SARASWATI VIDYA BHAVAN, MUMBAI V. CIT (E), MUMBAI

ITA 1778/MUM/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5595 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 26-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Opportunity of being heard; Principle of natural justice; Competent authority; Benefit of exemption; Cancellation of registration; Set aside
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.1778/M/2015 & ITA NO.2612/M/2016 ASSESSMENT YEAR: 2011-12 M/S. SARASWATHI VIDYA BHAVAN, SHIVAJI TALAO, TANK ROAD, BHANDUP, MUMBAI 400 078 PAN: AAATS0085M VS. DDIT (E)-1(2), PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ANIL THAKRAR, A.R. REVENUE BY : SHRI R. MANJUNATHA SWAMY, D.R. DATE OF HEARING :09.07.2019 DATE OF PRONOUNCEMENT :31.07.2019 O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)-12, MUMBAI DATED 30.12.2014, PASSED UNDER SECTION 12AA(3) OF T HE INCOME TAX ACT, 1961, WITHDRAWING REGISTRATION GRANTED UND ER SECTION 12A OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. NATURAL JUSTICE: 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX ( EXEMPTION), MUMBAI ['LD. CIT (E)'], ERRED IN PASSING THE APPELLATE ORDER WITHOUT GIVING SUFFICIENT, PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLAN T. ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 2 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE APPELLATE ORDER BE HELD AS BAD IN LAW AS T HE SAME IS PASSED IN BREACH OF THE PRINCIPLES OF NATURAL JUSTICE. WITHOUT PREJUDICE TO THE ABOVE 2.1 THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT TRUST BY INVOKING THE PROVISIONS OF SECTION 12AA (3) OF THE INCOME - TAX ACT, 1961. 2.2 WHILE DOING SO, THE LD. CIT (E) ERRED IN: (I) BASING HIS ACTION ONLY ON SURMISES, SUS PICION AND CONJECTURE; (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRA NEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDER ATIONS AS SUBMITTED BY THE APPELLANT. 2.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR. 3.1 WITHOUT PREJUDICE TO THE ABOVE, ASSUMING - BUT NOT ADMITTING - THAT THE REGISTRATION OF THE APPELLANT TRUST WAS LIABLE TO B E CANCELLED U/S. 12AA (3) OF THE ACT, THE LD. CIT(E) ERRED IN CANCELLING THE SAME WI TH EFFECT FROM 1986-1987. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, DEL ETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN EDUCATIONAL INSTITUTION ESTABLISHED AS A PUBLIC CHA RITABLE TRUST IN THE YEAR 1985 WITH MAIN OBJECTS OF IMPARTING EDU CATION. THE ASSESSEE IS RUNNING AN EDUCATIONAL INSTITUTION AND OFFERING VARIOUS COURSES IN THE NAME OF SARASWATHI VIDYA BHAV AN. THE ASSESSEE TRUST IS REGISTERED UNDER SECTION 12A OF T HE INCOME TAX ACT, 1961. THE LD. CIT(E) ISSUED A SHOW CAUSE NOTI CE UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 ON THE BASIS OF PROPOSAL RECEIVED FROM