TMI Blog2020 (11) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities of the Trust and finding should be rendered as to how such activities are not genuine. The activities of the assessee Trust have not been disputed, nor there is any allegation of non genuine activities. Therefore, by referring to the amendment to the proviso to Section 2(15) and referring to the meaning of the word 'education' as spelt out in certain decisions, cannot be construed to be a satisfaction, which is contemplated under sub-Section (3) of Section 12AA. Retrospective cancellation of the registration of the assessee is wholly without jurisdiction and the assessee cannot be vexed repeatedly on the same issue and reason for invoking the power under sub-Section (3) of Section 12AA is wholly unsustainable, without any basis and suffers from perversity writ large on the face of the order. Tribunal misdirected itself by addressing a wrong question without taking note of the earlier decisions rendered in the assessee's own case. The DIT(E) has not recorded his satisfaction that the activities of the assessee Trust are not genuine, nor he has made any observation that the assessee had carried out activities which are not covered in the Trust Deed or in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A)]. The assessee Trust was constituted by a Memorandum of Association dated 01.03.1954 and subsequently by Supplementary Deed dated 28.06.1961. The CIT(A) by order dated 30.06.1989, granted registration to the assessee Trust under the said provision. Proceedings were initiated by the Director of Income Tax (Exemptions) ('DIT(E)') under Section 12A(a)(iii) of the Act, after noting that the assessee Trust was granted registration by the CIT(A) under Section 12A(a), by order dated 30.06.1989. The DIT(E) examined the records and noted the objects and activities of the assessee Trust. It was stated in the records that the assessee does not run any school or colleges, though such purposes have been formulated as the main objects of the Trust, the Trust engages itself in the business of publishing the Tamil news business commitments 'Dina Thanthi' and also job works for printing are undertaken as business commitments. The surplus of the income from the business after defraying all the expenses is utilized for donation to another Trust, 'Aditanar Educational Trust' only. The DIT(E) after analysis of the gross receipts of the Trust and the surplus of income from bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities can only be for advancement of general public utility. Further, the Trust is conducting business of running the newspaper and the turnover exceeds the threshold limit as per second proviso to Section 2 (15) of the Act. It was held that undoubtedly the assessee is conducting business of publication of newspaper and gross receipts running into hundreds of crores of rupees exceeding the threshold limit as provided under second proviso to Section 2(15) of the Act. Therefore, the first proviso to Section 2(15) of the Act is squarely applicable to the assessee's case and therefore the activities, prima facie, shall not be charitable in nature. Further, it was held that this position will not change whether the business is carried independently or given as corpus by the settlor. Thus, the DIT(E) held that it appears that the activity of the assessee is hit by proviso to Section 2(15) of the Act and the prima facie activities of the Trust are no longer charitable in nature. 3.The assessee was called upon to show cause as to why action under Section 12AA(3) should not be taken to cancel the registration granted to them under Section 12A(a) of the Act. The assessee was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances not in law or in facts. Noting that in the show cause notice, the DIT(E) has stated that the registration was granted on the basis of the Memorandum of Trust dated 01.03.1954 and by Supplementary Deed dated 28.06.1961, the assessee stated that the Department is well aware that the assessee preferred appeals before the Appellate Assistant Commissioner (AAC) for the assessment year 1962-63 contending that they are entitled to the grant of exemption under Section 11 of the Act. The AAC accepted the plea of the assessee that the decree passed by this Court in C.S.No.90 of 1961 created a legal obligation on the Trustees to utilise the income from the Trust for the object set out in the schedule to the decree. The decree passed by this Court in the said suit was mandatory in nature and that the assessee had credited in the books of accounts 75% of the income in favour of 'Aditanar College'' and therefore, the assessee was entitled to the benefit of the exemption under Section 11 of the Act. It was further stated that aggrieved by the orders of AAC, the Revenue preferred appeals to the Tribunal contending that the Supplementary Deed dated 28.06.1961, which was subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in C.S.No.90 of 1961, the objects of the Trust are only those set out in the schedule to the said decree and they are charitable objects and that the assessee will be entitled to exemption from tax in respect of such income derived from the business as is shown to have been actually parted by it and actually spent on such charitable objects during the relevant previous years. With this finding, the Tribunal directed that the assessments for the two years in question should be modified. Aggrieved by such decision of the Tribunal, the Revenue as well as the assessee Trust sought for references to this Court and the following questions were referred for the opinion of this Court: (1) Whether on the facts and circumstances of the case, by reason of the judgment and decree of the Madras High Court in C.S.No.90 of 1961, the objects of the trust are only those that are set out in the schedule to the said decree and not those for which the trust was originally founded and that such objects are charitable objects within the meaning of section 2(15) of the Income Tax Act 1961? (2) Whether on the facts and circumstances of the case, the trustees are not bound to apply the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of Section 11(4a), the assessee referred to the judgment of the Honble Supreme Court in their case reported in ACIT vs. Thanthi Trust [(2001) 247 ITR 785(SC)]. The assessee referred to the instrument of declaration of Trust dated 01.03.1954 registered as document no.136/1954 on the file of the Sub Registrar, Mylapore and the Supplementary Deed dated 28.06.1961 and submitted that the judgment in C.S.No.90 of 1961 validates the Supplementary Deed and has held that the Trustees are bound to apply the surplus income to the objects mentioned in the Supplementary Deed. Further, it was submitted that the Director/Trustee is the Chairman of the governing body of the College from the very inception, he is managing and running the newspaper as Director, chosen by other trustees and he is also the Chairman of the educational agency which is a Society which runs various Colleges in Thiruchendur and there is no other effective way to carry out the directions, of those contained in the judgment in C.S.NO.90 of 1961 and wishes of the Founder of the Thanthi Trust. Therefore, it is submitted that it is not sustainable to contend that (a) Trust does not run any School or Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not fall within the scope of educational activity, as held in Victoria Technical Institute (supra). Reference was made to the decision of the Hon'ble High Court of Gujarat in Sorabji Nusserwanji Paarekh (supra). Relying upon the decision in the case of Loka Shikshana Trust (supra), it was stated that the word 'Education' connotes the process of training and developing the knowledge, mind and character of students by normal schooling. Further, by once again referring to the above stated decision, it was held that it is necessary to run educational institution to qualify under the category 'Education' in Section 2(15) of the Act. It was further stated that the material differences between Section 2(15) and Section 2(22) as far as a education is concerned, is a use of the word 'solely'. Further, the DIT(E) accepted that there is no dispute that the objects of the Trust as per the Supplementary Deed dated 28.06.1961 were ratified by judgment in C.S.No.90 of 1961 and that the Department is accepting the objects as per the Supplementary Deed after series of litigations. However, none of the decision in the assessee's case had dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the interpretation given to Section 2(15) of the Act is incorrect; DIT(E) failed to appreciate the findings of this Court in the assessee's own case, wherein it was held that the entire property were held under Trust and / or under legal obligation was the business itself and entire income from the business have to be utilised for the various charitable objects set out in the schedule to the decree of this Court and therefore they cannot be denied the benefit of exemption under the Act. The other contents and decisions which were referred by the assessee while submitting their reply dated 30.11.2011 to the show cause dated 25.10.2011, were placed before the Tribunal. The Revenue contended that as per the Trust Deed dated 01.03.1954, the object of the Trust was to establish the newspaper as an organ of educated public opinion for the Tamil reading public and to disseminate news and to ventilate opinion upon all matters of public interest through it. It was further stated that the assessee does not run any school or college, though such purposes have been stipulated as a main objects of the Trust. The activities of the trust in conducting a newspaper business cannot be said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing not carried out any charitable activity but only carrying on business activity is not entitled for registration. With these observations and findings, the appeal was dismissed by the Tribunal. 12.Aggrieved by such order, the assessee has preferred this Tax Case Appeal. 13.Mr.V.S.Jayakumar, learned counsel for the appellant with a view to assist this Court to take a decision in the matter and also to assimilate all relevant facts and details regarding the past litigation between the assessee and the Department on the same subject matter, prepared his notes on submissions in the form of Power Point Presentation (PPT). 14.To the best of our knowledge, this is the first time, we have come across arguments advanced by the learned counsel by submitting a PPT before this Court. One school of thought seeks to condemn PPT presentations and have faulted the speakers who had used PPT as being monotonous and boring. The fault does not lie on the PPT but on the presenter, invariably the presenter reads out what is displayed in the presentation, forgetting that the Powerpoint Presentations give salient features and bullet points on which the speaker will elaborate. If the PPT is don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A were listed several times. Only the appeal relating to refusal of registration u/s 12 A r/w 12AA was disposed off which is the impugned order passed by the ITAT in this TC(A) 822 if 2018 Donations list for various years from inception refer pg 22-23-spiral binding. Aditanar educational trust is the only donee Charitable activities of the assessee trust was questioned by the tax department from A Y 68-69 and 69-70 for the first time and exemption u/s 11 was denied. Refer 137 ITR 735(Mad)(see below).Other aspects like application of income etc were considered in earlier assessment years appeals. ITAT and HC upheld that supplementary deed was not valid as the trustees have no power under the deed to change the objects-but because of the Civil Court decree ordering the prayer to carry out six objects mentioned therein, there was a legal obligation on the part of the trustees to carry out the charitable activities which are six in numbers and so the trust is eligible for exemption u/s 11. Case law: (i) Sree Anjaneya Medical Trust v CIT 382 ITR 399(Ker) S.12A is one time registration. Exemption is annual -ACIT v Agra Dev Authority (2018) 90 taxmann.com 282(All) at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the profit resulting therefrom the business can be taken to be a by product. (ii)Page 65 para 22 end. The principle laid down by the SC(121 ITR1) in the said decision seems to squarely apply to this facts of the case. In this case the property held under trust or under legal obligation is the business itself and the entire income from the business has to be utilised for the various charitable objects set out in the schedule to the decree in CS No.90 of 1061. Thus, the objects will clearly fall under the head relief of the poor,education, medical relief etc, and merely because the trust is carrying on the charitable objects referred to in schedule to the decree, it cannot be deprived of S.11. (iii) Page 65-66 para 25 : As pointed out by the SC , if the contention of the revenue is accepted, no trust can carry on any business even for the fulfillment of the charitable objects, such as, relief of poor, education and medical relief, and, therefore, such a contention cannot be accepted. If the intention of the legislature were to prohibit a trust or institution established for a charitable purpose or for the prohibition of an object of general public utility from carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained separate books of account in respect thereof. .Pg. 180 of PB para 6 Court observes 137 ITR 735 has become final and binding on the revenue, namely, that the primary purpose of the trust was to carry out the charitable objects and that the business carried on only as a means in the course of the actual carrying on the purpose of the trust. ) Hon ble Justice Jeevan Reddy-(1999) 239 ITR 502(SC) CIT v Thanthi trust- application of income aspect only-para 2-page 208PB- 2. It appears that the Adityanar College was run, not by the assessee trust, but by another registered charitable society. In the circumstances, the HC was right in the conclusion which it arrived at. ..It may also be mentioned that it is no part of the revenue s case at any point of time that the credit entries made in the assessee s books of account were not genuine or true or that they were mere make believe or bogus. It was never doubted. Meaning of education/utilization of surplus Meaning of education is wider and not narrower- Justice Beg; Per Hon ble Justice Khanna meaning of education is narrower; Regarding Hon ble Justice Gupta s view there is no indication in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied , even if an activity for profit is carried on in the course of the actual carrying out the primary purpose of the trust or institution . Sree Anjaneya Medical trust v CIT 382 ITR 399(Ker) 12 A and 12AA deal with the registration only. Tamil nadu Kalvi Arakkatalai v CCIt (2014) 90 CCH 184(Mad) Income received by person on behalf of educational instn exemption allowed. Summing up of arguments up to this stage 1)In the impugned ITAT order and DIT( E ) s order they are reviewing the very same Issue once again ignoring the case laws cited before them by the assessee trust. Thanthi trust case in 137 ITR 735(Mad) has become final as observed in by the Hon ble Supreme Court. 2)The lower authorities held that the trust is not doing any activity for charitable purpose as there is no educational activity as such was carried on by the assessee trust in the absence of any scholastic institution or university as such instead the assessee only donates to another trust/ institution which carried on educational institution. The assessee trust helped the other institution to run the educational institution. 3)In order to arrive at this observation the DIT( E ) strongly rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91-92. 79-80 to 83-84 trust not entitled to exemption vide Sec 13(1)(bb). 84-85 to 91-92 not entitled to exemption as per Sec 11(4)/4A New 11(4A) from 01.04.1992 viz A.Y. 92-93 and thereafter the trust is eligible for exemption. Also education aspect is dealt with in this judgement. Sec 12AA(3) case law- 8)12AA(3) is not automatically to be invoked. CIT v Mumbai Metropolitan Region Development Authority (2020) 270 Taxmann 21(Mum) Goa Industrial Development Corporation v CIT (2020) 421 ITR 676(Mum) DIT(E) v Seervi Samaj Tambaram Trust 362 ITR 199(Mad) Industrial Infrastructure ltd 403 ITR 1(SC)- retrospective cancellation not proper DIT v. Khar Gymkhana 385 ITR 162(Bom) ACIT v Agra Development Authority (2018)302 CTR 308(All)-retrospective cancellation of Sec 12 AA is not proper-Sec 13(8) and CBDT Circular discussed. Ananda Social Educational Trust v CIT (2020) 272 Taxmann 7(SC) CIT v Sisters of Our lady of Providence educational society (2014) 89 CCH 132(All)- genuineness and activities of the trust should be tested on relevant material. CIT- Kutchi Dass 362 ITR 192(Guj) Donation by one trust to another 9) Donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and judicial discipline ignored. The impugned Tribunal order is perverse as the lower authorities have mixed up registration of a trust u/s 12 A with exemption under Sec 11 and judicial discipline is not adhered to by not following jurisdictional High Court decisions in rendered in Assessee s own case. Final arguments 1) Thanthi trust carries on business for carrying out its primary object of education on facts accepted by MDS HC and SC. This judgements have become final. Hence the last limb in S 2(15) is not attracted and so the proviso. 2) Registration u/s 12 A was validly granted as per the law that stood at that time and later amendment in S 12AA(3) is not automatic to withdraw the registration. Registration u/s 12 A is not an empty formality . It is a fait accompli. 3) Term education needs wider interpretation. Lok shikshana is misapplied. 137 ITR 735 has attained finality even in this aspect . 101 ITR 234 referred to in 137 ITR 735 as also 121 ITR 1(SC) which had disapproved 101 ITR 234(SC). Lok Shikshana is no longer a precedent as the said judgment is disapproved in 121 ITR 1(SC) The observations are obiter dicta and is not a ratio decidendi. 4) TNCA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no power till 01.10.2004 to cancel registration under the Income Tax Act 1961 as per the relevant provisions that stood at that point of time to cancel the registration originally granted in terms of Section 12A. In the case before the Hon'ble Supreme Court, the assessee company a State Government undertaking applied to the CIT on 10.02.1999 for grant of registration under Section 12 A of the Income Tax Act, 1961 on the basis that the assessee is engaged in public utility activity it was for a charitable purpose under Section 2(15) of the Act. The CT granted registration but later issued a notice to the assessee asking it to file its reply. By order dated 29.02.2002, the CIT cancelled the certificate. The ITAT set aside the order of cancellation of registration passed by the CIT but the High Court restored the order of the CIT holding that when there is no express power in the Act for cancelling the registration certificate u/s 12A of the Act power to cancel can be restored to Section 21 of the General Clauses Act 1897. On appeal, the Supreme Court decided the issue in favour of the assessee holding that there is no express provision in the Act vesting the CIT with power to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA, as per the law then stood under the definition of Section 2(15) of the Income Tax Act. Thus if a particular activity of the institution appears to be commercial in character, and it is dominant, then it is for the assessing officer to consider the effect of Section 11 of the Act in the matter of granting exemption on particular head of receipt. The mere fact that the said income does not fit in with Sec 11 of the Act would not, by itself, herein lead to the conclusion that the registration granted under Section 12AA is bad and hence to be cancelled. Further at para 51, this Hon'ble Court has observed that the cancellation of registration, in a given case could be done only under the stated circumstances under Section 12AA(3) of the Act and in the background of the definition relevant to the particular year of registration. 19.It is submitted that the Tribunals' further observation was ''that for claiming exemption only the Trust is seeking Registration under the Act and therefore for the purpose Registration of the Trust, ''Charitable Purposes'' is an essential ingredient; otherwise, the registration under Section 12A of the Act cannot be acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amendment to Section 2(15) of the Act with effect from 01.04.2009 gives importance to the attributes of the Trust. Therefore, the reasons assigned by the Tribunal is proper. 25.It is submitted that the assessee was originally granted registration under Section 12A of the Act in the year 1989 and the same was in force. During 2011, show cause notice was issued and orders cancelling/withdrawing the registration was passed, on 08.12.2011. The registration was withdrawn on the grounds that (i) Trust activities are not in the nature of charitable purpose as defined under Section 2(15) of the Act; (ii) business of newspaper is not an activity of eduction; (iii) business of newspaper is commercial in nature; (iv) mere diversion of income earned to its related Trust by way of donation does not amount to carrying on an educational activity by the Trust itself; and (v) activities of the Trust were not education, as no activity of charitable in nature was executed by the Trust as envisaged in its objects. 26.It is further submitted that as per the amended provision of Section 2(15) of the Act, the activities of relief of the poor, education, etc., need to be directly executed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Further, it is submitted that the decisions in Loka Shikshana Trust (supra), Oxford University Press (supra), Sorabji Nusserwanji Parekh (supra) and Victoria Technical Institute (supra) have held that the activities of general trading like that of newspaper or assisting, etc., cannot be treated as education and the assessee cannot claim any exemption. With the above submissions, the learned counsel prayed for sustaining the order passed by the Tribunal. 30.We have elaborately heard Mr.V.S.Jayakumar, learned counsel for the assessee and Mr.J.Narayanaswamy, learned Senior Standing Counsel for the Revenue and carefully perused the materials placed on record. 31.The substantial question of law to be decided is as to whether cancellation of the registration granted to the assessee under Section 12A(a) of the Act on 30.06.1989, by order dated 08.12.2011 under Section 12AA(3) of the Act is right in law. The subsidiary question, which falls for consideration is whether, if the order of cancellation/withdrawal of registration is valid, whether can it be cancelled retrospectively with effect from 01.04.2009 (AY 2009-10). The DIT(E) held that the assessee is not running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of such principle with particular reference to the facts of the case, though not as a general proposition in tax law. Admittedly, the decisions rendered by this Court and the Hon'ble Supreme Court pertain to the very same subject matter and the parties to the litigations were the assessee and the Income Tax Department. In all these decisions of this Court and the Hon'ble Supreme Court in the assessee's own case, the only issue which fell for consideration, was with regard to the objects of the assessee as spelt out in the Trust Deed dated 01.03.1954, and the Supplementary Deed dated 28.06.1981 and it has been held that the activity of the assessee to be charitable. The amendment by way of insertion of the proviso to Section 2(15) which itself is a definition section, cannot take away or dilute the effect of the judgment inter-parties and therefore, if such is the finding in the earlier round of litigations, then undoubtedly, it would bind the Department. Therefore, the observation made by the DIT(E) with regard to the applicability of the doctrine of estoppel is an outcome of wrong understanding of the legal principle. While on this issue, we shall refer to as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 proceed on the basis that as the original objects had since been achieved, new objects had been substituted for them. The new objects are purely charitable. If the new objects have been substituted for the original objects set out in the original trust deed, then the property held for the original objects should be taken to have been held for the new objects. As a matter of fact the decree in C.S. No. 90 of 1961 specifically states that the trustees are bound to carry out the objects set out in the Schedule to the decree with the income from the Thanthi Trust. Therefore, it is not possible to say that no property is held under trust or other legal obligation for the new objects set out in the supplementary deed. 19. .......... as per the decree of this court in C.S. No. 90 of 1961, the trustees are bound to spend the entire income after defraying the expenses in connection with the newspaper business for one or other of the objects referred to in the schedule to the decree, all of which are admittedly charitable and no discretion had been left to the trustees to spend the income for any noncharitable purposes. .......... The question of claiming exemption will arise only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n activity for profit for the purpose of carrying on the charitable objects referred to in the schedule to the decree, it cannot be deprived of the benefit of section 11. 36.With regard to the property held under the Trust, the business activities and the exclusivity of carrying on the charitable purpose etc., it was held as follows:- 25.In the case on hand the property held under trust is the business itself and the business is carried on only, and exclusively, for carrying out the charitable objects set out in the schedule to the decree in C.S. No. 90 of 1961. As pointed out by the Supreme Court, if the contention of the Revenue that once a trust carries on a business activity, it does the benefit of s. 11 is accepted, no trust can carry on any business even for the fulfilment of the charitable objects, such as, relief of the poor, education and medical relief and, therefore, such a contention cannot be accepted. If the intention of the Legislature were to prohibit a trust or institution established for a charitable purpose or for the promotion of an object of general public utility from carrying on any activity for profit, it would have provided in the clearest terms t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to earlier decisions, it was held as follows:- 34. .............. The conduct of the educational institution in drawing from the assessee trust larger sums that what was been credited by the trust in its favour in 1969-70 shows that it was fully aware of its credit with the assessee-trust and the funds that had been made available to it by the trust. If the amounts had been actually handed over to the Adityanar College during the assessment years in question the assessee could claim the benefit of exemption under s. 11 as the college has been established only for educational purposes and no part of its fund can be utilised for non-charitable purposes, and the Revenue cannot insist that unless the educational institution expands the amount donated by the assessee within the assessment year, the assessee cannot claim the benefit of exemption under s. 11. In this connection it is pertinent to refer to the decision in IRC v. Helen Slater Charitable Trust Ltd. [1980] 3 WLR 157; 1 All ER 785, wherein while considering the assessee's claim for exemption under s. 360(1)(c) of the Income and Corporation Taxes Act, 1970, and s. 35(1) of the Finance Act, 1965, the court held that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.It appears that the Adityanar College was run, not by the assessee-trust, but by another registered charitable society. In the circumstances, the High Court was right in the conclusion which it arrived at. It may also be mentioned that it is no part of the Revenue's case at any point of time that the credit entries made in the assessee's books of account were not genuine or true or that they were mere make-believe or bogus. It is also not brought to our notice that the ITO doubted the said entries and called upon the assessee to produce the accounts of the college and that the assessee failed to produce the same. 41.The Trust to which, the entire income earned by the assessee after defraying expenses viz., Aditanar Educational Trust's case was dealt with by the Hon'ble Supreme Court in Aditanar Educational Institution (supra). The Revenue contended that the plea of exemption under Section 10(22) of the Act would apply only to educational institution as such and not to the assessee which might be financing for running an educational institution, but it not being an educational institution itself. The Hon'ble Supreme Court while considering the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the actual carrying on the purpose of the Trust. The Revenue challenged the said order before the Hon'ble Supreme Court and it was held that the assessee Trust is entitled to the benefit of Section 11 for the assessment year 1992-93 and thereafter, it was specifically mentioned that it is not in dispute that the income of its newspaper business has been employed to achieve its objects of education and relief to the poor and it has maintained separate books of accounts in respect of thereof. Therefore, the Hon'ble Supreme Court had categorically held that the primary purpose of the assessee Trust was to carry out charitable objects and the business of newspaper was only as means in the course of the actual carrying on the purpose of the Trust. 43.In the assessee's own case, [(1999) 238 ITR 0635], writ petition was filed challenging the action of the Revenue in attempting to levy tax on the income derived from the newspaper business by relying upon the provision, which was introduced under Section 11(4A). The Hon'ble Court after taking note of the decisions in the assessee's case in 137 ITR 735 (Madras) and 213 ITR 626 (Madras), held that the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder law. The Revenue is estopped both on law as well as on facts from raising any contention as mentioned by the DIT(E) in its order dated 08.12.2011. The said order is an outcome of wrong understanding of the legal provisions, the effect of the judgment in C.S.No.90 of 1961 and the series of litigations between the Department and the assessee Trust all of which were in favour of the assessee. Thus, on the facts of the case, the principle of estoppel will hit the Revenue and they are not entitled to state that the assessee Trust is not carrying on a charitable activity and thus, it is not in the field of education, etc. 45.Having steered clear of this issue based on the decisions rendered by the Hon'ble Supreme Court in the assessee's own case, we now move on to consider the other decisions on what is the meaning of 'education'. We have seen that the DIT(E) in its order dated 08.12.2011, has made an observation that the word 'education' has not been defined under the Act and therefore, he would refer to the decision in the case of Victoria Technical Institute (supra), Oxford University Press (supra), Sorabji Nusserwanji Parekh (supra) and L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily be drawn in the absence of some indication to the contrary that the activity is for profit and the charitable purpose involves carrying on an activity for profit. It was further pointed out that the Court would not be justified in drawing any such inference merely because, the activity results in profit. Further, it was observed that there is no necessity for a provision in the constitution of the Trust that the activity shall be carried on 'no profit no loss' basis or profit shall be prescribed. It was observed that even if there is no such express provision, the nature of the charitable purpose, the manner in which the activity for advancing the charitable purpose is being carried on and the surrounding circumstances may clearly indicate that the activity is not propelled by a dominant profit motive. Therefore, it is held that what is necessary to be considered is whether having regard to all the facts and circumstances of the case, the dominant object of the activity is profit making or carrying out a charitable purpose. If it is the former, the purpose would not be a charitable purpose, but if it is the latter, the charitable character of the purpose would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as apparently not brought to the notice of the learned judges that a carefully enacted scheme has been incorporated in the Act which closely controls the utilisation of the trust income, and that the tax exemption is conditional on the observance of the statutory conditions stipulated in that schedule. 48.Thus, it is argued that in the light of the observations in Surat Art Silk Cloth Manufacturers' Association (supra), the observations made by the Hon'ble Supreme Court in Loka Shikshana Trust (supra) giving a narrower and restricted meaning to the word 'education' is obiter dicta . While on this issue, it would be worthwhile to refer to a few decisions of the High Courts which had dealt with the aspect as to whether the word 'education' should be given restrictive meaning. 49.In Gujarat State Cooperative Union vs. CIT [(1992) 195 ITR 0279 (Guj.)], the question which fell for consideration was whether the Tribunal was right in law in holding that the applicant therein was not entitled for exemption under Section 10(22) of the Act for the assessment years 1972-73 to 1977-78. In the said case, the State Cooperative Union claimed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horizons of knowledge may bring in changes in the methodology of teaching a shift for the better in the institution set up. Advancement of knowledge brings within its fold suitable methods of its dissemination and though the primary methods of sitting in classroom may remain ideal for most of the initial education, it may become necessary to have a different outlook for further education. It is not necessary to nail down the concept of education to a particular formula or to flow it only through a defined channel. Its progress lies in the acceptance of new ideas and development of appropriate means to reach them to the recipients. 50.The above decision recognises the modern trend of education, which is not solely confined to class room teaching, in fact, the pandemic has shown that online teaching and virtual classes are the order of the day and found to be a new normal. 51.The above decision was noted by us in Investor Financial Education Academy vs. ITO in T.C.A.No.900 of 2018 dated 04.09.2020, wherein it was held as follows:- 12.The CIT and the Tribunal were guided by the decision of the Hon'ble Supreme Court in Loka Shikshana Trust (supra). This judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ITR 0226]. The Court while considering a writ petition, filed challenging an order refusing recognition and issuance of certificate under Section 80G of the Act, took note of the decision in Loka Shikshana Trust (supra) and held as follows:- 9. .......... The Commissioner observed that it was not necessary to consider these facts as, in his opinion, the matter was concluded by a decision of this court in the case of CIT v. Sole Trustee,Lokashikshana Trust [1970] 77 ITR 61. In my opinion, the Commissioner was in error in brushing aside the material that had been placed before him by the company as irrelevant. The view had taken by him on the basis of the decision above mentioned cannot also be said to be accurate. The facts in that case lay in a narrow compass. The matter had been taken up in further appeal to the Supreme Court and the decision thereof is . Actually in the memorandum of association the express Education had been used. One of the judges, Justice Beg, was of the opinion that the use of that expression was only a camouflage and the only object was of a commercial nature. Mr. Justice Khanna and Justice Gupta delivered a separate judgment. They were als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the said case, the Trust is of a portion of the income of the Hamdard Dawakhana. Although the source of the income is a business, the object of the Trust is not to run the business, but to utilise the income of that business for a charitable purpose. Further, the Court taking note of the decision in the case of Surat Art Silk Cloth Manufacturers' Association (supra), held that merely because some remuneration was taken by the petitioner Foundation for undertaking of such action would not alter the character of the projects which remained research and consultancy work and the test is the application of the amounts received from those projects. The Court also considered the amended definition of charitable purpose as it stood at the relevant point of time and it was held as follows:- 21. The amended definition of charitable purpose would not alter this position. No doubt, proviso to this definition clarifies that advancement of any other object of general public utility will not be treated as charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering service in relation to trade, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and as per that principle, such amounts are bound to be applied only for charitable purposes and hence, the activities of the Trust are genuine. 56.We find that though such ground was specifically raised by the assessee, the Tribunal did not consider the same. In the earlier paragraphs, following the decision in the assessee's own case, we have held that the activity of the assessee is charitable in nature. In fact, in the earlier round of litigations, the Revenue raised the very same contention as raised before us that the assessee does not run a school or college, but runs a newspaper earning huge revenue and the same is given to only one Trust and not to other Trusts or education institutions and therefore, it cannot be construed to be a genuine charitable activity. The decisions in the assessee's case had considered the very issue and rejected the stand of the Revenue and we had, following those decisions, rejected the stand of the Revenue. However, the ground with regard to the diversion of the income from the newspaper business to the Trust is contended as diversion by overriding. To understand this concept, it will be beneficial to refer to the decision of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied the test laid down by the Hon'ble Supreme Court in CIT vs. Sitaldas Tirathdas [(1961) 41 ITR 367 (SC)] and held that the surcharge, being impressed with an obligation in the nature of trust for being applied to local charities, was by this obligation diverted before it reaches the hands of the assessee and, at no stage, it became a part of the income of the assessee. Accordingly, it was held that the surcharge received by the assessee therein was not regarded as income assessable. While on this issue, it will be beneficial to refer to the decision in CIT vs. Bijli Cotton Mills (P) Ltd. [(1979) 116 ITR 0060 (SC)]. The assessee therein was a private limited company engaged in the business of manufacturing and selling yarn. From its inception, it used to realise certain amounts on account of charity from its customers on sales of yarn and bales of cotton and these amounts were shown in a separate column headed 'charity' and the assessee did not credit in its trading account, but maintained a separate charity account. The Board of Directors of the assessee passed a resolution that the monies standing in the charity account be treated as trust fund of which, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the amendment to Section 2(15) by amended proviso is an argument which has to be outrightly rejected especially, when the Department has accepted the finality of the judgment in C.S.No.90 of 1961. (To be noted, the Department has no other option, or else they may be liable for contempt of Court.) 59.The Hon'ble Supreme Court in Radhasoami Satsang vs. CIT [(1992) 193 ITR 0321 (SC)], while considering the question whether, the income derived by the assessee therein, a religious institution, is entitled to exemption under Sections 11 and 12 of the Act, noted the contention raised by the assessee that in the absence of any change in circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question. In support of such contention, the assessee relied upon the decision of the Full Bench of this Court in the case of T.M.M.Sankaralinga Nadar Bros. vs. CIT [(1929) 4 ITC 226 (Madras)] and the decision of the Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. vs. ITO [(1977) 106 ITR 1 (SC)] wherein, it was held that the policy of law is that there must be a point of finality in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charitable activity and they are entitled for registration/exemption. This issue cannot be reopened by the Revenue, that too, by a perverse interpretation of the amendment to the proviso to Section 2(15) of the Act. 62.Moving a step further, we hasten to add that even such an argument is remotely possible, is not available to the Revenue on account of the earlier decisions of this Court and the Hon'ble Supreme Court which has attained finality and therefore, the issue cannot be reactivated and there can be no re-look by the Revenue on the aspect of the charitable nature of the assessee Trust and therefore, curtain has to be drawn and finality should prevail. While on this issue, we would have been well justified in imposing exemplary cost on the Revenue for their unsustainable interpretation. 63.In the light of the above finding, we are not required to proceed any further to examine the other contentions raised by the Revenue which largely rest upon the observations in Loka Shikshana Trust (supra). We have explained as to how the case of the Revenue cannot be sustained with reference to the said decision. Nevertheless we also note the other arguments, which were su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 65.In Tamil Nadu Kalvi Kapu Arakkattalai vs. CIT [(2014) 90 CCH 0184 ChenHC], it was held that while considering the claim for exemption, the substance of the claim would be more relevant than the form. In other words, the authority should not be solely guided by the objects set out in various clauses in the Instrument of Trust, rather should be guided by the activities of the Trust, as to how the funds are employed, since the exemption sought for is under Chapter III of the Act, which deals with incomes which do not form part of total income. Thus, under Chapter III, more particularly, Sections 10 to 13A, the Act brings certain categories of exemption and incomes falling within those categories are completely exempt from the purview of the Act as they are not at all to be included in the total income of the assessee. Therefore, such type of exemption/s has/have to be distinguished from certain types of income which are included in the total income of the assessee, but in respect of which, statute provides relief by way of deduction in computing total income, by granting rebate of tax and by granting certain other reliefs to the tax payers. 66.While on this issue, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the matter of granting exemption on particular head of receipt. The mere fact that the said income does not fit in with Section 11 of the Act would not, by itself, herein lead to the conclusion that the registration granted under Section 12AAis bad and hence, to be cancelled. 