LMS Educational Society, Firozabad V. C.I.T.-II, Agra

ITA 373/AGR/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0785 (ITAT-AGRA)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Corroborative evidences
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND D R . MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO. 373 /AGRA/201 4 (ASSESSMENT YEAR - N/A ) LMS EDUCATIONAL SOCIETY 20, SETH VIMAL JAIN COMPLEX, FIROZABAD. PAN NO. AA BTL1014G (ASSESSEE) V S .. COMMISSIONER OF INCOME TAX II , AGRA . (R EVENUE ) A SSESSEE BY SHRI ANURAG SINHA , ADV. REVENUE BY SHRI WASEEM ARSHAD, SR. DR. ORDER PER , A. D. JAIN, JUDICIAL MEMBER: THIS IS AN APPEAL AGAINST THE ORDER DATED 10.11.2014 PASSED BY THE LD. CIT , REJECTING THE APPLICATION FILED BY THE ASSESSEE SOCIETY , SEEKING REGISTRATION U/S 12AA OF THE INCOME TAX ACT. 2. WHILE REJECTING THE ASSESSEES APPLICATION, THE LD. CIT HAS OBSERVED, INTER ALIA, THAT THE A PPLICANT SOCIETY, AS PER THE FRA NCHISEE AGREEMENT DATED 21.01.2014, IS DATE OF HEARING 02 . 0 1 .201 7 DATE OF PRONOUNCEMENT 13 .0 2 .201 7 I.T.A NO. 373 /AGRA/201 4 2 A FRANCHISEE OF A CORPORATE BODY, NAMELY, M/S MDN EDIFY EDUCATION PVT. LTD., SECUNDERABAD (A.P.); THAT WHEN THE FRANCHISOR C OMPANY ITSELF ADMITTEDLY CONFIRMED IN THE AGREEMENT THAT ITS BUSINESS IS OF ESTABLISHING AND OPERATING EDUCATIONAL INSTITUTIONS, UNDER THE BRAND NAME EDIFY SCHOOL, THE FRANCHISEE I.E., THE APPLICANT SOCIETY CANNOT CLAIM ITS ACTIVITIES TO BE ANY DIFFERENT ; THAT FRANCHISE E IS A COMMERCIAL CONCEPT UNDER WHICH A FRANCHISOR AWARDS LICENSE/PERMISSION TO BE AN INDIVIDUAL OR GROUP TO MARKET ITS PRODUCE; THAT IT IS EVIDENT FROM THE FRANCHISEE AGREEMENT THAT FOR GETTING THE TRADE MARK/BRAND NAME, I.E, EDIFY SCHOOL , THE APPLICANT SOCIETY ENTERED INTO FRANCHISE AGREEMENT WITH A COMPANY REGISTERED UNDER THE COMPANIES ACT AND IT ALSO ENJO YS THE COPYRIGHT AND TRADE MARK OF EDIFY SCHOOL; THAT AS PER CLAUSE 4.1 OF THE FRANCHISEE AGREEMENT, THE CONSIDERATION AMOUN T WAS OF RS.21,00,000/ - PLUS SERVICE TAX, WHICH THE FRANCHISEE SHALL PAY AS AGREEMENT FEE, 50% OF WHICH IS TO BE PAID AS SIGNING AMOUNT AND THE REMAINING 50% IS TO BE PAID AT A LATER STAGE AND THE SAME IS NOT REFUNDABLE; THAT BESIDES, A MINIMUM ROYALTY OF RS. 5,00,000/ - OR 4% OF TOTAL REVENUE PER ANNUM, WHICHEVER IS HIGHER, IS TO BE PAID TO THE FRANCHISOR; THAT CLAUSE 7.14 OF THE FRANCHISEE AGREEMENT PRESCRIBES THAT THE STOCK OF SCHOOL UNIFORM, TE X T BOOKS AND STUDENT KITS HAS TO BE PURCHASED FROM THE FRANCHI SOR OR PREPARED ACCORDING TO ITS NORMS FROM THE LOCAL MARKET AND MAINTAINED IN SUFFICIENT QUANTITY AT OUTLETS OF THE ASSESSEE SOCIETY, AS PER ITS BUSINESS REQUIREMENTS; THAT THE SOCIETY I.T.A NO. 373 /AGRA/201 4 3 WAS RUNNING ON BUSINESS LINES WITH A PROFIT MOTIVE AND NOT FOR CHARITA BLE PURPOSES; THAT WITHIN A VERY SHORT SPAN , I.E., FROM 15.10.2013 , THE ASSESSEE SOCIETY HA D RAISED FUNDS TO THE TUNE OF RS.2,50,37,718/ - FROM DIFFERENT SOURCES, I.E., LOANS OF RS.6.74,838/ - FROM HDFC FINANCE LTD. AND LOANS OF RS.1,90,40,000/ - FROM MEMBER S; THAT A MEAGER CONTRIBUTION OF RS.3,12,000/ - HAD BEEN SPENT OVER DIFFERENT EXPENSES, LEAVING A SURPLUS OF RS.58,441/ - ; THAT LIABILITIES OF RS. 9,06,000/ - AND RS.82,000/ - ALSO APPEARED AS ADVANCE FEE AND REGISTRATION FEE PAYABLE TO M/S EDIFY WORLD SCHOOL ; THAT THE ASSESSEE SOCIETY COULD NOT BE CONSIDERED AS A CHARITABLE INSTITUTION WORKING INDEPENDENTLY; THAT IT HA D MANAGED ALL ITS INFRASTRUCTURE AS PER THE FRANCHISEE GUIDELINES; THAT IT WA S DISCHARGING AL L ITS OBLIGATIONS AS A FRANCHISEE, AS PER THE FRANCHISEE AGREEMENT; THAT IN OTHER WORDS, IT WA S WORKING UNDER THE UMBRELLA OF ITS FRANCHISOR, RUNNING ON COMMERCIAL LINES; THAT ITS ACTIVITIES, EVEN IF CLAIMED TO BE CHARITABLE, WERE CARRIED ON WITH A PROFIT MOTIVE; AND THAT A S SUCH, THE APPLICANT SOCIET Y COULD NOT BE CONSIDERED FOR REGISTRATION U/S 12AA OF THE I.T. ACT. 3. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED ( BY WAY OF ORAL SUBMISSIONS AS WELL AS SYNOPSIS FILED) THAT THE MATTER WAS REFERRED BY THE LD. CIT TO T HE ITO, WHO , VIDE LETTER DATED 26.6.2014 (APB - 114 - 115) , CALLED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM FOR APPROVAL U/S 12AA OF THE I.T. ACT WITH SUPPORTING EVIDENCE; THAT THE ASSESSEE, IN RESPONSE, FILED LETTER DATED 14.07.2014 (APB - 116 - 120), ENCLOSING TH EREWITH , NECESSARY EVIDENCE S IN THE SHAPE I.T.A NO. 373 /AGRA/201 4 4 OF ACKNOWLEDGMENT OF RETURN OF INCOME FOR A.Y. 2014 - 15 ALONGWITH INCOME AND EXPENDITURE ACCOUNT AND BALANCE SHEET; THAT THE ASSESSEE FILED FURTHER REPLY DATED 04.08.2014 (APB - 121 - 122) EMPHASIZING , AS PER PARA 5 THE REOF, THAT EDUCATION AL ACTIVITIES WERE BEING CARRIED OUT BY THE SOCIETY AS PER DETAILS FILED; THAT NOTICE DATED 29.09.2014 (APB - 123) WAS ISSUED BY THE LD. CIT , REQUIRING THE ASSESSEE TO FURNISH EVIDENCE AS LISTED THEREIN; THAT VIDE REPLY DATED 10.09.2014 (APB - 124 - 143), THE ASSESSEE FURNISHED EVIDENCE IN THE SHAPE OF CERTIFICATE ALONGWITH BYE LAWS, DETAILS OF MEMBERSHIP FEES , CONFIRMATION COPY OF REGISTER ED SALE DEED ALONGWITH COPY OF APPROVED BUILDING MAP , COPY OF INCOME AND EXPENDITURE A/C ALONG WITH BALA NCE SHEET FOR A.Y. 2014 - 15, COPY OF ITR ACKNOWLEDGMENT FOR A.Y. 2014 - 15, COPY OF BANK STATEMENT UP - TO - DATE AND COPY OF EVIDENCE FOR CHARITABLE ACTIVITIES; THAT THE ASSESSEE FILED FURTHER REPLY DATED 