ASSESSING OFFICER, AS PER WH ICH THE ACTIVITIES OF THE TRUST IS NOT CARRIED OUT IN ACCOR DANCE WITH OBJECTS, THEREFORE, THE LD. CIT(E) ISSUED A SHOW CA USE NOTICE AND CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY REGIS TRATION GRANTED UNDER SECTION 12A OF THE INCOME TAX ACT, 19 61 SHALL NOT BE CANCELLED. IN RESPONSE, THE ASSESSEE HAS FILED A WRITTEN SUBMISSION VIDE ITS LETTER DATED 02.09.2014 AND EXP LAINED THAT ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 3 THERE IS NO VIOLATION REFERRED TO IN ANY OF THE PRO VISIONS OF SECTION 11 AND 13 OF THE IT ACT, AND MERE ACCEPTANC E OF DONATION IN FORM OF BUILDING FUND FROM THE STUDENTS CANNOT BE CONSIDERED AS ACCEPTANCE OF CAPITATION FEE, AS DEFI NED UNDER THE PROVISIONS OF PROHIBITION OF CAPITATION FEE ACT (GO VERNMENT OF MAHARASHTRA), 1987. THE ASSESSEE HAS ALSO FILED EL ABORATE WRITTEN SUBMISSIONS ON THE OBJECTS OF THE TRUST AND ITS ACTIVITIES AND ARGUED THAT ITS OBJECTS ARE CHARTABLE IN NATURE , BECAUSE IT IS IMPARTING EDUCATION BY ESTABLISHING SCHOOLS AND COL LEGES AND ALSO ITS ACTIVITIES ARE CARRIED OUT IN ACCORDANCE W ITH ITS OBJECTS. THE ASSESSEE FURTHER SUBMITTED THAT THERE IS NO DIS PUTE WITH REGARD TO THE FACT THAT IT HAS ACCEPTED DONATIONS F ROM STUDENTS FOR DEVELOPING SCHOOL INFRASTRUCTURE AND SUCH DONAT IONS ARE NOT IN THE NATURE OF CAPITATION FEE AS PER THE PROVISIO NS OF PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MA HARASHTRA), 1987 AND ALSO SUCH DONATIONS ARE VERY SMALL IN NATU RE. THE ASSESSEE FURTHER SUBMITTED THAT THE DONATIONS ARE C OLLECTED FROM THE STUDENTS/PARENTS ARE VOLUNTARY AND THERE IS NO COMPULSION TO PAY DONATIONS IN CONNECTION WITH ADMISSION. FUR THER, THE AMOUNT OF DONATIONS COLLECTED, INCLUDING FEES IS WI THIN THE LIMIT PRESCRIBED BY THE STATE GOVERNMENT FOR THE COURSES OFFERED BY THE TRUST THEREFORE, MERELY FOR THE REASON THAT FEE S HAS BEEN STRUCTURED IN SUCH A WAY THAT PART OF THE AMOUNT IS BUILDING FUND, THE SAME CANNOT BE BROUGHT WITHIN THE AMBIT O F PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MA HARASHTRA), 1987. THE ASSESSEE ALSO FILED VARIOUS DETAILS TO P ROVE THAT AMOUNT COLLECTED IN FORM OF BUILDING FUND HAS BEEN USED FOR THE OBJECTS OF THE TRUST. IN THIS REGARD, IT HAS RELIE D UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF ITAT, MUMBAI IN ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 4 THE CASE OF SOUTH INDIAN EDUCATIONAL SOCIETY VS. CI T-CENTRAL IN ITA NO.3288/M/2013. 