THE NIMS UNIVERSITY RAJASTHAN, JAIPUR V. COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

ITA 545/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5055 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMT
• Assessee Lawyers: G M MEHTACA
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Loose papers; Document seized; Charitable institution; Retrospective amendment; Competent authority; Benefit of exemption; Cancellation of registration; Documents seized
• Section: 143(3); 153A; 12A; 12AA; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER ITA NOS. 252 & 253/JP/2018 ASSESSMENT YEAR: 2006-07 INDIAN MEDICAL TRUST, B-4, GOVIND MARG, ADARSH NAGAR, JAIPUR. VS. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), JAIPUR. PAN/GIR NO.: AAATI 1398 F APPELLANT RESPONDENT ITA NO. 736/JP/2017 ASSESSMENT YEAR: 2017-18 THE NIMS UNIVERSITY, RAJASTHAN, JAIPUR. VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR. PAN/GIR NO.: AAAJN 0906 E APPELLANT RESPONDENT ITA NO. 545/JP/2018 ASSESSMENT YEAR: 2017-18 & ONWARDS THE NIMS UNIVERSITY, RAJASTHAN, JAIPUR. VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR. PAN/GIR NO.: AAAJN 0906 E APPELLANT RESPONDEN T ASSESSEE BY : SHRI G.M. MEHTA(CA) REVENUE BY : SHRI MUKESH VERMA (CIT-DR), SMT. DEVANGI SWARNKAR (DCIT) & SMT. SHOBHA MEENA (DCIT) 2 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT DATE OF HEARING: 27/09/2018 DATE OF PRONOUNCEMENT: 12/10/2018 ORDER PER: BENCH THE APPEALS OF THE INDIAN MEDICAL TRUS T, JAIPUR, BEING ITA NO. 252 & 253/JP/2018 HAVE BEEN FILED BY THE ASSESS EE-APPELLANT AGAINST THE SEPARATE IMPUGNED ORDERS OF EVEN DATE 1 6/01/2018, PASSED BY THE LD. PR. COMMISSIONER OF INCOME TAX (C ENTRAL), RAJASTHAN, JAIPUR WITHDRAWING THE APPROVAL GRANTED TO THE ASSESSEE TRUST U/S 10(23C)(VI) AND (VIA) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED AS THE ACT) AND CANCELLATION OF REGISTRATION U/S 12AA(1)(B) OF THE ACT, BOTH W.E.F. 01/04/2016. THE GROUNDS TAKEN BY THE ASSESSEE IN BOTH THE APPEALS ARE AS UNDER: GROUNDS OF ITA NO. 252/JP/2018 (1) LD. PR.CIT(C) HAS ERRED IN LAW AND ON FACTS IN WITHDRAWING APPROVAL UNDER SECTION 10(23C)(VI) AND 10(23C)(VIA) BY INVOKING 14 TH PROVISO TO SECTION 10(23C)(VI) AND 10(23C)(VIA) OF INCOME TAX ACT BY MISINTERPRETING THE TRUE FACTS OF THE CASE. (2) LD. PR. CIT (C) WAS NOT JUSTIFIED IN:- (A) NOT DIFFERENTIATING THE DONATIONS AND CAPITATIO N FEES, AS THE CAPITATION FEES IS CHARGED IN ADVANCE AND IS OF EQU AL AMOUNT 3 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT FOR EACH COURSE WHEREAS THE DONATIONS ARE RECEIVED VOLUNTARILY, OF DIFFERENT SUMS AND WERE PAID BY THE DONORS EVEN AFTER THE ADMISSION OF THE STUDENTS AS PER THE IR OWN CONVENIENCE, EVEN IN INSTALLMENTS (IDENTICAL NATURE OF DONATIONS RECEIVED UP TO A.Y. 2008-09 WERE ACCEPTED AS SUCH IN SCRUTINY ASSESSMENTS UP TO THAT YEAR WHEN RECORD ED IN REGULAR BOOKS OF ACCOUNTS) IN WITHDRAWING THE APPRO VAL UNDER SECTION 10 (23C) (VI) AND (VIA) OF IT ACT. (B) TREATING THE ACTIVITIES OF APPLICANT TRUST AS N OT ACCORDING TO CONDITION SUBJECT OF WHICH IT WAS APPROVED U/S. UND ER SECTION 10(23C) (VI) & 10(23C) (VIA) OF IT ACT; (C) TREATING THE ASSESSEE TRUST AS NOT CARRYING ITS ACTIVITIES AS PER CONDITIONS LAID DOWN IN 10 TH PROVISO TO SECTION 10(23C) OF IT ACT. (D) TREATING THE ADDITIONAL DONATIONS OF RS.21.6 CR ORES, ESTIMATED/ CALCULATED BY HONBLE ITSC AS FURTHER RE ASON FOR WITHDRAWAL OF APPROVAL UNDER SECTION UNDER SECTION 10(23C) (VI) & 10(23C) (VIA) OF IT ACT; (E) AVOIDING THE DEGREES AND DIPLOMA BY THE ASSESSE E TRUST IN PRODUCTION OF T.V. PROGRAMMES AND FILMS BY ADVANCIN G MONEY TO TV CHANNEL AND IN TREATING IT AS PERSONAL BENEFIT AND USE OF TRUSTEES OF ASSESSEE TRUST. (F) MISINTERPRETING THE FACTS OF THE CASE IN TREATI NG AT PARA 3.2.9 AS MISUSE DONATIONS BY THE TRUSTEES THEMSELVES THOU GH THE ASSESSEE TRUST HAS APPLIED TOTAL INCOME IN ACCORDAN CE WITH THE PROVISIONS CONTAINED IN CLAUSE (A) AND CLAUSE ( B) OF THIRD PROVISO TO SECTION 10(23C) OF IT ACT AND NO PERSONA L USE OF ANY FUND OF THE ASSESSEE TRUST WAS FOUND OR ESTABLI SHED FROM ANY DOCUMENTS DURING COURSE OF SEARCH OR THEREAFTER . (G) TREATING UNSIGNED AND ROUGH AGREEMENT BETWEEN E ARLIER SHAREHOLDERS OF OMEGA TV CHANNEL LTD. ON ONE PART A ND DR. 4 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT B.S. TOMAR AND JUHI TOMAR ON OTHER PART FOR WHICH P AYMENT WAS MADE BY ASSESSEE TRUST TO OMEGA TV CHANNEL PVT. LTD. AS PERSONAL PAYMENT BY PARTY OF OTHER PART AND AS M ADE IN CONTRAVENTION TO THE PROVISIONS OF SECTION 11(5) OF IT ACT, THOUGH THE MAJOR SHAREHOLDER IN OMEGA TV CHANNEL IS NIMS UNIVERSITY HOLDING 15,19,999 SHARES OUT OF 15,20,00 0 SHARES OF RS.10 EACH. (H) UNSIGNED TYPED LIST OF