Lakshmi Trust, Kolkata V. CIT, (Exemptions), Kolkata, Kolkata

ITA 287/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1591 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P KHAITAN; PRATYUSH
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Gift; Charitable institution; Opportunity of being heard; Retrospective amendment; Corroborative evidences; Benefit of exemption; Cancellation of registration
• Section: 143(3); 12A; 12AA; 263; 11

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 285 / KOL / 2016 ASSESSMENT YEAR :2006-07 KRISHNA CHARITY TRUST 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATK 7682 E ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.286/KOL/2016 ASSESSMENT YEAR: 2006-07 AKLING CHARITY TRUST 12/1, ALIPORE PARK ROAD, KOLKATA-27 [ PAN NO.AAATK 4430 C ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.287/KOL/2016 ASSESSMENT YEAR:2006-07 LAKSHMI TRUST 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATL 2461 L ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 2 ITA NO.288/KOL/2016 ASSESSMENT YEAR: 2006-07 KISHORE KANTI KHANDELWAL CHARITY TRUST, 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATK 7533 J ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO. 289/KOL/2016 ASSESSMENT YEAR: 2006-07 HARSH VARDHAN CHARITY TRUST, 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATH 1762 N ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.1156/KOL/2016 ASSESSMENT YEAR: 2006-07 UDAIPUR CHARITY TRUST 12/1, ALIPORE PARK ROAD, KOLKATA-27 [ PAN NO.AAATU 1009 P ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.1157/KOL/2016 ASSESSMENT YEAR:2006-07 ASHOKE KUMAR MEMORIAL TRUST, 90/31, DIAMOND HARBOUR ROAD, KOLKATA- 38 [ PAN NO.AAATA 4466 A ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 3 ITA NO. 1158/KOL/2016 ASSESSMENT YEAR: 2006-07 NAWAL KISHORE KEJRIWAL CHARITY TRUST, 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATN 5888 R ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.1159/KOL/2016 ASSESSMENT YEAR:2006-07 NATIONAL AGRICULTURAL & SCIENTIFIC RESEARCH FOUNDATION, 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAAAN 0751 G ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT ITA NO.1160/KOL/2016 ASSESSMENT YEAR: 2006-07 ALWAR CHARITY TRUST 90/31, DIAMOND HARBOUR ROAD, KOLKATA-38 [ PAN NO.AAATA 4429 K ] V/S . COMMISSION OF INCOME TAX (EXEMPTIONS), KOLKATA /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI J.P. KHAITAN, SR. ADVOCATE & SHRI PRATYUSH JHUNJHUNWALA, ADVOCATE /BY REVENUE SHRI G. HANGSHING CIT-DR !'# /DATE OF HEARING 02-08-2017 $% # /DATE OF PRONOUNCEMENT 30-08-2017 ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 4 / O R D E R PER BENCH:- THESE ARE TEN APPEALS BY DIFFERENT ASSESSEE(S) ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (EXE MPTIONS)-KOLKATA U/S 12AA(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS THE ACT) VIDE DATED 15.12.2015 & 30.03.2016 RESPECTIVELY FOR ASSE SSMENT YEAR 2006-07 ONWARDS. SHRI J.P. KHAITAN, LD. SENIOR ADVOCATE & PRATYUSH J HUNJHUNWALA, LD ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI G. HANGSHIN G LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. ALL THESE APPEALS ARE HEARD TOGETHER AND ARE BEI NG DISPOSED OFF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. EXCEPT FIGURES ALL THE GROUNDS OF APPEALS ARE COMMON, THEREFORE, WE ARE TAKING THE FACTS OF THE CASE FOR A.Y 2006-07 IN ITA NO. 285/KOL/2016 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE AND TO PASS A CONSOLIDATED ORDER FOR ALL THE APPEAL S. 3. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS :- 1. FOR THAT THE CIT ERRED IN CANCELLING THE ASSESS EES REGISTRATION UNDER SECTION 12A AND THAT TOO WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2005. 2. FOR THAT THE CIT ERRED IN HOLDING THAT I) NO CHARITABLE ACTIVITY / REAL CHARITABLE ACTI VITY WAS DONE; II) ACTIVITIES OF THE ASSESSEE WERE NOT GENUINE; III) ASSESSEE HAD NOT PERFORMED AS PER OBJECTIVES F OR WHICH IT WAS CREATED; IV) ASSESSEE WAS ROTATING DONATIONS FROM GROUP TRUS TS TO SHOW APPLICATION OF INCOME, AND HIS PURPORTED FINDINGS I N THAT BEHALF ARE ARBITRARY, UNREASONABLE AND PERVERSE. 3. FOR THAT FURTHER AND IN ANY EVENT AND WITHOUT PR EJUDICE TO THE AFORESAID, THE CIT HAD NO POWER AND/OR JURISDICTION TO CANCEL THE REGISTRATION WITH RETROSPECTIVE EFFECT FROM APRIL 1 , 2005. 