3. THE LD. CIT(E) AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO BY RELIED UPON THE DECISION C ITED BY THE ASSESSEE IN THE CASE OF SOUTH INDIAN EDUCATIONAL SO CIETY VS. CIT (SUPRA) HELD THAT THE ASSESSEE HAS ACCEPTED DONATIO NS FROM STUDENTS, THEREBY, VIOLATED PROHIBITION OF CAPITATI ON FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987 AND HENCE, THE AC TIVITIES OF THE TRUST CANNOT BE CONSIDERED AS IN ACCORDANCE WIT H ITS OBJECTS. THE LD. CIT(E) FURTHER OBSERVED THAT IT HAS ACCEPTE D DONATIONS FROM STUDENTS FOR ADMISSION, BUT REITERATED ITS ARG UMENTS THAT DONATIONS TAKEN FROM STUDENTS DO NOT COME WITHIN TH E PROVISIONS OF PROHIBITION OF CAPITATION FEE ACT (GO VERNMENT OF MAHARASHTRA), 1987 WITHOUT EXPLAINING HOW SUCH DONA TIONS ARE NOT HIT BY PROVISIONS OF SAID ACT. THE LD. CIT(E) HAS ALSO DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSE SSEE, MORE PARTICULARLY, IN THE CASE OF SOUTH INDIAN EDUCATION AL SOCIETY VS. CIT (SUPRA) TO ARGUE THAT ALTHOUGH THE TRIBUNAL HAS HELD THAT WHEN OBJECTS ARE IN CHARITABLE IN NATURE AND ITS AC TIVITIES ARE CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS, MERELY FOR THE REASON OF ACCEPTANCE OF DONATIONS FROM THE STUDENTS, THE R EGISTRATION GRANTED UNDER SECTION 12A CANNOT BE CANCELLED AS LO NG AS DONATIONS ARE APPLIED FOR OBJECTS OF THE TRUST. BU T, FACTS REMAIN THAT PROVISIONS OF SECTION12AA(3) OF THE IT ACT, EM POWERS THE LD. CIT(E) TO CANCEL REGISTRATION, IF THE TRUST VIOLATE S ANY OF THE PROVISIONS OF THE IT ACT, OR PROVISIONS OF PROHIBIT ION OF CAPITATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987. THEREFO RE, HE OPINED THAT MERELY FOR THE REASON THAT THE TRUST OB JECTS ARE CHARITABLE IN NATURE, IT CANNOT BE HELD THAT ITS AC TIVITIES ARE ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 5 CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS, EVEN TH OUGH IT HAS VIOLATED PROHIBITION OF CAPITATION FEE ACT (GOVERNM ENT OF MAHARASHTRA), 1987 ACCORDINGLY, CANCELLED REGISTRAT ION GRANTED UNDER SECTION 12A OF THE IT ACT, 1961. 4. AGGRIEVED BY THE LD. CIT(E) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. A.R, FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(E) WAS ERRED IN CANCELLATION OF REGISTRATION GR ANTED UNDER SECTION 12A OF THE IT ACT, 1961 BY INVOKING PROVISI ONS OF SECTION 12AA(3) OF THE IT ACT, WITHOUT APPRECIATING THE FAC T THAT THERE IS NO CONDITION PRECEDENT FOR INVOKING POWERS UNDER SE CTION 12AA(3) OF THE ACT. THE LD. A.R. FURTHER SUBMITTED THAT IN ORDER TO INVOKE PROVISIONS OF SECTION 12AA(3), THE LD. CI T(E) SHOULD SATISFY HIMSELF THAT OBJECTS OF THE TRUST ARE NOT C HARITABLE IN NATURE AND ACTIVITIES ARE NOT CARRIED OUT IN ACCORD ANCE WITH OBJECTS OF THE TRUST. IN THIS CASE, ON PERUSAL OF ENTIRE ORDER OF THE LD. CIT(E), IT IS VERY CLEAR THAT THE LD. CIT(E ) HAS CANCELLED REGISTRATION FOR THE SOLE REASON OF ACCEPTANCE OF D ONATIONS ON THE GROUND THAT THE SAID DONATIONS ARE IN THE NATURE OF CAPITATION FEE, IN VIOLATION OF PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS ENTITLED TO COLLECT DONATIONS, IF SUCH DONATIONS ALONG WITH FEES COLLECTED FROM STUDENTS IS WITHIN THE PRE SCRIBED LIMIT