Hardayal Charitabal and Educational Trust, Agra V. C.I.T.-II, Agra

ITA 443/AGR/2011

• Counselvise Citation: 44320314 RSA 2011
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2012
• Assessment Year: misc
• Appeal Filed On: 01-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SOHAIL AKHTAR
• Assessee Lawyers: R K AGARWAL
• Keywords: Capital asset; Charitable institution; Opportunity of being heard; Condonation of delay
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 443 & 444/AGRA/2011 HARDAYAL CHARITABLE AND EDUCATIONAL TRUST, VS. THE COMMISSIONER OF 318, SHAMBHU NAGAR, SHIKOHABAD. INCOME-TAX-II, A GRA (PAN : AAATH 7652 M). (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI R.K. AGARWAL, ADVOCATE FOR REVENUE : SHRI SOHAIL AKHTAR, JR. D.R. DATE OF HEARING : 02.03.2012 DATE OF PRONOUNCEMENT : 07.03.2012 ORDER PER BHAVNESH SAINI, J.M. : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX-II, AGRA DATED 17/23 RD AUGUST, 2011, REFUSING TO GRANT REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT AND APPROVAL U/S. 80G OF THE INCOME-TAX ACT. 2. ACCORDING TO THE OFFICE, BOTH THE APPEALS ARE TI ME BARRED BY 37 DAYS. THE ASSESSEE EXPLAINED IN THE APPLICATION FOR CONDONATI ON OF DELAY THAT EARLIER THE ASSESSEE PREFERRED ONE APPEAL AGAINST THE COMMON OR DER UNDER BOTH THE SECTIONS, THOUGH THE ASSESSEE WAS REQUIRED TO FILE TWO INDEPE NDENT APPEALS. THEREFORE, WITH THE PERMISSION OF ITAT, AGRA BENCH, ITA NO. 341 OF 2011 WAS WITHDRAWN WITH ITA NO. 443 & 444/AGRA/2011 2 PERMISSION TO FILE SEPARATE APPEALS. COPY OF THE OR DER OF THE TRIBUNAL DATED 22.11.2011 IS FILED ON RECORD. IT IS, THEREFORE, EX PLAINED THAT THE DELAY WAS CAUSED DUE TO ABOVE TECHNICALITIES, THOUGH THE EARLIER APP EAL WAS PREFERRED WITHIN TIME. THE ASSESSEE PRAYED THAT THE DELAY IN FILING APPEAL S MAY BE CONDONED. THE LD. DR HAS NO OBJECTION FOR CONDONATION OF DELAY IN FLING THE APPEALS. CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE FACT THAT EARLI ER, THE ASSESSEE PREFERRED ONE APPEAL AGAINST THE COMMON ORDER, WHICH WAS WITHDRAW N WITH LIBERTY TO FILE TWO SEPARATE APPEALS, WOULD CONSTITUTE A SUFFICIENT CAU SE FOR CONDONING THE DELAY IN FILING THE APPEALS. CONSIDERING THE FACTS OF THE CA SE AND THAT THE LD. DR HAS NO OBJECTION FOR CONDONATION OF DELAY, THE DELAY IN FI LING THE APPEALS IS CONDONED. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE TRUST FILED AN APPLICATION FOR GRANT OF REGISTRATION U/S. 12AA AND APPROVAL U/ S. 80G OF THE IT ACT ON 14.03.2011. THE ASSESSEE INTENDS TO SET-UP SCHOOLS AND COLLEGES ETC. WITH THE STATED OBJECTIVE OF HELPING THE POOR AND DESTITUTE, WHO ST AND IN NEED OF AID FOR THE PURPOSE OF EDUCATION. IT HAS ALSO BEEN STATED THAT THE ASSESSEE WOULD PROVIDE MEDICAL BENEFITS TO THE POOR, NEEDY AND AGED. 3.1 DURING