DOCTORS WITH PROPOSED AM OUNT OF THEIR SALARIES AS PAYMENT MADE TO THE DOCTORS IN CASH WIT HOUT FINDING ANY PROOF OF ACTUAL PAYMENT OR WITHOUT EXAM INING THE RECIPIENTS. (I) NOT CONSIDERING THE BENEFITS DERIVED BY THE ASS ESSEE TRUST FROM TRUSTEES IN FORM OF THE RENT-FREE CITY OFFICE ACCOMMODATION, INTEREST FREE LOANS AND SERVING THE ASSESSEE TRUST WITHOUT CHARGING ANY SALARY OR ALLOWANCES BY THE TRUSTEES. (3) THAT ID. PR. CIT (A) HAD FAILED TO APPRECIATE A ND CONSIDER THAT EACH ASSESSMENT YEAR IS AN INDEPENDENT YEAR AND SUF FICIENT CHECKS AND BALANCES ARE PROVIDED UNDER THE INCOME T AX ACT TO BRING TO TAX ON VIOLATION OF PROVISIONS OF ACT BUT THE SAME CANNOT BE EQUATED TO BE A GROUND TO WITHDRAW THE AP PROVAL BY APPLYING 14 TH PROV. TO SECTION 10(23C) (VI) & (VIA) OF IT ACT. (4) WITHOUT PREJUDICE TO GROUND NO. (1) TO (3), ABO VE ID. PR. CIT (C) HAS ERRED IN LAW AND ON FACTS IN WITHDRAWING THE AP PROVAL UNDER SECTION 10(23C) ((VI) & (VIA) RETROSPECTIVELY W.E.F. 01.04.2006 WITHOUT FINDING ANY SUCH DOCUMENT OR NOT ICING ANY IN-GENUINE ACTIVITY OF THE TRUST DURING THE COU RSE OF SEARCH JUSTIFYING SUCH ACTION AS THE SAME BEING AFT ERTHOUGHT IN ORDER TO NULLIFY THE EFFECT OF ORDER DATED 30 TH JUNE 2017 U/S. 245D(4) OF IT ACT PASSED BY HONBLE INCOME TAX SETTLEMENT COMMISSION, ADDL. BENCH-2, NEW DELHI. 5 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT GROUNDS OF ITA NO. 253/JP/2018 (1) LD. PR.CIT(C) HAS ERRED IN LAW AND ON FACTS IN CANCELLING REGISTRATION UNDER SECTION 12AA OF IT ACT BY INVOKI NG PROVISIONS OF SECTION 12AA (3) OF INCOME TAX ACT BY MISINTERPRETING THE TRUE FACTS OF THE CASE. (2) LD. PR. CIT (C) WAS NOT JUSTIFIED IN:- (A) NOT DIFFERENTIATING THE DONATIONS AND CAPITATIO N FEES, AS THE CAPITATION FEES IS CHARGED IN ADVANCE AND IS OF EQU AL AMOUNT FOR EACH COURSE WHEREAS THE DONATIONS ARE RECEIVED VOLUNTARILY, OF DIFFERENT SUMS AND WERE PAID BY THE DONORS EVEN AFTER THE ADMISSION OF THE STUDENTS AS PER THE IR OWN CONVENIENCE, EVEN IN INSTALLMENTS (IDENTICAL NATURE OF DONATIONS RECEIVED UP TO A.Y. 2008-09 WERE ACCEPTED AS SUCH IN SCRUTINY ASSESSMENTS UP TO THAT YEAR WHEN RECORD ED IN REGULAR BOOKS OF ACCOUNTS) CANCELLING REGISTRATION UNDER SECTION 12AA OF IT ACT BY INVOKING PROVISIONS OF SE CTION 12AA(3) OF IT ACT. (B) TREATING THE ACTIVITIES OF APPLICANT TRUST AS N OT ACCORDING TO CONDITION SUBJECT OF WHICH REGISTRATION UNDER SECTI ON 12AA OF IT ACT WAS GRANTED. (C) TREATING THE ASSESSEE TRUST AS CARRYING ITS ACT IVITIES IN VIOLATION OF PROVISIONS OF SECTION 12A (1)(B) OF IT ACT. (D) TREATING THE ADDITIONAL DONATIONS OF RS.21.6 CR ORES, ESTIMATED/ CALCULATED BY HONBLE ITSC AS FURTHER RE ASON FOR CANCELLING REGISTRATION UNDER SECTION 12AA OF IT AC T BY INVOKING PROVISIONS OF SECTION 12AA(3); (E) AVOIDING THE DEGREES AND DIPLOMA BY THE ASSESSE E TRUST IN PRODUCTION OF T.V. PROGRAMMES AND FILMS BY ADVANCIN G 6 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT MONEY TO TV CHANNEL AND IN TREATING IT AS PERSONAL BENEFIT AND USE OF TRUSTEES OF ASSESSEE TRUST. (F) MISINTERPRETING THE FACTS OF THE CASE IN TREATI NG AT PARA 3.2.9 AS MISUSE DONATIONS BY THE TRUSTEES THEMSELVES THOU GH THE ASSESSEE TRUST HAS APPLIED TOTAL INCOME IN ACCORDAN CE WITH THE PROVISIONS 11 AND 12 OF IT ACT AND NO PERSONAL USE OF ANY FUND OR PART THEREOF BELONGING TO THE ASSESSEE TRUS T WAS FOUND OR ESTABLISHED AS USED BY THE TRUSTEE FROM AN Y EVIDENCE OR DOCUMENTS DURING COURSE OF SEARCH OR TH EREAFTER. (G) TREATING UNSIGNED AND ROUGH AGREEMENT BETWEEN E ARLIER SHAREHOLDERS OF OMEGA TV CHANNEL LTD. ON ONE PART A ND DR. B.S. TOMAR AND JUHI TOMAR ON OTHER PART FOR WHICH P AYMENT WAS MADE BY ASSESSEE TRUST TO OMEGA TV CHANNEL PVT. LTD. AS PERSONAL PAYMENT BY PARTY OF OTHER PART AND AS M ADE IN CONTRAVENTION TO THE PROVISIONS OF SECTION 11(5) OF IT ACT, THOUGH THE MAJOR SHAREHOLDER IN OMEGA TV CHANNEL IS NIMS UNIVERSITY HOLDING 15,19,999 SHARES OUT OF 15,20,00 0 SHARES OF RS.10 EACH. (H) UNSIGNED TYPED LIST OF DOCTORS WITH PROPOSED AM OUNT OF THEIR SALARIES AS PAYMENT MADE TO THE DOCTORS IN CASH WIT HOUT FINDING ANY PROOF OF ACTUAL PAYMENT OR WITHOUT EXAM INING THE RECIPIENTS. (I) NOT CONSIDERING THE BENEFITS DERIVED BY THE ASS ESSEE TRUST FROM TRUSTEES THEMSELVES IN FORM OF THE RENT-FREE C ITY OFFICE ACCOMMODATION, INTEREST FREE LOANS AND SERVING THE ASSESSEE TRUST WITHOUT CHARGING ANY SALARY OR ALLOWANCES BY THE TRUSTEES. (2) THAT ID. PR. CIT (A) HAD FAILED TO APPRECIATE A ND CONSIDER THAT EACH ASSESSMENT YEAR IS AN INDEPENDENT YEAR AND SUF FICIENT CHECKS AND BALANCES ARE PROVIDED UNDER THE INCOME T AX ACT TO BRING TO TAX ON VIOLATION OF PROVISIONS OF ACT BUT THE SAME 7 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CANNOT BE EQUATED TO BE A GROUND TO REVOKE THE REGI STRATION UNDER SECTION 12AA OF IT ACT. (3) WITHOUT PREJUDICE TO GROUND NO. (1) TO (3), ABO VE ID. PR. CIT (C) HAS ERRED IN LAW AND ON FACTS IN CANCELLING REGISTR ATION UNDER SECTION 12AA BY INVOKING PROVISIONS OF SECTION 12AA (3) OF IT ACT RETROSPECTIVELY W.E.F. 01.04.2006 WITHOUT FINDI NG ANY SUCH DOCUMENT OR NOTICING ANY IN-GENUINE ACTIVITY O F THE TRUST DURING THE COURSE OF SEARCH JUSTIFYING SUCH ACTION AS THE SAME BEING AFTERTHOUGHT IN ORDER TO NULLIFY THE EFFECT O F ORDER DATED 30 TH JUNE 2017 U/S. 245D(4) OF IT ACT PASSED BY HONBLE INCOME TAX SETTLEMENT COMMISSION, ADDL. BENCH-2, NE W DELHI. 