FIXED BY THE COMPETENT AUTHORITY. THE LD. A.R. FUR THER SUBMITTED THAT IT IS NOT THE CASE OF THE LD. CIT(E) THAT THE OBJECTS ARE NOT CHARITABLE IN NATURE AND ITS ACTIVI TIES ARE NOT CARRIED OUT IN ACCORDANCE WITH OBJECTS. THE ONLY ALLEGATION OF THE LD. CIT(E) FOR CANCELLATION OF REGISTRATION IS THAT COLLECTION OF DONATIONS BEING BUILDING FUND FROM PARENTS OF STU DENTS. THE ASSESSEE NEVER DISPUTED THE FACT THAT IT HAS COLLEC TED DONATIONS ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 6 BUT, SUCH DONATIONS ARE WITHIN THE PRESCRIBED LIMIT FIXED BY THE COMPETENT AUTHORITY AND ALSO DONATIONS HAVE BEEN UT ILISED FOR THE PURPOSE OF OBJECTS OF THE TRUST. THE LD. A.R. REFERRING TO PROVISIONS OF THE MAHARASHTRA EDUCATIONAL INSTITUTI ON, PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MA HARASHTRA), 1987 AND RULES, SUBMITTED THAT THERE IS NO BAR IN T HE IT ACT, FOR RECEIVING VOLUNTARY CONTRIBUTIONS FOR THE PURPOSE O F DEVELOPMENT AT TRUST, BUT IF THE INSTITUTION/TRUST COLLECTS CAP ITATION FEE IN PURSUANCE OF ADMISSION OF A STUDENT IN SCHOOL/COLLE GES, THEN IT VIOLATES THE PROHIBITION OF CAPITATION FEE ACT (GOV ERNMENT OF MAHARASHTRA), 1987. IN THIS CASE, THE ASSESSEE HAS DEMONSTRATED WITH EVIDENCES THAT IT HAS COLLECTED S MALL AMOUNT OF BUILDING FUND RANGING FROM RS.1000 TO RS.15000 F OR THE PURPOSE OF DEVELOPMENT OF INFRASTRUCTURE BEING BUIL DINGS AND SUCH DONATIONS ARE VOLUNTARILY GIVEN BY PARENTS WIT HOUT ANY COMPULSION FOR ADMISSION TO COURSES CONDUCTED BY TH E TRUST. IF YOU GO THROUGH THE LIST OF DONATIONS WHICH IS AVAIL ABLE IN PAPER BOOKS, IN MANY CASES THE DONATIONS ARE MEAGER AMOUN T RANGING FROM RS.1000 TO RS.2000. THE ASSESSEE HAS ACCOUNTE D THOSE DONATIONS IN ITS BOOKS OF ACCOUNTS AND ALSO APPLIED FOR THE PURPOSE FOR WHICH SUCH DONATIONS HAVE BEEN COLLECTE D. THEREFORE, IT IS INCORRECT ON THE PART OF THE LD. C IT(E) TO CANCEL REGISTRATION ONLY FOR THE REASON OF COLLECTION OF D ONATIONS WITHOUT BRINGING ON RECORD ANY EVIDENCES TO PROVE THAT THE ASSESSEE HAS VIOLATED ANY OF PROVISIONS OF SECTION 11 & 13 OF TH E ACT. IN THIS REGARD, HE RELIED UPON VARIOUS JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF ITAT, MUMBAI IN THE CASE OF SOUTH INDIA N EDUCATIONAL SOCIETY VS. CIT-CENTRAL IN ITA NO.3288/ M/2013. ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 7 5. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPOR TING ORDER OF THE LD. CIT(E) SUBMITTED THAT IT IS A CLEAR CASE OF VIOLATION OF PROVISIONS OF PROHIBITION OF CAPITATION FEE ACT (GO VERNMENT OF MAHARASHTRA), 1987 WHICH IS EVIDENT FROM THE FACT B ROUGHT OUT BY THE LD. CIT(E) IN ITS ORDER THAT THE ASSESSEE NE VER DISPUTED ACCEPTANCE OF DONATIONS FROM PARENTS IN PURSUANCE O F ADMISSION TO SCHOOL/COLLEGES. THEREFORE, THE LD. CIT(E) WAS VERY MUCH WITHIN HIS RIGHTS TO CANCEL