THE COURSE OF HEARING BEFORE THE LD. COM MISSIONER, IT WAS MENTIONED THAT THE ASSESSEE TRUST IS IN THE PROCESS OF CONSTR UCTION OF COLLEGES FOR MEDICAL, ENGINEERING AND MANAGEMENT STUDIES. A LOT OF MONEY HAS BEEN SPENT ON ITA NO. 443 & 444/AGRA/2011 3 ADVERTISEMENT OF THE INSTITUTION, AS MUCH AS, RS.1, 58,82,526/- BEING SPENT ONLY DURING THE PERIOD 1 ST APRIL, 2011 TO 2 ND AUGUST, 2011. THE LD. COMMISSIONER, CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE MATERIAL ON RECORD FOUND THAT THE ASSESSEE TRUST HAS PUBLISHED A VERY HIGH QUALIT Y PROSPECTUS OF THE COLLEGE. THE PROSPECTUS ALSO SHOWS ONE PAGE DEVOTED TO OTHER IND USTRY BEING CARRIED BY THE GROUP , I.E., HARDAYAL MILK PRODUCT (PVT.) LIMITED, COMPLETE WITH THE LOGO OF THE MILK PRODUCT COMPANY. IT WAS, THEREFORE, FOUND THAT THE ASSESSEE TRUST INTENDED TO PROMOTE THE BUSINESS OF HIS FAMILY CONCERN AND THAT THE COMMERCIAL ACTIVITY IS IN NO WAY SUBSERVIENT TO ITS STATED CHARITABLE MOTIVE. THE LD. CIT, CONSIDERING THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS, WAS NOT SATIS FIED THAT THE OBJECTS OF THE TRUST ARE CHARTABLE IN NATURE. ACCORDINGLY, THE REG ISTRATION U/S. 12AA WAS REFUSED AND APPROVAL U/S. 80G OF THE IT ACT WAS ALSO NOT GR ANTED. 4. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB- 4, WHICH IS COPY OF TRUST DEED, TO SHOW THAT THE ASSESSEE TRUST WAS CREATED S OLELY FOR THE PURPOSE OF IMPARTING EDUCATION ON DIFFERENT SUBJECTS. HE HAS S UBMITTED THAT SINCE THE ASSESSEE EXISTS ONLY FOR THE PURPOSE OF EDUCATION AND CHARIT ABLE ACTIVITIES, THEREFORE, THE LD. CIT SHOULD NOT HAVE REJECTED THE APPLICATIONS OF TH E ASSESSEE. HE HAS FILED COPY OF THE AUDIT REPORT ENDING 31 ST MARCH, 2011 AND ADMITTED THAT THE ASSESSEE IS STIL L AT THE STAGE OF CARRYING OUT CONSTRUCTION FOR SCHOOLS AND COLLEGES. THE CONSTRUCTION IS NOT COMPLETE AND AS SUCH, NO ACTUAL CHARITABLE OR E DUCATIONAL ACTIVITIES HAVE BEEN ITA NO. 443 & 444/AGRA/2011 4 CARRIED OUT BY THE ASSESSEE. HE HAS, HOWEVER, SUBMI TTED THAT SINCE THE OBJECTS OF THE ASSESSEE TRUST ARE EDUCATIONAL AND CHARITABLE ONLY, THEREFORE, THE LD. CIT SHOULD HAVE GRANTED REGISTRATION U/S. 12AA OF THE IT ACT A ND APPROVAL U/S. 80G OF THE IT ACT. HE HAS SUBMITTED THAT WITHOUT RAISING CONSTRUC TION, THE ASSESSEE MAY NOT BE ABLE TO GET CORPUS/DONATIONS AND, THEREFORE, NON-CA RRYING OF THE ACTIVITIES WOULD NOT DEBAR THE ASSESSEE FROM GETTING REGISTRATION AND AP PROVAL UNDER THE ABOVE PROVISIONS OF THE ACT. THE LD. COUNSEL FOR THE ASSE SSEE REFERRED TO SOME OF THE DECISIONS ON THE SUBJECT, WHICH WE WOULD DISCUSS LA TER IN THIS ORDER. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE IM PUGNED ORDER AND SUBMITTED THAT NO EVIDENCE HAS BEEN FILED TO DISPROVE THE FIN DING OF THE LD. COMMISSIONER AND RELIED UPON THE DECISION OF KERALA HIGH COURT IN TH E CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT, 247 ITR 18 (KER) AND THE D ECISION OF DELHI HIGH COURT IN THE CASE OF ALL INDIA J.D. EDUCATIONAL SOCIETY VS. DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS), 338 ITR 218 (DEL.) 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE OBJECTS OF THE ASSESSEE TRUST, ACCORDING TO WHICH THE ASSESSEE IS ESTABLISHED FOR THE PURPOSE OF MAINTAINING SCHOOLS, COLLEGES AND INSTITUTIONS FOR IMPARTING ED UCATION IN DIFFERENT ITA NO. 443 & 444/AGRA/2011 5 FIELDS/SUBJECTS. IT WAS, HOWEVER, CONCEDED BY THE L D. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS NOT ACTUALLY CARRIED OUT ANY CHARI TABLE OR EDUCATIONAL ACTIVITIES FOR ACHIEVING THE OBJECTS OF THE ASSESSEE TRUST. THE LD . COUNSEL FOR THE ASSESSEE ALSO CONCEDED THAT THE ASSESSEE IS STILL AT THE STAGE OF RAISING CONSTRUCTION FOR SCHOOLS AND COLLEGES AND NO EDUCATIONAL OR CHARITABLE ACTIV ITIES HAVE YET BEEN STARTED. SECTION 12AA OF THE IT ACT PROVIDES 12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) OF SECTI ON 12A SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS 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; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HE ARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF COM MISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE CO MMISSIONER AND THE COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UND ER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. ITA NO. 443 & 444/AGRA/2011 6 (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED UNDER CLAUSE (A) SECTION 12A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSION ER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATIO N OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSE D UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 8. SECTION 12AA OF THE IT ACT CONFERS POWER ON THE COMMISSIONER WHILE CONSIDERING THE APPLICATION FOR REGISTRATION OF TRU ST OR INSTITUTION MADE UNDER THE SAME PROVISION TO CALL FOR SUCH DOCUMENTS OR INFORM ATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACT IVITIES, HE SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION AND IF HE IS NOT SATISFIED, HE WOULD REFUSE REGISTRATION. FOR GRANT OF APPROVAL U/S. 80G(5), TH E ASSESSEE IS REQUIRED TO FULFILL THE CONDITIONS THAT SUCH INSTITUTION OR FUNDS DERIVED F ROM ANY INCOME WOULD NOT BE LIABLE FOR INCLUSION IN ITS TOTAL INCOME U/S. 11 & 12 OF THE IT ACT. THE READING OF PROVISIONS OF SECTION 12AA MAKES IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION AND ALSO IN CONSONANCE ITA NO. 443 & 444/AGRA/2011 7 WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THUS, ON ENQUIRY, THE LD. CIT SHALL HAVE TO EXAMINE AS TO WHETHER THE ASSESSEE WHO HAS MOVED APPLICATION FOR