27.10.2014 (APB - 144 - 148) BEFORE THE LD. CIT, ENCLOSING A LIST OF STUDENTS, DETAILS OF FEES STRUCTURE AND DETAIL OF TEACHERS; THAT COPY OF AGREEMENT WITH MDN EDIFY EDUCATION (P.) LTD. (APB - 79 - 107) AND SCOPE OF WORK TO BE DONE BY EDIFY IN PURSUANCE OF THE AGREEMENT (APB - 108 - 113) WERE ALSO FILED BY THE ASSESSEE BEFORE THE LD. CIT; THAT THE LD. CIT FOR MED THE UNILATERAL WRONG OPINION THAT THE ASSESSEE BEING A FRANCHISE E OF MDN EDIFY EDUCATION (P) LTD., WHICH COMPANY HAD ENTERED INTO THE BUSINESS OF ESTABLISHING AND OPERATING EDUCATION AL INSTITUTIONS, THE ASSESSEE COULD NO T CLAIM IT S ACTIVITIES TO BE ANY DIFFERENT FROM THOSE OF ITS FRANCHISOR; THAT THIS OPINION OF THE LD . CIT WAS FORMED I.T.A NO. 373 /AGRA/201 4 5 ILLEGALLY, UNILATERALLY , WITHOUT CONFRONTING THE SAME TO THE ASSESSEE; THAT THE REJECTION OF THE ASSESSEES APPL ICATION IS ALSO BASED WRONGLY ON THE OBSERVATION THAT ROYALTY IS TO BE PAID TO THE FRANCHISOR AND STOCK, AS PER THE ROYALTY AGR EEMENT , HAS TO BE MAINTAINED AS PER THE BUSINESS REQUIREMENT OF THE ASSESSEE; THAT THE LD. CIT HAS FAILED TO CONSIDER THAT THE FRANCHISEE AGREEMENT WAS ENTERED INTO WITH EDIFY EDUCATION BECAUSE OF ITS TECHNICAL EXPERTISE IN SETTING UP OF SCHOOL S AND BRAND NAME ASSURING PARENTS OF EDUCATION OF THEIR CHILDREN IN A PROFESSIONALLY OPERATED SCHOOL WHERE HIGH STANDARDS OF STAFF, STUDENTS AND OVER - ALL EDUCATIONAL ENVIRONMENT IS MAINTAINED BECAUSE OF REGULAR CHECK OF MDN EDIFY EDUCATION; THAT THE AGREEMENT DOES NO T NEGATE THE OBJECT OF THE ASSESSEE SOCIETY, WHICH IS ENGAGED IN PROVIDING EDUCATION AS PER THE REQUIREMENT S U/S 2(15) OF THE ACT; THAT THE OBJECTIONS RAISED WITH REGARD TO THE ROYALTY AND MAINTENANCE OF STOCK AS PER BUSINESS REQUIREMENTS ARE OF NO CONSEQUENCE, SINCE NO BUSINESS ACTIVITY HAS EITHER BEEN UNDERTAKEN, OR IS PROPOSED TO BE UNDERTAKEN BY THE ASSESSEE SOCIETY; AND THAT MERELY ON THE BASIS OF THE CONTENTS THE AGREEMENT, IT CANNOT BE HELD, AS HAS WRONGLY BEEN DONE, THAT THE ASSESSEE SOCIETY IS CARRYING ON ACTIVITIES WHICH ARE NOT CHARITABLE, BUT ARE BEING CARRIED ON WITH ANY PROFIT MOTIVE . 4. R ELIANCE HAS BE EN SOUGHT TO BE PLACED ON VIKAS LOK SEWA SAMIT VS. CIT - II, AGRA , 42 TAXMANN.COM 503 (AGRA) AND MERITTA WELFARE TRUST VS. CIT, 56 TAXMANN.COM 363 (DEL). I.T.A NO. 373 /AGRA/201 4 6 5. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT IT REMAINS UNCHALLENGED THAT THE BASIS OF THE WORKING/A CTIVITIES OF THE ASSESSEE SOCIETY IS THE FRANCHISEE AGREEMENT ENTERED INTO BY THE ASSESSEE SOCIETY WITH M/S MDN EDIFY EDUCATION (P) LTD. SECUNDERABAD (A.P.) . I T HAS BEEN EMPHASIZED THAT AS RIGHTLY NOTED BY THE LD. CIT, IN THE OPENING LINES OF THE AGREEMENT ITSELF, MDN, THE FRANCHISOR, ITSELF ADMITTEDLY CONFIRMS THAT IT IS IN THE BUSINESS OF ESTABLISHING AND OPERATING EDUCATIONAL INSTITUTIONS UNDER THE BRAND NAME OF EDIFY. THE LD. DR STRESS ED THAT THE TERMINOLOGY EMPLOYE D IS A DIRECT INDICATOR OF THE NATUR E OF THE ACTIVITIES UNDERTAKEN. THE VERY FACT THAT EDIFY HAS BEEN T E R M ED AS A BRAND NAME, IS AMPLY INDICA TIVE OF THE BUSINESS INTENTIONS OF BOTH , THE FRANCHISOR, I.E., MDN EDIFY EDUCATION (P) LTD., AS WELL AS THE FRANCHISEE , I.E., THE ASSESSEE SOCIETY. IT HAS BEEN URGED THAT FURTHER - MORE , THE VERY FACT THAT THE AGREEMENT UNDER CONSIDERATION IS A FRANCHISEE AGREEMENT ITSELF SHOWS THE BUSINES S NATURE OF THE ALLIANCE PER SE; THAT EDIFY SCHOOL , IN FACT, IS A COPYRIGHT AND TRADE MARK OF THE FRANCHISOR, AS CONFIRMED IN THE FRANCHISEE AGREEMENT AND AS CORRECTLY TAKEN NOTE OF IN THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT IT IS CLEAR THAT THE ASSESSEE SOCIETY IS BEING RUN OF COMMERCIAL LINES, PARTICULARLY WHEN THE INVOLVE MENT IS OF CONSIDER ATION AMOUNT SAND R OYALTY, BESIDES THE REQUIREMENT OF MAINTENANCE OF STOCK OF SCHOOL UNIFORM, AND TE X T BOOK S STUDENT KITS, ALL THREE OF WHICH HAVE BEEN T E R M ED AS MERCHANDISE, IN THE I.T.A NO. 373 /AGRA/201 4 7 AGREEMENT ITSELF, AMPLY DEMONSTRATING THE BUSINESS NATUR E OF THE LINES ON WHICH THE ACTIVITIES ARE CARRIED OUT. IT HAS BEEN ARGUED THAT AS SUCH, THE ACTIVITIES, THOUGH CLAIMED TO BE CHARITABLE, ARE BEING CARRIED ON WITH A PROFIT MOTIVE, THEREBY DISENTITLING THE ASSESSEE SOCIETY FOR REGISTRATION U/S 12A A OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE FACTS, AS DELINEATED IN THE RESPECTIVE ARGUMENTS OF THE PARTIES , ARE PATENT ON RECORD. IT IS SEEN THAT THE LD. CIT(A) HAS ALMOST ENTIRELY GONE BY THE FRANCHISEE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE SOCIETY AND M/S MDN EDIFY EDUCATION (P) LTD., SECUNDERABAD (AP). THE FACT THAT THIS AGREEMENT IS A FRANCHISEE, AGREEMENT IS THE FIRST FACTOR WHICH HAS LED TO THE RE GISTRATION OF THE ASSESSEES APPLICATION. THE LD. CIT H AS OBSERVED THAT FRANCHISE IS A COMMERCIAL CONCEPT. THEN, PAYMENT UNDER THE AGREEMENT INVOLVING CONSIDERATION AMOUNT AND ROYALTY HAS ALSO BEEN SEEN AS OF COMMERCIAL NATURE. FURTHER, STOCK OF SCHOOL UNIFORM , TE X T BOOKS AND STUDENT KITS HAVING BEEN T ERME D AS MERCHANDISE UNDER THE AGREEMENT, MAINTENANCE WHEREOF , AS PER BUSINESS REQUIREMENT OF THE ASSESSEE SOCIETY , HAVE BEEN PERUSED AS MAKING THE ACTIVITIES OF THE ASSESSEE SOCIETY AS ACTIVITIES RUN ON BUSINESS LINES WITH A PROFIT MOTIVE. 