IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 32/JODH/2011 ADARSH SHIKSHA SANSTHAN VS THE C.I.T. [ADMN] SECTOR NO. 4, JNV COLONY BIKANER BIKANER PAN NO. AAAAA 7687 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHESH GEHLOT DEPARTMENT BY : SHRI A.K. KHANDELWAL, CIT DATE OF HEARING : 12.12.2012 DATE OF PRONOUNCEMENT : 18.12.2012 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE-INSTITUTION IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), BIKANER DATED 29/10/2011. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-INSTITUTION/TRUST APPLIED FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO A S 'THE ACT', FOR SHORT] IN FORM NO. 10A ON 16.4.2010. THE LD. CIT(A) CALLED FOR A REPORT FROM HIS A.O. REGARDING THE GEN UINENESS OF THE TRUST. THE A.O./JCIT, RANGE-2, BIKANER FOUN D AND RECOMMENDED THE CASE OF THE APPELLANT AS FIT FOR RE GISTRATION U/S 12A OF THE ACT. THE COMMISSIONER [CIT] EXAMINE D THE AUDIT REPORTS FOR THE YEAR ENDING 31.3.2007, 31.3.2 008 AND 31.3.2009 SUBMITTED BY THE ASSESSEE BEFORE HIM. TH E LD. CIT HAS NOTED DOWN THAT THE AUDIT REPORT FOR THE YEAR E NDING 31.3.2010 WAS NOT PRODUCED. THE APPELLANT FURTHER FILED WRITTEN SUBMISSIONS ON 29.10.2010. THE TRUST WAS C REATED ON 16.4.1986 AND APPLIED FOR REGISTRATION ON 16.4.2010 . AS PER SECTION 12A, THE ASSESSEE WAS REQUIRED TO APPLY FOR REGISTRATION BEFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST. THE LD. CIT HAS FOUND THAT THIS APPLICATION WAS DELAYED BY 24 YEARS. THE TRUST MAN AGES MANY SCHOOLS IN BIKANER AT 18 DIFFERENT PLACES. TH E OBJECT OF THE TRUST IS TO PROVIDE EDUCATIONAL FACILITIES T O THE PUBLIC. 3 3. THE LD. CIT HAS MENTIONED THAT THE TRUST IS CHAR GING FEES FROM STUDENTS AND THUS EARNS INCOME FROM THIS ACTIV ITY. FINALLY, THE LD. CIT HAS OBSERVED AS UNDER: I. THE TRUSTS INCOME IS ABOVE RS. 1 CRORE AND TH E TRUST HAS ALSO NOT APPLIED FOR EXEMPTION U/S 10(23C). II. THE AMOUNT THAT TRUST HAS SHOWN IN INCOME & EXPENDITURE ACCOUNT UNDER THE HEAD AID & DONATION ACTUALLY APPEARS TO BE FEES CHARGED FROM STUDENTS III. THE ASSESSEE HAS SHOWN FOLLOWING INCOME IN HI S INCOME & EXPENDITURE ACCOUNT AS UNDER: F.Y. INCOME [RS.] 2008-09 RS. 6,47,313/ 2007-08 (-) RS. 3,76,247/- 2006-07 RS. 5,70,343/- 2005-06 RS. 5,27,709/- 4 IV. THE ASSESSEE TRUST WAS ASKED TO JUSTIFY ITS CLAIM FOR REGISTRATION U/S 12AA FOR ITS INVOLVEMENT IN CHARITABLE ACTIVITIES ON 26.10.2010, 28.10.2010 AND 29.10.2010 BUT THE LD. A.R. SHRI SUDHISH SHARMA, CA ALONGWITH SHRI MADAN LAL, CLARK FAILED TO JUSTIFY THAT ANY CHARITABLE ACTIVITIES CARRIED OUT DURING THE CURRENT YEAR AND AS WELL AS EARLIER YEARS. 4. FINALLY, THE LD. CIT HAS NOT FOUND THE TRUST AS GENUINE AND HAS, THEREFORE, NOT GRANTED REGISTRATION SOUGHT FOR U/S 12AA OF THE ACT. AGAINST THIS ORDER, THE ASSESSEE HAS COME UP IN APPEAL BY RAISING THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY THE LD. CIT(ADM) U/S 12AA IS BAD IN LAW AND ON FACTS. 2. THAT THE LD. CIT HAS ERRED IN FACTS AND LAW IN MAKING VARIOUS OBSERVATIONS WHICH ARE INCORRECT AND NOT RELEVANT FOR GRANTING REGISTRATION U/S 12 A IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE LD. CIT HAS NOT FOUND THAT THE OBJECT OF T HE TRUST IS NOT CHARITABLE IN NATURE. IT IS SETTLED POSITION O F LAW THAT IMPARTING EDUCATION IS A CHARITABLE ACTIVITY. THE TRUST IS RUNNING SEVERAL SCHOOLS AS STATED ABOVE AND IMPARTS EDUCATION TO STUDENTS BELONGING TO ALL CASTES, CREE D OR RELIGION AND CANNOT BE STATED TO HAVE A PROFIT MOTI VE EVEN IF SOME FEES IS CHARGES TO MANAGE THE CHARITABLE ACTIV ITIES. IT WAS BROUGHT TO OUR NOTICE THAT AROUND 8000 STUDENTS ARE STUDYING IN VARIOUS BRANCHES OF THE APPELLANT-TRUST AND FROM THEM A VERY NOMINAL FEE IS CHARGED. ALMOST 300 TEA CHERS ARE TEACHING THESE STUDENTS AND ARE EMPLOYED. BESIDES I MPARTING EDUCATION, THE TRUST ALSO ORGANIZES VARIOUS OTHER A LLIED ACTIVITIES WHICH ARE ALSO CHARITABLE IN NATURE. 6. THE LD. CIT(A) HAS TAKEN ONE OF THE GROUNDS AS D ELAY IN APPLYING FOR REGISTRATION. THE TRUST HAD APPLIED F OR REGISTRATION ON 16.4.2010 AND AS PER SECTION 12A(1) (ASSESSEE) WHICH MEANS THAT THE ASSESSEE TRUST IS SEEKING FOR REGISTRATION FROM THE FIRST DAY OF THE F.Y. IN WHIC H 6 APPLICATION WAS SUBMITTED. THE OTHER REASON FOR RE FUSAL OF REGISTRATION U/S 12A IS THAT A PROFIT IS REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT. WE ARE IN AGREEMEN T WITH THE SUBMISSION OF THE LD. A.R. THAT UNLESS A TRUST OR INSTITUTION IS REGISTERED U/S 12AA OF THE ACT, IT I S NOT ENTITLED TO EXCLUDE FROM ITS TOTAL INCOME DEDUCTION S OR CONTRIBUTIONS OR RECEIPT FROM OTHER SOURCES. AS A RESULT, ANY INCOME RELEVANT FRO SECTIONS 10(22), 10(23)(C) OR S ECTION 11 AND 12 ARE NOT APPLICABLE WHILE CONSIDERING THE APP LICATION FOR REGISTRATION U/S 12AA OF THE ACT SINCE THE OBJ ECT OF THE TRUST IS FOUND TO BE CHARITABLE, THEN THE ACTIVITIE S OF THE TRUST CANNOT BE SAID TO BE INGENUINE. THE STAGE WH ERE APPLICATION OF INCOME IS TO BE CONSIDERED IS WHERE REGULAR ASSESSMENT IS MADE AFTER THE INSTITUTION FILES ITS RETURN OF INCOME. IN OUR CONSIDERED OPINION, EVEN SUCH LIKE DELAYS IN FILING APPLICATION FOR REGISTRATION CAN BE CONDONES BECAUSE SUCH TRUSTS WHICH CARRY ON OTHER ACTIVITIES FOR CHA RITABLE PURPOSES MAY NOT BE WELL INFORMED ABOUT LAW, AND IN SUCH CIRCUMSTANCES, IGNORANCE OF LAW ALSO BECOMES A REAS ONABLE CAUSE WHICH GROUND FOR CONDONATION OF THIS DELAY AN D 7 REGISTRATION CAN BE GRANTED FROM THE DATE OF BIRTH OF INSTITUTION. THIS IS A FIT CASE FOR GRANT OF REGIS TRATION AS CLAIMED FOR. ACCORDINGLY, WE SET ASIDE THE ORDER A PPEALED AGAINST AND ALLOW THE APPEAL BY DIRECTING THE LD. C IT TO GRANT REGISTRATION U/S 12AA OF THE ACT TO THE APPELLANT-T RUST. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2012. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH DECEMBER , 2012 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR