M/s Siddhartha Educational Society, Eluru V. The ITO, Ward-2, Eluru

CO 41/VIZ/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6022 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Business income; Charitable institution; Earning of tax free income; Benefit of exemption; Cancellation of registration
• Section: 143(3); 80G; 12A; 12AA; 11

Judgement Text

ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 349 /VIZAG/ 20 07 ASSESSMENT YEAR : 2004 - 05 M/S. SIDDHARTHA EDU CATIONAL SOCIETY ELURU VS. ACIT, CIRCLE - 1 ELURU (APPELLANT) (RESPONDENT) PAN NO.AABTS 1259E ITA NO.99/VIZAG/2008 ASSESSMENT YEAR : 2004 - 05 M/S. SIDDHARTHA EDUCATIONAL SOCIETY ELURU VS. ACIT, CIRCLE - 1 ELURU (APPELLANT) (RESPONDENT) ITA NO.202/V IZAG/2009 ASSESSMENT YEAR : 2005 - 06 M/S. SIDDHARTHA EDUCATIONAL SOCIETY ELURU VS. ACIT, CIRCLE - 1 ELURU (APPELLANT) (RESPONDENT) C.O.NO.41/VIZAG/2010 ASSESSMENT YEAR : 2005 - 06 M/S. SIDDHARTHA EDUCATIONAL SOCIETY ELURU VS. ITO WARD - 2 ELURU (APPELLA NT) (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI R.K. SINGH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAIN ST THE RESPECTIVE ORDER OF THE CIT(A). THE REVENUE HAS ALSO FILED TH E C.O. IN SUPPORT OF THE ORDER OF THE CIT(A). SINCE THESE APPEALS AND THE C .O. WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. WE HOWEVER, PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. ITA 349 OF 2007 & 202 OF 2009: 2. THROUGH THESE APPEALS, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHO HAS DENIED THE E XEMPTION U/S 11 OF THE INCOME TAX ACT WITH REGARD TO THE INCOME FROM THE E DUCATIONAL INSTITUTIONS OF THE ASSESSEE WITHOUT REALIZING THE FACT THAT EXEMPT ION U/S 11 OF THE ACT WAS GRANTED IN EARLIER YEAR AND THERE WAS NO CHANGE IN FACTS OR ACTIVITIES OF THE ASSESSEES. ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 2 3. BRIEF FACTS BORNE OUT FROM THE RECORD OF THE LOW ER AUTHORITIES ARE THAT THE ASSESSEE SOCIETY WAS REGISTERED WITH THE REGIST RAR OF SOCIETIES ACT ON 30.12.1993 AND THEREAFTER IT OBTAINED A CERTIFICATE OF REGISTRATION U/S 12A OF THE ACT FROM THE CONCERNED COMMISSIONER OF INCOME T AX ON 20.12.2002. THE OBJECT OF SOCIETY WAS CLAIMED TO BE OF RUNNING OF EDUCATIONAL INSTITUTION KNOWN AS SIDDHARTHA GROUP OF EDUCATIONAL INSTITUT IONS AND THEREFORE ENTITLED TO NECESSARY EXEMPTION UNDER THE INCOME TA X ACT. ONE SHRI K. SURESH BABU, SECRETARY OF THE SOCIETY AND SMT. K. V IJAYA LAKSHMI (PRESIDENT OF THE SOCIETY) WERE THE ACTIVE AND FOUNDER MEMBERS OF THE SOCIETY. EARLIER TO THE COMING INTO EXISTENCE OF THE ASSESSEE SOCIET Y THE SAID SRI K. SURESH BABU AND SMT. K. VIJAYA LAKSHMI HAD STARTED THE BUS INESS ACTIVITY OF CONDUCTING REGULAR AS WELL AS RESIDENTIAL CLASSES B OTH FOR BOYS AND GIRLS IN THE INDIVIDUAL STATUS AND THEY WERE REGULARLY ASSESSED TO TAX IN RESPECT OF INCOME FROM THE SAID ACTIVITY. SUBSEQUENTLY, THEY FLOATED THE SOCIETY BY THE NAME OF SIDDHARTHA EDUCATIONAL SOCIETY IN THE YEAR 1993. SINCE THE STUDENTS WERE COMMON TO THE SOCIETY AS WELL AS TO THE INDIVIDUAL ACTIVITIES, THE FEES WERE COMMONLY COLLECTED FOR BOTH THE DAY SCHOLARS AND HO STELLERS AND THE SAME WERE PROPORTIONATELY DISTRIBUTED AMONG THE SOCIETY AND THE TWO INDIVIDUAL PROMOTERS DEPENDING UPON THEIR EXPENDITURE NEED. W ITH EFFECT FROM 1.4.2005 IT WAS CLAIMED ON BEHALF OF THE ASSESSEE S OCIETY THAT INDIVIDUAL ACTIVITIES WERE SHIFTED TO THE HANDS OF THE SOCIETY AND INCOME FROM THE RUNNING OF THE EDUCATIONAL INSTITUTIONS WERE ACCOUN TED FOR IN THE HANDS OF THE SOCIETY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. MADE A PERSONAL INSPECTION OF THE EDUCATIONAL PREMISES AND INQUIRED THE FEES COLLECTED FOR VARIOUS COURSES OFFERED, UPON WHICH B ROCHURES INDICATING CLASSWISE FEES STRUCTURES WERE FURNISHED. ON FURTH ER ENQUIRY, IT WAS REVEALED THAT PART OF THE INCOME FROM FEE COLLECTION FROM TH E STUDENTS WAS SHOWN IN THE HANDS OF THE SOCIETY AS EXEMPTED INCOME WHILE A MAJOR PART OF THE INCOME IS SHOWN AS A TAXABLE INCOME IN THE HANDS OF THE INDIVIDUAL PROMOTERS NAMELY K. SURESH BABU AND SMT. VIJAYA LAKSHMI UNDER THE HEAD BUSINESS INCOME. IT WAS FURTHER ADMITTED THAT FURTHER INCOM E HAD ALSO BEEN RECEIVED ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 3 IN THE FORM OF DONATION, PART OF WHICH WAS SHOWN AS EXEMPTED INCOME IN THE HANDS OF THE ASSESSEE AND OTHER PART OF THE INCOME WAS SHOWN AS BUSINESS INCOME IN THE HANDS OF THE SAID TWO INDIVIDUAL PROM OTERS. ON BEING QUERIED AS TO WHY ONLY A PART OF INCOME AND NOT THE WHOLE O F IT FROM THE ACTIVITY OF RUNNING OF EDUCATIONAL INSTITUTION WAS SHOWN AS BUS INESS INCOME, IT WAS CLARIFIED THAT ALL SAID ACTIVITIES WHICH GENERATE R ECURRING REVENUE WERE CONSIDERED AS VOCATION IN THE HANDS OF TWO INDIVIDU AL PROMOTERS AND THEREFORE OFFERED FOR TAX UNDER CHAPTER IVD OF THE ACT. HOWEVER, A PORTION OF THE INCOME FROM THE SAME ACTIVITY WAS CLAIMED FOR E XEMPTION IN THE HANDS OF THE SOCIETY IN TERMS OF SECTION 11 OF THE ACT. 5. AFTER HAVING CAREFULLY EXAMINED THE SUBMISSIONS AND THE CLARIFICATIONS ON BEHALF OF THE SOCIETY, THE ASSESSING OFFICER DEC LINED TO ACCEPT THE PLEA FOR ALLOWING EXEMPTION OF A PORTION OF INCOME FROM THE SAME ACTIVITIES IN THE HANDS OF THE SOCIETY FOR THE REASONS THAT THE ACTIV ITIES OF THE INDIVIDUAL AS WELL AS SOCIETY WAS ONE AND THE SAME, THEREFORE, PART OF THE ACTIVITY CANNOT BE TREATED AS A CHARITABLE ACTIVITY IN THE HANDS OF TH E SOCIETY. THE A.O. HAS ALSO OBSERVED THAT THE EDUCATIONAL INSTITUTION OF SOCIET Y AND THE SAID TWO INDIVIDUAL PROMOTERS ARE PERFORMING THEIR EDUCATIONAL ACTIVITI ES IN THE SAME PREMISES SHOWING NO DISTINCTION BETWEEN THE BUSINESS ACTIVIT Y OF THE INDIVIDUAL PROMOTERS AND THAT OF THE SOCIETY AND THE INTENTION OF THE SOCIETY TO RUN THE EDUCATIONAL INSTITUTION ON COMMERCIAL LINES. THE A.O. FURTHER DISCARDED THE CONTENTIONS OF THE ASSESSEE THAT THE REGISTRATION U /S 12AA HAD ALREADY BEEN GRANTED BY THE COMMISSIONER AND THE ASSESSMENT FOR EARLIER YEARS HAS BEEN COMPLETED ACCEPTING THE CLAIM OF EXEMPTION ON THE G ROUND THAT GRANT OF REGISTRATION U/S 12AA WOULD NOT PREVENT THE ASSESSI NG OFFICER FROM ASCERTAINING WHETHER IN A GIVEN ASSESSMENT YEAR THE ACTIVITIES OF THE SOCIETY ARE CHARITABLE IN NATURE? 6. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSIONS THAT THE ASSESSEE SOCIETY HAD BEEN RUNN ING THE EDUCATIONAL INSTITUTIONS UNDER THE NAME SIDDHARTHA GROUP ON I DENTICAL LINES FOR THE EARLIER YEARS FOR WHICH EXEMPTION HAD BEEN CLAIMED AND GRANTED AND HENCE, THERE WAS NO JUSTIFICATION TO DISALLOW EXEMPTION FO R THE RELEVANT ASSESSMENT ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 4 YEAR WHEN THERE WAS NO MATERIAL CHANGE OF THE FACTS . IN SUPPORT OF THIS CONTENTION, HE PLACED A RELIANCE UPON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT 193 ITR 321 AND JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. LOVELY BALASIKSHA PARISHAD 266 ITR 349. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THE SOCIE TY HAS BEEN GRANTED REGISTRATION U/S 12AA AND EXEMPTION U/S 80G OF THE ACT. ONCE AN INSTITUTION HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT, IT CONTINUE TO ENJOY THE SAID RECOGNITION AS A CHARITABLE BODY TILL IT IS CA NCELLED BY THE COMMISSIONER OF INCOME TAX U/S 12AA (3) OF THE ACT. THEREFORE, THE ASSESSING OFFICERS JURISDICTION IS LIMITED ONLY TO THE EXTENT PERMITTE D U/S 11 TO 13 OF THE ACT BUT HE IS NOT COMPETENT TO TAKE A DECISION AS TO WHETHE R THE ACTIVITIES PURSUED BY THE INSTITUTION THAT HAD ALREADY BEEN GRANTED REGIS TRATION U/S 12AA OF THE ACT IS CHARITABLE OR NOT. SINCE THE OBJECT OF THE INST ITUTION ON THE BASIS OF THE REGISTRATION WAS GRANTED BY THE COMMISSIONER OF INC OME TAX REMAINED UNALTERED, THE ASSESSING OFFICER CANNOT LOOK INTO T HE MEANS OF ACHIEVING THE OBJECT FOR DETERMINING WHETHER IT IS A CHARITABLE T RUST OR NOT. THEREFORE, THE A.O. HAS CLEARLY ERRED IN STEPPING INTO THE SHOES O F THE HIGHER AUTHORITIES FOR DETERMINING WHETHER ACTIVITIES PURSUED BY THE ASSES SEE SOCIETY IS CHARITABLE OR NOT. 7. IT WAS FURTHER CONTENDED THAT THE A.O. HAS NOT E STABLISHED ANY FACT TO THE EFFECT THAT THERE WAS ANY DIVERSION OF FUNDS IN THE HANDS OF THE ASSESSEE SOCIETY FOR ANY PURPOSE OTHER THAN THE OBJECTS OF R UNNING OF AN EDUCATIONAL INSTITUTION. THEREFORE, HE WAS NOT JUSTIFIED IN DE NYING THE EXEMPTION IN RESPECT OF THE SURPLUS INCOME OF THE ASSESSEE SOCIE TY. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PL ACED A RELIANCE UPON THE VARIOUS CASE LAWS BEFORE THE CIT(A) AND THE SAME AR E EXTRACTED HEREUNDER: ADITNAR EDUCATIONAL INSTITUTIONS VS. CIT 224 ITR 3 10 (SC) SAMARITAN SOCIETY VS. CIT 225 ITR 652 (SC) THYAGARAYA CHARITIES VS. ADDL. CIT 225 ITR 1010 (S C) VICTORIA TECHNICAL INSTITUTE VS. CIT 188 ITR 57 (S C) THAGARAJAR CHARITIES VS. ADDL. CIT 92 TAXMAN 152 ( SC) RANGARAYA MEDICAL COLLEGE VS. ITO 117 ITR 284 (AP HIGH COURT) CIT VS. ISA FARMS (P) LTD. 181 ITR 448 (BOMBAY HIG H COURT) CIT VS. THAGABRAHMA GANA SABHA 188 ITR 160 (MADRAS HIGH COURT) CIT VS. SRI RAM EDUCATION FOUNDATION 250 ITR 504 ( DELHI HIGH COURT) ARYAN EDUCATIONAL SOCIETY VS. CIT 281 ITR (AT) 72 (DELHI ITAT) ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 5 CIT VS. GAYATRI WOMEN WELFARE ASSOCIATION 203 ITR 3 89 (KARNATAKA HIGH COURT) BIRLA VIDYAVIHAR TRUST VS. CIT 136 ITR 445 (CALCUTT A HIGH COURT) 8. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT ACC ORDING TO THE CBDT CIRCULAR NO.F.NO.194/16-17 IT(AI) IT HAS BEEN CLARI FIED THAT WHERE ALL THE OBJECTS OF TRUST OR EDUCATIONAL INSTITUTION AND THE SURPLUS INCOME IF ANY FROM RUNNING THE EDUCATIONAL INSTITUTION IS USED FOR THE PURPOSE OF EDUCATION ONLY, IT CAN BE HELD THAT INSTITUTION IS EXISTING FOR EDU CATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT AND ACCORDINGLY ENTITLED TO N ECESSARY EXEMPTION. THE A.O. HAS CLEARLY IGNORED THE INSTRUCTIONS CONTAINED IN THE SAID BOARDS CIRCULAR WHILE HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION OF ITS SURPLUS INCOME. IN SUPPORT OF HIS CONTENTION THAT THE CIRC ULARS OF BINDING UPON THE REVENUE AUTHORITIES THE LD. COUNSEL FOR THE ASSESSE E HAS PLACED A RELIANCE UPON THE JUDGEMENT OF THE A.P. HIGH COURT IN THE CA SE OF CIT VS. SMT. NAYANA P. DEDHIA 270 ITR 572, CIT VS. T.V. RAMANAIA H & SONS 157 ITR 300 AND CIT VS. ANDHRA PRADESH STATE ROAD TRANSPORT COR PORATION 285 ITR 147. 9. IT WAS FURTHER POINTED OUT BEFORE THE CIT(A) THA T OUT OF THE TOTAL GROSS RECEIPTS IN THE HANDS OF ASSESSEES SOCIETY, THE A. O. HAS ACCEPTED THE CLAIM OF EXPENDITURE OF RS.45,78,401/- THEREBY GRANTING EXEM PTION TO THAT EXTENT U/S 11 OF THE ACT AND HAVING DONE SO HE WAS NOT JUSTIFI ED IN TREATING THE SURPLUS AMOUNT OF RS.17,13,219/- AS INCOME NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. SUCH APPROACH OF THE A.O. IS SELF-CONTRADICTO RY. THE JUDGEMENT OF THE APEX COURT IN THE CASE OF SAFDARJUNG ENCLAVE SOCIET Y VS. MUNICIPAL CORPORATION OF DELHI AIR 1992 (SC) 1456 WAS WRONGLY RELIED UPON BY THE A.O. AS THE JUDGEMENT WAS RENDERED UNDER THE PROVISIONS OF DELHI MUNICIPAL CORPORATION ACT. 10. THE CIT(A) RE-EXAMINED THE ISSUE IN THE LIGHT O F ASSESSEES CONTENTIONS BUT WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND HE CONFIRMED THE ORDER OF THE A.O. DENYING THE EXEMPTI ON U/S 11 OF THE ACT. 11. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS AS RAISED BEFORE THE CIT (A). HE HAS INVITED OUR ATTENTION TO THE BY LAWS/MEMORANDUM OF THE SOCIETY IN SUPPORT OF HIS ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 6 CONTENTION THAT THE OBJECT OF THE SOCIETY IS TO IMP ART EDUCATION BESIDES OTHER CHARITABLE ACTIVITIES. THE OBJECT OF THE SOCIETY W AS DULY EXAMINED BY THE CIT WHILE GRANTING REGISTRATION U/S 12A VIDE ITS ORDER DATED 20.12.2002. THE ASSESSEE SOCIETY WAS CREATED IN 1993 AFTER HAVING I T REGISTERED WITH THE REGISTRAR OF SOCIETIES ON 30 TH DECEMBER, 1993. THE MAIN PROMOTERS OF THE SOCIETY SHRI K. SURESH BABU AND SMT. K. VIJAYA LAKS HMI WERE CONDUCTING THE REGULAR AS WELL AS RESIDENTIAL CLASSES FOR BOTH BOY S AND GIRLS IN THE INDIVIDUAL STATUS ON COMMERCIAL LINES AND THEY HAD OFFERED THE INCOME EARNED BY THEM IN THEIR INDIVIDUAL STATUS. AFTER GETTING THE SOCI ETY REGISTERED U/S 12A OF THE ACT, THE EDUCATIONAL ACTIVITIES WERE PERFORMED BY T HE SOCIETY AS WELL AS BY THE PROMOTERS IN INDIVIDUAL CAPACITY. THE FEES COLLECT ED BY THEM WERE ALSO ACCORDINGLY BIFURCATED AMONGST THE SOCIETY AND THE INDIVIDUAL PROMOTERS. WHATEVER COLLECTION WERE MADE BY THE SOCIETY, IT WA S UTILIZED IN PROMOTING ITS EDUCATIONAL ACTIVITIES WHICH IS THE MAIN OBJECT OF THE SOCIETY. THE MAJOR PORTION OF THE RECEIPTS WERE DECLARED IN THE HANDS OF THE INDIVIDUAL PROMOTERS AND THE INCOME EARNED THEREON WAS OFFERED TO TAX. 12. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER IN VITED OUR ATTENTION TO THE BOARDS CIRCULAR NO.194 OF 16-17 II (AI) APPEAR ING AT PG.NO.24 OF THE COMPILATION OF THE ASSESSEES WHEREIN BOARD HAS CLAR IFIED THAT WHERE ALL THE OBJECTS OF THESE TRUST ARE EDUCATIONAL AND THE SURP LUS, IF ANY FROM RUNNING THE EDUCATIONAL INSTITUTION IS USED FOR EDUCATIONAL PUR POSE ONLY, IT CAN BE HELD THAT INSTITUTION IS EXISTING FOR EDUCATIONAL PURPOS E AND NOT FOR PURPOSE OF PROFIT. HE HAS INVITED OUR ATTENTION TO THE OBJECT S/MEMORANDUM OF THE SOCIETY TO SUBSTANTIATE THAT THE SOLE OBJECT OF THE SOCIETY IS TO IMPART EDUCATION AND WHATEVER SURPLUS INCOME OF THE ASSESS EE SOCIETY IS GENERATED IT WAS USED FOR THE PROMOTION OF THE EDUCATION AT A LL LEVELS. THE REVENUE HAS NOT BROUGHT ANYTHING ON RECORD TO ESTABLISH THAT SU RPLUS FUNDS OF THE SOCIETY OR THE INCOME OF THE SOCIETY WAS UTILIZED FOR THE P URPOSE OTHER THAN THE OBJECT OF THE ASSESSEE SOCIETY. THE LD. COUNSEL FO R THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE CIRCULAR NO.11 OF 2008 DATED 19.12.2008 APPEARING AT PAGE NO.12 OF SECOND COMPILATION OF TH E ASSESSEE IN WHICH BOARD HAS CLARIFIED THE DEFINITION OF CHARITABLE PU RPOSE GIVEN U/S 2(15) OF THE I.T. ACT 1961. WHILE DEFINING THE CHARITABLE PURPO SE IT HAS BEEN CLARIFIED THAT ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 7 THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL NO T APPLY IN RESPECT OF FIRST 3 LIMBS OF SECTION 2(15) I.E. THE RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTLY WHERE THE PURPOSE OF TRUST OR INSTITUT ION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CHA RITABLE PURPOSE EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITY. THEREFORE, SO LONG AS THE OBJECT OF THE TRUST IS TO IMPART EDUCAT ION, IT WILL CONSTITUTE CHARITABLE PURPOSE EVEN IF INCIDENTALLY IT INVOLVES THE CARRYING ON THE COMMERCIAL ACTIVITY. THE REVENUE HAS NOT BROUGHT A NYTHING ON RECORD TO ESTABLISH THAT ASSESSEE SOCIETY WAS EVER ENGAGED IN ANY OF THE COMMERCIAL ACTIVITY. WHATEVER INCOME WAS EARMARKED TO THE SOC IETY FROM THE EDUCATIONAL ACTIVITIES JOINTLY CONDUCTED BY THE SOC IETY AS WELL AS THE INDIVIDUAL PROMOTERS, IT WAS UTILIZED EITHER FOR IMPARTING EDU CATION OR FOR PROMOTING THE EDUCATIONAL ACTIVITIES. THIS ASPECT WAS NOT EXAMIN ED BY THE LOWER AUTHORITIES. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO SUBMI TTED THAT OBJECT OF THE SOCIETY CAN ONLY BE EXAMINED BY THE COMMISSIONER U/ S 12AA(3) OF THE I.T. ACT AND NOT BY THE ASSESSING OFFICER. THE JURISDIC TION OF THE ASSESSING OFFICER IS LIMITED AND HE CAN ONLY EXAMINE THE UTILIZATION OF FUNDS WHETHER IT WAS IN ACCORDANCE WITH THE OBJECT OF THE SOCIETY OR NOT? I N ADDITION TO THE JUDGEMENT REFERRED BEFORE THE CIT(A), THE LD. COUNS EL FOR THE ASSESSEE HAS PLACED A RELIANCE UPON THE FOLLOWING MORE JUDGEMENT S IN SUPPORT OF HIS CONTENTIONS: 1. ACIT VS. GANDHI INSTITUTE OF TECHNOLOGY & MANAGE MENT ITA NO.526/VIZAG/2009 2. G.V. EDUCATIONAL SOCIETY, VISAKHAPATNAM VS. CIT ITA 430/VIZAG/2010 3. DIT VS. GARDEN CITY EDUCATIONAL TRUST (2010) 1 91 TAXMAN 238 4. OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CIT & OTHERS 315 ITR 382. 14. HE HAS ALSO DISTINGUISHED THE JUDGEMENT THE DEL HI HIGH COURT IN THE CASE OF SAFDARJUNG ENCLAVE EDUCATIONAL SOCIETY VS. MCD 80 ITR 154 WITH THE SUBMISSION THAT THE JUDGEMENT WAS RENDERED WITH REG ARD TO THE PROVISIONS OF DELHI MUNICIPAL CORPORATION ACT AND IT CANNOT BE RELIED ON FOR DECIDING THE NATURE OF ACTIVITIES OF THE ASSESSEES. HE HAS ALSO INVITED OUR ATTENTION TO THE ASSESSMENT ORDER FOR A.Y. 2003-04 WITH THE SUBMISSI ON THAT ASSESSEE WAS ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 8 ENGAGED IN THE SIMILAR ACTIVITIES IN EARLIER YEAR A ND THE CLAIM OF THE ASSESSEE FOR EXEMPTION OF INCOME WAS ACCEPTED BY THE REVENUE . WHEN THE ACTIVITIES OF ASSESSEE REMAINED THE SAME IN ALL THESE YEARS, T HE REVENUE IS PRECLUDED FROM TAKING A CONTRARY VIEW IN THE IMPUGNED ASSESSM ENT YEAR ON THE SIMILAR SET OF FACTS. 15. THE LD. D.R. BESIDES PLACING A RELIANCE UPON TH E ORDER OF THE CIT(A) HAS CONTENDED THAT SINCE PART OF SUCH INCOME DURING THE PREVIOUS YEAR WAS USED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF PERS ONS REFERRED TO IN SUB-SECTION 3 OF SECTION 13 OF THE I.T. ACT, IT ATTRACTS VIOLA TION OF THE PROVISIONS OF SECTION 11 AND 13 OF THE I.T. ACT. THE ENQUIRIES C ONDUCTED BY THE DEPARTMENT BROUGHT OUT THE FACT THAT INSTITUTIONS H AVE COLLECTED FEES FROM THE STUDENTS AS PER THE BROCHURES BUT NOT AS PER DE TAILS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. THE ENQUIRIES ALSO BRO UGHT OUT THE FACT THAT SOME PART OF THE INCOME FROM FEES COLLECTED FROM TH E STUDENTS WAS SHOWN IN THE HANDS OF THE SOCIETY AS EXEMPTED INCOME WHILE M AJOR PART OF THE INCOME WAS SHOWN AS TAXABLE IN THE HANDS OF THE INDIVIDUAL PROMOTERS UNDER THE HEAD BUSINESS INCOME. THEREFORE, THE ACTIVITY OF T HE SOCIETY ARE AKIN TO THE BUSINESS ACTIVITY OF THE PROMOTERS. SINCE THE SOCI ETY AND TWO PROMOTERS WERE ESTABLISHED TO RUN A COMMERCIAL VENTURE, THE A .O. HAS RIGHTLY INFERRED THE ACTIVITY OF THE SOCIETY TO BE OF COMMERCIAL NAT URE AND NOT THE CHARITABLE ONE. THE LD. D.R. FURTHER CONTENDED THAT GRANTING OF REGISTRATION U/S 12A DOES NOT CONFER THE ASSESSEE BENEFIT OF EXEMPTION O F TAX U/S 11 OF THE ACT. THE A.O. HAS RIGHT TO EXAMINE THE NATURE OF ACTIVIT IES AND IN THE INSTANT CASE THE A.O. HAS PROVED THAT THERE IS A QUID PRO QUO IN THE ACTIVITIES CARRIED ON BY THE ASSESSEES AND THE ENTIRE ACTIVITY IS NOT RUN AS A GENERAL PUBLIC UTILITY BUT AS A COMMERCIAL VENTURE WITH A PROFIT MOTIVE. THE DONATION RECEIVED BY THE ASSESSEE ARE NOT VOLUNTARY AND IT WAS IN A FORM OF AN ADDITIONAL FEES PAID FOR SEEKING ADMISSION AND THUS A PURCHASE PRICE FOR OBTAINING THE SEAT IN THE COLLEGE CANNOT ASSUME A CHARACTER OF A DONATION. M ERE MAINTENANCE OF SEPARATE ACCOUNTS FOR THE SOCIETY AND ITS TWO CO-PR OMOTERS IS IMMATERIAL AS THEY CARRIED ON IDENTICAL ACTIVITIES FOR PROFIT FRO M THE SAME PREMISES. THEREFORE, THE LOWER AUTHORITIES HAVE RIGHTLY DENIE D THE EXEMPTION TO THE ASSESSEES. ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 9 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. UNDISPUTEDLY, THE ASSESSEE SOCIETY WAS FORMED BY TWO PROMOTERS NAMELY SHRI K. SURESH BABU AND SMT. K. VIJAYA LAKSHMI IN 1993 AND THEREAFTER S OCIETY OBTAINED A CERTIFICATE OF REGISTRATION U/S 12AA OF THE ACT FRO M THE CONCERNED COMMISSIONER OF INCOME TAX ON 20.12.2002. BEFORE F ORMING THE SOCIETY SHRI K. SURESH BABU AND SMT. K. VIJAYA LAKSHMI HAD STARTED THE BUSINESS ACTIVITY OF CONDUCTING REGULAR AS WELL AS RESIDENTI AL CLASSES BOTH FOR BOYS AND GIRLS IN THEIR INDIVIDUAL STATUS AND THEY WERE REGU LARLY ASSESSED TO TAX IN RESPECT OF INCOME FROM SUCH ACTIVITY. SUBSEQUENTLY , THEY FLOATED THE SOCIETY AND GOT IT REGISTERED U/S 12A OF THE I.T. ACT. SIN CE THE STUDENTS WERE COMMON TO THE SOCIETY AS WELL AS THEIR INDIVIDUAL A CTIVITY, THE FEES WERE COMMONLY COLLECTED FOR THE DAY SCHOLARS AND HOSTELL ERS AND THE SAME WERE PROPORTIONATELY DISTRIBUTED AMONGST THE SOCIETY AND THE TWO INDIVIDUAL PROMOTERS DEPENDING UPON THEIR EXPENDITURE NEEDS. WITH EFFECT FROM 1.4.2005 THE INDIVIDUAL ACTIVITIES WERE SHIFTED TO THE HANDS OF THE SOCIETY AND THE INCOME FROM RUNNING OF THE EDUCATIONAL INSTITUT IONS WERE ACCOUNTED FOR IN THE HANDS OF THE ASSESSEE SOCIETY. THE REVENUE HAS RAISED A DISPUTE THAT SINCE THE ACTIVITIES OF THE SOCIETY AS WELL AS THE PROMOTERS ARE MIXED UP AND THE PROMOTERS ARE RUNNING THEIR ACTIVITIES ON COMME RCIAL BASIS, THE ACTIVITIES OF THE SOCIETY SHOULD ALSO BE CONSIDERED TO BE THE COMMERCIAL ACTIVITY AND THE EXEMPTION U/S 12AA SHOULD BE WITHDRAWN. 17. NOW THE QUESTION ARISES AS TO WHAT ARE THE REQU IREMENTS FOR TREATING THE SOCIETY TO BE A CHARITABLE SOCIETY FOR GRANTING THE REGISTRATION U/S 12AA OF THE ACT? THE WORD CHARITABLE PURPOSE HAS BEEN DEFINED U/S 2(15) OF THE I.T. ACT. ACCORDING TO IT THE WORD `CHARITABLE PUR POSE INCLUDES A RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. SINCE THE ASSESSEE SOCI ETY IS ENGAGED IN IMPARTING OF EDUCATION IT CAN BE CONSIDERED TO BE ENGAGED IN A CHARITABLE ACTIVITY. WE HAVE ALSO EXAMINED THE BY-LAWS OR THE MEMORANDUM OF THE SOCIETY, APPEARING AT PG.NO.1 TO 8 OF THE COMPILATION OF THE ASSESSEE, WE FIND THAT THE SOCIETY UNDER THE NAME OF `SIDDHARTHA EDUCATION AL SOCIETY WAS ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 10 CONSTITUTED ONLY TO PROMOTE OR IMPART EDUCATION. I T HAS BEEN ALSO SPECIFIED IN CLAUSE 5 THAT THE ASSESSEE IS FORMED WITH NO PRO FIT MOTIVE AND NO COMMERCIAL ACTIVITY INVOLVED IN ITS WORKING. RELYI NG UPON THE OBJECTS OF MEMORANDUM OF THE SOCIETY, THE REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEES W.E.F. 31 ST NOV97, THE DATE ON WHICH THE APPLICATION FOR REGISTRATION WAS FILED VIDE LETTER DATED 20.12.2002 . NOW THE QUESTION IS RAISED WITH REGARD TO THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE SOCIETY AND ITS PROMOTERS. NOTHING HAS BEEN BROUGHT OUT BY THE REVENUE BEFORE US THAT PRESENT STATE OF AFFAIRS OF THE SOCIETY AND ITS PRO MOTERS DO NOT ALLOW THE SOCIETY TO CLAIM BENEFIT OF EXEMPTION U/S 11 OF THE ACT. WHAT IS TO BE SEEN TO DISALLOW A BENEFIT OF EXEMPTION TO A CHARITABLE SOCIETY, IS ONLY WHETHER THE SOCIETY IS ENGAGED IN COMMERCIAL ACTIVITIES OR THE SURPLUS FUNDS OF THE SOCIETY IS USED OTHER THAN THE PURPOSE FOR WHICH IT WAS CRE ATED. IN THE INSTANT CASE, IT HAS BEEN STATED THAT TWO PROMOTERS OF THE SOCIET Y HAVE BEEN IMPARTING EDUCATION ON COMMERCIAL BASIS AND LATER ON THEY FOR MED THE ASSESSEE SOCIETY AND WHATEVER THE FEES WERE COLLECTED, IT WA S BIFURCATED AMONG THE INDIVIDUAL PROMOTERS AND THE SOCIETY. MAJOR PORTIO N OF THE FEES WAS ALLOCATED TO THE INDIVIDUAL PROMOTERS WHICH WAS ASS ESSED TO TAX. WHATEVER PROPORTION WAS ALLOCATED TO THE ASSESSEE SOCIETY IT WAS UTILIZED BY THE SOCIETY TO ACHIEVE ITS OBJECT OF IMPARTING OF EDUCATION. 