while granting registration u/s 12A only genuineness of trust is to be examined and no examination of application of funds or ethical background of settlors called for at that stage. It is clear from a plain reading of sections 12A and 12AA that what is intended thereby is only a registration simpliciter of the entity of a trust. This has been made a condition precedent for the claiming of benefits under the other provisions of the Act regarding exemption of income, contribution, etc. No examination of the modus of the application of the funds of the Trust or an examination of the ethical background of its settlers is called for while considering an application for registration. The stage for consideration of the relevance of the object of the Trust and the application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee trust did not produce the books of account, bills and vouchers etc. for verification of the ld. CIT for which the ld. CIT held that the assessee society is not carrying out any charitable activities. Due to non-compliance of assessee society, the genuineness of the activities could not be verified. The ld. CIT, therefore, relying on various decisions including the decisions which have been relied on by the ld. CIT in the present case, rejected the claim of registration u/s 12A(1) of the I.T. Act. When the matter travelled to the Tribunal, the Tribunal allowed the claim of registration by holding that at this stage on granting registration u/s 12A the ld. CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption u/s 11 of the I.T. Act. 18. The said view has also been adopted by this Bench in the case of Rasee Educational Institute Vs CIT(Exemption) Lucknow in ITA No. 462/Agra/2017 wherein vide order dated 30.07.208 similar view was adopted where identical objections were raise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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