REGISTRATION GRANTED UN DER SECTION 12A OF THE IT ACT, 1961 BY INVOKING POWERS UNDER SE CTION 12AA(3) OF THE ACT. 1961 AND HIS ORDER SHOULD BE UP HELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT(E) HAS CANCELLED REGISTRATION G RANTED UNDER SECTION 12A OF THE IT ACT, 1961 BY USING HIS POWERS CONFERRED UNDER SECTION 12AA(3) OF THE IT ACT, 1961. THE SOL E REASON GIVEN BY THE LD. CIT(E) FOR CANCELLATION OF REGISTRATION IS THAT THE ASSESSEE HAS COLLECTED BUILDING FUND FROM PARENTS /STUDENTS, THEREBY, VIOLATED PROVISIONS OF PROHIBITION OF CAPI TATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987. EXCEPT THIS, TH ERE IS NO IOTA OF ANY EVIDENCE IN THE ORDER OF THE LD. CIT(E) THAT EITHER THE ASSESSEE HAS VIOLATED ANY OF PROVISIONS OF SECTION 11 & 13 OF IT ACT, 1961 OR OBJECTS OF THE TRUST ARE NOT CHARITABL E IN NATURE AND ALSO ITS ACTIVITIES ARE NOT CARRIED OUT IN ACCORDAN CE WITH ITS OBJECTS. IN ORDER TO INVOKE PROVISIONS OF SECTION 12AA(3), THE LD. CIT(E) SHALL MAKE A CLEAR CASE OF VIOLATIONS OF ANY OF THE PROVISIONS OF SECTION 11 & 13 AND ALSO THE ACTIVITI ES OF THE TRUST ARE NOT GENUINE. IN THIS CASE, THE LD. CIT(E) NEVE R DISPUTED THE FACT THAT THE OBJECTS OF THE TRUST ARE CHARITABLE I N NATURE. ONCE AN INSTITUTION/TRUST CAME WITHIN THE PHRASE EXISTE NCE SLOWLY FOR ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 8 EDUCATION PURPOSE AND NOT FOR PROFIT NO OTHER COND ITIONS LIKE APPLICATION OF INCOME WERE REQUIRED TO BE COMPLIED WITH. IF YOU GO THROUGH THE ORDER OF THE LD. CIT(E), IT IS VERY CLEAR THAT THE SOLE REASON GIVEN BY LD. CIT(E) FOR CANCELLATION OF REGISTRATION IS COLLECTION OF DONATIONS IN VIOLATIONS OF PROHIBITIO N OF CAPITATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987. WHETHER COLLECTION OF DONATIONS FROM THE PARENTS/STUDENTS AMOUNTS TO V IOLATION OF PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MA HARASHTRA), 1987 OR NOT HAS TO BE EXAMINED IN LIGHT OF QUANTUM OF DONATIONS COLLECTED BY THE ASSESSEE AND ALSO APPLICATIONS OF SUCH DONATIONS FOR THE OBJECTS OF THE TRUST. IN THIS CA SE, ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, WE FIND THAT THE ASS ESSEE HAS COLLECTED DONATIONS FROM PARENTS/STUDENTS RANGING F ROM RS.1000 TO RS.15000 AND IN TOTAL THE SUM OF SUCH DO NATIONS COLLECTED FOR THE YEAR UNDER CONSIDERATION IS AT RS .70,60,700/-. IN MOST OF THE CASES, THE DONATIONS COLLECTED FROM PARENTS/STUDENTS ARE RANGING FROM RS.1000 TO RS.200 0/-. THE ASSESSEE FILED NECESSARY EVIDENCES TO PROVE THAT TH E DONATIONS COLLECTED ARE ACCOUNTED IN THE BOOKS OF ACCOUNTS AN D ALSO SAME HAS BEEN APPLIED FOR OBJECTS OF THE TRUST. THE ASS ESSEE HAS ALSO FILED EVIDENCES TO PROVE THAT THE AMOUNT OF FEE COL LECTED FROM STUDENTS INCLUDING DONATIONS BEING BUILDING FUND IS WITHIN THE PRESCRIBED LIMIT FIXED BY THE COMPETENT AUTHORITY F OR COLLECTION OF FEES FOR PARTICULAR COURSES. ALL THESE FACTS ARE N OT DISPUTED BY LD. CIT(E). THE LD. CIT(E) IS ONLY ON THE POINT OF VIOLATION OF PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MA HARASHTRA), 1987. WE HAVE GONE THROUGH PROVISIONS OF THE MAHAR ASHTRA EDUCATIONAL INSTITUTION, PROHIBITION OF CAPITATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 1987 AND RULES AND REG ULATION. ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 9 AS PER SECTION 5 OF THE PRINCIPLE ACT, ANY TRUST OR INSTITUTION IS AUTHORISED TO COLLECT VOLUNTARY DONATIONS FROM ANY BENEVOLENT PERSONS FOR THE PURPOSE OF DEVELOPMENT OF TRUST/INS TITUTION, BUT SUCH DONATIONS SHALL NOT BE COLLECTED IN PURSUANCE OF ADMISSION TO A COURSE IN A COLLEGE/SCHOOLS RUN BY THE TRUST O R INSTITUTION. IN THIS CASE, ON PERUSAL OF DETAILS AVAILABLE ON RE CORD, IT IS ABUNDANTLY CLEAR THAT THE DONATIONS COLLECTED FROM THE PARENTS/STUDENTS IN THE FORM OF BUILDING FUNDS IS V OLUNTARY AND SUCH FUNDS HAVE BEEN APPLIED FOR THE PURPOSE OF DEV ELOPMENT OF BUILDINGS AND OTHER INFRASTRUCTURES. IT IS ALSO NO T IN DISPUTE THAT THE DONATIONS INCLUDING FEES COLLECTED FROM ST UDENTS IS NOT IN EXCESS OF PRESCRIBED FEES FIXED BY THE STATEMENT GOVERNMENT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE L D. CIT(E) ERRED IN CANCELLING REGISTRATION GRANTED UNDER SECTION 12 A BY INVOKING HIS POWERS UNDER SECTION 12AA(3) OF THE IT ACT, 196 1 ONLY FOR THE REASON OF RECEIPT OF DONATIONS FROM STUDENTS/PARENT S WITHOUT APPRECIATING THE FACT THAT SUCH DONATIONS ARE VOLUN TARY AND ALSO WITHIN THE LIMIT PRESCRIBED LIMIT FIXED BY THE COMP ETENT AUTHORITY. 7. COMING TO THE CASE LAWS RELIED UPON BY THE LD. A .R. FOR THE ASSESSEE. THE LD. A.R. RELIED UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF SOUTH INDIAN EDUCATIONAL SOCIETY VS. CIT-CENTRAL IN ITA NO.3288/M/2013. WE FIND THAT THE CO-ORDINAT E BENCH OF THE TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN L IGHT OF COLLECTION OF CAPITATION FEE FROM STUDENTS AND HELD THAT ONCE THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND I TS ACTIVITIES ARE CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST , MERELY FOR THE REASON OF COLLECTION OF DONATIONS, REGISTRATION GRANTED UNDER SECTION 12A OF THE IT ACT, 1961 CANNOT BE CANCELLED . WE FURTHER ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 10 NOTED THAT ITAT, PUNE BENCH IN THE CASE OF MAHARASH TRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH VS. CIT (2010) 133 TTJ 706 HELD THAT IF THE CIT HAD AN INFO RMATION OF SOME WRONGFUL MEANS OF EARNING FEES IN THE FORM OF A DONATION OR THE INFORMATION TELLS ABOUT EXCESSIVE CHARGING O F FEES; THEN THE CIT IN HIS RIGHTS CAN PASS ON THE INFORMATION T O THE CONCERNED AUTHORITY, BUT WHEN THERE IS NO MISUTILIS ATION OF FUNDS AND IT