REGISTRATION IS ACTUALLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUI NENESS OF ACTIVITIES OF ASSESSEE HAS TO BE SEEN. BOTH THE CONDITIONS SHALL HAVE TO BE SATISFIED BEFORE GRANTING/REFUSING REGISTRATION U/S. 12AA OF THE IT ACT. HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. C IT, 247 ITR 18 (KER.) HELD AS UNDER : SECTION 12AA OF THE INCOME-TAX ACT, 1961 WAS INSER TED WITH EFFECT FROM APRIL 1, 1997. THE PROVISION PROVIDES F OR A PROCEDURE TO BE FOLLOWED FOR GRANT OF REGISTRATION TO A TRUST OR INSTITUTION. EARLIER, THERE WAS NO PROVISION IN THE ACT FOR PROCESSING AN APPLICATION FOR EXEMPTION IN RESPECT OF INCOME OF A CHARITABLE OR R ELIGIOUS TRUST OR INSTITUTION ON SATISFYING CERTAIN CONDITIONS. AS PE R THE NEW PROVISION, THE CHIEF COMMISSIONER OR COMMISSIONER SHALL CALL F OR DOCUMENTS AND INFORMATION AND HOLD ENQUIRIES REGARDING THE GE NUINENESS OF THE TRUST OR INSTITUTION. IF HE IS SATISFIED ABOUT THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR INSTITUTION, HE WILL PASS AN ORDER GRANTING REGISTR ATION. IF HE IS NOT SATISFIED HE WILL REFUSE REGISTRATION, BUT IT IS MA NDATORY THAT OPPORTUNITY OF BEING HEARD SHALL BE GIVEN TO THE AP PLICANT BEFORE THE ORDER OF REFUSAL TO GRANT REGISTRATION IS PASSED BY THE COMMISSIONER. THE APPELLANT, A CHARITABLE SOCIETY, REGISTERED UN DER THE TRAVANCORE-COCHIN LITERARY SCIENTIFIC AND CHARITABL E SOCIETIES REGISTRATION ACT, 1955, MADE AN APPLICATION FOR REG ISTRATION UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961. THE APPLIC ATION WAS REJECTED. THE ORDER WAS CHALLENGED IN A WRIT PETITI ON AND A SINGLE JUDGE DISPOSED OF THE PETITION LEAVING THE SOCIETY AT LIBERTY TO FILE A FRESH APPLICATION AND DIRECTING THE COMMISSIONER TO HEAR IT IN ACCORDANCE WITH LAW. ON APPEAL : HELD, THAT A REFERENCE TO THE BYE-LAWS OF THE SOCI ETY WOULD SHOW THAT THOUGH SEVERAL CHARITABLE ACTIVITIES WERE INCL UDED IN THE OBJECTS OF THE SOCIETY, THE SOCIETY WAS NOT ABLE TO DO ANY OF THE CHARITABLE ACTIVITIES DURING THE FIRST YEAR OF ITS FUNCTIONING . THE PROPOSAL TO START A TECHNICAL EDUCATIONAL INTUITION ITSELF WAS TAKEN ONLY ON JUNE 14, ITA NO. 443 & 444/AGRA/2011 8 1999, AFTER THE REJECTION OF THE APPLICATION BY THE COMMISSIONER. SINCE THE SOCIETY HAD NOT DONE ANY CHARITABLE WORK AND THE ACTIVITIES WHICH IT HAD CARRIED ON WERE ONLY FOR THE PURPOSE O F GENERATING INCOME FOR ITS MEMBERS, THE REJECTION OF THE APPLIC ATION WAS JUSTIFIED. THE RELIEF GRANTED BY THE SINGLE JUDGE WAS APPROPRI ATE. HOWEVER, AN OPPORTUNITY WAS GIVEN TO THE SOCIETY T O FILE A FRESH APPLICATION WHEN IT STARTED CHARITABLE WORK AND THE COMMISSIONER WAS DIRECTED TO CONSIDER SUCH APPLICATION. 9. HONBLE DELHI HIGH COURT IN THE CASE OF ALL INDI A J.D. EDUCATIONAL SOCIETY VS. DIRECTOR GENERAL OF INCOME-TAX, 338 218 (DEL.) WHILE CONSIDERING THE APPLICATION U/S. 10(23C) FOUND THAT THE ACCOUNTS NO T MAINTAINED PROPERLY AND NO EVIDENCE WAS FILED REGARDING ACTIVITIES. THEREFORE, REJECTION OF APPLICATION WAS HELD TO BE JUSTIFIED. 10. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED BEFOR E US THAT ONLY CONSTRUCTION ACTIVITIES HAVE BEEN GOING ON AND NO ACTUAL EDUCATI ONAL OR CHARITABLE ACTIVITIES HAVE BEEN CARRIED OUT BY THE ASSESSEE. THEREFORE, THERE WAS NO QUESTION OF SATISFYING BOTH THE CONDITIONS OF SECTION 12AA OF THE ACT IN T HE CASE OF ASSESSEE. IT WOULD, THEREFORE, MAKE IT CLEAR THAT SOME CAPITAL ASSET IS CREATED IN FAVOUR OF THE ASSESSEE TRUST AT THE TIME OF FILING OF APPLICATION FOR REGI STRATION/APPROVAL AND EVEN SAME IS POSITION AT THE STAGE OF CONSIDERATION OF APPEAL BY THE TRIBUNAL. THE LD. COMMISSIONER ALSO FOUND THAT HUGE AMOUNT WAS SPENT ON ADVERTISEMENT OF THE INSTITUTION UPTO PASSING OF THE IMPUGNED ORDER, THO UGH THE ASSESSEE TRUST IS STILL AT THE STAGE OF RAISING CONSTRUCTION. NOTHING WAS EXPL AINED AS TO WHAT WAS THE ITA NO. 443 & 444/AGRA/2011 9 PURPOSE OF SPENDING HUGE AMOUNT ON ADVERTISEMENT OF THE INSTITUTION, WHICH IS IN THE PROCESS OF ESTABLISHMENT AND HAS YET TO COME IN PHYSICAL EXISTENCE. FURTHER, THE LD. COMMISSIONER FOUND THAT THE PROSPECTUS OF THE A SSESSEE TRUST SHOWS ONE PAGE DEVOTED TO THE OTHER INDUSTRY BEING CARRIED OUT BY THE GROUP CONCERN, I.E., HARDAYAL MILK PRODUCT (PVT.) LIMITED HAVING ITS COMPLETE LOG O OF MILK PRODUCT OF THE COMPANY. NOTHING WAS EXPLAINED BEFORE THE COMMISSIO NER AS TO WHAT WAS THE PURPOSE OF SHOWING THE INDUSTRY LOGO ON THE PROSPEC TUS OF THE INSTITUTION, WHICH IS YET TO EXIST. THE LD. CIT, THEREFORE, RIGHTLY INFER RED THAT THE TRUST INTENDED TO PROMOTE THE BUSINESS OF FAMILY CONCERN AND AS SUCH, IT COULD HAVE A COMMERCIAL MOTIVE AND WHAT TO SAY OF CHARITABLE MOTIVE TO ESTA BLISH EDUCATIONAL INSTITUTION. THE FINDING OF FACT RECORDED BY THE LD. COMMISSIONE R HAS NOT BEEN REBUTTED THROUGH ANY EXPLANATION OR MATERIAL ON RECORD. SINC E THE ASSESSEE TRUST HAD NOT COMMENCED ANY CHARITABLE OR EDUCATIONAL ACTIVITIES AND IT HAD PROMOTED THE BUSINESS OF FAMILY CONCERN BY SHOWING THEIR LOGO ON THE PROSPECTUS OF THE ASSESSEE TRUST, WOULD CLEARLY PROVE THAT EVEN AT THE INITIAL STAGE, THE ASSESSEE TRUST HAD CARRIED OUT SUCH ACTIVITIES WHICH WERE MEANT FOR TH E PURPOSE OF GENERATING OR ENHANCING INCOME OF THE FAMILY GROUP CONCERN. IN SU CH AN EVENT, BURDEN WOULD BE VERY HEAVY UPON THE ASSESSEE TO PROVE THAT IT INTEN DED TO CARRY OUT EDUCATIONAL AND CHARITABLE ACTIVITIES. IN THE ABSENCE OF ANY DETAIL S WHICH COULD REBUT THE FINDING OF THE LD. COMMISSIONER, WE ARE OF THE VIEW THAT SOLE OBJECTS OF THE ASSESSEE COULD NOT HAVE BEEN CONSIDERED AT THIS STAGE FOR THE PURPOSE OF GRANTING REGISTRATION/APPROVAL ITA