7. AT FI RST BLUSH, THE APPROACH OF THE LD. CIT IN FORMING THE OPINION OF THE ASSESSEE SOCIETY TO BE NOT ENTITLED TO REGISTRATION UNDER THE ACT, APPEARS TO BE OUT AND OUT CORRECT. THIS IS SO, BECAUSE OF THE FRANCHISEE AGREEMENT. HOWEVER, I.T.A NO. 373 /AGRA/201 4 8 JUXTAPOSED WITH THE REQUIRE MENTS OF THE ACT FOR GRANT OF REGISTRATION THEREUNDER, THE SIT UATION IS FOUND TO BE OTHERWISE. UNDER SECTION 12AA(1)(A) OF THE ACT, ON RECEIPT OF AN APPLICATION FOR REGISTRATION , THE PRINCIPAL COMMISSIONER , OR COMMISSIONER SHALL CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION , AS HE MAY FIND NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. 8. THEREFORE, IT IS O NLY THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION WHICH THE REGISTERING AUTHORITY NEEDS TO SATISFY HIMSELF ABOUT AT THE TIME OF CONSIDERING THE REQUEST FOR REGISTRATION. 9. SECTION 12AA(1)(B) OF THE ACT PROVIDES THAT AFTER SATISFYING HIMSE LF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE PRINCIPAL COMMISSIONER, OR COMMISSIONER SHALL PASS AN ORDER EITHER REGISTERING THE TRUST OR INSTITUTION , OR REFUSING TO REGISTER THE TRUST OR INSTITUTION. 10. A CONJOINT READING OF THE PROVISION S OF SECTION 12AA(1)(A) AND SECTION 12AA(1)(B) OF THE ACT SHOWS THAT IT IS ONLY THE OBJECT OF AND THE GENUINENESS OF THE ACTIVITIES OF THE APPLICANT SEEKING REGISTRATION UNDER THE ACT, WHICH ARE CONSIDERATIONS RELEVANT FOR GRANT / NON - GRANT OF REGISTRATION. I.T.A NO. 373 /AGRA/201 4 9 11. SO FAR AS REGARDS THE OBJECTS OF THE PRESENT ASSESSEE SOCIETY, THERE IS NO DISPUTE RAISED BY THE LD. CIT, INASMUCH AS IN PARA 7 OF TH E IMPUGNED ORDER, THE LD. CIT ACCEPTS SUCH OBJECTS TO BE CLAIMED TO BE CHARITABLE . FACTUALLY, THE OBJECTS OF THE ASSESSEE SOCIETY HAVE BEEN GIVEN IN THE MEMORANDUM SPECIFYING SUCH OBJECTS (APB - 5) . T HESE OBJECTS HAVE BEEN TRANSLATED AS FOLLOWS: MEMORANDUM NAME OF THE INSTITUTION LMS EDUCATIONAL SOCIETY ADDRESS OF THE INSTITUTION 20 S ETH VIMAL JAIN COMPLEX, FIRST FLOOR, NEAR VIMAL JAIN TRAUMA CENTRE, JAIN NAGAR, NH - 2, FIROZABAD WORK PLACE OF INSTITUTION UTTAR PRADESH OBJECT OF INSTITUTION THERE SHALL BE VARIOUS OBJECTS OF THE INSTITUTION 1. THE OBJECT OF THE INSTITUTION SHALL BE OF ADVANCEMENT AND PROPAGATION OF EDUCATION AND LEARNING INCLUDING THE ESTABLISHMENT, MAINTENANCE AND SUPPORT OF SCHOOLS AND OTHER EDUCATION INSTITUTION TO ADVANCE SOCIAL, MORAL, INTELLECTUAL EDUCATIONAL, CHARACTER, LITERARY, AND CULTURAL DEVELOPMENT OF THE S TUDENTS. 2. THE WORK AREA FOR THE OBJECT OF THE INSTITUTION FOR ADVANCEMENT OF EDUCATION SHALL BE TO SET UP EDUCATION INSTITUTION FROM PRIMARY TO JUNIOR HIGH SCHOOL, HIGH SCHOOL AND INTERMEDIATE AND AS PER THE NEED DEGREE COLLEGE, SANSKRIT DEGREE COLLEGE AND IMPART FREE EDUCATION OF COMPUTER SOFTWARE & HARDWARE, TECHNICAL AND COMPUTER EDUCATION. 3. THE OBJECT OF THE INSTITUTION SHALL BE FOR PROVIDING FREE EDUCATION TO ORPHAN, HANDICAPPED CHILDREN AND TO MAKE ADEQUATE PROVISIONS FOR THEIR SCHOLARSHIP AND FOR THE B ENEFIT OF THE CHILDREN TO PROVIDE THEM FREE FACILITIES OF HOSTELS, LIBRARY, PLAY GROUND, GYMNASIUM ETC. I.T.A NO. 373 /AGRA/201 4 10 4. THE OBJECT OF THE INSTITUTION IS TO PROVIDE FREE EDUCATION OF HINDI LANGUAGE, SANSKRIT, ENGLISH, URDU, FARSI, ETC BEING THE PREVAILING LANGUAGES AND ALS O TO PROVIDE FREE LITERATURE, SCIENCE, TECHNICAL EDUCATION. 5. THE OBJECT OF THE INSTITUTION IS TO MAKE CHILDREN INDEPENDENT & SELF SUFFICIENT QUALIFIED CITIZENS BY PROVIDING THEM FREE EDUCATION AND TRAINING AND TO CONTRIBUTE IN THE DEVELOPMENT OF THE NATION. 6. THE WORK AREA OF THE INSTITUTION SHALL ALSO BE TO IMPLEMENT THE VARIOUS SCHEMES OF SAMAJ KALYAN VIBHAG, AND EDUCATION DEPARTMENT AND TO OBTAIN THE BENEFIT OF BY CONTACTING RELATED INSTITUTIONS/DEPARTMENTS. 7. TO HOLD ARRANGE LECTURES. TALK, DISCUSSIONS, SEM INARS, CONFERENCES, COMPETITIONS, RESEARCH AND STUDY VISITS, TOUR AND ART EXHIBITIONS DEBATES AND OTHER CULTURAL ACTIVITIES AND ALSO TO ORGANIZE ACTIVITIES OF ADULT EDUCATION, PROHIBITION OF CHILD LABOUR, PROHIBITION OF LIQUOR ETC. 8. FOR THE BETTERMENT OF TH E PEOPLES AND MAKE THEM INDEPENDENT & SELF SUFFICIENT QUALIFIED CITIZENS WITH THE HELP OF THE CENTRAL AND STATE GOVERNMENT, NIGAM BOARD AND OTHER RELATED DEPARTMENTS TO ORGANIZE AND GIVE FREE TRAININGS LIKE, STITCHING, HANDICRAFT, ART, ARCHITECTURE, DRAWI NG, PAINTING TYPING, AND COMPUTER TRAINING ETC. 9. FOR THE HOLISTIC DEVELOPMENT OF THE WOMEN AND CHILDREN TO ORGANIZE FREE THE ACTIVITIES AND PROGRAMMES LIKE CLEANLINESS, LITERACY, FAMILY PLANNING, CHILD AND MOTHER NUTRITION, CHILD AND MOTHER DEVELOPMENT PROGRAMME AND VACCINATION IN THE BACKWARD AND SLUM O F URBAN AND RURAL AREAS. 10. FOR THE ENVIRONMENTAL BALANCE AND TO REDUCE THE POLLUTION LEVEL TO MAKE PLANTATION AND DEVELOP PLANT NURSERY. 11. TO ESTABLISH AND MANAGE FREE BAL ASHRAM, ORPHANAGE HOME, OLD AGE HOME, FOR SOCIALLY IGNORED PERSONS SUCH AS BLIND, LEP ROSY SUFFERED PERSON, DUMB AND DEAF PERSONS, HANDICAPPED AND 12. THAT NEITHER THE CERTIFICATE FOR THE COURSES AND DEGREES PROVIDED BY THE BOARD/UNIVERSITIES DULY ESTABLISHED BY LAW BY THE CENTRAL GOVERNMENT/STATE GOVERNMENT SHALL BE PROVIDED BY THE INSTITUTI ON I.T.A NO. 373 /AGRA/201 4 11 AND NOR THE SUCH COURSES AND DEGREES SHALL BE RUN WITHOUT THE PERMISSION OF THE CENTRAL GOVERNMENT/STATE GOVERNMENT. 12. AS EVIDENT FROM A BARE PERUSAL OF THE ABOVE OBJECTS , THE Y ARE EDUCATIONAL IN NATURE AND , HENCE, CHARITABLE IN NATURE. 