4. FOR THAT THE ORDER APPEALED AGAINST IS OTHERWISE ERRONEOUS ON FACTS AND/OR IN LAW. THE ASSESSEE CRAVES LEAVE TO ADD TO, ALTER, AMEND A ND/OR MODIFY THE GROUNDS TAKEN HEREIN. ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 5 4. ONLY EFFECTIVE ISSUE RAISED BY ASSESSEE IN ALL T HE GROUNDS OF APPEAL IS THAT LD. CIT (EX) ERRED IN CANCELLING THE REGISTRAT ION CERTIFICATE OF THE ASSESSEE U/S 12AA(3) OF THE ACT. 5. BEFORE COMING TO THE SPECIFIC ISSUE OF THE CASE, A BRIEF NOTE ON THE FACTUAL HISTORY OF THE CASE GOES AS UNDER. THE ASSE SSEE IN THE PRESENT CASE IS A TRUST AND HAVING A REGISTRATION U/S 12A OF THE AC T WITH EFFECT FROM 24.01.1979. 6. A SURVEY OPERATION WAS CARRIED OUT AT THE OFFICE PREMISES OF THE ASSESSEE DURING THE FINANCIAL YEAR 2005-06. DURING THE SURVEY, IT WAS OBSERVED BY AO THAT THERE ARE 10 TRUSTS HAVING THEI R OFFICES AT THE SAME PREMISES. IT WAS ALSO REVEALED THAT ALL THESE 10 TR USTS BELONGED TO ONE GROUP AND THE LIST OF THE TRUSTS STAND AS UNDER:- I) AKLING CHARITY TRUST II) KISHORE KANTI KHANDELWALA CHARITY TRUST III)KRISHNA CHARITY TRUST IV)HARSH VARDHAN CHARITY TRUST V) LAKSHMIS TRUST VI) NAWAL KISHORE KEJRIWAL CHARITABLE TRUST VII) NATIONAL AGRICULTURAL & SCIENTIFIC RESEARCH F OUNDATION VIII) ASHOKE KUMAR MEMORIAL TRUST IX) ALWAR CHARITY TRUST X) UDAIPUR CHARITY TRUST DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION ASSESSING OFFICER OBSERVED THAT ASSES SEE IS DERIVING MAINLY ITS INCOME FROM SOURCE OF INVESTMENT SUCH AS INTEREST, DIVIDEND FROM MUTUAL FUND ETC. THE IMPUGNED INCOME OF THE ASSESSEE WAS APPLIE D BY WAY OF DONATIONS TO A CERTAIN INSTITUTIONS WHICH ARE PART OF GROUP A ND HAVING REGISTRATION U/S 12A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER OBSERVED THAT ALL THE 10 TRUSTS HAVE TRANSFERRED CORPUS DONA TION TO ONE ANOTHER IN ORDER TO CLAIM THE BENEFIT OF EXEMPTION SECTION 11 OF THE ACT. AS SUCH, NO CHARITABLE ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 6 ACTIVITY WAS CARRIED OUT BY THE GROUP OF TRUSTS. ON LY SMALL AMOUNT OF MONEY WAS GIVEN AS DONATION TO THE OUTSIDE TRUST JUST TO SHOW THE GENUINENESS OF THE ACTIVITIES SO THAT THE BENEFIT OF SECTION 11 OF THE ACT COULD BE CLAIMED. IN VIEW OF THE ABOVE, AO IN HIS ASSESSMENT ORDER U/S. 143(3 ) OF THE ACT HAS DENIED THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT. 7. AGAINST THE ASSESSMENT ORDER THESE TRUSTS CARRIE D THE MATTER BEFORE LD. CIT (EX) WHO HAS ALSO CONFIRMED THE ORDER OF AO. TH EREAFTER THE MATTER WAS TRAVELLED TO THE HON'BLE ITAT KOLKATA BENCHES WHICH ALSO CONFIRMED THE ORDER OF AUTHORITIES BELOW IN ITA NO. 385/KOL/2014 VIDE O RDER DATED 16.9.2016. ON THE BASIS OF ABOVE FINDING THE LD. CIT(EX) ISSUE D SHOW-CAUSE NOTICE TO THE ASSESSEE U/S. 12AA(3) VIDE DATED 30.10.2014 AND PRO POSED THE CANCELLATION OF REGISTRATION GRANTED U/S. 12A OF THE ACT. THE CO PY OF THE SHOW-CAUSE NOTICE IS REPRODUCED AS UNDER:- INFORMATION IS RECEIVED THAT DURING THE FINANCIAL YEAR 2005-06 YOUR ORGANIZATION WAS INVOLVED IN CIRCUITOUS TRANSACTION S BY ROTATING THE SAME DONATION THROUGH INTER TRUST DONATION. MONEY D ONATED BY THE ASSESSEE TRUST AGAIN CAME BACK TO IT IN THE GRAB OF DONATIONS FROM OTHER TRUSTS REGISTERED US/S 12AA OF THE IT ACT, 1961. THEREFORE, THE ACTIVITY OF YOUR ORGANIZATION WAS NE ITHER GENUINE NOR IN ACCORDANCE TO THE STATED OBJECTIVE OF YOUR ORGANIZA TION. IN VIEW OF THE ABOVE FACTS AND DISCREPANCY, THE DIR ECTOR OF INCOME TAX (EXEMPTION), KOLKATA PROPOSES TO CANCEL THE REGISTR ATION U/S 12AA GRANTED TO YOUR ORGANIZATION. SHOULD BE REVOKED. YO U ARE REQUESTED TO APPEAR BEFORE THE DIRECTOR OF INCOME TAX (EXEMPTION ), KOLKATA THROUGH AUTHORISED REPRESENTATIVE ON 13.11.2014 AT 3.00 PM FOR HEARING AND SUBMIT YOUR REPLY ALONG WITH SUPPORTING DOCUMENTS. IN COMPLIANCE THERETO THE ASSESSEE MADE SUBMISSION WHICH IS COMPLIED AS UNDER:- I) THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER FO R THE A.Y 2006-07 HAS DENIED THE BENEFIT OF EXEMPTION U/S.11 OF THE A CT. BUT NO ACTION WAS TAKEN FOR THE CANCELLATION OF REGISTRATION CERTIFIC ATE U/S. 12A OF THE ACT. II) THE TIME LIMIT AVAILABLE U/S 263 OF THE ACT AGA INST THE ORDER OF AO HAS ALREADY BEEN EXPIRED. ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 7 III) THE ALLEGATION OF LD. CIT(EX) THAT THE AMOUNT DONATED BY THE ASSESSEE HAS COME BACK TO IT HAS NO LEG TO STAND. IV) INDEED THE CORPUS DONATION WAS GIVEN BY THE ASS ESSEE TO ANOTHER TRUST BUT IT WAS GIVEN OUT OF ITS CURRENT YEARS IN COME. THE DONATION RECEIVED BY THE TRUST AS CORPUS DONATION WAS RETAIN ED BY IT AND IT WAS NOT FORWARDED TO OTHER TRUST. THEREFORE THE THEORY OF LD. CIT(EX) THAT ALL THE GROUP OF 10 TRUSTS ARE ENGAGED IN CIRCULAR DONA TION HAS NO BASE. V) IN NONE OF THE CASE, AO HAS HELD THAT THE ACTIVI TIES OF THE TRUSTS ARE INGENUINE. ONLY BENEFIT U/S. 11 OF THE ACT WAS DENI ED ON THE GROUND THAT THE DONATION RECEIVED WAS SUBSEQUENTLY GIVEN T O ANOTHER TRUST. VI) AFTER AY 06-07 THE ASSESSEE HAS BEEN FILING ITS RETURN OF INCOME CLAIMING EXEMPTION BENEFIT U/S. 11 OF THE ACT FOR A LL THE AYS BEGINNING FROM 2007-08 TO 2015-16 RESPECTIVELY. ALL THE RETUR NS FILED BY ASSESSEE AFTER AY 06-07 WERE ACCEPTED BY THE REVENUE UP TO A Y 2014-15. HOWEVER, LD. CIT(EX) DISREGARDED THE CONTENTION OF ASSESSEE AND CANCELLED THE REGISTRATION CERTIFICATE U/S. 12AA(3) OF THE AC T BY OBSERVING AS UNDER:- BASED ON THE FINDINGS OF ASSESSING OFFICER, COMMIS SIONER OF INCOME TAX (APPEALS), HON'BLE ITAT, KOLKATA AND CONSIDERIN G THE SUBMISSION OF THE ASSESSEE. IT IS CONCLUDED- A) ROTATIONAL TRANSACTIONS AS DEPICTED IN PARA (3) OF THIS ORDER, ASSESSEE WAS ROTATING DONATIONS FROM VARIOUS GROUP TRUSTS JUST TO SHOW APPLICATION OF INCOME. B) ASSESSEE WAS NOT DOING ANY CHARITABLE ACTIVITY. EVEN IF HE HAS DONE, IT IS NOMINAL ONLY. C) ASSESSEE HAS NOT PERFORMED AS PER THE OBJECTIVES OF THE TRUST FOR WHICH PURPOSE IT WAS CREATED. D) ACTIVITIES OF THE TRUST WERE FOUND TO BE IN-GENU INE. E) NO REAL CHARITABLE ACTIVITIES ARE DONE BY ASSESS EE TRUSTS, INVOLVED IN ROTATION TRANSACTIONS. F) IT IS ALSO NOTED THAT THERE IS TIME LIMIT FOR CA NCELLATION OF REGISTRATION FOR IN-GENUINE ACTIVITIES. THEREFORE THE DEPARTMENT HAS EVERY RIGHT TO WAIT TILL THE APPEAL OF THE ASSESSEE IS DECIDED BY THE HON'BLE ITAT. G) THE ASSESSING OFFICER DID NOT DENY THE FULL BENE FIT U/S. 11 AS HE IS NOT AUTHORIZED BY THE ACT TO DO SO, AS LONG AS, THE REGISTRATION U/S. 12A IS NOT CANCELLED. H) THE CANCELLATION TAKES EFFECT FROM THE YEAR IN W HICH SUCH IN-GENUINE ACTIVITY TAKES PLACE. TILL SUCH CANCELLATION THE AS SESSING OFFICER IS ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 8 BOUND TO GIVE BENEFIT U/S. 11. HOWEVER, ONCE REGIST RATION U/S. 12AA IS CANCELLED, THEN THE ASSESSMENT OF ALL THE FOLLOW ING YEARS HAS TO BE REVISITED. 11. HENCE, REGISTRATION GRANTED U/S. 12A TO KRISHNA CHARITY TRU9ST IS CANCELLED U/S. 12AA(3) OF INCOME TAX W.E.F. 01.04.2 005, I.E. FINANCIAL YEAR 2005-06 (ASSESSMENT YEAR 2006-07) I. E. THE YEAR IN WHICH ACTIVITIES OF THE TRUST WERE FOUND TO BE IN-G ENUINE AND NOT AT PAR WITH OBJECTIVES OF THE TRUST. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(EX), ASSES SEE CAME IN SECOND APPEAL BEFORE US. 8. LD. AR FOR THE ASSESSEE BEFORE US SUBMITTED AS U NDER:- 1) THE ASSESSING OFFICER, LD. CIT(EX) AND HON'BLE I TAT FOR THE A.Y 2006-07 HAVE DENIED THE BENEFIT OF EXEMPTION11 OF T HE ACT ONLY ON THE GROUND THAT NO CHARITABLE ACTIVITY WAS CARRIED OUT BY ASSESSEE-TRUST. BUT NONE OF THE AUTHORITY HAS DISPUTED THE OBJECTS OF T HE TRUST AS WELL AS ACTIVITIES OF THE ASSESSEE-TRUST. 2) IT IS UNDISPUTED FACT THAT THE DONATION WAS MADE BY THE ASSESSEE TO ANOTHER TRUST AND ANOTHER TRUST FURTHER MADE DONATI ON TO ANOTHER TRUST AND SO ON. ALL THESE FACTS WERE DULY REPORTED UNDER THE INCOME TAX RETURNS AND THERE WAS NO CAMOUFLAGE IN THE ACTIVITI ES OF THE TRUST. AS SUCH EVERYTHING WAS DULY REPORTED. THE ASSESSEE WAS UNDER THE IMPRESSION THAT DONATION MADE TO OTHER TRUSTS AS CO RPUS WILL AMOUNT TO CHARITABLE ACTIVITY AND MISUNDERSTANDING OF THE LAW CANNOT AMOUNT TO IN- GENUINE ACTIVITIES OF THE ASSESSEE-TRUST. 3) THERE IS NO MATERIAL AVAILABLE WITH THE LD. CIT( EX) SUGGESTING THAT THE MONEY DONATED BY THE TRUST HAS COME BACK TO IT IN ANY MANNER. 4) THE BENEFIT OF EXEMPTION WAS DENIED TO ASSESSEE FOR THE A.Y 2006- 07 AND IN REST OF THE YEARS, IT ENJOYED THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT WHICH WAS DULY EXTENDED TO IT. THUS, IT IS CLEAR THAT OUT OF SEVERAL YEARS ONLY IN ONE YEAR THE BENEFIT OF EXEMPTION WAS NOT EXTENDED TO THE ASSESSEE. THEREFORE ON THE BASIS OF ONE YEAR THE RE GISTRATION U/S. 12A OF THE ACT CANNOT BE CANCELLED. EVEN IF IT IS PRESU MED THAT THE ASSESSEE ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 9 HAS DONE SOMETHING WRONG IN A YEAR THEN IT CANNOT B E INFERRED THAT THE TRUST IS IN-GENUINE. 5) LD. CIT(EX) HAS CANCELLED THE REGISTRATION CERTI FICATE WITH EFFECT FROM 01.04.2005 I.E. FINANCIAL YEAR 2005-06 CORRESPONDIN G TO AY 2006-07. IN THIS REGARD LD. AR SUBMITTED THAT LD. CIT(EX) HAS N O POWER TO CANCEL THE REGISTRATION CERTIFICATE W.E.F 01.04.2005 LD. A R IN SUPPORT OF ASSESSEES CLAIM RELIED ON CIRCULAR NO.1/2011 [F.NO . 142/1/2011- SO(TPL)] DATED 06.04.11. THE RELEVANT EXTRACT OF TH E CIRCULAR READS AS UNDER:- 7. CANCELLATION OF REGISTRATION OBTAINED UNDER SE CTION 12A 7.1 SECTION 12AA PROVIDES THE PROCEDURE RELATING TO REGISTRATION OF A TRUST OR INSTITUTION ENGAGED IN CHARITABLE ACT IVITIES. SECTION 12AA(3) PREVIOUSLY PROVIDED THAT IF THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE FOUND TO BE NON-GENUINE OR ITS ACTI VITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS FOR WHICH SUCH TRUST O R INSTITUTION WAS ESTABLISHED, THE REGISTRATION GRANTED UNDER SEC TION 12AA CAN BE CANCELLED BY THE COMMISSIONER AFTER PROVIDING TH E TRUST OR INSTITUTION AN OPPORTUNITY OF BEING HEARD. 7.2 THE POWER OF CANCELLATION OF REGISTRATION IS IN HERENT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWEVE R, JUDICIAL RULINGS IN SOME CASES HAVE HELD THAT THE COMMISSION ER DOES NOT HAVE THE POWER TO CANCEL THE REGISTRATION WHICH WAS OBTAINED EARLIER BY ANY TRUST OR INSTITUTION UNDER PROVISION S OF SECTION 12A AS IT IS NOT SPECIFICALLY MENTIONED IN SECTION 12AA . 7.3 THEREFORE, SECTION 12AA HAS BEEN AMENDED TO PRO VIDE THAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION O BTAINED UNDER SECTION 12A AS IT STOOD BEFORE AMENDMENT BY FINANCE (NO.2) ACT,1996. 7.4 APPLICABILITY- THIS AMENDMENT HAS BEEN MADE APP LICABLE WITH EFFECT FROM 1 ST JUNE, 2010 AND SHALL ACCORDINGLY APPLY FOR ASSESSMENT YEAR 2011-12 AND SUBSEQUENT ASSESSMENT Y EARS. THUS, LD. AR SUBMITTED THE POWER WAS GIVEN TO THE COMMISSIONER FOR THE CANCELLATION WITH EFFECT FROM 01.06.2010 AND REFERRED ON THE ORDER OF ITAT DELHI BENCH IN TH E CASE OF DELHI & DISTRICT CRICKET ASSOCIATION VS. DIRECTOR OF INCO ME-TAX (EXEMPTIONS) IN ITA NO. 3095/DEL/2012 DATED 13.01.2015 REPORTED (2015) 58 TAXMANN.COM 292 (DELHI- TRIB.). HOWEVER, IN ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 10 THE INSTANT CASE, LD. CIT(EX) CANCELED THE REGISTRA TION CERTIFICATE WITH EFFECT FROM 01.04.2005 WHICH IS ULTRA VIRES. 6. THE MONEY OF THE DONATION IS AVAILABLE WITHIN TH E BOOKS OF ACCOUNT FOR A CHARITABLE PURPOSE AND IT HAS NEVER B EEN TAKEN OUT OF THE STREAM OF CHARITABLE ACTIVITIES. LD. AR HAS ALSO FILED THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE DURING THE LA ST SEVERAL YEARS WHICH ARE DEPICTED BELOW:- NAME OF THE DONEE & THEIR ADDRESS MODE OF PAYMENT AMOUNT ACCOUNTING YEAR 20 11-12 SWAMI DAYANANDA SATBHISHEKAM CELEBRATION COMMITTEE (UNDER THE AUSPICES OF SRUTI SEVA TRUST) RTGS 2,00,000 SIVANAND MATH, KALI, MUNGER, BIHAR DEMAND DRAFT 5,000/- 2,05,000 ACCOUNTING YEAR 2012-13 INDIAN INSTITUTE OF CEREBERAL PALSY -35/1, TARATALLA ROAD, KOLKATA-88 CHEQUE 75,000 75,000 ACCOUNTING YEAR 2013 -14 ADITYA BAGLA SON OF MR. VINOD BAGLA, KAILASHPURI, HANUMAN NAGAR, KANKER BAGH, PATNA-20 BIHAR CASH 42,350 THE BHARAT SEVASHRAM SANGHA, 211, RASH BEHARI AVENUE, KOLKAATA-19 CHEQUE 10,000/- 52,359 ACCOUNTING YEAR 2014-15 SRUTI SEVA TRUST, P.O. ANAIKATTI, COIMBATORE-641108 CHEQUE 15,50,000 BIHAR SCHOOL OF YOGA, GANGA DARSHAN, MUNGER, BIHAR- 811201 CHEQUE 25,000/- 15,75,000 THE NECESSARY RECEIPTS & OTHER SUPPORTING EVIDENCES ARE ENCLOSED ON PAGES 47 TO 59 OF THE PAPER BOOK. ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 11 LD. AR ALSO SUBMITTED THAT THE DONATION RECEIVED BY THE ASSESSEE WAS ALLOWED TO BE ACCUMULATED @ 15% IN THE AY 2006-07 W HICH IMPLIES THAT THE ACTIVITIES OF THE TRUSTS WERE DULY ACCEPTED BY THE AUTHORITIES BELOW IN THE ASSESSMENT PROCEEDINGS. THE HON'BLE ITAT IN ASSESSE ES OWN CASE IN ITA NO. 385/KOL/2014 VIDE ORDER DATED 16.9.2016 HAS ALS O GIVEN THEIR VIEW FOR CONSIDERING THE AMOUNT OF DONATION RECEIVED BY IT W HICH WAS ACCUMULATED TO THE EXTENT @ 15% AS PER THE PROVISION OF SECTION 11 (1)(A) OF THE ACT. THUS, THE ORDERS OF AO AND LD. CIT(EX) FOR THE AY 2006-07 GOT MERGED WITH THE ORDER OF ITAT. THUS, IN SUCH CASE, LD. CIT(EX) PASS ED ORDER U/S. 12AA(3) OF THE ACT LOSES HIS JURISDICTION. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD INC LUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. IN T HE INSTANT CASE BEFORE LD. CIT(EX) CANCELLED THE REGISTRATION CERTIFICATE GRANTED BY IT U/S. 12A OF THE ACT ON THE GROUND THAT ASSESSEE IS NOT ENGAGED IN A NY REAL CHARITABLE ACTIVITIES. THERE IS NO DISPUTE WITH REGARD TO THE FACTS OF THE CASE. THEREFORE, WE ARE NOT INCLINED TO REPEAT THE SAME FOR THE SAKE OF BREVITY. AFTER CONSIDERING THE TOTALITY OF FACTS WE OBSERVE CERTAI N POINTS AS DETAILED UNDER:- A) INDEED THERE WERE 10 TRUSTS REGISTERED UNDER SEC TION 12AA OF THE ACT AND ALL OF THEM WERE OPERATING FROM ONE PLACE. THER E WERE COMMON TRUSTY IN ALL THE TRUSTS. THERE WAS DONATION OF COR PUS FUND FROM ONE TRUST TO ANOTHER TRUST IN THE FORM OF CORPUS. IT IS ALSO UNDISPUTED FACT THAT ALL THE CORPUS DONATIONS WERE GIVEN FROM ONE TRUST TO A NOTHER TRUST OUT OF CURRENT YEARS INCOME. IN NONE OF THE CASE CORPUS D ONATION RECEIVED BY ASSESSEE WAS GIVEN TO ANOTHER TRUST IN THE FORM OF CORPUS DONATION. THERE IS NO PROVISION UNDER THE ACT WHICH PROHIBITS TO FORWARD CORPUS DONATION OUT OF THE CURRENT YEARS INCOME. THUS COR PUS DONATION WILL AMOUNT TO APPLICATION OF INCOME. IN THIS REGARD, WE FIND THERE WAS AN ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 12 AMENDMENT WHICH WAS BROUGHT BY THE FINANCE BILL, 20 17 [BILL NO 12 OF 2017]. SECTION 11 OF THE ACT WHICH READS AS UNDER:- 1 2. . 8. AMENDMENT OF SECTION 11.- IN SECTION 11 OF THE I NCOME-TAX ACT, IN SUB-SECTION (1), THE EXPLANATION BELOW CLAUSE (D) S HALL BE NUMBERED AS EXPLANATION 1 THEREOF AND AFTER EXPLANATION 1 AS SO NUMBERED, THE FOLLOWING EXPLANATION SHALL BE INSERTED WITH EFFECT FROM THE 1STD DAY OF APRIL, 2018, NAMELY:- EXPLANATION 2. ANY AMOUNT CREDITED OR PAID, OUT OF INCOME REFERRED TO IN CLAUSE (A) OR CLAUSE (B) READ WITH E XPLANATION 1, TO ANY OTHER TRUST OR INSTITUTION REGISTERED UNDER SEC TION 12AA, BEING CONTRIBUTION WITH A SPECIFIC DIRECTION THAT THEY SH ALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, SHALL NOT B E TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS P URPOSES. FROM THE AMENDMENT, WE FIND THAT INCOME AUTHORITIES WERE CONSCIOUS ABOUT THE APPLICATION OF INCOME OUT OF CORPUS FUND WHICH SHALL NOT BE TREATED AS OBLIGATION BUT THE SAME IS APPLICABLE FROM 01.04.20 18.THUS, IT IS CLEAR PRIOR TO 01.04.2018 THE MONEY DONATED AS CORPUS WILL AMOUNT THE APPLICATION OF INCOME. B) IN THIS CONNECTION, WE ALSO FIND SUPPORT & GUIDA NCE FROM THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARLADEVI SARABHAI TRUST NO.2 REPORTED IN 172 ITR 698 (GUJ), WHEREIN IT WAS HELD AS UNDER:- WHEN A DONOR-TRUST WHICH IS ITSELF A CHARITABLE AND RELIGIOUS TRUST DONATES ITS INCOME TO ANOTHER TRUST, PROVISIONS OF SECTION. 11 ( 1 )(A) CAN BE SAID TO HAVE BEEN MET OUT BY SUCH DONOR-TRUST AND THE DONOR-TRUS T CAN BE SAID TO HAVE APPLIED ITS INCOME FOR RELIGIOUS AND CHARITABLE PUR POSES, NOTWITHSTANDING THE FACT THAT DONATION IS SUBJECTED TO ANY CONDITIONS T HAT DONEE-TRUST WILL TREAT THE DONATION AS TO ITS CORPUS AND CAN ONLY UTILISE THE ACCRUED INCOME FROM THE DONATED CORPUS FOR RELIGIOUS AND CHARITABLE PURPOSE S, AND THAT THE QUESTION WHETHER GIFTED INCOME IS TO BE UTILISED BY DONEE-TR UST FULLY FOR ITS RELIGIOUS AND CHARITABLE PURPOSES OR WHETHER DONEE-TRUST HAS TO K EEP INTACT THE CORPUS OF THE DONATION AND HAS TO UTILISE ONLY THE INCOME THE REFROM FOR ITS RELIGIOUS AND CHARITABLE PURPOSES WOULD NOT MAKE THE SLIGHTEST DI FFERENCE, SO FAR AS ENTITLEMENT OF THE DONOR-TRUST FOR EXEMPTION UNDER SECTION 11 ( 1 ) GOES. C) LD. CIT(EX) HAS CANCELLED THE REGISTRATION CERTI FICATE WITH EFFECT FROM 01.04.2005 THOUGH HE WAS DELEGATED THE POWER FOR CA NCELLATION OF REGISTRATION CERTIFICATE WITH EFFECT FROM ASSESSMENT YEAR 20011- 12 AS DISCUSSED ABOVE. ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 13 THUS, IN OUR CONSIDERED VIEW, LD. CIT(EX) HAS EXCEE DED HIS JURISDICTION BY CANCELLING REGISTRATION CERTIFICATE FROM EARLIER DA TE I.E. 01.04.2005. D) LD. CIT(A)(EX) HAS ALLEGED THAT THE ACTIVITIES O F ASSESSEE IS NOT IN ACCORDANCE TO THE OBJECT OF THE TRUST FOR WHICH IT WAS CREATED. BUT WE FIND THAT LD. CIT(EX) HAS NOT BROUGHT ANY IOTA OF EVIDENCE SU GGESTING THAT ASSESSEES ACTIVITIES ARE NOT AS PER THE OBJECT OF THE TRUST. E) LD. CIT(EX) FOUND ACTIVITIES OF THE TRUST IN-GEN UINE ONLY ON THE BASIS OF ASSESSMENT ORDER PASSED U/S 143(3) FOR THE A.Y. 200 6-07 BUT ON PERUSAL OF ASSESSMENT ORDER WE FIND THAT THERE IS NO WHISPER A BOUT THE IN-GENUINE ACTIVITIES OF ASSESSEE-TRUST. THE ALLEGATION OF LD. CIT(EX) THAT THE AMOUNT OF DONATION PAID BY ASSESSEE HAS COME BACK TO IT IN CA SH, IN THIS REGARD WE FIND THAT THERE IS NO MATERIAL AVAILABLE ON RECORD SUGGE STING THAT SUCH MONEY HAS COME BACK TO ASSESSEE IN CASH FORM. WITHOUT PREJUDICE TO THE ABOVE EVEN ASSUMING THAT T HE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY THEN THE ASSESS EE WILL NOT BE ELIGIBLE FOR EXEMPTIONS U/S 11 OF THE ACT. UNDER SUCH CIRCUMSTAN CES, THE REGISTRATION CERTIFICATE ISSUED U/S 12A OF THE ACT CANNOT BE CAN CELLED AS LONG AS THE OBJECTS OF THE TRUST ARE WITHIN THE PROVISIONS OF L AW. THE LD. CIT (EX) HAS NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT OBJECTS/ BYELAWS OF THE TRUST ARE CONTRARY TO THE PROVISIONS OF LAW. WHILE HOLDING SO , WE FIND SUPPORT & GUIDANCE FROM THE JUDGMENT OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. APEEJAY EDUCATION SOCIETY REPORTED IN 59 TAXMANN.COM 102 WHEREIN IT WAS HELD AS UNDER:- UNDER SECTION 12AA OF THE ACT, THE COMMISSIONER, A T THE RELEVANT TIME IN THE YEAR 1999 HAD CALLED FOR ALL DOCUMENTS AND INFORMATION F ROM THE RESPONDENT-ASSESSEE TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE INSTITUTION AND AFTER MAKING ENQUIRES HAD PASSED THE ORDER REGISTERING TH E SAID INSTITUTION AND GIVING IT THE BENEFIT UNDER SECTION 12A OF THE ACT, WHICH MADE TH E INSTITUTION ELIGIBLE FOR EXEMPTION FROM THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT. UNDER SECTION 12AA(3) OF THE ACT, THE COMMISSIONER WAS TO BE SATI SFIED ABOUT THE ACTIVITIES OF THE SAID INSTITUTION AND IF THEY WERE NOT GENUINE AND T HE SAME WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION H E COULD PASS THE ORDER CANCELLING THE REGISTRATION. IT CANNOT BE DISPUTED THAT THE RE SPONDENT-ASSESSEE IS ENGAGED IN CARRYING OUT ITS OBJECTS AND THE GENUINENESS OF THE SAME HAS NEVER BEEN DOUBTED. THE ALLEGATION IS REGARDING THE ALLEGED SUPPLY OF T HE INSTALLATION OF THE SOFTWARE AND ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 14 WHETHER THE SAME WAS DONE BY M/S. WSL OR NOT. MEREL Y BECAUSE SH. SANJAY D. SONAWANI HAD GIVEN A STATEMENT, THE COMMISSIONER AS SUCH IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION GRANTED ON 13.05.1999 W .E.F. THE ASSESSMENT YEAR 2004- 05. THE ASSESSEE HAD PLACED VARIOUS MATERIALS BEFOR E THE TRIBUNAL TO SHOW THAT SOFTWARE MODULES PURCHASED WERE INSTALLED BETWEEN 2 004 TO 2011 AND THE ASSESSEE HAD INCURRED AS MUCH AS 91.71% OF THE RECEIPTS FOR THE ASSESSMENT YEAR 2004-05. ACCORDINGLY, KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES AS NOTICED ABOVE, HIGH COURT ARE OF THE OPINION THAT THE COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN PASSING THE IMPUGNED ORDER FOR WITHDRAWING THE E XEMPTION AS ADMITTEDLY, THE RESPONDENT-ASSESSEE IS CARRYING OUT EDUCATIONAL ACT IVITIES BY RUNNING A LARGE NUMBER OF EDUCATIONAL INSTITUTIONS ALL OVER THE COUNTRY AN D, THEREFORE, THE QUESTIONS OF LAW SOUGHT TO BE RAISED DO NOT ARISE. 9.1 THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE INSTANT CASE BEFORE US. IN THE INSTANT CASE THE ASSESSEE IS A CHARITABLE TRUST DULY CONSTITUTED UNDER THE DEED OF TRUST AND NO FLAW IN ITS OBJECTS HAS BEEN B ROUGHT TO OUR NOTICE. SIMILARLY, WE ALSO RELY IN THE JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. ISLAMIC ACADEMY OF EDUCATION REPORTED IN 59 TAXMANN.COM 102 WHEREIN IT WAS HELD AS UNDER:- IF TRUSTEES WERE MISAPPROPRIATING FUNDS AND WERE M AINTAINING FALSE ACCOUNTS, IT WAS OPEN TO AUTHORITIES TO DENY BENEFI T UNDER SECTION 11 OF THE INCOME TAX ACT, BUT THAT COULD NOT BE GROUND FO R CANCELATION OF REGISTRATION ITSELF. APPLYING THE ABOVE RATIO LAID DOWN BY THE HONBLE H IGH COURT OF KARNATAKA IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION (SUPRA), IT CAN BE CONCLUDED THAT IN THE GIVEN FACTS & CIRCUMSTANCES THE BENEFIT OF EXEM PTIONS CAN BE DENIED. 9.2 THE PROVISIONS OF SECTION 12A OF THE ACT PRESCR IBE CONDITIONS FOR REGISTRATION OF TRUST AND MAKE OBLIGATORY FOR THE T RUST OR THE INSTITUTION TO SEEK REGISTRATION UNDER SECTION 12AA OF THE ACT, IF SUCH TRUST OR INSTITUTION INTENDS TO HAVE THE BENEFIT OF THE PROVISIONS OF SECTION 11 AN D 12 OF THE ACT. THESE PROVISIONS THUS MAKE IT CLEAR THAT IF THE TRUST OR THE INSTITUTION IS NOT REGISTERED UNDER SECTION 12AA OF THE ACT, IT WOULD NOT BE ABLE TO CLAIM ANY EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF TH E PREVIOUS YEAR, EVEN IF SUCH INCOME IS OTHERWISE LIABLE TO BE EXCLUDED UNDER ANY OF THE CLAUSES OF SECTION 11 OF THE ACT. THUS, IN A CASE WHERE REGISTRATION I S REFUSED, THE TRUST OR THE ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 15 INSTITUTION WOULD NOT BE ALLOWED TO CLAIM ANY SUCH EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YE AR. THE INCOME-TAX ACT THROUGH SECTION 12A HAS MADE IT OBLIGATORY FOR CHAR ITABLE TRUSTS AND INSTITUTIONS TO GET THEMSELVES REGISTERED WITH THE INCOME-TAX AU THORITIES FAILING WHICH THE BENEFIT OF EXEMPTION OF INCOME-TAX WOULD BE DENIED. THE REQUIREMENT OF REGISTRATION BEING PROCEDURAL IS PRESCRIBED UNDER S ECTION 12AA OF THE ACT WHICH READS AS UNDER:- PROCEDURE FOR REGISTRATION . 12AA. (1) THE [***] [PRINCIPAL COMMISSIONER OF] COMMISSI ONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1) ] OF SECTION 12A , SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABO UT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPL ICANT; FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THE LD CIT(EXEMPTION) BEFORE GRANTING THE REGISTRATION CERTIFICATE SHALL CONDUCT NECESSARY ENQUIRIES AS HE THINKS FIT IN ORDER TO SATISFY HIMSELF ABOUT THE GE NUINENESS OF ACTIVITIES OF THE TRUST. ONCE THE LD CIT(EXEMPTION) IS SATISFIED WITH THE GENUINENESS OF THE ACTIVITIES THEN HE WILL GRANT THE REGISTRATION CERT IFICATE. IN THE INSTANT CASE BEFORE US, WE FIND THAT THE ACTIVITIES OF THE TRUST HAVE NOT BEEN DOUBTED EXCEPT THE CORPUS DONATION GIVEN BY THE ASSESSEE TO OTHER TRUSTS. THUS IN OUR VIEW AT THE MOST THE EXEMPTION U/S 11 OF THE ACT WILL BE DE NIED TO SUCH DONATION. THUS, IN SUCH CIRCUMSTANCES THE REGISTRATION U/S 12 A OF THE ACT CANNOT BE CANCELLED. IN THIS REGARD, WE RELY IN THE PRINCIPLE S LAID DOWN BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL (2007) 212 CTR 394 (ALL). THE RELEVANT EXTRACT OF THE JUDGMENT IS EXTRACTED BELOW:- ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 16 A READING OF PROVISIONS OF SUB-CLS. (A) AND (B) OF S. 12AA MAKES IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUI NENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO ABO UT THE OBJECTS OF THE TRUST OR THE INSTITUTION. ON BEING SATISFIED ABOUT THE GE NUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION AND ALSO ABOUT ITS OBJECTS, THE CIT WOULD EITHER GRANT THE CERTIFICATE OR WOULD REJECT THE PRAYER. IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR THE INSTITUTION, HE CAN CALL FOR SUCH DOCUMENTS OR INFO RMATION FROM THE TRUST OR THE INSTITUTION, AS HE THINKS NECESSARY AND HE I S ALSO EMPOWERED TO MAKE SUCH ENQUIRIES AS HE MAY DEEM NECESSARY IN THI S BEHALF. THE OBJECTS OF THE TRUST CAN BE HAD FROM THE BYE-LAWS O R THE DEED OF TRUST, AS THE CASE MAY BE AND UNLESS, OF COURSE, THE OBJECTS OF THE TRUST APPARENTLY MAKE OUT THAT THEY WERE NOT IN CONSONANC E WITH THE PUBLIC POLICY OR THAT THEY WERE NOT THE OBJECTS OF ANY CHA RITABLE PURPOSE, REGISTRATION CANNOT BE REFUSED ACCORDINGLY ON THIS GROUND. IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR T HE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRARY TO PUBLIC POLICY AND AR E, IN FACT, RELATED TO CHARITABLE PURPOSES, THE CIT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CASE THE ACTIVITIES ARE NOT GENUI NE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION, OF COURSE, THE REGISTRATION CAN AG AIN BE REFUSED. BUT ON MERE PRESUMPTIONS AND ON SURMISES THAT INCOME DERIV ED BY THE TRUST OR THE INSTITUTION IS BEING MISUSED OR THAT THERE IS S OME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES RELATING TO ANY CHARITABLE PURPOSE, REJECTION CANNO T BE MADE. SEC. 12AA, WHICH LAYS DOWN THE PROCEDURE FOR REGISTRATIO N, DOES NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLIC ATION FOR REGISTRATION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSE OR SU CH INSTITUTION IS EARNING PROFIT. THE LANGUAGE USED IN THE SECTION ON LY REQUIRES THAT ACTIVITIES OF THE TRUST OR THE INSTITUTION MUST BE GENUINE, WHICH ACCORDINGLY WOULD MEAN, THEY ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST/INSTITUTION, AND ARE NOT MERE CAMOUFLAGE BUT ARE REAL, PURE AND SINCERE, NOR AGAINST THE PROPOSED OBJECTS. THE PROF IT EARNING OR MISUSE OF THE INCOME DERIVED BY CHARITABLE INSTITUTION FRO M ITS CHARITABLE ACTIVITIES, MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME BUT CANNOT BE TAKEN TO BE A SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE I NSTITUTION. IT IS SIGNIFICANT TO MENTION THAT REGISTRATION UNDER S. 12AA DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET THE INCOME EXCLUDED FROM THE IN COME OF THE PREVIOUS YEAR FOR THE PURPOSE OF DETERMINATION OF T AX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHIC H OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN RESTRICTED TO THE EXAMINATION, AS TO W HETHER THE ASSESSEE, WHO HAS MOVED THE APPLICATION FOR REGISTRATION UNDE R S. 12A, IS ACTUALLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 17 TRUST OR THE INSTITUTION HAS TO BE SEEN, KEEPING IN MIND THE OBJECTS THEREOF, WHICH NECESSARILY MEANS THAT THE CIT SHALL SATISFY HIMSELF ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER W ORDS, IF ESTABLISHING AND RUNNING A SCHOOL IS THE OBJECT OF THE SOCIETY, AS G IVEN IN ITS BYE-LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHE D THE SCHOOL, WHERE EDUCATION IS BEING IMPARTED AS PER RULES AND THE FA CTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIV ITY. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CANNOT BE S TRETCHED BEYOND THIS. SUFFICIENT SAFEGUARDS HAVING BEEN GIVEN IN SS. 11, 12 AND 13 FOR ASSESSING THE INCOME WHICH HAS NOT BEEN APPLIED TO THE PURPOSE OF THE TRUST OR THE INSTITUTION, THE INTENTION OF THE LAW MAKER AND THE SCOPE AND PURPORT OF THE PROVISION IS APPARENT WHILE CONSIDER ING THE QUESTION OF REGISTRATION. IN VIEW OF ABOVE PRECEDENT, WE FIND THAT THE ACTIVI TIES/ OBJECTS OF THE TRUST HAVE NOT BEEN DOUBTED AND ON THE BASIS OF SAME ACTIVITIE S/ OBJECTS REGISTRATIONS U/S 12AA WAS AWARDED TO THE ASSESSEE. SIMPLY THE ASSESS EE HAS GIVEN CORPUS DONATION TO A TRUST CANNOT BE THE BASIS FOR THE DEN IAL OF THE REGISTRATION CERTIFICATES AS DISCUSSED ABOVE. 9.3 IT IS ALSO IMPORTANT TO NOTE THAT THE ACTIVITIE S OF THE ASSESSEE HAVE NOT BEEN DOUBTED IN ALL OTHER YEARS AS DISCUSSED ABOVE. AS SUCH THE ACTIVITIES OF THE TRUST WERE DULY ACCEPTED BY THE REVENUE AS EVID ENCED FROM THE DETAILS SUBMITTED BY THE AR IN THE PRECEDING PARAGRAPH AND PLACED ON RECORD. THE LD. DR HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO T HE FINDING OF LD. AR. THUS THE AMOUNT OF DONATION GIVEN BY THE ASSESSEE TRUST TO THE OTHER TRUST IS VERY MUCH CHARITABLE ACTIVITIES. IN THIS CONNECTION THE CBDT HAS ISSUED INSTRUCTION NO. 1132 DATE 05.01.1978 WHEREIN IT WAS CLARIFIED T HAT THE PAYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILIZATION BY THE DONEE-TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR A CHARITABLE PURPOSE. IN VIEW OF ABOVE, WE HAVE NO HESITATION IN REVERSING T HE ORDER OF LD. CIT(EX) AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO.285-289 & 1156-1160/KOL/2016 A.Y. 200 6-07 PAGE 18 COMING TO ITA NO.286-289/KOL/2016 & ITA NO.1156-116 0/KOL/2016 FOR A.Y 06-07 . 11. SINCE THE FACTS ARE EXACTLY IDENTICAL, BOTH PAR TIES ARE AGREED WHATEVER VIEW TAKEN IN THE APPEAL OF ASSESSEE IN ITA NO.285/ KOL/2016 MAY BE TAKEN IN THESE APPEALS OF ASSESSEE ALSO, WE HOLD ACCORDINGLY . 12. IN THE RESULT, APPEALS OF ASSESSEE ARE ALLOWED. 13. IN COMBINE RESULT, ALL THE APPEALS OF ASSESSEE STAN D ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 30 /08/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP &!'(- 30 / 08 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-KRISHNA CHARITY TRUST/LKSHMI TRUST/KISHOR E KANTI KHANDELWAL CHARITY TRUST/HARSH VARDH AN CHARITY TRUST/ASHOKE KUMAR MEMORIAL TRUST/ NAWAL KISHORE KEJ RIWAL CHARITY TRUST/NATIONAL AGRICULTURAL & SCIENTI FIC RESEARCH FOUNDATI ON/ALWAR CHARITY TRUST 90/31, DIAMOND HRARBOUR ROAD, KOLKATA-38, /AKLING CHARITY TRUST/UDAIPUR CHARITY TRUST/12/1 ALIPORE PART ROAD ,KOLKATA-27 2. /REVENUE-CIT (EX), KOLKATA 3.'0'1 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5.56788!1 , 1 , / DR, ITAT, KOLKATA 6.7:;<= / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1 ,