NO. 443 & 444/AGRA/2011 10 TO THE ASSESSEE. THE ASSESSEE SHALL HAVE TO SATISFY BOTH THE CONDITIONS BEFORE GRANT OF REGISTRATION/APPROVAL THAT ITS OBJECTS WERE EDUC ATIONAL AND CHARITABLE AND THAT IT HAD CARRIED OUT GENUINE ACTIVITIES. NO GENUINE ACTI VITIES HAD BEEN CARRIED OUT, ADMITTEDLY, FOR THE PURPOSE OF ACHIEVING THE OBJECT S OF THE ASSESSEE TRUST, I.E., EDUCATIONAL OR CHARITABLE. THEREFORE, THE LD. COMMI SSIONER WAS RIGHTLY NOT SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSE SSEE TRUST. THOUGH APPARENTLY ON CONSIDERATION OF OBJECTS OF THE ASSESSEE TRUST, WE FIND THAT SAME MAY BE EDUCATIONAL OR CHARITABLE IN NATURE, BUT THE FINDING OF FACT GI VEN BY THE LD. COMMISSIONER ABOUT PROMOTING THE COMMERCIAL ACTIVITIES OF THE GROUP CO NCERN HAVE NOT BEEN REFUTED BY THE ASSESSEE THROUGH ANY MATERIAL ON RECORD. 11. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPO N THE FOLLOWING DECISIONS : (I). ORDER OF ITAT, RAJKOT (SMC) BENCH, RAJKOT IN T HE CASE OF SURAJBEN HARAKHCHAND MEHTA VS. CIT DATED 11.02.2011 IN ITA N O. 1333/RJT/2010, IN WHICH IT WAS HELD THAT WHEN THERE ARE NO ACTIVITIES AT ALL, THEN THERE IS NO QUESTION OF HOLDING THAT THE ACTIVITIES WERE NOT GE NUINE. (II). DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL, 212 CTR (ALLD.) 394 (HC), IN WHICH IT WAS STATED THAT THE ASSESSEE SOCIETY WAS REGISTERED ON 29.03.1982 AND I N PARA 41 OF THE ITA NO. 443 & 444/AGRA/2011 11 JUDGMENT, IT WAS NOTED THAT THE OBJECTS OF THE ASSE SSEE SOCIETY UNDISPUTEDLY ARE FOR CHARITABLE PURPOSE AND NOT AGAINST PUBLIC P OLICY. THE GENUINENESS OF ITS ACTIVITIES IS PROVED BY THE AFORESAID FACTS, WH ICH CONCLUSIVELY SHOW THAT THE SOCIETY HAS ESTABLISHED A SCHOOL FOR THE CHILDR EN IN THE YEAR 1982 AND THEREAFTER IT HAS OPENED ITS TWO MORE BRANCHES RAIS ING THE STANDARD OF THE SCHOOL UPTO CBSE, DELHI BOARD. THEREFORE, THE ACTIV ITIES OF THE ASSESSEE COULD NOT HAVE BEEN DOUBTED WITHIN THE MEANING OF S ECTION 12AA OF THE IT ACT. THE HONBLE HIGH COURT IN PARA 20 HELD AS UNDE R : IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRARY TO P UBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, THE C IT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CA SE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION , OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRES UMPTIONS AND ON SURMISES THAT INCOME DERIVED BY THE TRUST OR THE IN STITUTION IS BEING MISUSED OR THAT THERE IS SOME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES R ELATING TO ANY CHARITABLE PURPOSE, REJECTION CANNOT BE MADE. HONBLE HIGH COURT FURTHER IN PARA 28 OF THE JUDGM ENT HELD AS UNDER : IT IS SIGNIFICANT TO MENTION THAT REGISTRATION UND ER S. 12AA, DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET TH E INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOS E OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN R ESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MO VED THE APPLICATION FOR REGISTRATION UNDER S. 12A, IS ACTUA LLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION HAS TO BE SEEN, KEEPING IN MIND THE OBJ ECTS THEREOF, WHICH ITA NO. 443 & 444/AGRA/2011 12 NECESSARILY MEANS THAT THE CIT SHALL SATISFY HIMSEL F ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH T HE OBJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABL ISHING AND RUNNING A SCHOOL IS THE OBJECT OF THE SOCIETY, AS GIVEN IN IT S BYE-LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHO OL, WHERE EDUCATION IS BEING IMPARTED AS PER RULES AND THE FACTUM OF ES TABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIVITY. THE ENQUIRY R EGARDING GENUINENESS OF THE ACTIVITIES CANNOT BE STRETCHED B EYOND THIS. (III). ORDER OF ITAT, LUCKNOW BENCH IN THE CASE OF BAIJ NATH CHARITABLE & EDUCATIONAL TRUST VS. CIT, 125 TTJ (LUCKNOW) 255, I N WHICH THE ASSESSEE HAD WRITTEN TO THE CIT CLEARLY INDICATING THAT IT H AD CONDUCTED AN EYE RELIEF CAMP TO DISTRIBUTE THE BLANKETS TO THE PATIENTS. EV EN THOUGH THE ASSESSEE TRUST WAS ONLY FOUR MONTHS OLD, THE REGISTRATION WAS GRAN TED. (IV). ORDER OF ITAT DELHI BENCH IN THE CASE OF SHRE E KRISHNA EDUCATION & WELFARE TRUST VS. CIT, 27 SOT (DELHI) 331, IN WHICH IT WAS HELD THAT FOR GRANT OF REGISTRATION U/S. 12AA, THE CIT IS REQUIRE D TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND THE CHARITABLE NA TURE OF THE OBJECTS OF THE ASSESSEE TRUST. THE SCOPE OF HIS POWER IS LIMITED I N THIS REGARD TO MAKE SUCH ENQUIRIES AS HE MAY DEEM FIT TO SATISFY HIMSELF IN RESPECT OF THESE TWO ASPECTS. THE COMMISSIONER IS NOT REQUIRED TO EXAMIN E THE ASPECT OF APPLICATION OF INCOME. ITA NO. 443 & 444/AGRA/2011 13 (V). ORDER OF ITAT DELHI BENCH IN THE CASE OF AGRAW AL MITRA MANDAL TRUST VS. DIT (EXEMPTION, 109 TTJ (DELHI) 128, IN W HICH IT WAS HELD THAT POWERS U/S. 12AA ARE LIMITED TO MAKE ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE ACTIVITIES AND OBJECTS OF THE TR UST. (VI). DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT VS. GARDEN CITY EDUCATIONAL TRUST, 28 DTR (KAR) 139, IN WHICH, ADMI TTEDLY THE ASSESSEE TRUST WAS FOUND IMPARTING EDUCATION. 12. NONE OF THE ABOVE DECISIONS WOULD SUPPORT THE C ASE OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECIS ION OF KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTION) VS. MEENAKSHI AMMA ENDO WMENT TRUST, 50 DTR 243 IN WHICH IT WAS HELD THAT THE GENUINENESS OF THE AC TIVITIES OF THE TRUST CANNOT BE CRITERIA SINCE IT HAS YET TO COMMENCE ITS ACTIVITIE S. SOME OF THE OTHER DECISIONS OF TRIBUNAL ON THE SAME VIEW HAVE BEEN REFERRED TO IN THE PAPER BOOK. THE FINDINGS GIVEN IN THE DECISION OF JURISDICTIONAL ALLAHABAD H IGH COURT IN CASE OF RED ROSE SCHOOL (SUPRA) SHALL HAVE TO BE GIVEN PREFERENCE AS AGAINST THESE DECISIONS. 13. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE WAS N OT ABLE TO CONTRADICT THE FINDINGS OF THE LD. COMMISSIONER GIVEN IN THE IMPUG NED ORDER THAT THE ASSESSEE SPENT CONSIDERABLE AMOUNT ON ADVERTISEMENT OF THE I NSTITUTION WHICH NEVER EXISTED ITA NO. 443 & 444/AGRA/2011 14 AND FURTHER, PROSPECTUS OF THE ASSESSEE TRUST HAS D EVOTED SUBSTANTIALLY ON CARRYING OUT THE BUSINESS ACTIVITIES OF GROUP CONCERN SHOWIN G LOGO OF MILK PRODUCT. THESE FACTORS WERE SUFFICIENT TO HOLD THAT THE LD. CIT RI GHTLY REJECTED BOTH THE APPLICATIONS OF THE ASSESSEE, PARTICULARLY WHEN NO EDUCATIONAL O R CHARITABLE ACTIVITIES HAVE BEEN ACTUALLY CARRIED OUT AND THE ASSESSEE IN INITIAL ST AGE, ASSESSEE TRUST ITSELF HAS TRIED TO PROMOTE THE BUSINESS OF GROUP CONCERN. THEREFORE, T HE DECISION OF KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT (SUPRA) WOULD SQUARELY APPLY TO THE ASSESSEES CASE. THE ORDERS O F DIFFERENT BENCHES OF THE TRIBUNAL AND OF RAJKOT (SMC) BENCH, THUS, CANNOT BE GIVEN PREFERENCE AGAINST THE DECISION OF HONBLE KERALA HIGH COURT. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO ESTABLISH THAT IT HAS CARRIED OUT GENUINE ACTIVITIES TOWARDS THE OBJECTS OF THE ASSESSEE TRUST. WHATEVER OTHER ACTIVITIES WERE CARRIED OUT WERE FOUND FOR PR OMOTING COMMERCIAL ACTIVITIES OF THE GROUP CONCERN. THEREFORE, THE ASSESSEE HAS FAIL ED TO SATISFY THE REQUIREMENTS U/S. 12AA OF THE ACT AND AS SUCH, THE LD. COMMISSIO NER WAS JUSTIFIED IN REFUSING TO GRANT REGISTRATION AND APPROVAL UNDER THE ABOVE PRO VISIONS OF THE IT ACT. WE ARE, THEREFORE, OF THE VIEW THAT THERE IS NO IRREGULARIT Y OR ILLEGALITY IN THE IMPUGNED ORDER. THE DECISIONS CITED BY THE LD. COUNSEL FOR T HE ASSESSEE WOULD NOT SUPPORT ITS CASE. WE, THEREFORE, MAINTAIN THE ORDER OF THE LD. COMMISSIONER AND DISMISS BOTH THE APPEALS OF THE ASSESSEE. HOWEVER, CONSIDERING T HE FACTS OF THE CASE THAT THE ASSESSEE TRUST IS STILL AT THE STAGE OF RAISING CON STRUCTION FOR SCHOOLS AND COLLEGES ITA NO. 443 & 444/AGRA/2011 15 AND YET TO START EDUCATIONAL AND CHARITABLE ACTIVIT IES, THE ASSESSEE IS GIVEN OPPORTUNITY TO FILE FRESH APPLICATION BEFORE THE LD . COMMISSIONER FOR GRANT OF REGISTRATION AND APPROVAL WHEN IT WOULD ACTUALLY ST ART EDUCATIONAL AND CHARITABLE ACTIVITIES AND IN THAT EVENT, THE LD. COMMISSIONER SHALL CONSIDER FRESH APPLICATIONS OF THE ASSESSEE IN ACCORDANCE WITH LAW. WE, HOWEVER , ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER AT THIS STAGE. WITH THE ABO VE OBSERVATIONS, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH MARCH, 2012 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. 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