13. NOW, SO F AR AS REGARDS THE ACTIVITIES OF THE ASSESSEE SOCIETY AND THEIR GENUINENESS, THE ASSESSEE HAS PLACED BEFORE THE LD. CIT, ORDER DATED 03.02.2014 (APB - 11 - 74) PASSED BY THE ASSISTANT COLLECTOR/ SDM, TUNDLA, DECLARING LAND TO BE NON - AGRICULTURAL FOR THE PURPO SE OF RAISING CONSTRUCTION OF SCHOOL BUILDING. THE ASSESSEE FURNISHED A LIST OF STUDENTS, DETAIL OF FEES STRUCTURE AND DETAIL OF TEACHERS (APB - 144 - 148) FROM THESE EVIDENCES, THE ACTIVITIES OF THE ASSESSEE HAVE BEEN L AI D BEFORE THE REGIST ERING AUTHORITY. THE ACTIVITIES OF THE ASSESSEE SOCIETY HAVE NOT BEEN FOUND ANY FAULT WITH BY THE LD. CIT . T HE MEMORANDUM OF THE SOCIETY, IT S BYE LAWS AND REGISTRATION CERTIFICATE, HAVE BEEN FOUND TO BE IN ORDER. THE BALANCE SHEET AND INCOME AND EXPENDITURE ACCO UNT ALONGWITH SCHEDULES, AND THE BANK STATEMENTS, THE PAN, NAME AND COMPLETE ADDRESS WITH PIN NUMBERS, BOOKS OF ACCOUNT WITH BILLS AND VOUCHERS, CONFIRMATION STATEMENT OF UNSECURED LOANS, COPIES OF THREE REGISTER ED PURCHASE DEEDS OF LAND FOR CONSTRUCTION O F SCHOOL BUILDING, LIST OF DONORS/MEMBERSHIP FUNDS RECEIVED ALONG WITH NAMES AND ADDRESSES AND CONFIRMATIONS OF THE DONORS, HAVE BEEN FOUND TO BE IMPECCABLE. SO MUCH SO, NONE I.T.A NO. 373 /AGRA/201 4 12 OF THESE DOCUMENTARY EVIDENCES SHOWING THE EXACT NATURE OF THE ASSESSEES ACTIVIT IES AND GENUINENESS THEREOF FIND S EVEN AS MUCH AS A MENTION IN THE ORDER UNDER APPEAL. 14. THE ASSESSEE ALSO FILED COPIES OF INCOME TAX RETURN ACKNOWLEDGMENT, COMPUTATION OF INCOME AND BANK STATEMENTS IN RESPECT OF PERSONS FROM WHOM LOAN HAD BEEN OBTAINED DURING THE F.Y. 2013 - 14, COPY OF RECEIPT OF LETTER DATED 27.06.2014, FOR APPLICATION FI LED IN BSA EDUCATION DEPARTMENT (U.P.), REGARDING CARRYING OUT OF EDUCATIONAL ACTIVITIES, COPY OF BUILDING PLAN , AND DETAILS OF INVESTMENT IN LAND AND BUILDING OF THE S CHOOL UP TO 07.07.2014 AND DETAILS OF EDUCATIONAL ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE SOCIETY. THE LD. CIT ALSO DID NOT FIND ANY DISCREPANCY THEREIN. 15. THE QUESTION IS AS TO WHETHER THE WORDING AND TERMINOLOGY EMPLOYED IN THE FRANCHISEE AGREEME NT CAN BE THE SOLE DETERMINING FACTOR FOR THE ENTITLEMENT OR OTHERWISE OF THE ASSESSEE SOCIETY TO REGISTRATION UNDER THE ACT. IN OUR CONSIDERED OPINION, THE ANSWER IS , EVIDENTLY, IN THE NEGATIVE. AS CONSIDERED HEREINABOVE, THE REQUIREMENT FOR GRANT OF REGI STRATION IS ONLY THE SATISFACTION OF THE REGISTERING AUTHORITY WITH REGARD TO THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES OF THE APPLICANT TRUST OR INSTITUTION. IN THE PRESENT CASE, AS SEEN, NO DEFECT HAS BEEN FOUND BY THE LD. CIT, EITHER WITH THE OB JECTS , OR WITH THE GENUINENESS OF THE ACTIVITIES OF THE APPLICANT SOCIETY. I.T.A NO. 373 /AGRA/201 4 13 16. MERELY BECAUSE THE ASSESSEE HAS ENTERED INTO A FRANCHISEE AGREEMENT WITH MDN EDIFY EDUCATION (P.) LTD., NEITHER THE OBJECTS , NOR THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE SOCIETY CAN BE CALLED IN QUESTION ON THIS SOLE BASIS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL PLACED ON RECORD. UNDOUBTEDLY, IN THE PRESENT TIMES, EDUCATION CARRIED OUT PROFESSIONALLY IS PREFERRED BY ALL AND SUNDRY FOR THEIR CHILDREN AND WARDS. IT IS IN THIS BACK - GROUND THAT THE ASSESSEE SOCIETY HAS PREFERRED TO ENTER INTO AN ALLIANCE WITH MDN, PARTICULARLY IN VIEW OF THEIR EXPERTISE IN THE FIELD OF EDUCATION. BE THAT AS IT MAY, NOTHING HAS BEEN BROUGHT ON RECORD BY THE LD. CIT TO THE EFFECT THAT EITHER ANY BUSINESS IS BEING CARRIED OUT BY THE ASSESSEE SOCIETY , OR ANY PROFIT MOTIVE IS INVOLVED. AS AN ASIDE , IT MAY BE NOTED THAT PROFIT, IF INCIDENTAL, IS NOT DETRIMENTAL TO THE CHARITABLE NATURE O F THE AVOWED ACTIVITIES OF THE ASSESSEE. 17. IN THIS REGARD, IN VIKAS LOK SEWA SAMIT I (SUPRA), UNDER EXACTLY SIMILAR FACTS AND CIRCUMSTANCES, THE AGRA BENCH OF THE TRIBUNAL HAS HELD THAT MERELY BECAUSE THE ASSESSEE IS ENGAGED IN A COMMERCIAL VENTURE FO R SETTING UP OF SCHOOL OR PROVID ING EDUCATIONAL PROGRAMME TO THE SCHOOL OF THE ASSESSEE, THAT WOULD NOT MAKE THE ASSESSEE DISENTITLE D FOR REGISTRATION, PARTICULARLY WHEN EDUCATION PER SE IS A CHARITABLE ACTIVITY. 18. MERITTA WELFARE TRUST (SUPRA) IS TO THE SAME EFFECT, HOLDING FURTHER, THAT COMMERCIALITY IS NOT A TEST TO DETERMIN E THE GENUINENESS OF THE CHARITABLE NATURE OF I.T.A NO. 373 /AGRA/201 4 14 THE EDUCATION ACTIVITIES OF A TRUST OR INSTITUTION UNDER THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT, AND THAT EVEN OTHERWISE , THE CONDITION S OF A FRANCHISOR UNDER A FRANCHISEE AGREEMENT CANNOT BE A GOOD GROUND TO ASSUME THAT INCOME OF THE TRUST WOULD NOT BE APPLIED FOR EDUCATIONAL ACTIVITIES. 19. IN VIEW OF THE ABOVE, WE FIND MERIT IN THE GRIEVANCE SOUGHT TO BE RAISED BY THE A SSESSEE SOCIETY. SUCH GRIEVANCE IS ACCEPTED. THE ORDER UNDER APPEAL IS CANCELLED. THE LD. CIT IS DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY FORTHWITH, IN ACCORDANCE WITH LAW , FROM THE DATE OF FILING OF THE APPLICATION FOR GRANT OF REGISTRATION, PREFERABLY WITHIN ONE MONTH FROM THE RECEIPT OF THIS ORDER. 20. IN THE RESULT, THE APPEAL IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 13 /0 2 / 201 7 . SD/ - SD/ - ( DR . MITHA LAL MEENA) (A.D. JAIN) ACCOUTANT MEMBER JUDICIAL MEMBER DATED: 13 /0 2 /2017 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR I.T.A NO. 373 /AGRA/201 4 15 DATE 1. DRAFT DICTATED (DNS) 03. 0 1 .201 7 PS 2. DRAFT PLACED BEFORE AUTHOR 06 . 0 1 .201 7 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.