18. WE HAVE ALSO EXAMINED THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. GANDHI INSTITUTE OF TECHNOLOGY AND MANAGEMENT I TA NO.525/V/2009 IN WHICH THE ISSUE OF FEES COLLECTED AND THE DONATION RECEIVED BY THE ASSESSEE SOCIETY WAS EXAMINED AND IT WAS HELD THAT ON ACCOUN T OF HIGHER FEES COLLECTED OR DONATION RECEIVED THE REGISTRATION U/S 12A CANNOT BE CANCELLED. THE TRIBUNAL HAS EXAMINED ALL RELEVANT ASPECTS AND HAS OBSERVED THAT SINCE NO IOTA OF EVIDENCE IS BROUGHT ON RECORD BY THE REV ENUE TO DEMONSTRATE THAT ASSESSEE WAS EVER ENGAGED IN ANY SORT OF COMMERCIAL ACTIVITY, THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT CANNOT BE DENIED BY CAN CELLING THE REGISTRATION U/S 12A OF THE ACT. THE RELEVANT OBSERVATION OF TH E TRIBUNAL ARE EXTRACTED HEREUNDER: 9. WE HAVE ALSO CAREFULLY EXAMINED THE JUDGEMENTS O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF GOVERNING BODY OF ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 11 RANGARAYA MEDICAL COLLEGE VS. ITO (SUPRA) AND WE FI ND THAT THE JURISDICTIONAL HIGH COURT HAS CATEGORICALLY HELD TH AT MERELY BECAUSE CERTAIN SURPLUS ARISES FROM ITS OPERATION, IT CANNO T BE HELD THAT INSTITUTION IS BEING RUN FOR THE PURPOSE OF PROFIT SO LONG AS NO PERSON OR INDIVIDUAL IS ENTITLED TO ANY PORTION OF THE SAID PROFIT AND THE SAID PROFIT IS USED FOR THE PURPOSE AND FOR THE PROMOTION OF THE OBJECT OF THE INSTITUTION. WE HAVE ALSO EXAMINED THE ORDER OF THE TRIBUNAL PUNE BENCH IN THE CASE OF MAHARASHTRA ACAD EMY OF ENGINEERING AND EDUCATIONAL RESEARCH VS. CIT (SUPRA ) IN WHICH THE IDENTICAL ISSUE WAS RAISED. IN THAT CASE THE MAIN ALLEGATION OF THE DEPARTMENT WAS THAT THE TRUST WAS TAKING THE DONATI ONS AND CAPITATION FEES FOR ADMISSIONS THOUGH PROHIBITED UN DER MAHARASHTRA INSTITUTION (PROVISION OF CAPITATION FEES) ACT, 198 7. HAVING EXAMINED THOROUGHLY VARIOUS JUDICIAL PRONOUNCEMENTS OF APEX COURT AND THE VARIOUS HIGH COURTS, THE TRIBUNAL HAS HELD THAT SO LONG AS THERE WAS NO EVIDENCE OF MISUTILISATION OF FUNDS AN D THE PRESCRIBED ACTIVITY OF EDUCATION WAS FOUND TO BE CARRIED ON BY THE ASSESSEE, CIT HAS NO JURISDICTION TO CANCEL THE REGISTRATION U/S 12AA(3) OF THE I.T. ACT. IF THE CIT HAD AN INFORMATION OF SOME WR ONGFUL MEANS OF EARNING FEES IN THE FORM OF A DONATION OR ABOUT EXC ESSIVE CHARGING OF FEES IN THE INVESTIGATION PROCESS, THE CIT CAN O NLY PASS ON THE INFORMATION TO THE CONCERNED REGULATORY AUTHORITIES OF THE EDUCATIONAL INSTITUTIONS WITHIN HIS RIGHTS. THE RE LEVANT OBSERVATION OF THE TRIBUNALS ARE EXTRACTED HEREUNDER FOR THE SA KE OF REFERENCE: IN THE RECENT PAST SUB-S.(3) WAS INSERTED IN S.12AA W.E.F 1 ST NOV., 2004 WHICH GIVES POWER OF CANCELLATION OF REG ISTRATION TO THE CIT, IF HE FINDS THAT THE ACTIVITIES ARE NOT GENUIN E OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TR UST. THESE POWERS ARE CONFERRED WITH A VIEW TO ENSURE THAT IF ONCE A REGISTRATION HAS BEEN GRANTED UNDER S. 12AA, A TRUS T OR INSTITUTION MAY NOT TAKE ANY SUCH LIBERTY OF MISUSE OF THE REGI STRATION OR THE PROVISIONS BY GOING HAYWIRE RATHER FURTHERING THE O BJECTS OF THE TRUST OR GENUINELY NOT PURSUING THE ACTIVITIES FOR WHICH IT WAS ESTABLISHED. THE MOST IMPORTANT FEATURE OF S. 12AA IS AS ALSO REFERRED IN THIS APPEAL FOR ADJUDICATION, THAT THIS SECTION HAS ONLY LAID DOWN THE PROCEDURE OF REGISTRATION AND THIS SE CTION NOWHERE SPEAKS THAT WHILE CONSIDERING THE APPLICATION OF RE GISTRATION, THE CIT SHALL ALSO LOOK INTO THE PROCEDURE OF EARNING O F INCOME AND SOURCES FROM WHERE RECEIPTS ARE DERIVED. THE POWER OF ENQUIRY, IN RESPECT OF SOURCES OF RECEIPTS AND THE UTILIZATION OF INCOME IS ENTRUSTED IN SEPARATE SECTIONS. THE LANGUAGE THUS USED IN THIS SECTION ONLY CONFINES TO ENQUIRE ABOUT THE ACTIVITI ES OF THE TRUST AND ITS GENUINENESS, WHICH MEANS, IN CONSONANCE WITH TH E OBJECTS FOR WHICH CREATED AND THOSE OBJECTS AS ALSO ACTIVITIES SHOULD NOT BE A CAMOUFLAGE BUT PURE, SINCERE, CHARITABLE AND FOR PU BLIC UTILITY AT LARGE. WHAT IS IMPLICIT IS THAT THE CIT HAS TO SIN CERELY EXAMINE THAT THE OBJECTS AS ALSO THE ACTIVITIES SHOULD NOT BE PR IMA FACIE AGAINST THE BASIC STRUCTURE FOR WHICH BENEFICIAL LAW IS MAD E AND ALSO BE NOT IN CONFLICT WITH THE GENERAL PUBLIC UTILITY. NATUR ALLY AN INSTITUTION IF ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 12 ESTABLISHED TO CARRY OUT AN ILLEGAL ACTIVITY OR ACT IVITIES ARE CAUSING ANY TYPE OF NUISANCE NOT IN THE INTEREST OF THE PUB LIC AT LARGE SHOULD DEFINITELY LEAD TO CANCELLATION OF REGISTRAT ION. THE SCHEME OF THE ACT OTHERWISE DO NOT SUBSCRIBE AND ALLOW A TRUS T TO TAKE THE BENEFIT OF THE PROVISIONS OF SS. 11 AND 12 UNLESS E STABLISH THE PRESCRIBED UTILIZATION OF THE INCOME, EVEN IF, AT A LL THE TRUST HOLDS THE REGISTRATION IN ITS HANDS. THEREFORE, AT THE ST AGE OF GRANTING REGISTRATION THE CIT IS NOT EXPECTED TO BOTHER HIMS ELF ABOUT THE OTHER PROVISIONS OF THE ACT AND SUPPOSED TO CONFINE HIMSELF TO THE PROCEDURE OF REGISTRATION AS LAID DOWN THEREIN. NOWHERE THE CIT HAS TAKEN ANY OBJECTION TO THE CHA RITABLE AND EDUCATIONAL NATURE OF THE INSTITUTION. IN FACT , THE OBJECTS OF THE INSTITUTION AS DECLARED IN THE TRUST DEED DOES REFL ECT THAT ALL ARE PHILANTHROPIC OR BENEVOLENT IN NATURE, PRECISELY FO R THE PURPOSE OF IMPARTING EDUCATION. STRANGE ENOUGH THERE IS NO FI NDING RECORDED BY THE CIT CONTRARY TO THIS FACT. BE THAT AS IT MA Y, THE REAL AND THE ONLY SUBSTANTIAL OBJECTION FOR REFUSAL OF REGISTRAT ION WAS THAT THE INSTITUTION HAS COLLECTED DONATIONS THUS ADOPTED SO ME WRONG MEANS OF COLLECTION OF FEES. BUT WHETHER AT THIS P RELIMINARY STAGE HE HAD THE RIGHT TO DRAW AN ADVERSE INFERENCE SO AS TO REFUSE REGISTRATION OR ALTERNATIVELY CONFINE HIMSELF TO TH E ENQUIRY ABOUT THE OBJECTS AND THE ACTIVITIES OF THE TRUST AS PER THE LIMITS OF THE JURISDICTION OF S. 12AA. RATHER THIS IS ALSO NOT T HE CASE OF THE CIT THAT THE INSTITUTION IS DOING SOME OTHER ACTIVITY O F EARNING PROFIT OTHER THAN THE ACTIVITY OF RUNNING EDUCATIONAL INST ITUTIONS. THE ESTABLISHED FACTUAL POSITION IS THAT THE INSTITUTIO N IS NOT DOING IN ANY OTHER ACTIVITY EXCEPT RUNNING EDUCATIONAL INSTITUTI ONS. IN SUCH CIRCUMSTANCES, THE ACTION OF CANCELLATION OF REGIST RATION CANNOT BE UPHELD. AS FAR AS THE OBJECTIVE OF THE APPELLANT I S CONCERNED THIS IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS N OT IMPARTING EDUCATION. SINCE THE QUESTION ABOUT THE IMPARTING OF EDUCATION HAS NOT BEEN DOUBTED OR CHALLENGED BY THE REVENUE THERE FORE, THE IMPUGNED ORDER PASSED BY THE RESPONDENT IS UNSUSTAI NABLE IN LAW. STRANGE ENOUGH THERE IS NOTHING ON RECORD TO PROVE SIGHTLESSLY THAT THE PURPOSE OF IMPARTING OF EDUCATION WAS NOT FULFI LLED BY THIS INSTITUTE THUS THE REVENUE DEPARTMENT HAS HOPELESSL Y FAILED TO ESTABLISH THAT THERE WAS ANY ILLEGAL ACTIVITY OR IN FRINGEMENT OF ANY LAW SO THAT TO DOUBT THE GENUINENESS OF THE ACTIVIT IES. IF IT WAS SO THEN IT CAN BE HELD THAT THE ALLEGATIONS OF THE REV ENUE REMAINED UNSUPPORTED THUS DESERVES DISMISSAL. THE CITS APP ROACH FOR DECIDING THE ELIGIBILITY OF REGISTRATION OF A TRUST SHOULD BE DIFFERENT FROM THE ANGLE BY WHICH AN ASSESSMENT OF AN INCOME IS MADE BY THE A.O. WHAT PURPOSE DOES IT SERVE TO REVENUE BY CANCELING A REGISTRATION IF THE ACTIVITIES ARE IN PUBLIC INTERE ST BECAUSE IN CASE OF ANY BREACH OF THE LAWS THE SAME IS SUBJECT TO TAX U NDER SS. 11 AND 12. THESE TWO PROVISIONS AND FEW OTHER PROVISIONS ARE COMPETENT ENOUGH TO TACKLE FIRMLY A DEFAULTER OF PHILANTHROPI C APPLICATION OF INCOME OR FUNDS OF THE TRUST. THE OTHER ADVERSE SI DE OF ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 13 CANCELLATION IS THAT ON REFUSAL OF REGISTRATION THE ENTIRE RECEIPTS SHALL BE SUBJECT TO ASSESSMENT WITHOUT GRANTING BEN EFIT OF S.11 AND S.12 TO ASSESS INCOME WHICH DOES NOT FORM PART OF T OTAL INCOME THOUGH THE FACTUAL POSITION COULD BE THAT MAJOR PAR T MIGHT HAVE BEEN DEVOTED TOWARDS ACHIEVING THE OBJECTS I.E., IM PARTING EDUCATION, AS IN THIS CASE, BUT THE A.O. SHALL BE A UTOMATICALLY FORBIDDEN TO GRANT ADVANTAGE OF EXEMPTION CONSEQUEN T UPON THE CANCELLATION AS IS MANDATORY IN STATUTE. THE OUTCO ME OF THE DELIBERATION MADE IN DETAIL HERE IN ABOVE IS THAT P ERCURIAN OPINION IS TO DEBAR THE CIT TO ENTER INTO THE AREA OF INVES TIGATION OF SOURCE OF INCOME AND ALSO APPLICATION OF INCOME, SO THAT T HE AMOUNT OF CORRECT EXEMPT INCOME BE NOT PREJUDGED. IF THE CIT HAD AN INFORMATION OF SOME WRONGFUL MEANS OF EARNING FEES IN THE FORM OF A DONATION OR THE INFORMATION TELLS ABOUT EXCESSIVE CHARGING OF FEES; THEN THE CIT IN HIS RIGHTS CAN PASS ON THE IN FORMATION TO THE CONCERNED OFFICE BEARERS WORKING UNDER THE MAHARASH TRA CAPITATION FEES (PROHIBITION) ACT. THESE AUTHORITIES HAVE ENO UGH POWER TO DEAL WITH SUCH NATURE OF DEFAULT, SIDE BY SIDE THE CIT IS TO LIMIT HIS JURISDICTION WITHIN THE AMBITS OF PROVISIONS OF THE ACT AND EXPECTED TO GIVE A FINDING ON FACTS THAT EITHER THE OBJECTS ARE NOT FOR GENERAL PUBLIC UTILITY OR NOT ACHIEVED AS PRESCRIBED UNDER LAW. HOWEVER, PRESENTLY THE SITUATION IS THAT THE REVENUE HAS NOT SAID ABOUT ANY IMMORAL ACTIVITY OF THE APPELLANT OR THE COLLECTION OF FEES WAS BY WRONGFUL MEANS. PRIMA FACIE NO CASE WAS MADE OUT B Y THE CIT SO AS TO EVEN VAGUELY DEMONSTRATE THAT THE ACTIVITIES OF THE APPELLANT WERE NOT GENUINE OR ACTIVITY OF IMPARTING OF EDUCAT ION, FOR WHICH THE TRUST WAS CREATED, WERE NOT CARRIED OUT. EVEN THE CIT HAS FAILED TO ESTABLISH THAT ANY PART OF THE INCOME/REC EIPT OF THE TRUST WAS IN ANY MANNER MISUTILISED BY THE TRUSTEES FOR T HEIR PERSONAL BENEFIT I.E., NOT IN FULFILLMENT OF THE OBJECT OF T HE TRUST. OTHERWISE ALSO THERE ARE THREE WAYS TO LOOK AT THIS PROBLEM. ONE IS, THAT THE DONATIONS ARE RAISED BUT NOT UTILIZED FOR ACHIEVING THE OBJECTS I.E., TOWARDS IMPARTING EDUCATION; THEN SUCH AN INSTITUTI ON MUST BEAR THE CONSEQUENCE OF CANCELLATION OF REGISTRATION SIN CE IPSO FACTO INFRINGED S. 12AA(3) CONDITION. SECOND ASPECT IS, THAT THOUGH THE DONATIONS RECEIVED ARE MEANT TO FULFILL THE OBJECTS BUT TOGETHER WITH FEES HAVE INFRINGED ANTI CAPITATION PROHIBITION ACT ; THAT COMES WITHIN THE CLUTCHES OF THAT ACT BUT DEFINITELY NOT UNDER S. 12AA(3) PROVISIONS. THE THIRD ASPECT IS, THAT THE DONATION PLUS FEES DO NOT EXCEED THE PRESCRIBED LIMIT OF ANTI CAPITATION FEE ACT I.E., FIVE TIMES THE NORMAL FEES; FURTHER THAT NO EVIDENCE OF MISUTI LISATION OTHER THAN THE PRESCRIBED ACTIVITY THEN NO ACTION CAN BE SUGGESTED UNDER S. 12AA(3). THE ASSESSEES CASE FALLS UNDER THE TH IRD CATEGORY. WITH THE RESULT, TOTALITY OF THE CIRCUMSTANCES THUS WARRANTS, IN THE LIGHT OF THE FOREGOING DISCUSSION, NOT TO ENDORSE THE VIEW OF THE CIT. THE ORDER OF CANCELLATION OF REGISTRATION IS HEREBY REVOKED AGGARWAL MITRA MANDAL TRUST VS. DIRECTOR OF IT (EXE MPTION) (2007) 109 TTJ (DEL) 128, KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT (2008) 113 TTJ (CTK) 906 : (2008) 1 DTR (CTK) 2 73 AND HIMACHAL PRADESH ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD VS. CIT (2009) 125 TTJ (CHD) 98: (2009) 28 DTR (CHD ) (TRIB) 289 RELIED ON. ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 14 10. THE SIMILAR VIEWS WERE ALSO EXPRESSED BY THE TR IBUNAL IN THE CASE OF KAKINADA INSTITUTE OF TECHNOLOGY AND SCIENC E EDUCATIONAL SOCIETY VS. CIT ITA NO.92 OF VIZAG 2008. COPY OF T HE SAME IS PLACED ON RECORD AT PG.NO.69 TO 76 OF THE ACT. WE HAVE ALSO CAREFULLY EXAMINED THE CIRCULAR NO.11 OF 2008 DATED 19.12.2008 IN WHICH THEY HAVE GIVEN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE I.T. ACT 1961. WHILE DEFINING THE CHA RITABLE PURPOSE IT HAS BEEN CLARIFIED THAT THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL NOT APPLY IN RESPECT OF FIRST 3 LIMBS OF SECTI ON 2(15) I.E. RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTL Y WHERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF IT WILL CONSTITUTE CHARITABLE PURPOS E EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITIES. THEREFORE, SO LONG AS PERFORMANCE OF THE TRUST/OBJE CT OF THE TRUST IS TO IMPART EDUCATION, IT WILL CONSTITUTE CHARITABLE ACTIVITIES EVEN IF INCIDENTALLY IT INVOLVES CARRYING OF THE COMMERCIAL ACTIVITIES. 11. TURNING TO THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE TRUST IS SOLELY INVOLVED IN IMPARTING OF EDUCATION. NO IOTA OF EVIDENCE WAS BROUGHT ON RECORD BY THE REVENUE TO DE MONSTRATE THAT ASSESSEE WAS EVER ENGAGED IN ANY SORT OF COMME RCIAL ACTIVITIES. THE SOLE ALLEGATION IS WITH REGARD TO THE RECEIPT OF DONATIONS FROM THE PARENTS OF 8 MEMBERS AND THE REC EIPT OF DONATIONS MAY BE AGAINST A SPIRIT OF A PARTICULAR A CT BUT IT DOES NOT DISENTITLE THE ASSESSEE EITHER FROM THE REGISTRATIO N U/S 12 OR THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT SO LONG AS I T IS UTILIZED TO ACHIEVE THE OBJECT OF THE ASSESSEE TRUST. 19. WE HAVE ALSO EXAMINED THE CIRCULAR NO.11 OF 208 DATED 19.12.2008 IN WHICH THE BOARD HAS CLARIFIED THE DEFINITION OF `CH ARITABLE PURPOSE GIVEN U/S 2(15) OF THE INCOME TAX ACT. THE BOARD HAS FURTHER CLARIFIED THE IMPLICATIONS ARISES FROM THE FIRST PROVISO TO SECTION 2(15) OF T HE ACT WHICH SAYS THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON O F ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A C ESS OR FEES OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY, BY STATING THAT THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL NOT APPLY IN RESPECT OF THE FIRS T THREE LIMBS OF SECTION 2(15) I.E. RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIE F. THE RELEVANT CLARIFICATION GIVEN BY THE BOARD IS EXTRACTED HEREUNDER: ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 15 2. THE FOLLOWING IMPLICATIONS ARISE FROM THE AMEND MENT 2.1 THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL NO T APPLY IN RESPECT OF THE FIRST THREE LIMBS OF SECTION 2(15), I.E., RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTLY, W HERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE `CHARITABLE PURP OSE EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITIES. 2.2 `RELIEF OF THE POOR ENCOMPASSES A WIDE RANGE O F OBJECTS FOR THE WELFARE OF THE ECONOMICALLY AND SOCIALLY DISADV ANTAGED OR NEEDY. IT WILL, THEREFORE, INCLUDE WITHIN ITS AMBI T PURPOSES SUCH AS RELIEF TO DESTITUTE, ORPHANS OR THE HANDICAPPED, DI SADVANTAGED WOMEN OR CHILDREN, SMALL AND MARGINAL FARMERS, INDI GENT ARTISANS OR SENIOR CITIZENS IN NEED OF AID. ENTITIES WHO HAVE THESE OBJECTS WILL CONTINUE TO BE ELIGIBLE FOR EXEMPTION EVEN IF THEY INCIDENTALLY CARRY ON A COMMERCIAL ACTIVITY, SUBJECT, HOWEVER, TO THE CONDITIONS STIPULATED UNDER SECTION 11(4A) OR THE SEVENTH PROV ISO TO SECTION 10(23C) WHICH ARE THAT: (I) THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE ENTITY, AND SIMILARLY, ENTITIES W HOSE OBJECT IS `EDUCATION OR `MEDICAL RELIEF WOULD ALSO CONTI NUE TO BE ELIGIBLE FOR EXEMPTION AS CHARITABLE INSTITUTIONS E VEN IF THEY INCIDENTALLY CARRY ON A COMMERCIAL ACTIVITY SUBJECT TO THE CONDITIONS MENTIONED ABOVE. 3. THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS `ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E. THE FOURTH LIMB OF THE DEFINITION OF `CHARITABLE PURPOSE CONTAINED IN SECTION 2(15). H ENCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION UNDER S ECTION 11 OR UNDER SECTION 10(23C) OF THE ACT IF THEY CARRY ON COMMERC IAL ACTIVITIES. WHETHER SUCH AN ENTITY IS CARRYING ON AN ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS IS A QUESTION OF FACT W HICH WILL BE DECIDED BASED ON THE NATURE, SCOPE, EXTENT AND FREQ UENCY OF THE ACTIVITY. 20. WE HAVE FURTHER EXAMINED ONE MORE ORDER OF THE TRIBUNAL OF THIS BENCH IN THE CASE OF G.V. EDUCATIONAL SOCIETY VS. C IT ITA 430/V/2001 ON THE SAME ISSUE IN WHICH THE REVENUE HAS MADE OUT A CASE FOR DENYING THE REGISTRATION ON THE GROUND THAT AT THE END OF THE D IFFERENT FINANCIAL YEARS, ASSESSEE HAS SURPLUS INCOME AND RELYING UPON THE VA RIOUS JUDGEMENTS OF DIFFERENT HIGH COURTS, THE TRIBUNAL HAS HELD THAT S INCE CIT HAS NOT BROUGHT OUT ANYTHING ON RECORD IN SUPPORT OF HIS FINDING TH AT ASSESSEE WAS EVER ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 16 ENGAGED IN COMMERCIAL ACTIVITY, THE REGISTRATION U/ S 12A CANNOT BE DENIED ON THE BASIS OF THE PRESUMPTION THAT ASSESSEE HAD A SU RPLUS FUND AT THE END OF THE FINANCIAL YEAR WITHOUT BRINGING ANYTHING ON REC ORD THAT THE SURPLUS WAS UTILIZED FOR THE PURPOSE OTHER THAN THE CHARITABLE. THE RELEVANT OBSERVATION OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION TO THE JUDGEMENT OF THE BOMBAY HIGH COURT IN THE CASE OF VANITA VISHRAM TRUST VS. CCIT AND OTHERS 233 CTR 90 IN WHICH THEIR LORDSHIP HAVE HELD THAT PETITIONER TRUST WHIC H ONLY CONDUCTED EDUCATIONAL INSTITUTIONS, MUST BE REGARDED AS EXIST ING SOLELY FOR THE PURPOSE OF EDUCATION; FACT THAT A SURPLUS MAY INCID ENTALLY ARISE FROM THE ACTIVITIES OF THE TRUST AFTER MEETING THE EXPENDITURE INCURRED FOR CONDUCTING EDUCATIONAL ACTIVITIES WOUL D NOT DISENTITLE THE TRUST OF THE BENEFIT OF SECTION 10(23C) OF THE ACT. THE RELEVANT OBSERVATION OF THEIR LORDSHIP ARE EXTRACTED HEREUND ER: THE PETITIONER HAS BEEN CONDUCTING PRIMARY AND SECO NDARY SCHOOLS AND COLLEGES FOR ARTS, SCIENCE, COMMERCE AN D TECHNICAL COURSES IN MUMBAI SINCE 1929 AND IN SURAT SINCE 194 0. EXCEPT FOR CONDUCTING THESE EDUCATIONAL INSTITUTIONS, THE PETI TIONER HAS NOT CARRIED ON ANY OTHER ACTIVITIES RIGHT SINCE 1929. IN THIS BACKGROUND, IT WOULD BE NECESSARY TO ADVERT TO THE OBJECTS SET OUT IN THE MEMORANDUM OF ASSOCIATION, CLAUSE III(B) SPELLS OUT AS THE OBJECT, AMELIORATION OF THE CONDITION OF GUJARATI HINDU WOM EN OF THE THEN BOMBAY PRESIDENCY AND OTHER PLACES AND ALLEVIATION OF THEIR SOCIAL STATUS BY EDUCATING TO THEM IN SUBJECTS TENDING TO THEIR MATERIAL, MORAL AND SPIRITUAL ADVANCEMENT, OPENING OUT FOR TH EM PROPER AND SUITABLE FIELDS OF WORK, LAWFULNESS AND INFLUENCE I N HINDU SOCIETY. FROM THIS OBJECT, IT IS ABUNDANTLY CLEAR THAT THE A MELIORATION OF THE CONDITION OF GUJARATI SPEAKING HINDU WOMEN WAS SOUG HT TO BE IMPROVED, WHEN THE TRUST WAS FOUNDED IN MARCH, 1928 , BY PROVIDING FOR THE EDUCATION OF THIS CLASS OF WOMEN. THE MEANS BY WHICH THIS OBJECT IS SOUGHT TO BE ACHIEVED IS BY CO NDUCTING ASHRAMS OR HOMES FOR WOMEN AND GIRLS, PARTICULARLY FOR WIDOWS AND ORPHANED GIRLS EITHER AS FREE OR AS PAYING INMATES AND BY CONDUCTING SCHOOLS FOR IMPARTING RELIGIOUS, SECULAR AND INDUSTRIAL EDUCATION AND TRAINING IN FINE ARTS. A NUMBER OF A NCILLARY OBJECTS HAVE BEEN ADVERTED THEREIN INCLUDING PROVISION OF L IBRARIES AND GYMNASIUMS, PUBLICATION OF BOOKS AND BY MEANS OF PE CUNIARY AND OTHER HELP TO STUDENTS OF THE INSTITUTION. A HOLIS TIC READING OF THE OBJECT CLAUSE WOULD ESTABLISH BEYOND DOUBT THAT THE SOLE PURPOSE FOR THE ESTABLISHMENT OF THE PETITIONER WAS TO FURT HER THE CLAUSE OF EDUCATION AMONGST WOMEN BELONGING TO A PARTICULAR C LASS, AS STATED THEREIN. THOUGH THE OBJECTS CLAUSE CONTAINE D VARIED OBJECTS INCLUDING THE MANAGEMENT AND DEVELOPMENT OF MOVABLE AND IMMOVABLE PROPERTIES, THE STATEMENT OF FACT BEFORE THE COURT WHICH IS NOT DISPUTED IS THAT THE ONLY ACTIVITY WHICH HAS BEEN CARRIED OUT BY THE TRUST EVER SINCE ITS INCEPTION IS THE CONDUC T OF EDUCATIONAL ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 17 INSTITUTIONS. THE COURT, IT MUST BE EMPHASIZED, IS NOT DEALING WITH IN INSTITUTION WHICH HAS SOUGHT APPROVAL FOR THE FI RST TIME OR WHICH HAS BEEN SET UP IN THE PROXIMATE PAST. THE TRUST H AS A HISTORY OF OVER EIGHTY YEARS DURING THE COURSE OF WHICH THE ON LY ACTIVITY IS OF CONDUCTING EDUCATIONAL INSTITUTIONS. THE FACT THAT THE TRUST EXISTS SOLELY FOR EDUCATIONAL PURPOSES IS EVIDENCED FROM T HE ASSESSMENT ORDERS FOR ASST. YRS. 2000-01 AND 2006-07. BOTH TH ESE ORDERS WHICH HAVE BEEN MADE UNDER S. 143(3) CONTAIN A STAT EMENT TO THE EFFECT THAT THE ASSESSEE IS RUNNING SCHOOLS WITH GU JARATI AND ENGLISH AS MEDIA OF INSTRUCTION AT THE PRIMARY AND SECONDARY STAGES AND THAT THE ASSESSEE ALSO CONDUCTS A COLLEGE FOR G IRLS WITH THE SOLE INTENT OF IMPARTING EDUCATION. THE RECORD OF THESE PROCEEDINGS ALSO CONTAINS A JUDGEMENT OF A DIVISION BENCH OF TH E COURT DATED 29 TH JUNE, 2005 IN A REFERENCE UNDER S. 256(1) TO WHICH THE PETITIONER WAS THE APPLICANT. THE ISSUE BEFORE THE COURT IN THE REFERENCE WAS WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER S. 10(22) ON INTEREST EARNED ON SURPLUS FUNDS OF THE SCHOOL RUN BY THE TRUST FOR ASST. YRS. 1979-80 AND 1980-81 . THE DIVISION BENCH OBSERVED THAT MERELY BECAUSE A CERTAIN SURPLU S AROSE FROM THE OPERATIONS OF THE TRUST, IT COULD NOT BE HELD T HAT THE INSTITUTION WAS RUN FOR THE PURPOSE OF PROFIT, SO LONG AS NO PE RSON OR INDIVIDUAL WAS ENTITLED TO ANY PORTION OF THE PROFIT AND THE P ROFIT WAS UTILIZED FOR THE PURPOSE OF PROMOTING THE OBJECTS OF THE INS TITUTION. THE INCOME OF THE TRUST WAS, THEREFORE, HELD TO BE EXEM PT UNDER S. 10 (22). THE DIVISION BENCH NOTED AS A PRINCIPLE OF L AW THAT IF AFTER MEETING THE EXPENDITURE, A SURPLUS RESULTS INCIDENT ALLY FROM AN ACTIVITY LAWFULLY CARRIED ON BY THE EDUCATIONAL INS TITUTION, THE INSTITUTION WOULD NOT CEASE TO BE ONE WHICH IS EXIS TING SOLELY FOR EDUCATIONAL PURPOSES SINCE THE EDUCATIONAL PURPOSES AND CONDUCTS AN EDUCATIONAL INSTITUTION, THE FACT THAT IT HAD OT HER OBJECTS WOULD NOT DISENTITLE IT TO THE EXEMPTION SO LONG AS THE A CTIVITY CARRIED OUT BY IT IN THAT ASSESSMENT YEAR WAS THAT OF RUNNING A N EDUCATIONAL INSTITUTION AND NOT FOR PROFIT. THE COURT OBSERVED THAT THE ASSESSEE HAD EXISTED ONLY FOR EDUCATIONAL PURPOSES WHICH CON SISTED OF RUNNING EDUCATIONAL INSTITUTION AND NOT FOR EARNING PROFITS. THE OBSERVATIONS OF THE DIVISION BENCH WHICH THE APPLIC ATIONS FOR APPROVAL WERE REJECTED BY THE FIRST RESPONDENT. FI RSTLY, THOUGH THE MEMORANDUM OF ASSOCIATION CONTAINS VARIED OBJECTS, SO LONG AS THE RECORD DEMONSTRATES THAT THE ASSESSEE ONLY CONDUCTS EDUCATIONAL INSTITUTIONS, IT MUST BE REGARDED AS EXISTING SOLEL Y FOR THE PURPOSE OF EDUCATION. NO OTHER ACTIVITY IS CARRIED ON. SE CONDLY, THE FACT THAT A SURPLUS MAY INCIDENTALLY ARISE FROM THE ACTI VITIES OF THE TRUST, AFTER MEETING THE EXPENDITURE INCURRED FOR CONDUCTI NG EDUCATIONAL ACTIVITIES WOULD NOT DISENTITLE THE TRUST OF THE BE NEFIT OF THE PROVISIONS OF S. 10(23C). IN SO FAR THE ASPECT OF SURPLUS IS CONCERNED, ONE MUST IN ADDITION, ADVERT TO THE PROV ISION WHICH HAS BEEN MADE BY PARLIAMENT IN THE THIRD PROVISO TO S. 10(23C). BY THE THIRD PROVISO, IT HAS BEEN CLARIFIED THAT IN THE CA SE INTER ALIA OF UNIVERSITIES OR OTHER EDUCATIONAL INSTITUTIONS WHIC H HAVE APPLIED ITS INCOME OR ACCUMULATED IT FOR APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED AND IN A CA SE WHERE FIFTEEN PER CENT OF INCOME IS ACCUMULATED ON OR AFTER 1 ST APRIL, 2002, THE ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 18 PERIOD OF THE ACCUMULATION OF THE AMOUNT EXCEEDING FIFTEEN PER CENT, SHALL IN NO CASE EXCEED FIVE YEARS. THIS PRO VISION WOULD ESTABLISH THAT PARLIAMENT DID NOT REGARD THE ACCUMU LATION OF INCOME BY A UNIVERSITY OR EDUCATIONAL INSTITUTION GOVERNED BY SUB-CL (VI) AS A DISABLING FACTOR, SO LONG AS THE PURPOSE OF ACCUM ULATION IS THE APPLICATION OF THE INCOME WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH THE INSTITUTION HAS BEEN ESTABLISHED. PARLIA MENT HAS, HOWEVER, PRESCRIBED THAT WHERE MORE THAN FIFTEEN PE R CENT OF THE INCOME IS ACCUMULATED AFTER 1 ST APRIL, 2002, THE AMOUNT EXCEEDING FIFTEEN PER CENT SHALL NOT BE ACCUMULATED FOR A PER IOD IN EXCESS OF FIVE YEARS. FOR ALL THESE REASONS, THE REJECTION O F THE APPROVAL BY THE FIRST RESPONDENT WAS MANIFESTLY MISCONCEIVED. 6. IN THE CASE OF PINEGROVE INTERNATIONAL CHARITABL E TRUST & ORS VS. UOI & ORS 230 CTR 477, THEIR LORDSHIP OF THE PU NJAB & HARYANA HIGH COURT HAVE CATEGORICALLY HELD THAT EVE N IF THERE REMAINS A SURPLUS AT THE HANDS OF THE EDUCATIONAL I NSTITUTION, IT WOULD BE ENTITLED TO THE EXEMPTION U/S 10(23C)(VI), PROVIDED THE EDUCATIONAL INSTITUTION SOLELY EXIST FOR EDUCATIONA L PURPOSES. 7. IN THE CASE OF RAEBAREILY POLYTECHNIC ASSOCIATIO N VS. CIT 48 DTR 1, THE TRIBUNAL HAS HELD THAT AT THE TIME OF GR ANTING REGISTRATION U/S 12A, CIT IS ONLY REQUIRED TO EXAMI NE AS TO WHETHER THE OBJECTS OF APPLICANT ARE OF CHARITABLE NATURE A ND WHETHER THE ACTIVITIES CARRIED ON BY IT ARE FOR ACHIEVING SUCH OBJECTS AND HE IS NOT REQUIRED TO LOOK INTO THE PRESENCE OF SURPLUS A RISING AS A RESULT OF SUCH ACTIVITIES AND ENTITLEMENT OF EXEMPTION U/S 11 IN RESPECT OF SUCH SURPLUS; PRESENCE OF INCOME IN A PARTICULAR YE AR CANNOT BE TREATED AS A DISQUALIFICATION FOR THE PURPOSE OF RE GISTRATION U/S 12A. 8. AGAIN IN THE CASE OF DIRECTOR OF INCOME TAX VS. GARDEN CITY EDUCATIONAL TRUST 330 ITR 480, THEIR LORDSHIP OF TH E KARNATAKA HIGH COURT HAVE MADE THE SAME OBSERVATIONS AND HELD THAT SO LONG AS THE TRUST HAD EDUCATION AS ONE OF ITS OBJECT, WH ICH IS ONE OF THE ENUMERATED HEADS WHICH QUALIFY AND COME WITHIN THE SCOPE OF CHARITABLE PURPOSE AS ENUMERATED IN SUB SECTION 15 OF SECTION 2, IT HAD TO BE ACCEPTED THAT TRUST WAS HAVING A CHARITAB LE PURPOSE AS ITS OBJECT AND COULD QUALIFY FOR CLAIMING EXEMPTION IN TERMS OF SECTION 11 AND 12 SUBJECT TO TRUST FULFILLING THE C ONDITIONS ENUMERATED THEREIN. 9. IN THE LIGHT OF RATIO LAID DOWN THROUGH AFORESAI D JUDGEMENTS, IF WE EXAMINE THE FACTS OF THE CASE, WE FIND THAT T HE CIT HAS NOT BROUGHT OUT ANYTHING ON RECORD IN SUPPORT OF HIS FI NDING THAT ASSESSEE WAS EVER ENGAGED IN COMMERCIAL ACTIVITIES. HE HAS DRAWN HIS CONCLUSION SIMPLY ON THE BASIS THAT SOME SURPLU S WAS FOUND AT THE END OF THE FINANCIAL YEAR. THERE IS NO EVIDENC E THAT SURPLUS WAS UTILIZED FOR THE PURPOSE OTHER THAN THE CHARITA BLE. MOREOVER, IT ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 19 HAS BEEN CLARIFIED BY THE CIRCULAR OF THE BOARD AND BY VARIOUS HIGH COURTS THROUGH THEIR JUDGEMENTS THAT EVEN IF ASSESS EES INCIDENTALLY INVOLVES IN THE CARRYING ON COMMERCIAL ACTIVITIES, THE REGISTRATION U/S 12A SHOULD NOT BE DENIED. IN THE INSTANT CASE, THERE IS NO EVIDENCE WHICH PROVES THAT ASSESSEE WAS EVER ENGAGE D IN COMMERCIAL ACTIVITIES. THEREFORE, WE FIND NO FORCE IN THE OBSERVATION OF THE CIT THAT ASSESSEE WAS ENGAGED IN COMMERCIAL ACTIVITIES. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT AND DIRECT HIM TO GRANT THE REGISTRATION U/S 12AA OF THE ACT. 21. WE HAVE ALSO EXAMINED THE JUDGEMENT OF THE KARN ATAKA HIGH COURT IN THE CASE OF DIT VS. GARDEN CITY EDUCATIONAL TRUST ( 2010) 191 TAXMAN 238 IN WHICH THEIR LORDSHIP HAS CATEGORICALLY HELD THAT WH ERE IMPARTING OF EDUCATION BEING THE MAIN OBJECT OF THE TRUST, IT HAS TO BE AC CEPTED THAT ASSESSEE EXIST FOR A CHARITABLE PURPOSE AND THEREFORE IT IS ENTITL ED TO REGISTRATION U/S 12A. MANNER OF APPLICATION OF FUNDS AND ALLOWABILITY OF BENEFIT OF EXEMPTION U/S 11 & 12 ARE MATTERS WHICH ARE TO BE EXAMINED BY THE A.O. AT THE TIME OF THE ASSESSMENT AND NOT BY THE CIT. 22. IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELO PMENT VS. CIT 315 ITR 382, HONBLE ALLAHABAD HIGH COURT HAS ALSO EXAM INED THIS ASPECT AND HAS CONCLUDED THAT SECTION 12AA(3) WAS INCORPORATED IN THE ACT W.E.F. 2004 AND NOT APPLICABLE RETROSPECTIVELY. REGISTRATION G RANTED TO ASSESSEE ON 1 ST APRIL, 1999 COULD NOT THEREFORE BE CANCELLED BY THE CIT BY INVOKING POWERS U/S 12AA(3). WITH REGARD TO THE ACTIVITY OF IMPART ING EDUCATION THE HONBLE HIGH COURT HAS OBSERVED AS UNDER: IN THE INSTANT CASE, THE ASSESSEE IS PREPARING STU DENTS BY PROVIDING COACHING/GUIDELINES TO GET ADMISSIONS IN PROFESSIONAL INSTITUTIONS TO PURSUE THEIR STUDIES. THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN USED IN S.2(15) OF THE ACT IS THE SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING GIVEN TO THE YOU NG IN PREPARATION FOR THE WORK OF LIFE. SIMILARLY, EXTENDING FINANCI AL ASSISTANCE/SCHOLARSHIP, ETC., TO STUDENTS FOR THEIR EDUCATIONAL PURPOSE WOULD SQUARELY AND FAIRLY FALL WITHIN THE C ONNOTATION OF EDUCATION AS PER THE RATIO LAID DOWN IN THE CASE OF CIT VS. SARASWATH POOR STUDENTS FUND (1985) 46 CTR (KAR) 10 7 : (1984) 150 ITR 142 (KAR). THUS, THE ASSESSEE IS ENGAGED I N EDUCATIONAL ACTIVITIES WHICH FALLS UNDER CHARITABLE PURPOSE. RECENTLY, THE HONBLE SUPREME COURT IN THE CASE OF AMERICAN HOSTEL & LODGING ASSOCIATION EDUCATIONAL I NSTITUTE VS. ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 20 CBDT & ORS (2008) 216 CTR (SC) 377 : (2008) 7 DTR ( SC) 183: (2008) 301 ITR 86 (SC) HAS OBSERVED AS UNDER: ON THE GRANT OF APPROVAL, SS. 11 AND 13 DID NOT A PPLY. ONCE AN APPLICANT INSTITUTION CAME WITHIN THE PHRAS E `EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PROFIT NO OTHE R CONDITION LIKE APPLICATION OF INCOME WAS REQUIRED TO BE COMPLIED W ITH. THE PRESCRIBED AUTHORITY WAS ONLY REQUIRED TO EXAMINE T HE NATURE, ACTIVITIES AND GENUINENESS OF THE INSTITUTION. THE MERE EXISTENCE OF PROFIT/SURPLUS DID NOT DISQUALIFY THE INSTITUTION. BY TAKING THE LIBERAL APPROACH, THE JHARKHAND HIGH COURT IN THE CASE OF CIT VS. KARIMIA TRUST (2008) 218 CTR (J HARKHAND) 670: (2008) 302 ITR 57 (JHARKHAND) HAS OBSERVED THAT BRE ACH OF THE CONDITIONS OF THE TRUST DEED EVEN IF COMMITTED BY T HE ASSESSEE WOULD NOT DISENTITLE THE ASSESSEE FROM GETTING THE BENEFIT WHICH THE ASSESSEE HAD BEEN GRANTED EARLIER BEING A CHARI TABLE-CUM- RELIGIOUS TRUST. IT MAY BE MENTIONED THAT THE HONBLE SUPREME COURT IN THE CASE OF ASST. CIT VS. SURAT CITY GYMKHANA (2008) 21 6 CTR (SC) 23 : (2008) 300 ITR 214 (SC) OBSERVED THAT AFTER REGI STRATION, FURTHER PROBE INTO OBJECT IS NOT PERMISSIBLE. IN THE LIGHT OF THE ABOVE DISCUSSION AND BY CONSID ERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE HOLD THAT THE ORDER DATED 9 TH MARCH, 2004, PASSED BY THE CIT (ANNEX. NO.15 TO THE WRIT PETITION) AS PER THE THEN LAW IS WITHOUT P OWER AND JURISDICTION AND THEREFORE, IT IS LIABLE TO BE SET QUASHED. 23. IT IS ALSO EVIDENT FROM THE RECORD THAT IN EARL IER YEAR I.E. IN A.Y. 2003- 04, THE BENEFIT OF EXEMPTION WAS ALLOWED TO THE ASS ESSEE ON THE SIMILAR ACTIVITIES. A COPY OF THE ASSESSMENT ORDER IS ALSO PLACED ON RECORD AT PG.NO.34 OF THE COMPILATION OF THE ASSESSEE. 24. WE HAVE ALSO EXAMINED THE JUDGEMENT OF THE DELH I HIGH COURT IN THE CASE OF SAFDARJUNG ENCLAVE SOCIETY VS. MUNICIPAL CO RPORATION OF DELHI AIR 1992 (SC) 1456 WHICH WAS RENDERED ON 9.2.1989 AND W E FIND THAT IN THAT CASE THE WORD `CHARITABLE PURPOSE WAS EXAMINED WIT H RESPECT TO THE RELEVANT PROVISIONS OF THE DELHI MUNICIPAL CORPORATION ACT, 1957. IT HAS NO RELEVANCE TO THE PROVISIONS OF THE INCOME TAX ACT AS SUCH THE JUDGEMENT CANNOT BE APPLIED WHILE ADJUDICATING THE ISSUE UNDER THE INCO ME TAX ACT. ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 21 25. OUR ATTENTION WAS ALSO INVITED TO THE INCOME AN D EXPENDITURE ACCOUNT OF THE PROMOTERS AND THE COPY OF THE RETURN OF INCO ME AND WE FIND THAT WHATEVER INCOME WAS ALLOCATED IN THE HANDS OF THE P ROMOTERS THAT WAS DULY OFFERED TO TAX. THEREFORE, MERE ON ACCOUNT OF ALLO CATION OF PART OF THE RECEIPTS TO THE PROMOTERS DOES NOT DISENTITLE THE A SSESSEE FROM CLAIMING A BENEFIT OF EXEMPTION BECAUSE WHATEVER FUNDS COMES I N THE HANDS OF THE ASSESSEE ON ACCOUNT OF EDUCATIONAL TUITION FEES OR DONATIONS, IT WAS UTILIZED FOR THE PURPOSE FOR WHICH THE ASSESSEE SOCIETY WAS CREATED I.E. TO PROMOTE OR IMPART EDUCATION. MERE COLLECTION OF DONATION OR FEES FROM THE STUDENTS CANNOT BE A GROUND FOR DENYING THE EXEMPTION U/S 11 OF THE ACT, IN AS MUCH AS NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENU E THAT ASSESSEE WAS EVER ENGAGED IN ANY SORT OF NON CHARITABLE ACTIVITY OR ANY OF ITS FUNDS WAS UTILIZED FOR THE PURPOSE OTHER THAN THE PURPOSE FOR WHICH IT WAS CREATED. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS FORMED FOR THE CHARITABLE PURPOSE AND WAS ALSO ENGA GED IN CHARITABLE ACTIVITIES OF IMPARTING THE EDUCATION AND THE REVEN UE AUTHORITIES ARE NOT JUSTIFIED IN DENYING THE EXEMPTION TO THE ASSESSEES . WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO ALLO W THE EXEMPTION U/S 11 OF THE ACT. ITA NO.99 OF 2008: 26. THIS IS AN APPEAL OF THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX WHO HAS CANCELLED THE RE GISTRATION EARLIER GRANTED U/S 12A OF THE ACT VIDE ITS ORDER DATED 26. 11.2007. DURING THE COURSE OF THE HEARING OF THE APPEAL, THE ASSESSEE H AS FILED THE REVISED GROUNDS OF APPEAL BUT THEY ALL RELATE TO THE CANCEL LATION OF REGISTRATION U/S 12AA(3) OF THE ACT. 27. FACT IN BRIEF BORNE OUT FROM THE RECORD ARE THA T RELYING UPON THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2004-05 PA SSED ON 29.12.2006, THE CIT ISSUED A SHOW CAUSE NOTICE VIDE LETTER DATE D 11.10.2007 AS TO WHY REGISTRATION U/S 12A GRANTED TO IT SHOULD NOT BE CA NCELLED IN THE LIGHT OF OBSERVATION MADE BY THE A.O. IN THE ASSESSMENT ORDE R FOR A.Y. 2004-05. THE ASSESSEE FILED A REPLY STATING THE CORRECT FACTS BU T THE CIT HAVING RELIED UPON ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 22 THE OBSERVATION OF THE A.O. IN THE ASSESSMENT ORDER CANCELLED THE REGISTRATION. NOW THE ASSESSEE IS BEFORE US WITH T HE SUBMISSION THAT THE ASSESSEE WAS ENGAGED IN THE CHARITABLE ACTIVITIES A ND WHATEVER FEES OR DONATION WAS ALLOCATED TO ITS ACCOUNT, IT WAS UTILI ZED FOR THE CHARITABLE PURPOSE. HE HAS ALSO PLACED THE COPY OF BY-LAWS AN D THE CORRESPONDENCE EXCHANGED BETWEEN THE ASSESSEE AND THE COMMISSIONER . HE HAS ALSO PLACED A RELIANCE UPON A CIRCULAR NO.194/16-17 II(AI) IN W HICH THE QUESTION REFERRED TO BOARD IS; WHETHER AN EDUCATIONAL INSTITUTION EXI STING SOLELY FOR EDUCATIONAL PURPOSE BUT WHICH SHOWS SOME SURPLUS AT THE END OF THE YEAR IS ELIGIBLE FOR EXEMPTION? THE BOARD HAD REPLIED THIS QUESTION IN THE FOLLOWING MANNER: IF THE PROFIT OF THE EDUCATIONAL INSTITUTION CAN B E DIVERTED FOR THE PERSONAL USE OF THE PROPRIETOR THEREOF, THE N THE INCOME OF THE EDUCATIONAL INSTITUTION WILL BE SUBJECT TO TAX. HOWEVER, THERE MAY BE CASES WHERE THE EDUCATIONAL INSTITUTIONS MAY BE OWNED BY THE TRUSTS OR SOCIETIES TO WHOM THE PROVISIONS OF S ECTION 11 MAY BE APPLICABLE. WHERE ALL THE OBJECTS OF THESE TRUSTS ARE EDUCATIONAL, AND THE SURPLUS, IF ANY, FROM RUNNING THE EDUCATION AL INSTITUTION IS USED FOR EDUCATIONAL PURPOSES ONLY, IT CAN BE HELD THAT THE INSTITUTION IS EXISTING FOR EDUCATIONAL PURPOSES AN D NOT FOR PURPOSES OF PROFIT. HOWEVER, IF THE SURPLUS CAN BE USED FOR NON-EDUCATIONAL PURPOSES, IT CANNOT BE SAID THAT THE INSTITUTION IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND SUCH INSTITUTIONS WILL NOT BE LIABLE FOR EXEMPTION U/S 10(22). BUT, IN SUCH CASES, THE APPL ICABILITY OF SECTION 11 CAN BE EXAMINED AND IF THE CONDITIONS LA ID DOWN THEREIN ARE SATISFIED, THE INCOME WILL BE EXEMPT U/S 11. 28. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVIT ED OUR ATTENTION THAT REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE ON 20.12.2002 W.E.F. 3 RD NOVEMBER, 1997 BEFORE THE AMENDMENT BROUGHT IN SECT ION 12AA OF THE I.T. ACT BY INCORPORATING SUB-SECTION 3. THE SUB-SECTIO N 3 WHICH EMPOWERS THE CIT TO RE-EXAMINE THE ACTIVITY AND IF NOT SATISFIED WITH THE ACTIVITIES OF THE ASSESSEES, HE CAN CANCEL THE REGISTRATION OF THE TR UST OR INSTITUTION, WAS BROUGHT ON THE STATUTE W.E.F. 1 ST OCTOBER, 2004. THEREFORE, THE REGISTRATION EARLIER GRANTED U/S 12A OR 12AA CANNOT BE RE-EXAMIN ED BY THE CIT UNDER SUB-SECTION 3 OF SECTION 12AA OF THE ACT. THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELOPMEN T VS. CHIEF COMMISSIONER OF INCOME TAX 315 ITR 382 HAS CATEGORI CALLY HELD THAT SECTION 12AA(3) INCORPORATED IN THE ACT W.E.F 1.10.2004 WOU LD NOT BE APPLICABLE RETROSPECTIVELY. REGISTRATION GRANTED TO THE ASSES SEE ON 1 ST APRIL, 1999 COULD ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 23 NOT THEREFORE BE CANCELLED BY THE CIT BY INVOKING T HE POWERS U/S 12AA(3) OF THE ACT. IN VIEW OF THE ABOVE SAID FACTS AND LEGAL PROPOSITIONS, WE ARE OF THE VIEW THAT IF THE REGISTRATION IS GRANTED BEFORE THE INCORPORATION OF SUB-SECTION 3 TO SECTION 12AA, THE CIT HAS NO POWER TO CANCEL T HE REGISTRATION. MOREOVER, IN THE INSTANT CASE IN FOREGOING APPEALS, WE HAVE ALREADY HELD THAT ASSESSEE WAS ENGAGED IN THE CHARITABLE ACTIVITIES A S NOTHING WAS BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO DEMONSTRATE TH AT THE ASSESSEE WAS EVER ENGAGED IN NON CHARITABLE ACTIVITY. THEREFORE, WE ARE OF THE VIEW THAT FIRST OF ALL THE CIT HAS NO POWER TO CANCEL THE REGISTRATION AND EVEN IF HE HAS POWER, THE CANCELLATION MADE BY IT IS ALSO NOT PROPER BECA USE ASSESSEE WAS ENGAGED IN CHARITABLE ACTIVITIES BY IMPARTING EDUCATION. W E THEREFORE, SET ASIDE THE ORDER OF THE CIT. C.O. 41 OF 2010: 29. THIS C.O. IS PREFERRED BY THE REVENUE IN SUPPOR T OF THE ORDER OF THE CIT(A). BESIDES SUPPORTING THE ORDER OF THE CIT(A) , THE DEPARTMENT HAS ALSO DISPUTED THE GROUNDS RAISED BY THE ASSESSEE IN THEI R APPEALS. IT HAS BEEN POINTED OUT THAT THIS C.O. IS FILED LATE BY 414 DAY S AND THE REASONS FOR THE DELAY WAS EXPLAINED THAT THE DELAY WAS CAUSED ON AC COUNT OF TRANSFER OF THE FILE FROM ONE ASSESSING OFFICER TO THE OTHER ASSESS ING OFFICER OF DIFFERENT CIRCLE AND THERE AFTER THE FILE WAS MISPLACED. AS AND WHE N THE FILE WAS TRACED OUT, THE C.O. WAS FILED. KEEPING IN VIEW THE REASONS EX PLAINED FOR THE DELAY, WE CONDONE THE DELAY AND ADMIT THE C.O. FOR HEARING. 30. THE ASSESSEES APPEAL HAS BEEN ADJUDICATED BY U S IN THE FOREGOING PARAS AND WE HAVE ALLOWED THE RELIEF CLAIMED BY THE ASSESSEES. IN THE LIGHT OF THESE FACTS, THE GROUNDS RAISED BY THE REVENUE I N THE C.O. ARE DISPOSED OF AND WE ACCORDINGLY DISMISS THE C.O. OF THE REVENUE. 31. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE C.O. OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9.5.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 9 TH MAY, 2011 ITA NOS.349 OF 07 99 OF 08 202 OF 09 & CO 41 OF 10 SIDDHARDHA EDN. SOCIETY, ELURU 24 COPY TO 1 SIDDHARTHA ED UCATIONAL SOCIETY, SHANTI NAGAR, ELURU, WEST GODAVA RI DIST. 2 ACIT, CIRCLE - 1,ELURU 3 THE CI T, RAJAHMUNDRY 4 THE CIT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM