THE SOUTH INDIAN EDUCATION SOCIETY , K.A, MUMBAI V. CIT CEN I, MUMBAI

ITA 3288/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71857 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2003-2004
• Appeal Filed On: 29-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHA KALA CHANDA
• Keywords: Search and seizure; Charitable institution; Cancellation of registration
• Section: 80G; 12A; 132; 2; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL H HH H BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . !' !' !' !' , # # # # $% $% $% $% BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, AM , AM , AM , AM ./ I.T.A I.T.A I.T.A I.T.A. NO. . NO. . NO. . NO.3288/MUM/2013 3288/MUM/2013 3288/MUM/2013 3288/MUM/2013 ( & & & & ' ' ' ' / ASSESSMENT YEAR :2003-04) THE SOUTH INDIAN EDUCATION SOCIETY, K. A. SUBRAMANIAM ROAD, (OPP. INDIAN GYMKHANA MATUNGA, MUMBAI-400019 / VS. CIT-CENTRAL I, MUMBAI %( # ./ ) ./ PAN/GIR NO. :AAAAS6062R ( (* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,(* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) & && & -. -. -. -. 0 1 0 1 0 1 0 1 /ASSESSEE BY : SHRI VIJAY MEHTA & SHRI PARESH SHAPARIA % % % % 0 1 0 1 0 1 0 1 / REVENUE BY : MS. ABHA KALA CHANDA 0 00 0 .# .# .# .# / DATE OF HEARING : 18 TH NOVEMBER 2013 23 2323 23' ' ' ' 0 00 0.# .# .# .# /DATE OF PRONOUNCEMENT: 29 TH NOVEMBER 2013 $4 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.3.2013 OF COMMISSIONER OF INCOME TAX PASSED U/S 12AA(3) OF THE INCOME TAX ACT WHEREBY THE REGISTRATION U/S 12A GRA NTED TO THE ASSESSEE WAS WITHDRAWN WITH EFFECT FROM ASSESSMENT YEAR 2003 -04. 2. THE ASSESSEE IS A CHARITABLE EDUCATIONAL TRUST A ND WAS SET UP IN THE YEAR 1932 AS PER THE REGISTRATION CERTIFICATE U NDER REGISTRATION OF SOCIETIES ACT. SUBSEQUENTLY, THE ASSESSEE WAS ALSO REGISTERED WITH THE BOMBAY PUBLIC TRUST ON 22.5.1953. THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A OF THE INCOME TAX ACT VIDE CER TIFICATE DATED 22.3.2000 AND ALSO GRANTED CERTIFICATE U/S 80G ON 2 9.5.2009. THE ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 2 ASSESSEE RUNS VARIOUS INSTITUTIONS RIGHT FROM NURSE RY TO HIGH SCHOOL AND VARIOUS COLLEGES ALONG WITH ACADEMIC AND PROFESSION AL INSTITUTIONS OF HIGHER LEARNING. SOME OF THE MAIN OBJECTS OF THE AS SESSEE SOCIETY ARE AS UNDER: I) TO PROMOTE THE ADVANCEMENT OF EDUCATION AND OTHE R INTERCONNECTED FIELDS IN ALL ITS ASPECTS GLOBALLY AND DO ALL THING S NECESSARY FOR THE SAME. II) TO ESTABLISH, CONDUCT, CONTROL AND MANAGE SCHOO LS, ACADEMICS, COLLEGES, OLD AGE HOMES FOR DESTITUTE, RETIRED TEAC HING FACULTY AND/OR ANY DESERVING PERSONS/S, VEDIC PATASHALAS, INSTITUTIONS FOR SPREAD OF SOCIAL AWARENESS AND FOR PROMOTING SOCIAL CAUSES IN FORM I NCLUDING HOME FOR THE PHYSICALLY CHALLENGED AND IDENTIFIED VULNERABLE SECTIONS OF THE SOCIETY, AND INSTITUTIONS FOR PROMOTION OF EDUCATIO N, SCIENTIFIC RESEARCH AND/OR OTHER RELEVANT EDUCATIONAL ACTIVITIES AND DE VELOPMENT IN ALL ASPECTS INCLUDING SPORTS AND GAMES. 3. A SEARCH ACTION U/S 132 OF THE ACT WAS CARRIED O UT ON 11.5.2010 ON THE CASES OF MANAGING COUNSEL MEMBERS OF THE ASSESS EE. SIMULTANEOUSLY, THERE WAS A SURVEY U/S 133 IN THE P REMISES OF THE ASSESSEE TRUST AT MATUNGA, SIESC, CAMPUS, NERUL, M/ S REDFINE PROPERTIES PVT. LTD. AND ENCUBE ETHICALS PVT. LTD. FROM THE EV IDENCE GATHERED AND STATEMENTS RECORDED DURING THE SEARCH/SURVEY IT WAS FOUND THAT THE ASSESSEE IS COLLECTING DONATIONS/CAPITATION FEE FRO M THE CANDIDATES WHO WERE SEEKING ADMISSIONS TO VARIOUS COURSES RUN BY T HE ASSESSEE INSTITUTIONS. STATEMENT OF ONE SHRI G. R. RAMCHANDR AN WAS RECORDED U/S 132(4) OF THE ACT. IN HIS STATEMENT SHRI G. R. RAMC HANDRAN HAS EXPLAINED ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 3 HOW THE ADMISSION UNDER THE MANAGEMENT QUOTA WAS UN DERTAKEN AGAINST THE DONATIONS RECEIVED FROM THE ADMISSION S EEKER. HE HAS EXPLAINED THAT A SUM RANGING FROM ` 50,000/- TO ` 1 5,00,000/- BEING CHARGED FOR ADMISSION TO VARIOUS COURSES. DURING TH E SEARCH OPERATION, A NUMBER OF LOCKERS WERE FOUND IN THE NAME OF OFFICER BEARERS OR PERSONS CONNECTED WITH THE ASSESSEE. ONE OF THE LOCKER NO. 320H, INDIAN BANK, MATUNGA BELONGING TO SHRI N. VENKATANATHAN WAS FOUN D WITH CASH OF ` 2.28 CRORES WHICH WAS SEIZED BY THE SEARCH PARTY. I T WAS STATED IN HIS STATEMENT THAT THE CASH WAS ACCUMULATED FROM THE AM OUNTS RECEIVED IN CASH FROM THE STUDENTS SEEKING ADMISSION THROUGH HI M TO THE VARIOUS COURSES THROUGH MANAGEMENT QUOTA IN THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE TRUST. THUS, ON THE BASIS OF STATEM ENTS RECORDED, IT WAS FOUND BY THE SEARCH PARTY THAT SHRI N. VENKATANATHA N HAD COLLECTED CASH OF ` 2.28 CRORES FROM STUDENTS SEEKING ADMISSION BY WAY OF DONATION/CAPITATION FEE OVER A PERIOD OF 3 TO 4 YEA RS. SHRI N. VENKATANATHAN SUBMITTED THAT THE AMOUNT WAS SIPHONE D BY HIM FROM THE MONEY COLLECTED FROM STUDENTS. STATEMENT OF SHR I G. CHIDAMBRAM, TRUSTEE WAS ALSO RECORDED IN WHICH HE EXPLAINED THA T THE MARK R APPEARING ON CERTAIN PAPERS STANDS FOR RECEIPT REQ UIRED WHERE THE RECEIPT IS REQUIRED BY THE ADMISSION SEEKER FOR THE DONATION AND MARK NR STANDS FOR NOT REQUIRED WHERE A RECEIPT IS N OT REQUIRED BY THE ADMISSION SEEKER. SHRI G. R. RAMACHANDRAN EXPLAINED THAT WHERE THE RECEIPT WAS REQUIRED THE ASSESSEE TRUST ISSUED RECE IPT FOR THE DONATION AND THE AMOUNT IS DEPOSITED IN THE CORPUS FOUND OF THE TRUST. THE ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 4 AMOUNT OF DONATION AGAINST WHICH RECEIPT WAS NOT IS SUED IS KEPT ASIDE IN THE LOCKER OPERATED BY SHRI N. VENKATANATHAN. 4. BASED ON THE INFORMATION GATHERED FROM THE EVIDE NCE AND STATEMENTS RECORDED DURING THE SEARCH AND SURVEY AC TION THE COMMISSIONER FOUND THAT THE ACTIVITY OF THE SOCIETY CANNOT BE REGARDED AS GENUINE WHICH IS AGAINST CHARITY OR PUBLIC POLIC Y. ACCORDINGLY, THE COMMISSIONER ISSUED A SHOW-CAUSE NOTICE DATED 26.2. 2013 AS TO WHY THE REGISTRATION GRANTED U/S 12A SHOULD NOT BE WITHDRAW N/CANCELLED. THE ASSESSEE SUBMITTED REPLY TO THE SHOW-CAUSE NOTICE V IDE LETTER DATED 13.3.2013 AND CONTENDED THAT THE ASSESSEE IS ONE OF THE PIONEER IN THE CITY OF BOMBAY IN IMPARTING EDUCATION TO PUBLIC BY RUNNING SEVERAL EDUCATIONAL INSTITUTIONS FOR SEVERAL DECADES. IT WA S CONTENDED THAT THE CAPITATION FEE COLLECTED IS UTILISED ONLY FOR THE A DVANCEMENT OF THE PURPOSE OF THE ASSESSEE TRUST AND THEREFORE, WHEN T HE ACTIVITY OF THE ASSESSEES ARE TO ACHIEVE THE OBJECT OF THE TRUST T HEN THE REGISTRATION CANNOT BE WITHDRAWN U/S 12AA(3). IT WAS FURTHER CON TENDED THAT THE AMOUNT OF ` 2.28 CRORES FOUND IN THE LOCKER OF MR. N. VENKATANATHAN WAS NEVER BROUGHT TO NOTICE OF MANAGING COUNSEL MEMBER NOR TRUSTEE OR OFFICE BEARER OF ANY EDUCATIONAL INSTITUTION OF THE ASSESSEE TRUST. MR. N. VENKATANATHAN IS A RETIRED PERSON AND WITHOUT THE K NOWLEDGE OF THE MANAGING COUNSEL SIPHONED MONEY IN HIS PERSONAL CAP ACITY THOUGH HE OFFERED THE SAID AMOUNT OF ` 2.28 CRORES IN HIS RET URN OF INCOME. THE ASSESSEE TRUST HAS NOTHING TO DO WITH THE ACT OF SH RI N. VENKATANATHAN. THE COMMISSIONER DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE AND ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 5 HELD THAT THE COLLECTION OF CAPITATION FEE IN CONTR AVENTION OF MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE ACT, 1987) CANNOT BE REGARDED AS GENUINE ACTIVITY. ACCORDINGLY, THE C OMMISSIONER HAS CANCELLED THE REGISTRATION U/S 12A VIDE IMPUGNED OR DER. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS S UBMITTED THAT APART FROM REGISTRATION U/S 12A AS WELL AS REGISTRA TION UNDER BOMBAY TRUST ACT AND 80G OF THE INCOME TAX ACT, THE ASSESS EE WAS ALSO NOTIFIED U/S 35 OF THE INCOME TAX ACT BY THE CBDT ON 28.4.20 09. THEREFORE, THE ASSESSEE HAS BEEN RECOGNISED AS CHARITABLE TRUST IM PARTING EDUCATION. HE HAS EXPLAINED THAT THE ASSESSEE HAS BEEN ALLOWED TO TAKE ADMISSION UNDER MINORITY QUOTA AND THEREFORE, DISCRETION HAS BEEN GIVEN TO THE ASSESSEE UNDER THE MINORITY QUOTA. THE LD. COUNSEL HAS EXPLAINED THAT THE CAPITATION FEE AGAINST WHICH THE RECEIPTS WERE ISSUED BY THE ASSESSEE OR ITS INSTITUTION HAS BEEN DULY ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE THERE IS NO D ISPUTE ABOUT THE SAID RECEIPT BEING UTILISED FOR THE OBJECTS OF THE ASSES SEE. HE HAS FURTHER SUBMITTED THAT PART OF THE CAPITATION FEE RECEIVED IN CASH AND AGAINST WHICH RECEIPT WAS NOT DESIRED BY THE ADMISSION SEEK ERS HAS BEEN REGULARISED AND BROUGHT INTO BOOKS BY TAKING DONATI ONS FROM THIRD PARTIES. THUS, THE LD. COUNSEL HAS SUBMITTED THAT T HE ENTIRE AMOUNT OF CAPITATION FEE HAS BEEN SHOWN IN THE BOOKS THOUGH P ART OF THE AMOUNT RECEIVED IN CASH WAS SHOWN AS DONATION FROM THIRD P ARTIES AS CHEQUES WERE TAKEN FROM THE THIRD PARTIES AGAINST THE CASH. SOME AMOUNT WAS SIPHONED OF BY SHIR N. VENKATANATHAN IN HIS OWN CAP ACITY IN THE PROCESS ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 6 OF ADMISSION AND THE SAME WAS OFFERED TO TAX BY HIM . THE ASSESSEE ISSUED RECEIPTS AGAINST THE CAPITATION FEE IN THE C ASE WHERE THE RECEIPT WAS ASKED FOR BALANCE AMOUNT THOUGH RECEIVED IN CAS H BUT WAS CONVERTED INTO DONATION FROM THIRD PARTY. THEREFORE , THE ENTIRE AMOUNT COLLECTED AS CAPITATION FEE WAS ACCOUNTED FOR THOUG H UNDER DIFFERENT HEADS. THUS, THE LD. A.R HAS SUBMITTED THAT THE AMO UNT COLLECTED UNDER CAPITATION FEE HAS BEEN USED FOR ACHIEVING THE OBJE CTS OF THE ASSESSEE TRUST. HE HAS FURTHER SUBMITTED THAT THE OBJECTS OF THE ASSESSEE ARE CHARITABLE IN NATURE AND IT WAS NOT DISPUTED BY THE TAXING AUTHORITIES. THE LD. A.R HAS REFERRED SECTION 12AA(3) OF THE INC OME TAX ACT AND SUBMITTED THAT THE REGISTRATION GRANTED U/S 12A CAN BE CANCELLED ONLY ON THE SATISFACTION OF THE CONDITION THAT THE ACTIVITI ES OF TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THE LD. A.R HA S CONTENDED THAT THE ACTIVITIES OF PROMOTION AND IMPARTING EDUCATION ARE VERY MUCH GENUINE ACTIVITY OF THE ASSESSEE AND THEREFORE, THE INCIDEN TS OF ACCEPTING THE CAPITATION FEE DOES NOT CHANGE THE GENUINE ACTIVITY OF PROMOTION AND IMPARTING EDUCATION INTO NON-GENUINE ACTIVITY. HE H AS REFERRED THE DECISION OF HONBLE MADRAS HIGH COURT IN CASE OF CI T VS SARVODAYA ILAKKIYA PANNAI 343 ITR 300 AND SUBMITTED THAT THE HONBLE HIGH COURT HAS OBSERVED THAT IN ORDER TO APPLY THE PROVISIONS OF SECTION 12AA(3), THERE MUST BE SPECIFIC FINDING THAT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR NOT BEING CARRIED OUT IN ACCORDA NCE WITH THE OBJECT OF TRUST OR INSTITUTION AS CASE MAY BE. THE REASON FOR CANCELLATION OF REGISTRATION THAT THE ACTIVITIES OF TRUST WAS NOT C HARITABLE CANNOT BE ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 7 BROUGHT UNDER THE PROVISIONS OF SECTION 12AA(3) OF THE ACT. THE LD. A.R HAS REFERRED THE OBJECTS OF THE ASSESSEE TRUST AND SUBMITTED THAT THE OBJECTS OF THE ASSESSEE ARE NOT IN DISPUTE BEING CH ARITABLE IN NATURE THEREFORE, THE ACTIVITY OF IMPARTING EDUCATION IS G ENUINE ACTIVITY AND IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS EXPLAINED IN THE REPLY TO THE SO-CAUSE NOTICE ABOUT SOME OF THE PROMINENT PATRON MEMBER OF THE INSTITUT ION ARE FORMER PRESIDENT OF INDIA AND OTHER PROMINENT PERSONALITIE S BEING PRINCIPLE SCIENTIFIC ADVISOR TO THE PM AND MEMBER OF THE OTHE R CONSTITUTIONAL BODY. SOME OF THE ACCREDITATION, ACHIEVEMENTS AND RECOGNI TION OF THE ASSESSEE TRUST ARE ALSO REFERRED BY THE LD. A.R AND SUBMITTE D THAT THESE ACHIEVEMENTS AND RECOGNITION IN THE FIELD OF EDUCAT ION GO TO PROVE THAT THE ASSESSEE IS A GENUINE TRUST IN THE FIELD OF EDU CATION. HE HAS THEN REFERRED THE DECISION OF PUNE BENCH OF THIS TRIBUNA L IN CASE OF MAHARASHTRA ACADEMY & ENGINEERING EDUCATION RESEARC H VS CIT 133 TTJ (PUNE) 706 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT ACCEPTING DONATION AND CAPITATION FEE FOR ADMISSION CANNOT BE A GROUND FOR CANCELLATION OF REGISTRATION BUT IS A SUBJECT MATTE R OF ASSESSMENT BEING SOURCE OF INCOME. HE HAS THEN REFERRED THE DECISION OF THIS TRIBUNAL IN CASE OF RAMA RAO ADIK EDUCATION SOCIETY VS CIT IN I TA NO. 5742/2007 AND SUBMITTED THAT ONLY WHEN THE FUNDS COLLECTED BY THE ASSESSEE TRUST THROUGH CAPITATION FEE/DONATION HAVE BEEN USED FOR THE PURPOSE OTHER THEN RUNNING THE INSTITUTION CAN BE SAID TO BE THE ACTIVITIES ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE A SSESSEE. HE HAS THEN RELIED UPON THE DECISION OF THIS TRIBUNAL IN CASE O F VIDYAVARDHINI VS CIT IN ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 8 ITA NO. 6509/2007 AND SUBMITTED THAT IF SOME PERSON INDULGES IN WRONG ACTIVITIES THAT DOES NOT MEAN THAT THE INSTITUTION HAS INDULGED IN THE WRONG ACTIVITIES. THE LD. A.R HAS ALSO RELIED UPON THE FOLLOWING DECISIONS: M/S PADANILAM WELFARE TRUST VS DCIT 20 TAXMAN 113 (CHENNAI) ADIT VS ST. FRANCIS EDUCATION TRUST IN ITA NO. 2669 /M/2012 MISS MOHINI JAIN VS STATE OF KARNATAKA AND ORS. 2 S SC 666 SHAVAK SHIKSHA SAMITI VS CIT 104 TTJ 127 (DEL) AMBY INTERNATIONAL SCHOOL ACADEMY VS DIT (EXEMP.) IN ITA NO. 6214/M/2009 M/S KRUPANIDINI EDUCATION TRUST VS DIT (EXEMP.) IN ITA NO. 86/BNG/2012 PROJECT MANAGEMENT INSTITUTE VS DIT (EXEMP.) 142 IT D 339 (HYD.) M/S AGRA DEVELOPMENT AUTHORITY VS CIT 31 TAXMAN 40 (AGRA- TRIB.) 6. THUS, THE LD. A.R HAS SUBMITTED THAT IN ALL THES E DECISIONS THE CANCELLATION OF REGISTRATION ON THE GROUND OF ACCEP TING CAPITATION FEE WAS FOUND NOT SUSTAINABLE IN LAW. THE LD. A.R THEN SUBM ITTED THAT THE CIT(A) ACCEPTED THE GENUINENESS OF THE ACTIVITY OF IMPARTI NG EDUCATION IN PARA 21 OF THE IMPUGNED ORDER AND THEREFORE, THE INCIDEN T OF ACCEPTING CAPITATION FEE CANNOT BE THE GROUND FOR CANCELLATIO N OF REGISTRATION. HE HAS THEN POINTED OUT THAT THE COMMISSIONER HAS RELI ED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MISS MOHINI JAI N VS STATE OF KARNATAKA AND ORS. 2 SSC 666. IN THE SAID CASE THE QUESTION BEFORE THE HONBLE SUPREME COURT WAS THE VALIDITY OF CIRCULAR ISSUED BY THE KARNATAKA GOVERNMENT ALLOWING THE CAPITATION FEE TO BE RECEIVED BY THE ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 9 EDUCATIONAL INSTITUTIONS IN THE STATE THEREFORE THE SAID DECISION IS NOT RELEVANT FOR THE PURPOSE OF CANCELLATION OF REGISTR ATION U/S 12AA(3) OF THE ACT. THE DECISION IN CASE OF VODHITHALA EDUCATION S OCIETY VS ADIT 20 SOT 353 (HYD) RELIED UPON BY THE CIT(A) IS ON THE ISSUE OF EXEMPTION U/S 11 OF THE ACT IN RESPECT OF CAPITATION FEE. THEREFORE, THE DECISIONS RELIED UPON BY THE CIT WHILE PASSING THE IMPUGNED ORDER AR E NOT APPLICABLE ON THE ISSUE OF CANCELLATION OF REGISTRATION. THE LD. A.R HAS FURTHER SUBMITTED THAT WHATEVER CAPITATION FEE RECEIVED BY THE ASSESSEE HAS BEEN DULY ACCOUNTED FOR AND USED FOR THE OBJECTS OF THE TRUST. THE AMOUNT RECEIVED BY THE THIRD PERSON WAS OFFERED TO TAX BY THE SAID PERSON CANNOT BE OTHERWISE CONSIDERED AS AN ACTIVIT Y OF THE ASSESSEE FOR CANCELLATION OF REGISTRATION. THE LD. A.R HAS REFER RED THE ASSESSMENT ORDER PASSED BY THE A.O SUBSEQUENT TO THE CANCELLAT ION OF REGISTRATION WHEREIN THE A.O HAS ACCEPTED THE FACT THAT THE CASH OF ` 2.28 CRORES FOUND IN THE LOCKER WAS OFFERED AS INCOME BY N. VEN KATANATHAN. THE LD. A.R HAS ALSO DISTINGUISHED THE DECISION OF HONBLE SUPREME COURT IN CASE OF SOLE TRUSTEE, LOK SHIKASHANA TRUST VS CIT 101 IT R 234 WHICH HAS BEEN RELIED UPON BY THE COMMISSIONER AND SUBMITTED THAT THE SAID DECISION IS IN RESPECT OF UNAMENDED PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT AND FURTHER IT WAS NOT A CASE OF EDUCATION SOCI ETY OR TRUST. 7. ON THE OTHER HAND, THE LD. D.R HAS HEAVILY RELIE D UPON THE IMPUGNED ORDER OF COMMISSIONER AND SUBMITTED THAT T HE FACTS OF THE CASE ARE NOT IN DISPUTE WHERE THE ASSESSEE HAS ACCE PTED DONATION/CAPITATION FEE FOR ADMISSION WHICH AMOUNTS TO SELL OF EDUCATION ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 10 AND NOT CHARITABLE ACTIVITY. THUS, THE ACCEPTANCE O F CAPITATION FEE ITSELF IS A ACTIVITY FOR A PROFIT MOTIVE AND THE EDUCATION LO SES IS CHARACTER OF CHARITY WHEN THE ACTIVITIES CARRIED OUT WITH THE MO TIVE OF EARNING PROFIT IN THE SHAPE OF CAPITATION FEE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE RELEVANT RECORD AS WELL AS THE DECISIONS RELIED UPON BY THE PARTIES. THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASS ESSEE HAS RECEIVED THE DONATION/CAPITATION FEE FROM THE ADMISSION SEEKERS IN VARIOUS COURSES IN THE INSTITUTE RUN BY THE ASSESSEE. THE COMMISSIONER HAS NOTED THE FACT THAT FROM THE LOCKER NO. 320H WITH BANK OF INDIA, M ATUNGA, A SUM OF ` 2.28 CRORES FOUND DURING THE SEARCH AND SEIZURE ACT ION. THE LOCKER WAS IN THE NAME OF SHRI N. VENKATANATHAN. APART FROM THE A MOUNT OF ` 2.28 CRORES FOUND IN THE LOCKER A SUM OF ` 1.18 CRORES W AS ALSO SEIZED FROM THE RESIDENCE OF SHRI N. VENKATANATHAN. OUT OF THIS THE TOTAL AMOUNT OF ` 3.46 CRORES SHRI N. VENKATANATHAN HAS ADMITTED ` 2. 28 CRORES AS HIS UNDISCLOSED INCOME AND OFFERED TO TAX. THE BALANCE OF ` 1.18 CRORES WAS STATED TO BE BELONGING TO THE ASSESSEE BEING CASH D ONATION/CAPITATION FEE FROM THE PARENTS OF THE ADMITTED STUDENTS. IT I S ALSO UNDISPUTED FACT THAT THE ASSESSEE HAS ACCOUNTED FOR THE ENTIRE AMOU NT OF DONATION/CAPITATION FEE. THE PART OF THE CAPITATION FEE AGAINST WHICH THE RECEIPTS WERE ISSUED BY THE ASSESSEE WAS ACCOUNTED FOR UNDER THE SAME HEAD AND THE REMAINING PART WHERE THE ADMISSION SEE KERS DID NOT ASK FOR RECEIPT WAS CONVERTED INTO DONATION FROM THIRD PART IES. THIS FACT HAS BEEN ACCEPTED BY THE A.O IN THE ASSESSMENT PASSED S UBSEQUENT TO THE ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 11 SEARCH AND CANCELLATION OF REGISTRATION U/S 12A. TH E A.O HAS RECORDED THESE FACTS IN PARA 3.2 AND 3.3 AS UNDER: 3.2 OUT OF THE CASH DONATIONS COLLECTED (SR. NO. 1 ), THE ASSESSEE HAS CLAIMED UNACCOUNTED CASH EXPENDITURE ( SR. NO. 2), CONVERSION/RECYCLE INTO CHEQUES (SR. NO. 3) AND THE BALANCE OF AROUND ` 1.18 CRORES WAS HOARDED TEMPORARILY IN LOCKERS FOR FUTURE CONVERSION/APPLICATION (SR. NO. 5). HOWEVER, IT IS SEEN AT SR. NO. 4 THAT A PART OF THE UNACCOUNTED CASH COLLE CTION WAS DEPOSITED IN THEIR BANK ACCOUNTS WHEREIN THE PAYERS HAVE INSISTED ON RECEIPTS AND HENCE HAVE BEEN ACCOUNTED FOR BY DEFAULT. DURING THE COURSE OF POST SEARCH ENQUIRES, ASSESSEE HAS CLAIMED UNACCOUNTED EXPENSES AND AMOUNT RECYCLES/CONVERTED BUT WITHOUT PRODUCING ANY EVIDEN CE. 3.3 TOTAL CASH OF ` 3.46 CRORES WAS SEIZED FROM RES IDENCE AND BANK LOCKERS MAINTAINED BY SHRI N. VENKATANATHAN, P ERSONAL AIDE OF SHRI V. SHANKAR. OUT OF THE CASH SO SEIZED FROM SHRI N. VENKATANATHAN, HE ADMITTED ` 2.28 CRORES AS HIS UND ISCLOSED INCOME AND ` 1.18 CRORES WAS OWNED UP BY SIES, DURI NG THE POST SEARCH PROCEEDINGS, ASSESSEE HAS SUBMITTED AN EXPLANATION FOR ` 1.18 CRORES CLAIMING THAT IT PERT AINS TO CASH DONATIONS (CORPUS DONATIONS) RECEIVED FROM PARENTS OF THE ADMITTED STUDENTS DURING THE F.Y. 2009-10 AND WHICH REMAINED UNACCOUNTED FOR SEVERAL MONTHS IN THAT YEAR TILL IT WAS BROUGHT TO LIGHT BY THE SEARCH & SEIZURE OPERATION. 9. THUS, THE FACTUM OF THE COLLECTION OF CAPITATION FEE AND CONVERSION PART OF THE SAME INTO DONATION IS NOT IN DISPUTE. T HE QUESTION ARISES IS WHETHER THE ACCEPTANCE OF CAPITATION FEE CAN BE A G ROUND FOR CANCELLATION OF REGISTRATION GRANTED U/S 12A BY INV OKING SECTION 12AA(3) OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEES OBJECTS ARE ACCEPTED AS CHARITABLE IN NATURE. EVEN OTHERWISE THE FACT OF THE PROMOTION AND IMPARTING EDUCATION THROUGH VARIOUS SCHOOLS AND INS TITUTIONS RUN BY THE ASSESSEE IS ALSO NOT IN DISPUTE. THEREFORE, THE PRI MARY ACTIVITY OF THE ASSESSEE IS IN THE FIELD OF EDUCATION WHICH IS UNDO UBTEDLY A CHARITABLE ACTIVITY AS PER SECTION 2(15) OF THE INCOME TAX ACT . IT IS FURTHER ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 1 2 CORROBORATED BY THE REGISTRATION GRANTED BY THE INC OME TAX AUTHORITIES U/S 12A AS WELL AS 80G AND ALSO THE REGISTRATION UN DER BOMBAY PUBLIC TRUST ACT, 1950. A REGISTRATION GRANTED U/S 12A CAN BE CANCELLED U/S 12AA(3) ON SATISFACTION OF EITHER OF THE TWO CONDIT IONS VIZ. I) IF THE ACTIVITIES CARRIED OUT BY THE TRUST/INSTITUTION ARE NOT GENUINE II) THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS CASE MAY BE. THE COMMISSION ER HAS CANCELLED THE REGISTRATION BY CONSIDERING THE ACTIVITY OF ACCEPTI NG THE CAPITATION FEE AS NON-GENUINE ACTIVITY. IT IS PERTINENT TO NOTE THAT THE ACTIVITY OF THE ASSESSEE TRUST IS PROMOTING AND IMPARTING THE EDUCA TION AND THE RECEIPT OF DONATION/CAPITATION FEE IS ONLY A SOURCE OF INCO ME AND NOT THE ACTIVITY ITSELF. THE ACTIVITY OF EDUCATION IS NO WHERE DISPU TED BY THE COMMISSIONER AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE COMMISSIONER TO SHOW THAT THE ASSESSEE IS CARRYING ON ANY ACTIVITY WHICH IS NOT RELATED TO THE PROMOTION OF EDUCATION OR IMPARTING OF EDUCATION. THEREFORE, THE SOURCE OF INCOME BEING TH E CAPITATION FEE IS PURELY A SUBJECT OF ASSESSMENT AND EXEMPTION U/S 11 AND CANNOT BE A GROUND FOR CANCELLATION AS STIPULATED U/S 12AA(3) W HEN THE ACTUAL CARRYING OUT OF THE ACTIVITY OF IMPARTING EDUCATION IS NOT DISPUTED. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT AS WELL AS THIS TRIBUNAL IN A SERIES OF DECISIONS. IN THE CASE OF CIT VS SARVODAYA ILAKKIYA PANNAI (SUPRA) THE REGISTRATION GRANTED U/ S 12A WAS CANCELLED BY THE COMMISSIONER ON THE GROUND THAT THE ASSESSEE SO CIETY WAS ENGAGED IN THE PURCHASE AND SALE OF BOOKS. THE HONBLE HIGH COURT HAS OBSERVED IN PARA 6 AND 9 AS UNDER: ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 13 6. IN ORDER TO APPLY THE ABOVE PROVISION, THERE MU ST BE A SPECIFIC FINDING BY THE COMMISSIONER THAT THE ACTIV ITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR NOT BEING C ARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE MAY BE. THE QUESTION IS, WHETHER THE ORDER OF THE COMMISSIONER OF INCOME TAX COULD FALL UNDER THE POW ERS CONFERRED ON HIM UNDER SECTION 12AA(3) OF THE ACT. THE ONLY REASON GIVEN BY THE COMMISSIONER OF INCOME TAX TO C ANCEL THE REGISTRATION IS THAT THE ACTIVITIES OF THE TRUST WE RE NOT CHARITABLE AND, THEREFORE, THE TRUST IS NOT ENTITLED TO EXEMPT ION UNDER SECTION 11 AND, CONSEQUENTLY, CANCELLED THE REGISTR ATION GRANTED UNDER SECTION 12AA. 6. 8. 9. UNDER SECTION 12AA, THE COMMISSIONER IS EMPOWERE D TO GRANT OR REFUSE THE REGISTRATION AND AFTER GRANTING REGISTRATION, WOULD BE EMPOWERED TO CANCEL AND THAT TOO, ONLY ON TWO CONDITIONS LAID DOWN UNDER SECTION 12AA(3) OF THE A CT. WHETHER THE INCOME DERIVED FROM SUCH TRANSACTION WOULD BE A SSESSED FOR TAX AND ALSO WHETHER THE TRUST WOULD BE ENTITLE D TO EXEMPTION UNDER SECTION 11 ARE ENTIRELY THE MATTERS LEFT TO THE ASSESSING OFFICER TO DECIDE AS TO WHETHER IT SHOULD BE ASSESSED OR EXEMPTED. 10. THUS, IT IS CLEAR THAT THE REASON GIVEN BY THE COMMISSIONER FOR CANCELLATION OF REGISTRATION BEING THE ACTIVITIES W ERE NOT CHARITABLE WAS HELD BEYOND THE SCOPE OF SECTION 12AA(3). IT WAS HE LD THAT CARRYING ON THE PUBLICATION AND SELL OF BOOKS TREATING AS NOT C HARITY CANNOT BE BROUGHT UNDER THE PROVISIONS OF SECTION 12AA(3) OF THE ACT. IN THE CASE OF MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATION RESE ARCH VS CIT (SUPRA) THE TRIBUNAL HAS HELD IN PARA 11.9 AND CONC LUSION IN PARA 11.14 AS UNDER: 11.9 WE HAVE ALSO GONE THROUGH A DECISION REFERRED FROM THE SIDE OF THE REVENUE NAMELY THE JAMMU & KASHMIR BANK PRIORITY SECTOR ASSET RISK FUNS VS CIT (ITA NO. 61/ASR/2006 ORDER DT. 1 ST SEPT., 2006) (SUPRA); CITED IN SUPPORT OF THE ARGUM ENT THAT FIRSTLY THE CIT HAS BEEN VESTED WITH THE POWERS VID E S. 12AA(3, ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 14 INSERTED W.E.F. 1 ST OCT., 2004, TO ENQUIRE ABOUT THE GENUINENESS OF THE ACTIVITIES OF A TRUST AND TO SATISFY HIMSELF THAT SUCH ACTIVITIES ARE BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. SECONDLY IN CASE OF DISSATISFACTION HE I S EMPOWERED TO CANCEL THE ALREADY GRANTED REGISTRATION. THIRDLY IN CASE IT IS FOUND THAT THE ACTIVITIES ARE NOT IN CONFORMITY WIT H THE OBJECT THAT TOO IS THE GOOD REASON FOR CANCELLATION OF REG ISTRATION. FOURTHLY THE SWEEP OF THE SECTION IS WIDE ENOUGH TO EMPOWER THE CIT TO EXAMINE THE NATURE OF THE OBJECT WHETHER FOR GENERAL PUBLIC UTILITY AND PHILANTHROPIC IN NATURE. IN OUR CONSCIENTIOUS VIEW THERE IS NO DISAGREEMENT ABOUT THE ABOVE-MENTI ONED FOUR LEGAL PROPOSITION AS ERUDITELY LAID DOWN BY THE RES PECTED AMRITSAR BENCH. UNDISPUTEDLY WE HAVE ALSO TO DECIDE THIS APPEAL MORE OR LESS WITHIN THESE PARAMETERS. BUT TH E BASIC QUESTION IS THAT BEFORE STEPPING TOWARDS THE CANCEL LATION OF REGISTRATION THE HEAVY BURDEN IS ON THE LEARNED CIT TO CONCLUSIVELY DEMONSTRATE THAT ALL HAD GONE HAYWIRE I.E., OBJECTS ARE MEANT FOR PERSONAL BENEFITS; THAT ENGAGED IN IM MORAL ACTIVITIES OR THAT THERE IS NO ELEMENT OF PUBLIC BE NEFIT. IN THE PRESENT APPEAL NONE OF THE ABOVE CRITERIA FOR REJEC TION OF REGISTRATION WAS IN EXISTENCE, HOWEVER MAINLY CONFI NED TO THE FINDING THAT BY CHARGING DONATION THE TRUST HAS INF RINGED THE RULES OF PROHIBITION OF CAPITATION FEE ACT. 11.10 11.11 .. 11.12 . 11.13 11.14 FACTS OF THIS APPEAL ARE PECULIAR, AS ALREADY DISCUSSED IN ABOVE PARAS IN DETAIL AND THEREUPON CAN COMMENT THA T PRIMA FACIE NO CASE WAS MADE OUT BY THE LEARNED CIT SO AS TO EVEN VAGUELY DEMONSTRATE THAT THE ACTIVITIES OF THE APPE LLANT WERE NOT GENUINE OR ACTIVITY OF IMPARTING OF EDUCATION, FOR WHICH THE TRUST WAS CREATED, WERE NOT CARRIED OUT. EVEN THE L EARNED CIT HAS FAILED TO ESTABLISH THAT ANY PART OF THE INCOME /RECEIPT OF THE TRUST WAS IN ANY MANNER MISUTILIZED BY THE TRUSTEES FOR THEIR PERSONAL BENEFIT I.E., NOT IN FULFILMENT OF THE OBJ ECT OF THE TRUST. OTHERWISE ALSO THERE ARE THREE WAYS TO LOOK AT THIS PROBLEM. ONE IS, THAT THE DONATIONS ARE RAISED BUT NOT UTILI ZED FOR ACHIEVING THE OBJECTS I.E., TOWARDS IMPARTING EDUCA TION; THEN SUCH AN INSTITUTION MUST BEAR THE CONSEQUENCE OF CA NCELLATION OF REGISTRATION SINCE IPSO FACTO INFRINGED S. 12AA( 3) CONDITION. SECOND ASPECT IS, THAT THOUGH THE DONATIONS RECEIVE D ARE MEANT TO FULFIL THE OBJECTS BUT TOGETHER WITH FEES HAVE I NFRINGED ANTI CAPITATION PROHIBITION ACT; THEN COMES WITHIN THE C LUTCHES OF THAT ACT BUT DEFINITELY NOT UNDER S. 12AA(3) PROVIS IONS. THE THIRD ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 15 ASPECT IS, THAT THE DONATION PLUS FEES DO NOT EXCEE D THE PRESCRIBED LIMIT OF ANTI CAPITATION FEE ACT I.E., F IVE TIMES THE NORMAL FEES; FURTHER THAT NO EVIDENCE OF MISUTILIZA TION OTHER THAN THE PRESCRIBED ACTIVITY THEN NO ACTION CAN BE SUGGESTED UNDER S. 12AA(3). THE ASSESSEES CASE FALLS UNDER T HE THIRD CATEGORY. WITH THE RESULT, TOTALITY OF THE CIRCUMST ANCES THUS WARRANTS, IN THE LIGHT OF THE FOREGOING DISCUSSION, NOT TO ENDORSE THE VIEW OF THE LEARNED CIT; CONSEQUENCE THERE UPON REVERSE THOSE FINDINGS. THE ORDER OF CANCELLATION OF REGIST RATION IS HEREBY REVOKED. GROUNDS ALLOWED. 11. SIMILARLY, IN THE CASE OF RAMA RAO ADIK EDUCATI ON SOCIETY VS CIT (SUPRA) THE TRIBUNAL HAS HELD IN PARA 46 AND 47 AS UNDER: 46. NOWHERE IN HIS PROCEEDINGS THE COMMISSIONER HA S STATED THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUINE. IT IS BEYOND DOUBT AND BROUGHT ON RECORD THAT THE ASSE SSEE IS CARRYING ON A NUMBER OF EDUCATIONAL INSTITUTIONS AP PROVED BY THE CENTRAL AND STATE GOVERNMENT AGENCIES INCLUDING UNIVERSITY GRANTS COMMISSION. IT IS A FACT THAT MOR E THAN 7000 STUDENTS ARE PURSUING THEIR EDUCATION IN THESE INST ITUTIONS. THE ASSESSEE IS RUNNING HOSPITALS AND RURAL HEALTH CENT RES. THERE IS NO DOUBT REGARDING THESE FACTS. THE COMMISSIONER HAS NOT BROUGHT ANY MATERIALS ON RECORD TO HOLD A VIEW THAT THE ABOVE ACTIVITIES CARRIED ON BY THE ASSESSEE-TRUST ARE NOT GENUINE. THERE IS NO SUCH CASE AT ALL. THE OBJECTS OF THE AS SESSEE-TRUST ARE TO ENGAGE IN THE ACTIVITIES IN THE FIELD OF EDU CATION, MEDICAL CARE AND RURAL DEVELOPMENT. THE ACTIVITIES NOW CARR IED ON BY THE ASSESSEE-TRUST ARE IN CONSONANCE WITH THE OBJEC TS AND ENSHRINED IN ITS MEMORANDUM OF ASSOCIATION. THE COM MISSIONER HAS NO CASE THAT THE ACTIVITIES OF ASSESSEE-TRUST A RE NOT REFLECTED IN THE OBJECTS CLAUSE OF THE ASSESSEE-TRU ST. 47. THEREFORE, AS A CLEAR PROPOSITION OF FACTS, IT IS VERY EVIDENT FROM THE RECORD THAT THE CONDITIONS NECESSARY TO BE SATISFIED FOR THE PURPOSE OF CANCELLING THE REGISTRATION AS PROVI DED U/S 12AA(3) HAVE NOT BEEN SATISFIED IN THE PRESENT CASE . THE LAW DOES NOT SPEAK OF ANY OTHER SITUATION IN WHICH THE COMMISSIONER OF INCOME TAX HAS THE POWER TO CANCEL THE REGISTRATION OF A CHARITABLE INSTITUTION IN ORDER T O CANCEL THE REGISTRATION, IT SHOULD BE SEEN THAT EITHER THE ACT IVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUINE OR THE ACTIVITIE S OF THE ASSESSEE-TRUST ARE NOT IN CONSONANCE WITH THE DECLA RED OBJECTS. THE ASSESSEE IS NOT HIT BY ANY OF THE ABOVE RIDERS. THEREFORE, WE FIND THAT THE COMMISSIONER IS NOT JUSTIFIED IN E XERCISING THE POWERS U/S 12AA(3) IN CANCELLING THE REGISTRATION O F THE ASSESSEE-TRUST. ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 16 12. THUS, IT IS CLEAR THAT WHEN THE ASSESSEE IS CAR RYING ON A NUMBER OF EDUCATIONAL INSTITUTIONS APPROVED BY THE CENTRAL AN D STATE GOVERNMENT BOARD AND UNIVERSITY THEN IT CANNOT BE SAID THAT TH E ACTIVITY OF PROMOTION AND IMPARTING EDUCATION IS NOT GENUINE. IN THE CASE OF VIDYAVARDHINI VS CIT (SUPRA) THE TRIBUNAL HAS AGAIN CONSIDERED THE I SSUE OF CANCELLATION OF REGISTRATION ON THE GROUND OF ACCEPTANCE OF CAPITAT ION FEE AND BY FOLLOWING THE VARIOUS OTHER DECISIONS OF THE TRIBUN AL IT WAS HELD THAT THE CANCELLATION ON THE GROUND OF RECEIPT OF CAPITATION FEE ITSELF IS NOT SUSTAINABLE. SIMILAR VIEW HAS BEEN TAKEN IN THE CAS E OF PADANILAM WELFARE TRUST VS DCIT (SUPRA) AND IT WAS HELD THAT THE CANCELLATION OF REGISTRATION U/S 12A ON THE GROUND OF ACCEPTING CAP ITATION FEE IS NOT SUSTAINABLE IN LAW. IN THE CASE OF ADIT VS ST. FRAN CIS EDUCATION TRUST (SUPRA), THE TRIBUNAL AFTER CONSIDERING THE DECISIO N IN CASE OF VODITHALA EDUCATION SOCIETY 20 SOT 353 HAS HELD IN PARA 2.3 A S UNDER: 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL BEFORE US. IT IS FOUND THAT OUT OF THE TOT AL DONATION OF ` 30.5 LAKHS A SUM OF ` 1.98 LAKHS WAS RECEIVED FROM THE STUDENTS. A.O HAS NOT DOUBTED THE FACT THAT THE ASS ESSEE IS IMPARTING EDUCATION AND AS PER THE SETTLED LAW OF T AXATION IMPARTING EDUCATION IS COVERED BY THE WORD CHARITAB LE ACTIVITY. IF INCOME EARNED BY A TRUST IS UTILISED FOR CHARITA BLE PURPOSES IT CANNOT BE HELD THAT TRUST IS CARRYING OUT BUSINESS. FAA HAS RIGHTLY POINTED OUT THAT THERE IS NO EVIDENCE ON RE CORD THAT PROFIT EARNED BY THE ASSESSEE-TRUST WERE NOT UTILIS ED BY IT FOR NON CHARITABLE PURPOSES. IT IS ALSO A FACT THAT THE RE IS NO INSTANCE OF VIOLATION OF PROVISIONS OF SECTIONS 11- 13 OF THE ACT BY THE TRUST. IN OUR OPINION PRINCIPLES ENUMERATED BY THE HONBLE SUPREME COURT IN THE CASES OF GUJARAT MARIT IME BOARD AND SURAT CITY GYMKHANA ARE APPLICABLE TO THE CASE UNDER CONSIDERATION. THEREFORE, WE ARE OF THE OPINION THA T ASSESSEE- TRUST WAS CARRYING OUT CHARITABLE ACTIVITIES AND WA S ENTITLED TO EXEMPTION. THEREFORE, CONFIRMING THE ORDER OF THE F AA WE DECIDE GROUND NO. 1 AGAINST THE A.O. ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 17 13. IT IS CLEAR FROM THE SERIES OF DECISIONS RELIED UPON BY THE ASSESSEE THAT THE MERE ACCEPTING THE CAPITATION FEE CANNOT B E BROUGHT INTO THE SCOPE OF SECTION 12AA(3) IF THE PROMINENT ACTIVITY OF THE ASSESSEE ARE NOT DOUBTED BEING IMPARTING OF EDUCATION AND PROMOT ION OF EDUCATION. THE ASSESSEE HAS BEEN CARRYING ON THE ACTIVITY IN T HE FIELD OF EDUCATION THROUGH ITS AIDED AND UNAIDED INSTITUTIONS SINCE TH E YEAR 1932. THE VARIOUS EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSE E ARE AFFILIATED WITH THE BOARDS OF SCHOOL EDUCATION AND UNIVERSITIES. TH ESE ACTIVITIES IN THE FIELD OF EDUCATION THROUGH VARIOUS INSTITUTIONS ARE NOT IN DISPUTE AND THEREFORE, THE GENUINENESS OF THE SAME ARE NOT IN D ISPUTE. THE COMMISSIONER HAS ALSO ACCEPTED THE FACT OF THE ACTI VITY OF THE ASSESSEE THAT THE ASSESSEE IS ENGAGED IN THE EDUCATIONAL ACT IVITY BUT HE HAS OPINED THAT THE EDUCATIONAL ACTIVITY HAS BEEN CONVE RTED INTO COMMERCIAL VENTURE. THEREFORE, IT IS NOT THE CASE OF THE COMMI SSIONER THAT THE ASSESSEE HAS DIVERTED ITS ACTIVITY FROM EDUCATION T O SOME OTHER FIELD AND THEREFORE, THE ACTIVITY OF IMPARTING EDUCATION IS N O MORE GENUINE. WHEN NOTHING HAS BEEN BROUGHT ON RECORD TO SAY THAT THE ASSESSEE HAS CARRIED OUT THE ACTIVITIES OTHER THEN IMPARTING AND PROMOTI NG THE EDUCATION THEN THE CANCELLATION OF REGISTRATION ON THE GROUND OF A CCEPTING THE CAPITATION FEE WHICH HAS BEEN USED FOR THE PURPOSE OF ACHIEVIN G THE OBJECTS OF THE ASSESSEE IS NOT SUSTAINABLE IN LAW IN VIEW OF THE V ARIOUS DECISIONS AS DISCUSSED ABOVE. ACCORDINGLY, WE SET ASIDE THE IMPU GNED ORDER OF THE COMMISSIONER AND RESTORED THE REGISTRATION U/S 12A. ITA NO.3288/M/2013 THE SOUTH INDIAN EDUCATION SOCIETY 18 14. THE ASSESSEE THOUGH HAS RAISED AN ANOTHER GROUN D REGARDING WITHDRAWAL OF REGISTRATION WITH RETROSPECTIVE EFFEC T HOWEVER, THE SAME BECOME INFRUCTUOUS IN VIEW OF OUR FINDING ON THE IS SUE OF CANCELLATION OF REGISTRATION. EVEN OTHERWISE THE SAID ISSUE IS COVE RED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTION HI GH COURT IN CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY VS CIT 343 ITR 23. ACCORDINGLY, THE SAME IS DISMISSED AS BECOME INFRUCTUOUS. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF NOVEMBER 2013 SD/- SD/- ( . . !' ) # $% (N. K. BILLAIYA) ACCOUNTANT MEMBER ( ) & $% (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 29 TH NOVEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI