Doon Educational Trust Society, Dehradun V. CIT, Dehradun

ITA 2540/DEL/2012

• Counselvise Citation: 254020114 RSA 2012
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-07-2012
• Assessment Year: misc
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ISHTIYAQUE AHMED
• Keywords: Gift; Depreciation; Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.2540/DEL/2012 ASSESSMENT YEAR : - DOON EDUCATIONAL TRUST SOCIETY, (THROUGH ITS SECRETARY SH. RAJESH KUMAR TIWARI), HADWALI, P.O. JHAJRA, CHAKRATA ROAD, DEHRADUN. PAN : AAATD7286M VS. CIT, 13-A, SUBHASH ROAD, DEHRADUN. (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA/SHRI ASHWANI TANEJA REVENUE BY : SHRI ISHTIYAQUE AHMED, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 28.03.2012 PASSED BY THE LD. CIT, DEHRADUN, REFUSING R EGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF THE IT ACT. 2. AS PER THE IMPUGNED ORDER, IT WAS NOTICED FROM THE DOCUMENTS/PAPERS SUBMITTED BY THE ASSESSEE SOCIETY THAT IN THE F.Y. ENDING 31.03.1990, THE ASSESSEE SOCIETY HAD EARNED/RECEI VED AN AMOUNT OF ` 7,74,090/- FROM SALE OF UNIFORM/TRANSPORTATION FEE, ETC. AND ` 43,300/- FROM THE SALE OF PROSPECTUS; THAT IN THE YE AR ENDING 3/2010 THE ASSESSEE SOCIETY HAD RECEIVED AN AMOUNT OF ` 4,04,100/- ITA NO.2540/DEL/2012 2 FROM THE SALE OF UNIFORM, TRANSPORTATION FEE, ETC. AN D ` 54,750/- FROM THE SALE OF PROSPECTUS; THAT IN A.Y. 2009-10, THE ASSESSE E SOCIETY HAD OBTAINED A SURPLUS OF 27%, IN A.Y. 2010-11, A SURPLU S OF 38% AND IN A.Y. 2011-12, A SURPLUS OF 22% AND HAD USED ALL ITS SURP LUS FOR FURTHER EXPANSION IN THE SAME OR SUBSEQUENT YEARS; THAT IT WAS AL SO NOTICED THAT THE ASSESSEE SOCIETY WAS SPENDING SUBSTANTIALLY ON ADVERTISEMENTS; THAT IN A.Y.2011-12, ADVERTISEMENT EXP ENSES WERE OF ` 3,68,375/-, IN A.Y. 2010-11, THESE EXPENSES WERE OF ` 1,99,049/- AND IN A.Y. 2009-10, THESE EXPENSES WERE OF ` 3,20,723/-; THAT THE PROFITS & LOSS ACCOUNT OF THE SOCIETY FOR A.Y. 2010-11 SHOWED PAY MENTS OF INTEREST EXCEEDING ` 10 LAC AND PAYMENT OF INTEREST OF APPROXIMATELY ` 8 LAC IN A.Y. 2011-12; THAT IN A.Y. 2009-10 THE ASSESSE E SOCIETY HAD CLAIMED DEPRECIATION EXCEEDING ` 20 LAC, WHEREAS IN A.Y. 2010-11, THE DEPRECIATION EXCEEDING ` 70 LAC HAD BEEN CLAIMED AND IN A.Y. 2011-12, THE CLAIM OF DEPRECIATION EXCEEDED ` 17 LAC. FROM THESE FACTS, THE LD. CIT OBSERVED THAT IT CONCLUSIVELY STOOD SHOWN THAT THE ASSESSEE SOCIETY WAS BEING RUN FOR COMMERCIAL PURPOSES RATHER TH AN FOR CHARITABLE PURPOSES. THE LD. CIT FURTHER OBSERVED THA T THE RECEIPT OF THE ASSESSEE SOCIETY IN A.Y. 2011-12 ALSO SHOWED THAT THE ASPIRANTS WERE PAYING FOR THEIR COST OF LEARNING; AND THAT THE ASSESSEE SOCIETY WAS SEEN TO BE WORKING IN A COMMERCIAL MANNER AND NOT FULFILLING THE DEFINITION OF CHARITABLE PURPOSES AS DEFINED IN SECT ION 2 (15) OF THE IT ACT. IT WAS ON THESE OBSERVATIONS THAT THE REGISTRAT ION SOUGHT BY THE ASSESSEE SOCIETY WAS NOT GRANTED. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 4. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL F OR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT HAS ERRED IN REJECTING THE APPLICATION FOR REGISTRATION FILED BY THE ASSESSEE SOCIETY, HOLDING THAT THE ASSESSEE SOCIETY WAS BEING RUN FOR COMMERCIAL PURPOSES AND NOT F OR CHARITABLE ITA NO.2540/DEL/2012 3 PURPOSES; THAT THE LD. CIT ALSO ERRED IN OBSERVING THA T THE ASSESSEE SOCIETY WAS EARNING SURPLUS AND WAS USING IT FOR EXPANSION AND WAS EXPENDING SUBSTANTIALLY ON ADVERTISEMENT; THAT THE CI TS DECISION REGARDING GRANT OF REGISTRATION IS CIRCUMSCRIBED BY TH E PROVISIONS OF SECTION 12AA (B) OF THE ACT, WHICH SPECIFICALLY STATE S THAT AT THE TIME OF CONSIDERING GRANT OF REGISTRATION, ONLY THE OBJECTS AN D THE GENUINENESS OF THE ACTIVITIES OF AN ASSESSEE ARE TO BE TAKEN INTO CO NSIDERATION; THAT UNDENIABLY, THE ASSESSEE IS RUNNING AN EDUCATIONAL INSTIT UTION IMPARTING EDUCATION; THAT FURTHER, THERE IS NO SURPLU S EARNED BY THE ASSESSEE SOCIETY AND NO COMMERCIAL ACTIVITIES ARE BEING C ARRIED OUT BY IT; THAT EVEN IF, FOR THE SAKE OF ARGUMENT, THESE OBSE RVATIONS WERE TO BE TAKEN TO BE CORRECT, AS PER CBDT CIRCULAR NO.11/2 008 DATED 19.12.2008 (COPY AT PAGES 100-101 OF THE ASSESSEES PAPER BOOK), THE PROVISO TO SECTION 2 (15) OF THE ACT WOULD NOT APPLY , INTER ALIA, IN THE CASE OF EDUCATION, AS THE SAME WOULD CONSTITUTE CHARIT ABLE PURPOSE, EVEN IF THE ENTITY CARRYING ON SUCH ACTIVITY INCIDEN TALLY CARRIES ON COMMERCIAL ACTIVITIES; THAT FURTHER, SECTION 11 (4A) OF THE ACT PROVIDES THAT SUB-SECTIONS (1) OR (2) OR (3) OR (3A) OF SECTI ON 11 SHALL NOT APPLY IN RELATION TO AN INCOME OF A TRUST OR INSTITUTION, B EING PROFITS AND GAINS OF BUSINESS UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINM ENT OF THE OBJECTIONS OF THE TRUST, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED OF SUCH TRUST IN RESPECT OF SUCH BUSINESS; THAT APROPOS T HE OBJECTION REGARDING THE ASSESSEE SOCIETY EARNING SURPLUS, THE DETA ILS OF SURPLUS/DEFICIT FOR THE LAST FOUR YEARS ARE CONTAINED A T PAGES 50-51 OF THE ASSESSEES PAPER BOOK BY WAY OF A COMPARATIVE COMPUT ATION CHART; THAT A READING OF THIS CHART SHOWS CLEARLY THAT WHAT T HE ASSESSEE HAS EARNED IS A DEFICIT RATHER THAN ANY SURPLUS, DUE TO WHICH FACT, THE LD CIT HAS WRONGLY OBSERVED THAT THE ASSESSEE HAS EARNED ANY SURP LUS; THAT MOREOVER, THE INCOME AND EXPENDITURE ACCOUNT FOR TH E YEAR ENDING 31.03.2009 (COPY AT PAGE 65 OF THE ASSESSEES PAPER BOO K) SHOWS THAT THE EARNINGS OF THE ASSESSEE SOCIETY ARE EXCLUSIVELY FROM EDUCATION, ITA NO.2540/DEL/2012 4 WHICH BRINGS THE ACTIVITIES OF THE ASSESSEE SOCIETY SQUAR ELY WITHIN THE PURVIEW OF CHARITY AS DEFINED IN SECTION 2 (15) OF THE ACT; THAT AS REGARDS THE EXPENSES ON ADVERTISEMENT, THE ASSESSEE IS HAV ING 200 STUDENTS, AS IS AMPLY CLEAR FROM THE CHART CONTAINED A T PAGE 29 OF THE ASSESSEES PAPER BOOK; THAT THE OBJECTIVES OF THE ASSESSEE SOC IETY HAVE BEEN DELINEATED IN ITS MEMORANDUM, A COPY WHERE OF HAS BEEN APPENDED AT PAGES 18-20 OF THE ASSESSEES PAPER BOOK; AN D THAT A PERUSAL OF THESE AIMS AND OBJECTIVES OF THE ASSESSEE SOCIETY SHOWS THAT NONE OF THESE ARE COMMERCIAL AIMS OR OBJECTIVES. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CA SE LAWS:- 1. RELIABLE EDUCATIONAL ALLIANCE SOCIETY VS. CIT (2009) 31 DTR 239 2. DIT VS. GARDEN CITY EDUCATIONAL TRUST (2009) 28 DTR (KAR) 139 3. CIT VS. RED ROSE SCHOOL (2007) 212 CTR 394 (ALL) 4. DREAM LAND EDUCATIONAL TRUST VS. CIT (2007) 109 TTJ 8 50 (ASR) 5. CIT VS. GUJARAT MARITIME BOARD (2007) 289 ITR 139 (G UJ) 5. ON THE ABOVE CONTENTIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ORDER OF LD. COMMISSIONER OF INCOME -TAX BE SET ASIDE AND THE APPLICATION FILED BY THE ASSESSEE SOCIETY F OR REGISTRATION BE ALLOWED. 6. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. OUR ATTENTION HAS BEEN DRAWN TO THE CHART CONTAINED AT PAGES 50-51 OF THE ASSESSEES PAPER BOOK AND IT HAS BEE N CONTENDED THAT NO DETAILS OF BUILDING HAVE BEEN FILE D. IT HAS BEEN CONTENDED THAT THE SCHOOL RUN BY THE ASSESSEE SOCIETY IS B EYOND THE REACH OF THE COMMON MAN AND THE SAME IS RUN ON COMMER CIAL LINES; THAT THE FEE STRUCTURE OF THE SCHOOL IS VERY HIGH; AND THAT THE EXPENSES ITA NO.2540/DEL/2012 5 ON EDUCATION HAVE NOWHERE BEEN SEGREGATED BY THE ASSESSE E SOCIETY BEFORE THE AUTHORITY BELOW AND, HENCE, THE LD. CIT IS JUSTIFIED IN REJECTING THE APPLICATION FILED BY THE ASSESSEE FOR REG ISTRATION; AND THEREFORE, THERE BEING NO MERIT THEREIN, THE APPEAL BE DISMISSED WHILE UPHOLDING THE WELL REASONED ORDER PASSED BY THE LD. C IT. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. THE LD. CIT, IT IS SEEN, HAS REJECTED THE ASSESSE ES APPLICATION FOR THE REASON THAT THE ASSESSEE SOCIETY HAS MADE EARNING FROM SALE OF UNIFORM/TRANSPORTATION FEE AND SALE OF PROSPECTUS; THAT THE ASSESSEE HAS OBTAINED SURPLUS IN THE PRECEDING YEARS AND HAS USED THE SAME FOR FURTHER EXPANSION IN THE SAME OR SUBSEQUENT YEARS; THAT THE ASSESSEE HAS BEEN SPENDING SUBSTANTIALLY ON ADVERTISEMENTS; THAT THERE HAS BEEN EXORBITANT PAYMENT OF INTEREST AND CLAIM OF DEP RECIATION; AND THAT THE STUDENTS ARE PAYING FOR THEIR COST OF LEARNIN G. THE LD. CIT HAS CONCLUDED THAT THUS, THE ASSESSEE SOCIETY IS BEING RUN FO R COMMERCIAL PURPOSE RATHER THAN FOR CHARITABLE ONES. 8. NOW, THE OBJECTS OF THE SOCIETY, AS CONTAINED AT P AGES 18-20 OF THE ASSESSEES PAPER BOOK, ARE AS FOLLOWS:- (1) TO ESTABLISH SCHOOL/SCHOOLS AND COLLEGE/COLLEGES AT DEHRADUN OR ELSEWHERE IN THE STATE OF UK AND UTTAR PR ADESH, AIMING TO IMPART PROFESSIONAL TECHNICAL & PRIMARY EDU CATION TO CHILDREN OF ALL COMMUNITIES AND NATIONALITIES IRRE SPECTIVE OF SEX, CASTE OR CREED AND TO LAY SOLID FOUNDATION OF MOD ERN EDUCATION IN STUDENTS AND TO IMPART MORAL TRAINING CO UPLED WITH PHYSICAL, TECHNICAL AND SCIENTIFIC EDUCATION. (2) TO IMPART THE BEST EDUCATION TO THE STUDENTS OF THE SC HOOL WITH THE AID OF MODERN EQUIPMENT AND WITH THE HELP AND GUIDANCE OF THE BEST SUITED STAFF-MEMBERS AMIDST THE MO DERN ITA NO.2540/DEL/2012 6 AND BEST SURROUNDING TO ENABLE THE STUDENTS TO DEVELOP THEIR POTENTIALITIES TO THE FULLEST. (3) TO GENERATE THE IDEALS OF GOOD CITIZENSHIP DISCIPLINE D LIFE AND GOOD MORAL CHARACTER. (4) TO FOSTER AND DEVELOP AN ACTIVE AND POSITIVE FEELING OF LOVE AND BROTHERHOOD FOR EVERYONE AND CULTIVATE A STRONG SENSE OF PATRIOTISM. (5) TO ENSURE AN ALL ROUND DEVELOPMENT OF THEIR PERSONALI TIES THROUGH EDUCATIONAL, SOCIAL AND CULTURAL ACTIVITIES. (6) TO FOSTER SUCH EDUCATION TO THE POOR IRRESPECTIVE OF C ASTE, CREED AND CULTURE. (7) TO ORGANIZE EDUCATIONAL PROGRAMS SUCH AS ADULT EDUCATI ON OF ALL TYPE INCLUDING VOCATIONAL AND TRAINING PROGRAMS EITHER IN VILLAGES OR IN SLUM AREAS OF THE COUNTRY. (8) TO TRAIN THE STUDENTS TO BE PERSONS OF STRONG CHARACTER , INITIATIVE, MORAL DRIVE AND LEADERSHIP AND OF TOLER ANT AND SYMPATHETIC OUTLOOK. (9) TO ESTABLISH AND MAINTAIN LIBRARY READING ROOMS, EDUCA TIONAL CLUBS TO ENABLE THE STUDENTS TO BE WITH THE WORLD WIDE DEVELOPMENT IN THE FIELDS OF SCIENCE, LITERATURE, SPOR TS AND TO FURTHER THE OBJECT OF THE SIMILAR OBJECT. (10) TO CONSTRUCT, DEMOLISH, ACQUIRE, MAINTAIN ANY BUILDIN G IN CONNECTION WITH THE SCHOOL AND BOARDING HOUSE FOR THE RESIDENCE OF THE STUDENTS, EMPLOYEES AND WORKER TO THE SOCIETY AND AFFILIATED OR MANAGED INSTITUTION OF THE SIMILAR OBJECT. (11) TO PROVIDE SCHOLARSHIP TO DESERVING STUDENTS. (12) TO SEEK HELP FROM THE PUBLIC OR GOVERNMENT FOR FINAN CE, AS AND WHEN DEEMED NECESSARY IN THE INTEREST OF THE SOCIET Y. (13) TO ACCEPT VOLUNTARY DONATIONS FROM THE PARENTS OF THE STUDENTS OR FROM ANY OTHER PERSONS FIRM, SOCIETY AND/OR ITA NO.2540/DEL/2012 7 FOREIGN COUNTRY, WHO MAY DESIRE TO CONTRIBUTE TOWARD S THE AIMS OF THE SOCIETY. (14) TO ORGANIZE CULTURAL SHOWS, DRAMAS, FETES, FAIRS AND SPO RTS TO COLLECT FUNDS FOR THE BENEFIT OF THE SOCIETY ON A NONCOMMERCIAL BASIS. (15) TO SEEK HELP FROM THE GOVERNMENT FOR ALLOTMENT OF LA NDS OR BUILDINGS FOR THE CAUSE OF THE SOCIETY. (16) TO BUY, PURCHASE, TAKE ON LEASE OR IN EXCHANGE, HIRE R OTHERWISE ACQUIRE ANY IMMOVABLE OR MOVABLE PROPERTY OF ANY TENURE OR DESCRIPTION AND ANY ESTATE OR INTEREST THERE ON AND ANY RIGHTS OR PRIVILEGES, WHICH THE SOCIETY MAY THINK NECESSARY OR CONVENIENT FOR THE PROMOTION OF ITS OBJEC TS AND TO CONTRACT, MAINTAIN AND ALTER ANY BUILDING OR ERE CTIONS NECESSARY OR CONVENIENT FOR THE WORK OF THE SOCIETY. (17) TO SELL, LET LEASE, MORTGAGE, EXCHANGE, GIFT, DISPOSE O F, MANAGE, DEVELOP, BUILD OR ALTER IMPROVE OR TURN TO ACCOUNT ALL OR ANY OF THE PROPERTY OR ASSETS OF THE SOCIETY AS MAY B E THOUGHT EXPEDIENT WITH A VIEW TO THE PROMOTION OF I TS OBJECTS. (18) TO ENGAGE, EMPLOY AND REMUNERATE PERSON FOR CARRYING ON THE WORK OF THE SOCIETY OR SUCH TERMS AS MAY BE DETERMINED FROM TIME TO TIME. (19) TO RECEIVE, UNDERTAKEN AND EXECUTE ANY SOCIETY, WHIC H MAY LAWFULLY BE UNDERTAKEN BY THE SOCIETY AND MAY BE CON DUCIVE TO ITS OBJECTS. (20) TO BORROW OR RAISE MONEY FOR THE PURPOSE OF CARRYING OUT THE AIMS AND OBJECTS OF THE SOCIETY ON SUCH TERMS AND BY GI VING SUCH SECURITY AS MAY BE DETERMINED FROM TIME TO TIME. (21) TO INVEST MONEYS OF THE TRUST, WHICH CANNOT BE APPLIE D IMMEDIATELY OR AT ANY EARLY DATE FOR CARRYING OUT I TS AIMS AND OBJECTS. ITA NO.2540/DEL/2012 8 (22) TO DRAW, MAKE, ACCEPT, DISCOUNT, ENDORSE, NEGOTIATE B UY, SELL, EXECUTE AND ISSUE BILLS OF EXCHANGE, GOVERNMENT OF IND IA AND OTHER PROMISSORY NOTES, CHEQUES, WARRANTS, DEBENTURES AND OTHER NEGOTIABLE OR TRANSFERABLE INSTRUMENTS OR SECURIT IES. (23) TO CO-OPERATE, FEDERATE, ASSOCIATE OR OTHERWISE TO ESTA BLISH CONTACT WITH OTHER ORGANIZATIONS IN INDIA OR ABROAD HAVING SIMILAR AIMS AND OBJECTS AND NATURE. 9. FROM THE ABOVE AIMS AND OBJECTS OF THE ASSESSEE SOCIET Y, IT DOES NOT COME OUT THAT ANY AIM OR OBJECT IS OF A COMMERCI AL NATURE. UNDISPUTEDLY, THE ASSESSEE IS RUNNING A SCHOOL, AN EDUCATI ONAL INSTITUTION. EDUCATION, THEN, IS AN OBJECT COVERED U NDER THE PROVISIONS OF SECTION 2 (15) OF THE IT ACT, WHICH DEFINES CHAR ITABLE PURPOSE AS FOLLOWS:- 2(15) CHARITABLE PURPOSE INCLUDES..EDUCATION.. 10. THE FIRST PROVISO TO SECTION 2 (15) OF THE ACT STA TES THAT: PROVIDED THAT ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVO LVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, I RRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF T HE INCOME FROM SUCH ACTIVITY. 11. THE DEPARTMENT HAS NOT BEEN ABLE TO SHOW AS TO HO W THE CASE OF THE ASSESSEE FALLS WITHIN THE AMBIT OF THE AFORESAID FIR ST PROVISO TO SECTION 2 (15) OF THE ACT. A PERUSAL OF THE CHART C ONTAINED AT PAGES 50- 51 OF THE ASSESSEES PAPER BOOK SHOWS THAT NO SURPLUS ACCR UED TO THE ASSESSEE SOCIETY IN THE YEARS 2007-08 TO 2010-11. RATHER , THERE WAS A ITA NO.2540/DEL/2012 9 DEFICIT TO THE ASSESSEE IN ALL THESE YEARS. NO COMMERCIA L ACTIVITY HAS BEEN SHOWN TO BE CARRIED OUT BY THE ASSESSEE SOCIETY AND EVEN IF IT WERE SO, AS RIGHTLY POINTED OUT, AS PER CBDT CIRCULAR NO.11/2008 DATED 19.12.2008 (SUPRA), IF ANY COMMERCIAL ACTIVITY IS CAR RIED ON INCIDENTALLY, THE FIRST PROVISO TO SECTION 2 (15) WO ULD NOT APPLY IN THE CASE OF IMPARTING OF EDUCATION. FURTHER, THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2009 SHOWS THE EARNING OF THE ASSESSEE SOCIETY TO BE EXCLUSIVELY FROM ED UCATION AND FROM NO OTHER ACTIVITY. 12. IN RELIABLE EDUCATIONAL ALLIANCE SOCIETY (SUPR A) (AUTHORED BY ONE OF US-JM), IT HAS BEEN HELD THAT WHERE THE OBJE CTS OF A SOCIETY ARE, INTER ALIA, TO ESTABLISH AND RUN EDUCATIONAL INSTITUTI ONS, IT IS A CHARITABLE PURPOSE, AS EDUCATION IS CLEARLY A CHARITABLE PURPOSE W ITHIN THE MEANING OF SECTION 2 (15) OF THE ACT; AND THAT AT T HE TIME OF GRANTING REGISTRATION, THE CIT IS ONLY REQUIRED SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES, AND NO FURTHER. 13. IN THE PRESENT CASE TOO, THE LD. CIT HAS CLEARLY G ONE BEYOND HIS PURVIEW OF SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. THE REGISTRATION REQUEST ED BY THE ASSESSEE IS, THUS, ENTITLED TO BE GRANTED, AS DONE IN REL IABLE EDUCATIONAL ALLIANCE SOCIETY (SUPRA). 14. IN GARDEN CITY EDUCATIONAL TRUST (SUPRA), LIKEW ISE, IT HAS BEEN HELD THAT WHERE THE TRUST HAD EDUCATION AS ONE OF ITS OBJECTS AND IT WAS NOT THAT SOME OTHER ACTIVITY NOT IN THE NATURE OF EDUCATION WAS SOUGHT TO BE PASSED OFF IN THE NAME OF EDUCATION, IT HAD TO BE ACCEPTED THAT THE TRUST EXISTED FOR A CHARITABLE PURP OSE. IN THE PRESENT CASE TOO, CLEARLY, THE ASSESSEE HAS NOT TRIED TO P ASS OFF SOME NON-EDUCATIONAL ACTIVITY IN THE NAME OF EDUCATION. THE LD. CIT HAS NOT ITA NO.2540/DEL/2012 10 FOUND THE ASSESSEE NOT COMPLYING WITH ANY OF THE PROCE DURAL REQUIREMENTS OF REGISTRATION. AS SUCH, THE ASSESSEE HEREI N, AS THE ONE IN GARDEN CITY EDUCATIONAL TRUST (SUPRA) IS ENTITLE D TO REGISTRATION. 15. IN RED ROSE SCHOOL (SUPRA), CONSIDERING THE SCOPE OF INQUIRY BY THE CIT WHILE GRANTING REGISTRATION U/S 12A OF THE AC T, IT HAS BEEN HELD THAT SECTION 12AA OF THE ACT CONFERS POWER ON THE C IT WHILE CONSIDERING THE APPLICATION FOR REGISTRATION OF A TRU ST, TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST AS HE THINKS NE CESSARY SO AS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITI ES OF THE TRUST AND ALSO TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS O F THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST AND IF HE IS NOT SO SATISFIED, HE WOULD REFUSE THE REGISTRATION; THAT SECTION 12AA OF THE ACT DOES NOT S PEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, THE CIT SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSES OR THE TRUST IS EARNING PR OFIT; THAT PROFIT EARNING OR MISUSE OF THE INCOME DERIVED BY THE CHARI TABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES MAY BE A GROUND FOR R EFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME, BUT I T CANNOT BE TAKEN TO BE A SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF TH E TRUST; AND THAT WHILE CONSIDERING THE REGISTRATION U/S 12AA, THE SCOPE OF INQUIRY OF THE CIT WOULD BE LIMITED TO THE AFORESAID EXTENT. IN TH AT CASE, THE TRIBUNAL WAS HELD TO HAVE RIGHTLY FOUND THAT THE OBJECTS OF TH E ASSESSEE SOCIETY SHOWED THAT NONE OF THE OBJECTS WAS AGAINST PUBLIC POL ICY AND THE MAIN ACTIVITY OF THE SOCIETY WAS, INTER ALIA, TO PROV IDE EDUCATION TO CHILDREN. IT WAS HELD THAT IN CASE THE INSTITUTION HA D DEFAULTED IN DEPOSITING CONTRIBUTIONS OF THE EMPLOYEES PROVIDENT F UND, THE ACT CONCERNED SHALL TAKE CARE OF SUCH DEFAULT, BUT IN NO CASE COULD IT BE A GROUND FOR REFUSAL OF REGISTRATION. ITA NO.2540/DEL/2012 11 16. IN THE PRESENT CASE TOO, IT HAS NOT BEEN SHOWN THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE NOT FOR CHARITABLE PURPOSES OR AR E AGAINST PUBLIC POLICY. THE LD. CIT, AS CONSIDERED HEREINABOV E, HAS, CLEARLY, GONE BEYOND HIS JURISDICTION CONFERRED FOR GRANT OF REGISTRATION INASMUCH AS WITHOUT MAKING ANY ADVERSE COMMENT ABOUT E ITHER THE OBJECTIVES OR THE ACTIVITIES OF THE ASSESSEE SOCIETY, HE HAS GONE ON TO REFUSE REGISTRATION TO THE ASSESSEE SOCIETY. 17. DREAM LAND EDUCATIONAL TRUST (SUPRA) (AUTHORED BY ONE OF US THE JM) IS ALSO DEALING WITH THE SCOPE OF THE INQUIRY BY THE CIT WHILE CONSIDERING GRANT OF REGISTRATION U/S 12A OF THE ACT. REGISTRATION WAS ORDERED TO BE GRANTED TO THE ASSESSEE IN THAT CASE, WHER E THE OBJECTIONS OF THE CIT WERE HELD TO BE IRRELEVANT FO R THE PURPOSES OF GRANT OF REGISTRATION, THE CIT REFUSING GRANT OF REGI STRATION ON THE GROUND THAT THE DISSOLUTION DEED OF THE FIRM VIDE WHI CH, PROPERTY WAS SETTLED ON THE TRUST, HAD NOT BEEN REGISTERED, THAT NO TRANSFER DEED WAS EXECUTED REGARDING THE PROPERTY TRANSFERRED TO THE T RUST, THAT THE TAKE- OVER ACTION WAS UNILATERAL, THAT NO OBJECTION CERTIFICATE HAD NOT BEEN OBTAINED FROM THE BANKERS AND THAT ON DISSOLUTION OF THE FIRM, IT WAS LEFT TO THE TRUSTEES TO DECIDE THE FATE OF THE NET ASSETS. 18. HEREIN ALSO, AS DISCUSSED IN THE PRECEDING PARAGRAPH S, THE LD. CIT HAS NOT RESTRICTED HIMSELF TO THE REQUIREMENTS OF SECTI ON 12AA (1), FULFILLMENT WHEREOF IS THE SOLE CRITERION FOR GRANT O F REGISTRATION. 19. IN GUJARAT MARITIME BOARD (SUPRA), IT WAS HELD THAT WHERE THE ASSESSEE, GUJARAT MARITIME BOARD, A STATUTORY BODY ENGAG ED IN THE ACTIVITY OF DEVELOPMENT AND MAINTENANCE OF PORTS IN THE STATE OF GUJARAT, FULFILLED THE CONDITIONS OF SECTION 12AA OF THE ACT, IT WAS ENTITLED TO REGISTRATION U/S 12A OF THE ACT. ITA NO.2540/DEL/2012 12 20. IN THE CASE BEFORE US, IT HAS NOT BEEN SHOWN AS TO H OW THE ASSESSEE SOCIETY DOES NOT FULFILL THE CONDITIONS PRESCRIBE D U/S 12AA OF THE ACT. 21. AS REGARDS THE OBJECTIONS RAISED BY THE LD. DR BEFO RE US WITH REGARD TO NO DETAILS OF BUILDING FUND BEING FILED, AND THE SCHOOL RUN BY THE ASSESSEE BEING BEYOND THE REACH OF THE COMMON MAN A ND BEING RUN ON COMMERCIAL LINES, THE FEE STRUCTURE BEING VERY HIGH AND THE EXPENSES OF EDUCATION BEING NOT SEGREGATED, AGAIN, THE SE ISSUES ARE NOT RELEVANT FOR THE GRANT OF REGISTRATION TO THE A SSESSEE INASMUCH AS THE ONLY THING TO BE CONSIDERED AT THE TIME OF GRANT OF REGISTRATION IS THE OBJECTS OF THE SOCIETY AND THE ACTIVITIES CARRIED ON BY IT. MOREOVER, THESE ISSUES WERE NEVER RAISED BY THE LD. CIT. 22. IN VIEW OF THE ABOVE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. THE ORDER PASSED BY THE LD. CIT, ACCORDINGLY, IS SET ASIDE AND TH E APPLICATION FOR REGISTRATION FILED BY THE ASSESSEE U/S 12A OF THE ACT IS DIRECTED TO BE ALLOWED. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.20 12. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 31.08.2012. DK ITA NO.2540/DEL/2012 13 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES