TMI Blog2021 (8) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... at without being influence of the observation made by us while remanding the matter back to his file/desk. Assessee appeal is treated allowed for statistical purposes. - I.T.A. No. 301/Asr/2018 - - - Dated:- 16-8-2021 - Sh. Laliet Kumar, Judicial Member And Dr. M. L. Meena, Accountant Member For the Appellant : Sh. Surinder Mahajan, Vikash Bhagat K. Bhagat, ARs. For the Respondent : Sh. Anupam Kant Garg, CIT DR ORDER PER DR. M. L. MEENA, AM: This appeal of the assessee trust is directed against the order dated 26.03.2018 passed by the CIT(E), Chandigarh challenging rejection of its application for registration under section 12AA of Income Tax Act 1961. Grounds of appeal: 1. That the order passed u/s 12AA(1)(b)(ii) by the Commissioner of Income Tax (Exemptions) is against the law and facts of the case. ii. That the CIT (Exemptions) has wrongly mentioned in para 7 of its order that the applicant has claimed exemptions u/s 10(23C) (iiiad). iii. That the CIT (Exemptions) has drawn wrong inference regarding amendment made in the provisions of the Income Tax Act, in regard to applicability of substantial grants prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions, to make other provisions for imparting education arts, management science and technology, to hold and manage education endowment, to erect, equip and manage school and college laboratories, libraries, hostel and to make regulations relating to residence and institutions mentioned and managed by the Trust, to patronize, enema-and grant stipends to poor and deserving students for higher education and specialized study in science or technical subjects and management, to propagate and keep in mind, while working for the attainment of the aims and objectives, the Gospel of truth Disipline in conduct as preached by the Sikh Gurus, to do all such acts as are incidental conductive to the attainment of above noted objectives, to do all such acts as are found beneficial by the trust. The applicant assessee was seeking registration u/s 12AA of the Act after a lapse of twenty years since creation of the trust and that it has receipts exceeding ₹ 1.0 Crore and it has been claiming exemptions without having any approval u/s 10(23C)(vi) or registration u/s 12AA of the I.T. Act , althpugh it has been disputed as per its reply dated 15.03.2018, submitted before the CIT(E) that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. These are clearly illegal actions that have a direct bearing on the genuineness of activities. 8. It is further clear that the reply of the applicant is vague and not based on the facts of the case as the application for grant of approval u/s 10(23C)(vi) of the Act was rejected vide order dated 31.03.2016 which has been remanded back by the ITAT, Amritsar vide order dated 30.12.2017 for statistical purpose. The claims of the assessee without a valid 10(23C)(vi) approval in the past shall be examined by the A.O. separately. The applicant instead of pursuing its earlier application u/s 10(23C)(vi) of the Act, has now chosen to seek registration u/s 12AA of the Act which in sync with the meaning of the term registration should have been pursued in the initial year or incipient stage and not after a gap of twenty years. The trust has created a huge asset worth ₹ 1,89,44,685/- as on 31.03.2017 after its inception. There are no grounds for seeking registration under a different code even when the applicant has claimed for exemption u/s 10(23C)(vi) and the earlier applicant is still pending for adjudication. Moreover, in light of the fact that permissible reasonableness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Guru Teg Bahadur Public School reveals that the total income received by the school during F.Y. 2014-15 F.Y. 2015-16 F.Y. 2016-17 are ₹ 1,18,14,851/-, ₹ 1,39,70,278/-, and ₹ 1,60,19,787/- respectively. Further, perusal of the Income Expenditure account trust reveals that the net surplus obtained from the school is reflected as the income of the trust, showing the total income of the applicant trust at ₹ 24,51,278/-, ₹ 39,83,709/- and ₹ 44,82,863/- during F.Y. 2014-15, F.Y. 2015-16 and F.Y. 2016-17 respectively. Clearly, the financial statements of the applicant trust do not show true affairs of its total income. The trust is required to reveal consolidated receipts and income in its account in order to enable examination of income that has been utilized for charitable purposes. 11. In view of the above the activities of the applicant trust cannot be termed to fall under the category of charitable purposes but purely on commercial principles having profit motives [ net surplus of the applicant trust is at 43.9%, 69.3% and 73.7% during the F.Y. 2014- 15,2015-16 and F.Y. 2016-17respectively]. The applicant has been claiming exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para 9 of its order that the application u/s 12(A) of Income Tax Act can t be filed by the applicant and in para 10 of its order that the financial statements do not show the true affairs of its total income as he has drawn wrong conclusions; that the CIT(E) has not taken into consideration the investment made in fixed assets by the applicant trust. The investment in fixed assets of the applicant trust are to the extent of ₹ 2569004/-,₹ 3066891/- arid ₹ 3348027/- for financial year 2014- 15, 2015-16 and 2016-17 respectively and sale of fixed assets is of ₹ 5 lac and 1.50 lac for the financial year 2014-15 and 2015-16 respectively. The net surplus after investment / sale of fixed assets is Rs.(-991451), Rs.(-152825) and Rs.(- 42955) respectively. He requested that suitable direction be issued to the CIT(E) to grant 12AA to the applicant Trust. In support, the ld. Counsel for the assessee has submitted PB containing pages 1 to 22 and CLPB of 116 pg. tabulated as under: Sr. No Description Page No. 1. Memorandum of Aims and Objects of the Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Jain Society (Regd.), Daresi Road, Ludhiana Income Tax Appeal No.231 of 2016 (P H HC) 60-71 8. Beant College Of Engineering vs Commissioner Of Income Tax (I.T.A. No. 592/(Asr)/2016 and S. A. No. 05/(Asr)/2017 - Amritsar ITAT) 72-82 9. Arya Shiksha Mandal K.M.V. vs. CIT (2017) 49 CCH 0418 AsrTrib 83-86 10. Bharati Vidyapeeth Medical Foundation vs. ACIT (2013) 89 DTR 0001 (Pune)(Trib) 87-103 11. CIT and Another vs. Society of Advanced Management Studies (2013) 88 DTR 0182 (All) 104-106 12. Shri Shirdi Sai Darbar Charitable Trust (Dharamshala), Bamala vs. The C.I.T.(Exemptions), Chandigarh ITA No.692/Chd/2015 107-110 13. CIT Vs. Shri Advait Ashram Society (2013) 50(1) ITCL 209 (All-HC) (2012) 211 TAXMAN 0311 111-113 14. Shine Educational Social Welfare Trust Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the trust reveals net surplus of 43.9%, 69.3% and 73.7% during the financial year 2014-15, 2015-16 and 2016-17 respectively in para 8 of its order, while actual surplus is -8.33%, -1.08% and -0.27% respectively, that the CIT(Exemptions) had wrongly inferred in para 9 of its order that the application u/s 12(A) of Income Tax Act can t be filed by the applicant and in para 10 of its order that the financial statements do not show the true affairs of its total income as he has drawn wrong conclusions; that the CIT(E) has not taken into consideration the investment made in fixed assets by the applicant trust. The investment in fixed assets of the applicant trust are to the extent of ₹ 2569004/ -,₹ 3066891/- arid ₹ 3348027/- for financial year 2014-15, 2015-16 and 2016-17 respectively and sale of fixed assets is of ₹ 5 lac and 1.50 lac for the financial year 2014-15 and 2015-16 respectively. The net surplus after investment / sale of fixed assets is Rs.(- 991451), Rs.(-152825) and Rs.(-42955) respectively. 09. On the basis of above said document it was submitted that the observation made by the ld. CIT(Exemption) in the impugned order is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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