TMI Blog2019 (6) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... of application for registration of trust or institution shall have to examine the documentary evidence filed by the assessee along with the application for granting registration. Commissioner can call for any type of documentary evidence or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust or institution. If he has any doubt in his mind then he may also make such inquiries as he may deem necessary. Before granting the registration to any trust or institution, Commissioner should be satisfied about the genuineness of activities of the trust or institution, as the case may be. The trust in the instant case has not produced any evidence to the satisfaction of the CIT (E) about its real charitable character. On the other hand the CIT (E) could prove cogently the non charitable and commercial nature of the work undertaken by the assessee trust. In view of the foregoing discussion no interference is required in the impugned order. Accordingly we uphold the order of the CIT(E). - Decided against assessee. - ITA NO. 426/Chd/2018 - - - Dated:- 1-5-2019 - Sh. Sanjay Garg, JM And Dr. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also held that the heads of expenses as shown in the Income expenditure account for the last two years since inception do not evidence carriage of any activity out of the sixteen point aims objects mentioned in the trust deed of the applicant trust. It has been revealed that the terms of the agreement, the fee structure etc are all aligned to maximising the profits and its sharing between the franchisor and the franchisee. The structure of the trust, its character in terms of trustees etc are all controlled within a family. Lack of representation from other sections doesn t impart the character of an entity amenable to public charity. 7. Based on the submissions of the assessee trust it was held that the Trustees is running a franchise purely on commercial basis with no intent of imparting education to public at large. In the instant case the regulations are predominantly those of the franchisor and aimed to maximize its returns/ receipts from the arrangements. Holding thus the Ld. CIT(E) denied grant of Registration under section 12AA. 8. Before us, the Ld. AR argued that the Trust has 250 students and they belong to different sections of the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Institutions can be opened in any state/ Union territory/Abroad under any name as per resolution passed by the founder Trustees from time to time, to help the poor/needy and intelligent students for their welfare and to spread education in the society at large, special emphasis shall be done for welfare of poor section of the society in addition to the other clauses pertaining to dissolution, donation, properties and application of funds. Regarding the primary aims and objectives like technical education, basic education, higher education, spiritual education the assessee is not found to be undertaking or in the process of undertaking any of the activities mentioned in the trust deed. The only activity the assessee involved is obtaining a franchisee of Zee Learn Ltd. The Franchisee Agreement of the Zee Learn Ltd. undisputedly shows the commercial nature of the activities between the franchisee and the franchisor. The relevant portion of the Franchisee Agreement is as under: (a) It is expressly agreed by the parties that the Franchisee shall be responsible for collecting the annual fees from all Students, at the time of admission on behalf of the Fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s approved in writing by the Franchisor. In the event the Franchisee deviates from the quantum of fees as agreed upon by the Franchisor and the Franchisee, then the Franchisee shall be liable to pay such damages, penalties, losses, etc. to the Franchisee, as may be decided by the Franchisor. (d) The Franchisee shall not offer any credit facilities to any Students. (e) Notwithstanding the above, the Franchisor reserves the right to make amendments, alterations to the collection procedures and to the amounts mentioned in this Agreement, to be followed by the Franchisee from time to time, as situations demand and Franchisee shall execute the same, implement and cooperate in implementing those changes. These may also include directions to collect the Programs fees in the name of the Franchisor and to deposit the same directly in the Franchisor's bank account or instruction received from them, if the Franchisor so desires at a later date for banking and operational convenience. 13. The following points emerge out of the above agreement: a. It is the responsibility of the Trust to collect the annual fee on behalf of fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities of that previous year. 14. Thus when the provisions of the Section are read with regard to the activities of the assessee we find that either by the aims and objective or by the conduct or implementation of the objective of the Trust, it do not qualify for registration under section 12AA. It could be well evident that the Trust is running with a primary objective of earning the profits. The Co-ordinate Bench of ITAT Chennai held in the case of Rajah Sir Annamalai Chettiar Foundation (supra) held that the institutions run by the charitable societies may collect fees and service charges does not mean that the institutions can charge fees, etc., at commercial rates from all the people without giving any element of charity to needy people. The charitable purpose defined and manifested as including relief of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the charitable purpose. Mere imparting education for primary purpose of earning profit cannot be said to be a charitable activity as interpreted by the Apex Court in Municipal Corpn. of Delhi v. Children Book Trust [1992] 3 SCC 390. In the expression 'charitable purpose', charity is soul of the expression. Mere trade and commerce in education cannot be said to be a charitable purpose . 15. For getting the benefit of registration under section 12AA of the Act, motive should be very clear that is charitable in nature for the benefit of public in general not for self aggrandizement of the family of the Trustees. In this case, we are of the opinion that the objectives of the trust are not found to be charitable in nature. The relevant provisions for registration of the Trust under section 12AA are as under: .. .. I. The commissioner on receipt an application for registration of a trust shall call for the documents and information as he thinks necessary to satisfy about the genuineness of the activities of trust. II. He shall pass an order in writing after satisfying himself about the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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