46. It may be of relevance to note the language used in the definition charitable purpose in Section 2(15) of the Act, which states that charitable purpose includes relief of the poor, education, medical relief and advancement of any other object of general public utility. The assessee's case falls within the phrase of the definition general public utility . In the decision reported in (2000) 246 ITR 188 in the case of Hiralal Bhagwati Vs. Commissioner of Income Tax, the Gujarat High court considered the said phrase in the context of Section 12AA registration and held that registration of the charitable trust under Section 12AA of the Act is not an idle or empty formality; the Commissioner of Income-tax has to examine the objects of the trust as well as an empirical study of the past activities of the applicant; the Commissioner of Income-tax has to examine that it is really a charitable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or registration. In terms of the proviso, no order under sub-Section (3) shall be passed, unless such trust or institution has been given a reasonable opportunity of being heard. Thus, the power under sub-Section (3) of Section 12AA would be invokable under two circumstances mentioned in the provision and upon the Commissioner being satisfied that the activities of the trust are not genuine or the activities are not in accordance with the objects of the Trust. 71.In the case on hand, there is no allegation that the assessee Trust has not carried on its activities in accordance with the objects of the Trust as set out in the Deed of Trust and the Supplementary Deed. The Revenue has accepted the said fact and also acceded to the finality of the judgment and decree in C.S.No.90 of 1961. The DIT(E) seeks to bring the assessee's case in the first limb of sub-Section (3) by stating that the activities of the Trust are not genuine. 72.We find that except for stating that the activities are not genuine because of the amendment to the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, similar question arose where also, the registration was cancelled, as the assessee was hit by the proviso to Section 2(15). The Court referred to Circular No.21/2016 dated 27.05.2016, issued by the CBDT, which states that cancellation of registration has to be initiated strictly in accordance with the provisions under Section 12AA(3) and after carefully examining the application of the said provision. Further, merely because in a particular year, the limits may be exceeded, is not a good ground to cancel the registration itself. 75.In DIT(E) vs. Khar Gymkhana [(2016) 385 ITR 0162 (Bom)], the Court considered Circular No.21/2016 and held that registration granted under Section 12AA could not be cancelled merely on the ground the receipts on account of business exceeded the cut-off specified in the proviso to Section 2(15) of the Act. The jurisdiction to cancel the registration only arises if there is a change in the activity of the institution or the activities of the institution are not genuine. It was further held that Circular No.21 of 2016 directs the officer of Revenue not to cancel the registration only because the receipts on account of business are in excess of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nn.com 693 (SC)), the Hon'ble Supreme Court explained as to the duties cast upon the Commissioner under Section 12AA while considering the application for registration in the following lines:- 9.Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. 10. ............. 11. ........... The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the activities of the Trust had not commenced. The CIT had also made a comment upon the activities of the assessee by stating that they are contributing only to one Trust and not to other Trust with similar objects. The question is whether this can be a reason for cancellation of the registration. The answer to the same should be in the negative because, this aspect was dealt with in the earlier round of litigation and held against the Revenue. While on this issue, it would be useful to refer to the decision in the case of CIT vs. Hindusthan Charity Trust [(1983) 139 ITR 0913 (Cal.)]. In the said case, donation was made by the assessee Trust to another Trust and the question was whether the assessee was entitled for exemption under Section 4(3)(i). It was held that donation made to another Trust, which was charitable or eligible was entitled for exemption under Section 4(3)(i). 81.In Director of Income Tax (E) vs. Chartered Accountants Study Circle [(2012) 347 ITR 0321], the activities of the Trust in publishing and selling books of professional interest meant to be used as reference materials by the general public as well as by the professionals in respect of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prospective in nature. 28. The issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in the case of Director of Income Tax (Exemptions) vs. Mool Chand Kairati Ram Trust, (2011) 243 CTR(Del) 245, Uttaranchal High Court in the case of Welham Boys School Society vs. CBDT, (2006) 285 ITR 74(Uttaranchal) and Allahabad High Court in the case of Oxford Academy for Career Development vs. Chief Commissioner of Income Tax Ors. (2009) 315 ITR 382 (All). 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the objects for which such trust or institution was established, the registration granted under Section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard. 7.2. The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under provisions of Section 12A as it is not specifically mentioned in Section 12AA. 7.3. Therefore, Section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under Section 12A as it stood before amendment by Finance (No.2) Act, 1996. 7.4. Applicability This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for assessment year 2011-12 and subsequent assessment years. 89.Circular No.1 of 2011 will clearly show that the amendment brought out in Section 12AA is applicable with effect from 1st June, 2010, i.e., from the assessment year 2011-12 and subsequent years. There ..... 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