CONTINUE TO CARRY ON, ITS ACTIVITIES, THEN THE CIT HAS NO JURISDICTION TO CANCEL REGISTRATION UNDER SECTIO N 12AA(3) OF THE IT ACT, 1961. THE HONBLE KARNATAKA HIGH COURT , IN THE CASE OF CIT VS. ISLAMIC ACADEMY OF HIGHER EDUCATION (201 3) 229 TAXMANN.COM HELD THAT WHERE ASSESSEE TRUST WAS FULF ILLING ITS MAIN OBJECT OF IMPARTING EDUCATION, REGISTRATION OF TRUST SHOULD NOT BE CANCELLED ON THE BASIS OF TRUSTEES MISAPPROP RIATING TRUST FUNDS. THE HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. GARDEN CITY EDUCATION TRUST 28 DTR 139 (KAR.) HELD THAT WHERE THERE IS NO DISPUTE IN RESPECT OF THE OBJECTS OF TH E TRUST, THAT OF IMPARTING OF EDUCATION AND ALSO WHEN THERE IS NO DI SPUTE REGARDING THE FACT THAT THE TRUST IS ACTUALLY IMPAR TING EDUCATION AND NOT CARRYING ON ANY OTHER ACTIVITIES, THE TRUST IS ELIGIBLE FOR GETTING REGISTRATION UNDER SECTION12A, AS A CHARITA BLE INSTITUTION AND THE QUESTION REGARDING APPLICATION OF FUNDS AND ALLOWABILITY OF BENEFIT OF EXEMPTION UNDER SECTION 11 & 12 ARE M ATTERS WHICH ARE TO BE EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT AND NOT BY REGISTERING AUTHORITY. 8. COMING TO THE CASE LAWS RELIED UPON BY THE LD. D .R. THE LD. D.R. RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY VS. CIT (CENTRAL) 249 CTR 45. WE FIND THAT THE ISSUE BEFOR E THE HONBLE ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 11 BOMBAY HIGH COURT WAS THAT AFTER AMENDMENT TO SECTI ON12AA OF THE IT ACT, 1961, WHETHER COMMISSIONER WAS EMPOWERE D TO CANCEL REGISTRATION OF A TRUST WHICH HAS BEEN OBTAI NED AT ANY TIME UNDER SECTION 12A OF THE ACT. NO DOUBT, AFTER AMENDMENT TO SECTION 12AA(3) THE COMMISSIONER IS EMPOWERED TO CANCEL THE REGISTRATION OF A TRUST UNDER SECTION 12AA(3), BUT SUCH CANCELLATION SHOULD BE ONLY WHEN THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. TH E LD. D.R. FURTHER RELIED UPON THE DECISION OF HONBLE KARNATA KA HIGH COURT IN THE CASE OF NAVODAYA EDUCATION TRUST VS. U OI (2018) 90 TAXMANN.COM 148 (KARNATAKA). WE FIND THAT THE H ONBLE KARNATAKA HIGH COURT AFTER CONSIDERING THE FACT THA T THE TRUST IS COLLECTING HUGE CAPITATION FEE FOR GETTING ADMISSIO N STUDENTS FOR PURSUING MEDICAL EDUCATION AND ALSO SUCH DONATIONS HAVE BEEN MISUSED BY THE TRUSTEES FOR THE PERSONAL PURPOSE CA ME TO THE CONCLUSION THAT ONCE THE TRUST IS COLLECTING HUGE A MOUNT OF CAPITATION FEE FROM STUDENTS FOR ADMISSION TO MEDIC AL COLLEGES, WITHDRAWAL OF EXEMPTION UNDER SECTION 10(23C)(B) DI D NOT REQUIRE ANY INTERFERENCE. 9. IN THIS CASE, ON PERUSAL OF FACTS AVAILABLE ON R ECORD, WE FIND THAT THE LD. DIT(E) IN HIS ORDER EXCEPT STATING THA T THE TRUST IS COLLECTING DONATIONS BEING 'BUILDING FUND FROM STUDENTS/PARENTS HAS NOT MADE ANY OBSERVATIONS WITH REGARD TO ACTIVITIES OF THE TRUST, IF ANY, AS REFERRED TO IN SECTION 11 OR 13 OF THE IT ACT, 1961. UNLESS, THE LD. DIT(E) BRINGS ON RECORD ANY EVIDENCES TO PROVE THAT THE OBJECTS OF THE TRUST AR E NOT CHARITABLE IN NATURE AND ITS ACTIVITIES ARE NOT CARRIED OUT IN ACCORDANCE WITH OBJECTS, THEN MERELY FOR THE REASON OF COLLECT ION OF DONATIONS FROM STUDENTS, THAT TOO WHEN SUCH DONATIO NS ARE ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 12 WITHIN THE LIMIT AT PRESCRIBED FEES FIXED BY THE CO MPETENT AUTHORITY, REGISTRATION GRANTED UNDER SECTION 12A C ANNOT BE CANCELLED BY INVOKING HIS POWERS UNDER SECTION 12AA (3) OF THE IT ACT,1961. HENCE, WE SET ASIDE THE ORDER OF THE LD. DIT(E) AND RESTORED REGISTRATION GRANTED UNDER SECTION 12A OF THE IT ACT, 1961. ITA NO.2612/M/2016 10. THE ISSUE INVOLVED IN THIS APPEAL IS CONSEQUENT IAL AND FOLLOW UP ACTION OF THE AO, CONSEQUENT TO CANCELLAT ION OF REGISTRATION GRANTED UNDER SECTION 12A OF THE IT AC T, BY THE LD. CIT(E) UNDER SECTION 12AA(3) OF THE ACT. THE AO AS SESSED SURPLUS FOR THE YEAR UNDER THE HEAD INCOME FROM BUS INESS OR PROFESSION FOR THE REASON THAT EXEMPTION GRANTED UN DER SECTION12A HAS BEEN WITHDRAWN FOR THE IMPUGNED ASSE SSMENT ORDER FOR THE REASON STATED IN THE ORDER OF THE LD. CIT(E) AS PER WHICH THE ASSESSEE HAS VIOLATED PROVISIONS OF PROHI BITION OF CAPITATION FEE ACT (GOVERNMENT OF MAHARASHTRA), 198 7 BY COLLECTING BUILDING FUND FROM PARENTS/STUDENTS IN C ONNECTION WITH ADMISSION IN SCHOOLS/COLLEGES RUN BY THE TRUST . EXCEPT THIS, NO OTHER REASONS HAVE BEEN BROUGHT ON RECORD TO DENY THE BENEFIT OF EXEMPTION CLAIMED UNDER SECTION 11 OF TH E INCOME TAX ACT, 1961. WE FIND THAT THE TRIBUNAL HAS RESTORED REGISTRATION GRANTED UNDER SECTION 12A TO THE ASSESSEE FROM THE DATE OF REGISTRATION FOR THE DETAILED REASONS RECORDED IN I TS ORDER IN ITA NO.1778/M/2015. THEREFORE, ONCE REGISTRATION GRANT ED UNDER SECTION 12A IS AVAILABLE TO THE ASSESSEE FROM THE D ATE OF REGISTRATION INCLUDING FOR THE IMPUGNED ASSESSMENT YEAR, THEN THE AO WAS INCORRECT IN DENYING THE EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT, 1961. THEREFORE, WE DIRECT THE AO TO ITA NO.1778/M/2015 & ITA NO.2612/M/2016 M/S. SARASWATHI VIDYA BHAVAN 13 ALLOW THE BENEFIT OF EXEMPTION CLAIMED UNDER SECTIO N 11, IN RESPECT OF INCOME DERIVED FROM PROPERTY HELD UNDER TRUST SUBJECT TO OTHER PROVISIONS OF THE IT ACT, WHICH IS APPLICA BLE TO THE ASSESSEE. HENCE, WE SET ASIDE THE ISSUE TO THE FIL E OF THE AO AND DIRECT HIM TO ASSESS THE INCOME OF THE ASSESSEE UND ER THE PROVISIONS OF SECTION 11 OF THE INCOME TAX ACT, 196 1. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 12. AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2019. SD/- SD/- ( PAWAN SINGH ) (G. MANJUNAT HA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31.07.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/A SSTT. REGISTRAR, ITAT, MUMBAI.