2. IN THE CASE OF NIMS UNIVERSITY, RAJASTHAN, JAIP UR, THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST SEPARATE IMP UGNED ORDERS DATED 29/08/2017, REFUSING THE GRANT OF REGISTRATIO N U/S 12AA(1)(B) OF THE ACT; AND ORDER DATED 19/03/2018 REFUSING THE GRANT OF APPROVAL OF EXEMPTION U/S 10(23C) (VI) AND (VIA) OF THE ACT BY LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS). 3. IN SO FAR AS THE APPEALS IN THE CASE OF INDIAN MEDICAL TRUST ARE CONCERNED, THE FACTS AND ISSUES INVOLVED FOR CA NCELLATIONS OF REGISTRATION U/S 12AA (3) AND WITHDRAWAL OF APPROVA L U/S 10(23C) ARE IDENTICAL AND SIMILAR FINDING HAS BEEN GIVEN BY THE LD. PCIT, THEREFORE, OUR FINDING AND REASONING WOULD BE APPLI CABLE TO BOTH THE 8 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT APPEALS EXCEPT FOR EXAMINING THE RELEVANT PROVISION S UNDER WHICH SUCH WITHDRAWAL OF EXEMPTION/CANCELLATION HAS BEEN DONE. IN THE CASE OF NIMS UNIVERSITY, RAJASTHAN, JAIPUR ALSO, FA CTS AND ISSUES ARE EXACTLY SIMILAR IN BOTH THE APPEALS, THEREFORE, OUR FINDING GIVEN WOULD APPLY IN BOTH THE APPEALS. ACCORDINGLY, ALL THE FOUR APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE AND BREVITY, A COMMON ORDER IS BEING PASSED. 4. WE WILL FIRST TAKE UP THE APPEALS OF THE INDI AN MEDICAL TRUST ESPECIALLY WITH REGARD TO THE WITHDRAWAL OF APPROVA L FOR EXEMPTION U/S 10(23C) OF THE ACT. BRIEF BACKGROUND OF THE CASE: 5. BRIEF FACTS AND BACKGROUND OF THE CASE ARE TH AT THE APPLICANT/ASSESSEE TRUST WAS CONSTITUTED VIDE TRUST DEED DATED 23/02/2000 WITH THE OBJECTS WHICH WERE IN THE NAT URE OF CHARITABLE PURPOSES. THE OBJECTS HAVE BEEN INCORP ORATED IN THE IMPUGNED ORDER AT PAGE 2, WHEREIN THE MAIN OBJECT R ELATED TO CARRYING OUT EDUCATIONAL ACTIVITIES IN THE FIELD OF MEDICAL EDUCATION AND OTHER ANCILLARY OBJECTS IN FIELD OF EDUCATION. LOOKING TO ITS OBJECTS WHICH WERE SOLELY FOR EDUCATIONAL PURPOSES, THE ASSESSEE 9 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT WAS GRANTED APPROVAL BY THE LD. CHIEF COMMISSIONER OF INCOME TAX U/S 10(23C)(VI) & (VIA) OF THE ACT, VIDE NOTIFICATI ON DATED 20/03/2006 FOR THE FINANCIAL YEARS 2003-04 TO 2005- 06, I.E., FOR THE ASSESSMENT YEARS 2004-05 TO 2006-07; AND THEREAFTER VIDE ANOTHER NOTIFICATION DATED 29/04/2008, THE APPROVAL WAS GRA NTED BY THE LD. CHIEF COMMISSIONER OF INCOME TAX, JAIPUR FOR THE AS SESSMENT YEARS 2007-08 AND ONWARDS. APART FROM THAT, THE ASSESSEE WAS ALSO EARLIER GRANTED REGISTRATION U/S 12AA OF THE ACT VI DE CERTIFICATE DATED 24/3/2000. THUS, IN VIEW OF APPROVAL GRANTED U/S 10(23C) AND REGISTRATION U/S 12AA OF THE ACT, THE ASSESSEE TRUST WAS ENJOYING THE EXEMPTION U/S 10 AND ALSO ALTERNATIVEL Y THE BENEFIT OF SECTION 11 TO 13 OF THE ACT. SEARCH AND SEIZURE ACT ION U/S 132(1) OF THE ACT WAS CARRIED OUT ON 30.10.2014 AT VARIOUS PR EMISES OF THE ASSESSEE TRUST AND THE INSTITUTIONS RUN BY IT AND T HE RESIDENTIAL PREMISES OF THE TRUSTEES. DURING THE COURSE OF SEAR CH AND SEIZURE OPERATION, VARIOUS DOCUMENTARY EVIDENCES WERE COLLE CTED WHICH AS PER THE REVENUE WERE MOSTLY INCRIMINATING IN NATURE AND ALSO POST SEARCH ENQUIRIES ESTABLISHED THAT THE ACTIVITIES OF THE TRUST WERE NOT GENUINE. ONE OF THE KEY INCRIMINATING MATERIALS WHI CH IS THE 10 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT SUBJECT MATTER OF MAJOR DISPUTE BEFORE US, WAS RECE IPT OF UNACCOUNTED CAPITATION FEES CHARGED BY THE TRUST OUTSIDE ITS REGULAR BOOKS OF ACCOUNT AND INCOME AND EXPENDITURE ACCOUNT FOR THE VARIOUS ASSESSMENT YEARS. THOUGH, THERE WERE OT HER MATERIALS RELATING TO UNDISCLOSED INVESTMENTS WERE FOUND FROM THE POSSESSION OF THE TRUSTEES AND PERSONS RUNNING THE INSTITUTION IN THE FORM OF UNACCOUNTED CASH, JEWELLERY, FOREIGN CURRENCY ETC., WHICH MAY NOT HAVE THAT DIRECT RELEVANCE FOR THE CANCELLATION OF APPROVAL/REGISTRATION, ALBEIT IT MAY HAVE SOME BEARING IN THE HANDS OF THE TRUSTEES. THE ASSESSEE POST SEARCH PROCEEDIN GS HAD FILED AN APPLICATION BEFORE THE INCOME TAX SETTLEMENT COMMIS SION, WHEREIN IT HAD OFFERED RS. 1.7 CRORES ON ACCOUNT OF UNACCOU NTED CAPITATION FEES, HOWEVER, AFTER CALLING FOR THE DETAILS AND R EPORT FROM THE DEPARTMENT BASED ON THE SEIZED MATERIAL AND POST SE ARCH ENQUIRY, THE SETTLEMENT COMMISSION HAD DETERMINED THE UNACCO UNTED RECEIPTS IN THE FORM OF CAPITATION FEES AT RS.22, 63,46,000/-, BESIDES QUANTIFYING UNDISCLOSED INVESTMENTS. ANOTHE R IMPORTANT FACT IS THAT, THE ASSESSEE TRUST HAD ESTABLISHED NI MS MEDICAL COLLEGE AND HOSPITAL IN THE YEAR 2008 AND LATER ON DENTAL COLLEGE 11 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT AND HOSPITAL WERE ALSO ESTABLISHED UNDER THE AEGIS OF NIMS UNIVERSITY, WHICH WAS WHOLLY OWNED AND CONTROLLED BY THE ASSESSEE TRUST. AS CULLED OUT FROM THE RECORD, THE NIMS UNIV ERSITY WAS ENACTED BY THE LEGISLATURE OF STATE OF RAJASTHAN IN THE YEAR 2008, WHICH RECEIVED THE CONSENT OF THE HONBLE GOVERNOR ON 29/03/2008. AFTER THE ESTABLISHMENT OF THE NIMS UNI VERSITY, THE ASSESSEE THROUGH SUCH AN INSTITUTION HAD EXPANDED I TS EDUCATIONAL ACTIVITIES AND AT PRESENT NIMS UNIVERSITY RUNS MORE THAN 345 COURSES BESIDES ITS MAJOR FIELD RUNNING MEDICAL AND DENTAL COLLEGES. FINDING OF THE LD. PR.CIT IN THE IMPUGNED ORDER: 6. IN THE IMPUGNED ORDER, THE LD. PR. CIT(CENTRAL), RAJASTHAN, JAIPUR HAD REFERRED TO VARIOUS INCRIMINATING MATERI AL FOUND DURING THE SEARCH SO AS TO REACH TO A CONCLUSION THAT THE TRUSTS ACTIVITIES WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE O BJECTS AND ALSO ITS ACTIVITIES WERE NOT GENUINE. THE FIRST AND FORE MOST ISSUE WHICH HAS BEEN RAISED IN THE IMPUGNED ORDER IS OF UNACCOU NTED CAPITATION FEES COLLECTED BY THE ASSESSEE TRUST FOR ADMISSION OF VARIOUS COURSES MAINLY RELATING TO MEDICAL AND DENTAL COURS ES. HE HAS NOTED THAT CERTAIN DIARIES/REGISTERS, LOOSE PAPERS AND COMPUTER 12 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT PRINTOUTS WERE FOUND AND SEIZED FROM THE CHAMBER OF SMT. SHOBHA TOMAR (ONE OF THE TRUSTEES AND WIFE OF DR. B.S. TOM AR) AND SHRI KAILASH CHANDRA JAT, WHO WAS THE REGISTRAR OF THE N IMS UNIVERSITY AND ALSO FROM THEIR RESIDENCES. IN ALL, THERE WERE 638 ENTRIES OF CAPITATION FEES PAID OVER THE PERIOD OF TIME FROM THE FINANCIAL YEAR 2006-07 TO 2014-15 WHICH HAS BEEN RECEIVED BY THE A SSESSEE TRUST FROM VARIOUS STUDENTS. THE DETAILS OF THESE ENTRIES SPREADING INTO VARIOUS YEARS HAVE BEEN ELABORATED IN ANNEXURE-A TO THE IMPUGNED ORDER. LD. PCIT OBSERVED THAT DETAILED ANALYSIS AND INVESTIGATIONS WERE CARRIED BY THE DEPARTMENT FROM VARIOUS PERSONS BASED ON THE DETAILS FOUND DURING SEARCH IN RESPECT OF THE ENTRI ES OF UNACCOUNTED CAPITATION FEES RECEIVED BY THE TRUST FROM THE AS SESSMENT YEAR 2006-07 TO 2014-15, WHICH AS PER THE DEPARTMENT AGG REGATED TO RS. 79.09 CRORES. IT WAS ALSO GATHERED THAT THE CAPITA TION FEES RECEIVED FROM THE STUDENTS WERE NEITHER FROM THE MANAGEMENT QUOTA NOR NRI QUOTA BUT FROM GENERAL STUDENTS. THE DOCUMENTS WHER EIN CAPITATION FEES RECORDED, WERE FOUND TO BE WRITTE N IN THE HANDWRITING OF THE TRUSTEES AND ONE OF THE MAIN TRU STEES, DR. B.S. TOMAR HAS BEEN STATED TO BE KEEPING TRAIL OF SUCH C APITATION FEES. IN 13 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT RESPONSE TO THE SHOW CASE NOTICE BY THE LD. PR. CIT , THE ASSESSEE SUBMITTED THAT, FIRSTLY , IT IS IN THE NATURE OF VOLUNTARY DONATIONS RECEIVED FROM THE PARENTS/STUDENTS AND UP TO ASSESS MENT YEAR 2008-09 ALL THESE DONATIONS WERE DULY RECORDED IN THE REGUL AR BOOKS OF ACCOUNT, WHICH WERE SUBJECTED TO SCRUTINY U/S 143(3) AND THE SAME WERE ACCEPTED BY THE ASSESSING OFFICER; AN D SECONDLY , FROM A.Y. 2009-10 ONWARDS THOUGH SUCH VOLUNTARY CON TRIBUTIONS WERE NOT RECORDED BUT ASSESSMENT WERE COMPLETED U/S 143(3). HOWEVER, THE LD. PR.CIT NOTED THAT FROM THE A.Y. 20 09-10 ONWARDS, THE CAPITATION FEES WHICH HAS BEEN TREATED AS VOLUN TARILY DONATIONS BY THE ASSESSEE WERE COLLECTED IN CASH BY THE TRUST EES AND HAVE NEITHER BEEN RECORDED IN THE REGULAR BOOKS OF ACCOU NT NOR HAS BEEN DISCLOSED IN THE AUDITED FINANCIAL STATEMENTS. THOU GH, THE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(3) OF THE A CT, BUT THE ISSUE OF CAPITATION FEES/VOLUNTARY DONATION BASES O N SUCH SEIZED MATERIAL WERE NEVER SCRUTINIZED, BECAUSE ASSESSMENT S WERE MADE ON THE BASIS OF ENTRIES MADE IN THE REGULAR BOOKS O F ACCOUNT AND AMOUNT SHOWN IN THE AUDITED INCOME AND EXPENDITURE ACCOUNT. THE LD. PR.CIT FURTHER NOTED THAT THE TRUST ITSELF HAS ADMITTED BEFORE THE 14 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT INCOME TAX SETTLEMENT COMMISSION THAT VOLUNTARY DON ATION TOWARDS CORPUS WERE RECORDED IN THE BOOKS OF ACCOUN T FROM A.Y. 2001-02 TO 2008-09. HOWEVER, NO SUCH ENTRIES WERE R ECORDED AFTER 2009-10. THEREFORE, RELIANCE PLACED BY THE ASSESSEE ON THE EARLIER ASSESSMENT ORDER PASSED U/S 143(3) WILL NOT HAVE AN Y RELEVANCE. THE ASSESSEES FURTHER CONTENTION BEFORE THE LD. PR .CIT THAT MAJOR PART OF THE DONATIONS RECEIVED, WHICH HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT HAVE BEEN ULTIMATELY UTILIZED IN T HE CONSTRUCTION OF EDUCATIONAL AND HOSPITAL BUILDINGS ON EXISTING L ANDS AND THUS, ANY SUCH UNDISCLOSED AMOUNT ON ACCOUNT OF DONATION STANDS FULLY UTILIZED FOR THE EDUCATIONAL PURPOSES. HOWEVER, THE LD. PR.CIT AFTER MAKING VARIOUS REMARKS HELD THAT, IF CAPITATION FEE S/VOLUNTARY DONATIONS RECEIVED IN CASH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT AND STATED TO BE EXPANDED IN CONSTRUCTION O F BUILDINGS, THEN SUCH ASSERTIONS OF THE ASSESSEE IS WITHOUT ANY EVIDENCE OR ANY BASIS. THE ASSESSEE HAS NEITHER ABLE TO SUBSTANTIAT E THIS CONTENTION AND NOR ANY SUCH DOCUMENT OR MATERIAL WAS FOUND DUR ING THE COURSE OF SEARCH THAT THE ASSESSEE HAD SPENT UNACCO UNTED CAPITATION FEES FOR THE CONSTRUCTION OF THE HOSPITA L BUILDING OR 15 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT UTILIZED FOR ITS OBJECTS. HE HAS ALSO REJECTED THE ASSESSEES CONTENTION THAT THESE VOLUNTARY DONATIONS HAVE BEEN RECEIVED ONLY BY NRI OR MANAGEMENT QUOTA STUDENTS FOR ADMISSION I N MBBS AND PG COURSES AFTER RECORDING THE FINDING OF FACT FROM THE SEIZED MATERIAL THAT IN THE F.Y. 2008-09, CAPITATION FEES WERE COLLECTED FROM 82 STUDENTS WHO WERE FROM GENERAL QUOTA AND SI MILAR OTHER NUMBER OF STUDENTS WHO WERE FROM GENERAL QUOTA IN O THER YEARS. THUS, THE CONTENTION OF THE ASSESSEE WAS FOUND TO B E MISLEADING. IN SO FAR AS THE ASSESSEES CONTENTION THAT THE AMOUNT OF VOLUNTARY DONATION WAS NOT FIXED AND IT PURELY DEPENDS UPON T HE DONORS SWEET WILL, HE HELD THAT THE SAME DOES NOT HAVE ANY FORCE IN WAKE OF EVIDENCES FOUND AND INQUIRIES CONDUCTED THAT THE ST UDENTS WERE FORCE TO PAY CAPITATION FEES FOR TAKING ADMISSIONS AND RECEIVING FINAL NO DUES CERTIFICATE ONLY WHEN THE ENTIRE CAPITATI ON FEES WAS PAID. MANY INSTANCES HAVE BEEN FOUND WHERE INSTALLMENTS W ITH FIXED DURATION OF PAYMENTS OF CAPITATION FEES WAS GRANTED WHICH ONLY GOES TO SHOW THAT IT WAS NOT VOLUNTARILY AT ALL BUT WAS THRUST UPON THE PARENTS/GUARDIANS OF THE STUDENTS AND WERE TAKE N FORCEFULLY. FURTHER THE ASSESSEES TRUST WAS FOLLOWING A PACKA GE SYSTEM IN 16 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT WHICH THE STUDENTS WERE GIVEN FIXED PACKAGES OF CAP ITATION FEE, HOSTEL FEE AND ADMISSION FEE AND THIS HE HELD THAT IT CLEARLY GOES TO PROVE THAT THE STUDENTS WERE REQUIRED TO COMPULSORI LY PAY THE CAPITATION FEE TO RECEIVE THEIR DEGREES. LD. PCIT H AS ALSO DEMOLISHED THE ASSESSEES CONTENTION THAT THE MAJOR PART OF SU CH VOLUNTARY DONATION HAS BEEN APPLIED IN CONSTRUCTION OF NEW ED UCATIONAL BUILDING ON THE GROUND THAT, FIRSTLY , THERE IS NO EVIDENCE FOR APPLICATION OF CAPITATION FEES IN THE CONSTRUCTION OF EDUCATIONAL BUILDING WHICH HAS BEEN FOUND DURING THE COURSE OF SEARCH PROCEEDINGS; AND SECONDLY , ON THE CONTRARY THERE WERE VARIOUS DOCUMENTS WHICH SHOWS THE USE OF VOLUNTARY DONATION /CAPITATION FEES FOR PERSONAL PURPOSES, SUCH AS FOREIGN TRAVEL BY THE TRUSTEES, INVESTMENT IN BENAMI PROPERTY BY THE CHILDREN OF TH E TRUSTEE AND INVESTMENT IN A REAL ESTATE COMPANY. HE HAS ALSO RE FERRED TO CERTAIN OBSERVATIONS OF THE SETTLEMENT COMMISSION A ND THE DOCUMENTS FURNISHED BY THE ASSESSEE DURING THE COUR SE OF THE SETTLEMENT COMMISSION PROCEEDINGS, WHEREIN ADVERSE VIEW HAS BEEN TAKEN BY THE ITSC. THE SETTLEMENT COMMISSION I TSELF HAS DETERMINED THE AMOUNT OF UNACCOUNTED VOLUNTARY DONA TION / 17 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CAPITATION FEES AT RS. 21.06 CRORES AND ALSO THERE WERE VARIOUS EVIDENCES OF UNACCOUNTED EXPENDITURE IN THE FORM OF PAYMENT OF SALARY TO DOCTORS IN CASH, UNACCOUNTED INVESTMENTS IN CONSTRUCTION OF PROPERTY OTHER THAN PERTAINING TO THE TRUST, FOR EIGN TRAVELS ETC. THE FOREIGN CURRENCY AND UNACCOUNTED CASH FOUND FRO M THE RESIDENCE OF THE TRUSTEES AMOUNTED TO RS. 3,36,09,6 10/-. HE HAS FURTHER OBSERVED THAT THE FEES OF THE STUDENTS ADMI TTED IN THE UNIVERSITY WERE TO BE DECIDED BY THE FEE COMMITTEE IN WHICH THE TRUSTEES THEMSELVES WERE THE DECISION MAKERS. IT WA S ONLY IN THE WAKE OF VARIOUS HON'BLE SUPREME COURTS JUDGMENTS ST RICTLY PROHIBITING COLLECTION OF CAPITATION FEES FROM THE STUDENTS, THE ASSESSEE TRUST INDULGED IN RECEIVING CAPITATION FEE S OUTSIDE THE BOOKS IN CASH AND IN THIS WAY, IT HAS NOT ONLY VIOL ATED THE OBJECTIVES OF THE TRUST AND ALSO ITS ACTIVITIES CANNOT BE SAID TO BE GENUINE. HE HAS ALSO NOTED VARIOUS INSTANCES FROM THE SEIZED MA TERIAL ABOUT THE BREAKUP OF THE FEES AND HOW THE FEE PACKAGE WAS CHA RGED, LIKE THERE IS MENTION ABOUT SEPARATE CAPITATION FEES IN FIGURE S AND ALSO REGULAR FEES AND HOSTEL FEES. BASED ON THE MATERIALS ON REC ORD AND REBUTTING ALL THE CONTENTION RAISED BY THE ASSESSEE, HE HELD THAT THE ACTIVITIES 18 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT OF THE TRUST CANNOT BE HELD TO BE CHARITABLE, ALBEIT IT WAS FOR PROFITEERING BY TAKING UNACCOUNTED CAPITATION FEES FROM STUDENTS AND PARENTS IN THE GARB OF FEE AND SAME CANNOT BE H ELD TO BE GENUINE. ACCORDINGLY, HE INVOKED THE CLAUSE (II)(A) OF THE 14 TH PROVISO TO SECTION 10(23C) (VI)&(VIA) OF THE ACT. 7. FURTHER, THE LD. PR.CIT HAS GIVEN DETAILED OBSE RVATIONS AND FINDING AS TO HOW THE ACTIVITIES OF THE TRUST WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE CONDITIONS FOR WHICH IT WAS GIVEN APPROVAL U/S 10(23C). HE HELD THAT, THE ASSESSEE HA S BEEN EARNING UNDISCLOSED INCOME IN CASH FROM CAPITATION FEES, WH ICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND HENCE IT VIOLATED THE CONDITIONS LAID DOWN IN 10 TH PROVISO TO SECTION 10(23C)(VI) & (VIA) OF THE ACT BY EARNING UNDISCLOSED/SUPPRESSED INCOME IN THE FORM OF CAPITATION FEES AND NOT ACCOUNTING FOR IT IN THE BO OKS OF ACCOUNT. THE RECEIPTS OFFERED BY THE ASSESSEE BEFORE THE ITS C AND THE AMOUNT ADDED BY THE ITSC WERE UNACCOUNTED RECEIPTS NOT FOUND RECORDED IN THE BOOKS OF THE TRUST AND THEREFORE, I T WAS CLEAR CUT VIOLATION OF 10 TH PROVISO . THUS, HE CONCLUDED THAT IN VIEW OF CLEAR- CUT VIOLATION OF PROVISIONS OF SECTION 10(23C) (VI) & (VI) OF THE ACT 19 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT I.E., 10 TH PROVISO AND 14 TH PROVISO WHEREBY THE ASSESSEES ACTIVITIES HAS BEEN FOUND TO BE NON-GENUINE, THE APPROVAL GRAN TED TO ASSESSEE TRUST NEEDS TO BE WITHDRAWN. 8. ANOTHER IMPORTANT ISSUE WHICH HAS BEEN RAISED B Y LD. PCIT IS ON ACCOUNT OF EXPENDITURE BEING INCURRED IN NEWS I NDIA CHANNEL, BY THE TRUST WHICH WAS NOT AS PER THE OBJECTIVES OF THE TRUST. THE LD. PR.CIT HAS NOTED THAT THE ASSESSEE TRUST WAS OP ERATING A NEWS CHANNEL NAMELY, NEWS INDIA AT NIMS UNIVERSITY AND HAS TWO MORE OFFICES AT RANCHI AND PATNA. THE ASSESSEES CLAIM W AS THAT THE NEWS INDIA CHANNEL WAS ESTABLISHED IN ACCORDANCE WITH IT S OBJECTIVES, BECAUSE IT WAS RUNNING COURSES FOR DIPLOMA IN TV AN D FILM PRODUCTION AFTER 2013. HOWEVER, THE LD. PCIT OBSERV ED THAT THE ASSESSEE COULD NOT GIVE ANY SINGLE AUDIO/VIDEO CD C ONTAINING TRANSMISSION OF EDUCATION RELATED MATERIAL ON THE N EWS INDIA CHANNEL. HE HAS ALSO REFERRED TO THE OBSERVATIONS M ADE BY THE ITSC THAT THE EXPENDITURE INCURRED ON ACQUIRING AND RUNN ING OF THE CHANNEL CANNOT BE TREATED AS FOR THE OBJECTIVES OF THE TRUST AS SUCH AN EXPENDITURE HAS NOT ACTUALLY BEEN MADE TO FULFIL L THE OBJECTIVE. IN SO FAR AS THE ASSESSEES PLEA THAT THE CHANNEL IS O WNED BY OMEGA 20 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT TV MEDIA PVT. LTD. WHICH IS SEPARATELY ASSESSED TO TAX, HE HELD THAT AS PER THE MOU, THE ENTIRE SHARE HOLDING INCLUDING THE RIGHTS TITLE AND INTEREST IN OMEGA TV MEDIA PVT. LTD. WAS GIVEN TO DR. B.S. TOMAR AND DR. JUHI TOMAR FOR CONSIDERATION OF RS. 3 .00 CRORES, WHICH WAS PAID BY THE ASSESSEE TRUST ON THEIR BEHAL F. THUS, HE CONCLUDED THAT THE TRUSTS FUND HAS BEEN UTILIZED I N CONTRAVENTION OF THE OBJECTIVES OF THE TRUST. IN SO FAR AS THE AS SESSEES CONTENTION AT THE OBJECTIVES OF THE NEWS CHANNEL WAS FOR ITS O WN EDUCATIONAL PURPOSE AND PROGRAMME AND COURSES RUN BY THE NIMS U NIVERSITY, THE LD PR.CIT HAS GIVEN A DETAILED REASONING AS INC ORPORATED FROM PAGES 21 AND 22 OF THE IMPUGNED ORDER AND BASED ON THE REASONING GIVEN THEREIN, HE CAME TO THE CONCLUSION THAT SETTI NG UP AND RUNNING OF A COMMERCIAL NEWS CHANNEL BY UTILIZING T HE FUNDS OF THE TRUST IS IN VIOLATION OF THE OBJECTIVES OF THE TRUS T. ONE MOST VITAL FINDING GIVEN BY HIM WAS THAT THE CONDITIONS LAID D OWN IN SUB- SECTION (5) OF SECTION 11; AND CLAUSE (B) OF 3 RD PROVISO TO SECTION 10(23C) (VI) & (VIA) OF THE ACT HAVE BEEN VIOLATED AS THE TRUST CANNOT INVEST IN SHARES OF PRIVATE LIMITED COMPANY. HE HAS FURTHER DISCUSSED AS TO HOW SUCH PAYMENT MADE BY THE TRUST ON BEHALF OF 21 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT THE TRUSTEES FOR ACQUIRING THE SHARES AND RIGHTS IS IN VIOLATION OF PROVISIONS OF THE ACT AND THEREFORE, SUCH AN ACTIVI TY IS NEITHER IN ACCORDANCE WITH THE OBJECTIVES NOR CAN BE RECKONED AS GENUINE. 9. LASTLY, THE LD. PR.CIT HAS ALSO RAISED AN ISSUE OF UNACCOUNTED CASH PAYMENTS OF SALARY TO DOCTORS AND STAFFS. HE H AS NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, LOOSE PAPE RS WERE SEIZED MARKED AT PAGE NO. 79 AS ANNEXURE-A-2 AND AT PAGE N O. 66 OF ANNEXURE-A-4 WHICH GOES TO SHOW THAT THE CASH PAYME NTS WERE MADE TO DOCTORS WHICH WERE NOT ACCOUNTED FOR IN THE BOOKS. FOR INSTANCE, IN PAGE 79 THERE IS A NOTING OF SALARY PA ID TO DR. NILESH AT 5.40 LACS, WHICH IS 90,000/- FOR SIX MONTHS AND SIM ILAR PAYMENT TO DR. HARVEY @ RS.95,000/- FOR 12 MONTHS AND DR. MAHE SH @ RS. 70,000/- FOR THREE MONTHS. THE TOTAL OF THESE AMOUN TS HAS BEEN WRITTEN AS 18.9, WHICH WAS DEDUCED BY THE DEPARTM ENT AS RS. 18.9 LACS. SIMILAR NOTING WAS THERE REGARDING CASH PAYME NT TO DR. THOMAS FOR RS. 95,000+80,000. ALL THESE REVEALED TH AT PAYMENTS WERE MADE TO THE DOCTORS IN CASH TO THE TUNE OF RS. 20.65 LACS. SIMILARLY, NOTING IS APPEARING AT PAGE NO. 66 FOR T HE PAYMENT MADE TO THE VARIOUS DOCTORS, THE DETAILS OF WHICH HAS BE EN NOTED BY HIM 22 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT IN PARA 6.1 OF THE IMPUGNED ORDER WHICH AGGREGATED TO RS. 6.25 LACS. FROM THESE SEIZED DOCUMENTS, THE LD. PR.CIT C ONCLUDED THAT THE TRUST WAS INCURRING EXPENDITURE IN CASH FROM IT S UNACCOUNTED RECEIPTS AND THIS FACT TOO HAS BEEN ACCEPTED BY THE ITSC IN PARA 16.15 OF THE ORDER. 10. AFTER GIVING DETAIL REASONING, HE THUS CONCL UDED THAT THE APPROVAL GRANTED TO THE ASSESSEE TRUST U/S 10(23C) (VI) & (VIA) OF THE ACT IS TO BE WITHDRAWN AFTER INVOKING THE 14 TH PROVISO TO ITS SECTION W.E.F. FROM 01/4/2006. THE FINAL CONCLUSION OF THE LD. PR. CIT IN PARA 7 READS AS UNDER: - 7. IN VIEW OF THE FACTS STATED ABOVE ESPECIALLY FO RCING STUDENTS/PARENTS TO GIVE UNACCOUNTED DONATIONS IN L IEU OF ADMISSION, ENRICHING THE TRUSTEES FROM SUCH UNACCOU NTED CAPITATION FEE, RUNNING OF COMMERCIAL CHANNEL & INCURRING UNACCOUNTED EXPENDITURE, IT IS ESTABLISHED THAT ACTIVITIES OF THE TRUST CANNOT BE HELD TO BE CHARITABLE AS PER SE C. 2(15) OF THE ACT, AND HENCE NOT GENUINE. IT HAS ALSO BEEN ES TABLISHED THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE NOT B EING CARRIED OUT IN ACCORDANCE WITH THE CONDITION SUBJECT TO WHI CH IT WAS NOTIFIED AND THE TRUST IS BEING RUN NOT AS PER THE OBJECTS MENTIONED IN THE TRUST DEED. IN VIEW OF THE DISCUSS ION MADE ABOVE, I AM SATISFIED THAT THE ASSESSEE TRUST (M/S INDIAN 23 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT MEDICAL TRUST) HAS NOT APPLIED ITS INCOME IN ACCORD ANCE WITH THE PROVISIONS OF CLAUSE (A) OF 3 RD PROVISO TO SECTION 10(23C)(VI) AND S. 10(23C)(VIA), HAS NOT INVESTED O R DEPOSITED ITS FUNDS IN ACCORDANCE WITH THE PROVISIONS OF CLAU SE (B) OF 3 RD PROVISO TO SECTION 10(23C)(VI) AND S. 10(23C)(VIA) , THE ACTIVITIES OF THE ASSESSEE TRUST ARE NOT GENUINE AN D ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE CONDITIONS SUBJECT TO WHICH IT WAS NOTIFIED. THEREFORE, THE APPROVAL GRAN TED TO THE TRUST U/S 10(23C)(VI) AND S.10(23C)(VIA) IS HEREBY WITHDRAWN BY INVOKING THE 14 TH PROVISO TO S. 10(23C)(VI) AND S.10(23C)(VIA) OF THE I.T. ACT, 1961 WITH EFFECT FR OM 01/04/2006. 11. IN THE APPEAL RELATING TO CANCELLATION OF REGI STRATION U/2 12AA OF THE ACT, EXACTLY SIMILAR FACTS ARE PERMEATING AN D EXACTLY SAME REASONING HAS BEEN GIVEN BY THE LD. PR. CIT BASED O N THE SAME FACTS AND MATERIAL ON RECORD. THE LD. PR.CIT HAS ANALYSED THE SAME MATERIAL AND HAS APPLIED THE SAME REASONING FOR HOL DING THAT THERE IS CLEAR CUT VIOLATION OF CONDITIONS LAID DOWN FROM SECTIONS 11 TO 13 OF THE ACT AND AGAIN VIDE PARA 7 OF THE IMPUGNED OR DER, HE HAS CANCELLED THE REGISTRATION W.E.F. 01/4/2006, WHICH READS AS UNDER: 7. IN VIEW OF THE FACTS STATED ABOVE ESPECIALLY FO RCING STUDENTS/PARENTS TO GIVE UNACCOUNTED DONATIONS IN L IEU OF 24 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ADMISSION, ENRICHING THE TRUSTEES FROM SUCH UNACCOU NTED CAPITATION FEE, RUNNING OF COMMERCIAL CHANNEL & INCURRING UNACCOUNTED EXPENDITURE, IT IS ESTABLISHED THAT ACTIVITIES OF THE TRUST CANNOT BE HELD TO BE CHARITABLE AS PER SE C. 2(15) OF THE ACT, AND HENCE NOT GENUINE. THE ACTIVITIES OF T HE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECT S. IN VIEW OF THE DISCUSSION MADE ABOVE, I AM SATISFIED THAT A CTIVITIES OF THE ASSESSEE TRUST (M/S INDIAN MEDICAL TRUST) ARE N OT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE TRUST. THEREFORE, THE REGIS TRATION OF THE ASSESSEE TRUST U/S 12AA(1)(B)(I) IS HEREBY CANC ELLED BY INVOKING SECTION 12AA (3) OF THE INCOME TAX ACT, 19 61 WITH EFFECT FROM 01/04/2006. ARGUMENT PLACED BY THE LD. A.R. OF THE ASSESSEE: 12. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SHRI G.M. MEHTA AFTER REITERATING THE ENTIRE FACTS AND BACKGROUND O F THE CASE SUBMITTED THAT THE VARIOUS ALLEGATIONS MADE BY THE LD. PR. CIT, IN THE IMPUGNED ORDER CANNOT BE SUSTAINED SO AS TO CAN CEL THE APPROVAL/REGISTRATION FROM RETROSPECTIVE EFFECT. ON E OF THE MAIN ALLEGATION OF THE LD. PR.CIT WAS THAT THE ASSESSEE HAS RECEIVED CAPITATION FEES IN CASH, THE SAME IS NOT CORRECT AP PRECIATION OF FACTS, BECAUSE THESE WERE PURELY IN THE NATURE OF VOLUNTA RY DONATIONS 25 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT RECEIVED FROM THE PARENTS/STUDENTS AND SUCH VOLUNTA RINESS IS BORNE BY THE FACT THAT, FIRSTLY , IT HAS NOT BEEN RECEIVED BY ALL THE STUDENTS BUT FROM VERY FEW STUDENTS AS HIGHLIGHTED IN THE ANNEXURE-2 OF THE IMPUGNED ORDER; SECONDLY , THERE IS NO FIXED AMOUNT CHARGED AND IN FACT THE AMOUNT VARIES FROM S TUDENT TO STUDENT; AND LASTLY , THE SO CALLED CAPITATION FEE WAS NOT RECEIVED AT THE TIME OF ADMISSION WHICH GENERALLY IS A FEATURE WHERE THE CAPITATION FEES ARE RECEIVED BY THE COLLEGES. ONCE, SIMILAR NATURE OF VOLUNTARY DONATION WHICH WERE RECORDED IN THE BOOKS OF ACCOUNT UP TO A.Y. 2008-09, HAS BEEN ACCEPTED TO BE GENUINE BY THE DEPARTMENT IN THE SCRUTINY ASSESSMENT PASSED U/S 14 3(3) OF THE ACT, THEN FOR SIMILAR NATURE OF VOLUNTARY DONATION, IT CANNOT BE HELD THAT IT IS A CAPITATION FEE WHICH NEEDS TO BE ADVER SELY VIEWED IN THE CASE OF ASSESSEE. EARLIER, THESE DONATIONS WERE REC ORDED IN THE REGULAR BOOKS OF ACCOUNT AND NOW THEY ARE RECORDED IN DIARIES AND MOST IMPORTANTLY ALL THE DONATIONS HAVE BEEN FULLY UTILIZED FOR ITS CHARITABLE OBJECTS AND THERE WAS NO USE OR MISUSE O F SUCH FUND BY THE TRUSTEES OR BY ANY OF THEIR RELATIVES. THE ASSE SSEE IS CARRYING OUT VARIOUS PHILANTHROPIC AND CHARITABLE ACTIVITIES, WH ICH IS EVIDENT 26 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT FROM THE FACT THAT IT HAS UNDERTAKEN FREE MEDICAL C AMPS AT VILLAGES WHEREIN MAJOR OPERATIONS WERE CONDUCTED FOR A NOMIN AL FEE AND EVEN VARIOUS MEDICAL INVESTIGATION PROCEDURES LIKE MRI, SCANNING, X-RAY ETC. WERE DONE FOR FREE FOR THE POOR CITIZENS . IN SUPPORT, HE ALSO SHOWED US CERTAIN PAMPHLETS AND NEWS CUTTINGS. APART FROM THAT, HE SUBMITTED THAT THE ASSESSEE TRUST HAD UTIL IZED THE ENTIRE FUNDS OF THE TRUST IN EXPANSION OF INFRASTRUCTURE F ACILITIES, MEDICAL EQUIPMENT, MODERNIZATION AND CONSTRUCTION OF EDUCAT IONAL BUILDINGS, ETC. THERE IS NO EVIDENCE FOUND FROM THE SEARCH WHICH COULD INDICATE THAT THE FUNDS OF THE TRUST HAVE BEE N MISUSED BY THE TRUSTEES. IN FACT, HE POINTED OUT THAT THE TRUSTEES HAVE NOT CHARGED ANY REMUNERATION FOR THEIR SERVICES RENDERED TO THE ACTIVITIES OF THE TRUST AND IN FACT THEY HAVE GIVEN HUGE INTEREST FRE E FUNDS TO THE TRUST. NONE OF ITS ACTIVITIES HAS BEEN FOUND TO BE CARRIED OUT BEYOND THE OBJECTS. ONCE THE ACTIVITIES OF THE ASSESSEE TR UST ARE CHARITABLE IN NATURE AS DEFINED IN SECTION 2(15) OF THE ACT, T HEN WITHOUT ANY MATERIAL ON RECORD THAT THE ASSESSEE HAS DIGRESSED FROM SUCH ACTIVITIES, THE APPROVAL/REGISTRATION GRANTED UNDER THE ACT CANNOT BE REVOKED/ CANCELLED. THE TRUST IS STILL RUNNING H OSPITAL AND 27 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT PROVIDING MEDICAL FACILITIES AND EDUCATION. THE OBS ERVATION AND THE FINDING OF THE LD. PR.CIT THAT THE ACTIVITIES OF TH E TRUST ARE NOT IN ACCORDANCE WITH THE OBJECTS IS NOT CORRECT OR BASED ON ANY MATERIAL ON RECORD, BUT IS BASED ON SURMISES AND CONJECTURES WITH VARIOUS INCORRECT INTERPRETATION OF FACTS WRONG ASSUMPTIONS . LD. PR. CIT COULD NOT SHOW FROM THE MATERIAL ON RECORD THAT THE RE HAS BEEN DIVERSION OF FUNDS BY THE ASSESSEE TRUST TO THE TRU STEES AND IT WAS USED FOR THE PERSONAL PURPOSES AS ALLEGED IN THE IM PUGNED ORDER. HE POINTED OUT THAT THE ADDITION MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES, UNACCOUNTED INVESTMENTS, JEWELLERY ETC. I N THE HANDS OF THE TRUSTEES AND RELATIVES HAVE BEEN SUBJECT MATTER OF SCRUTINY ASSESSMENT U/S 153A OF THE ACT IN THEIR HANDS AND N O ADVERSE INFERENCE HAS BEEN DRAWN AND ALL THE ADDITIONS HAVE BEEN DELETED. THUS, THE OBSERVATIONS OF THE LD. PR.CIT THAT THE T RUSTS FUND HAS BEEN MISUSED ARE WHOLLY DIVORCED FROM THE FACTS. TH E ENTIRE ADVERSE INFERENCE BASED ON SO CALLED ALLEGED CAPITATION FEE S RECEIVED IN CASH, HE SUBMITTED THAT THOUGH MAY NOT HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT BUT THE SAME HAS BEEN FULLY UTILIZED FOR THE OBJECTS AND ACTIVITIES OF THE TRUST AND THEREFORE, NO ADVERSE I NFERENCE 28 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT WHATSOEVER COULD HAVE BEEN DRAWN. MERE MENTIONING O F CAPITATION FEES AT SOME PLACES IN THE SEIZED DOCUMENT DOES NO T MAKE THAT THE WHOLE PAYMENT RECEIVED BY THE ASSESSEE WAS NOT VOLU NTARY DONATION AND THERE IS NO PROOF WITH THE DEPARTMENT THAT THE DONATIONS WERE NOT BY FREE WILL OF THE DONORS. THE DEPARTMENT HAD RECORDED THE STATEMENT OF DONORS BEHIND THE BACK OF THE ASSESSEE WITHOUT CROSS EXAMINATION AND THEREFORE, SUCH STATEMENT CANNOT BE ADVERSELY VIEWED AGAINST THE ASSESSEE. HE ALSO POINTED OUT TH AT THE ITSC AFTER EXAMINING NATURE OF RECEIPTS OF ALL THE 638 ENTRIES RECORDED IN THE DIARIES ON ACCOUNT OF VOLUNTARY DONATION WHICH HAS BEEN TERMED AS CAPITATION FEES BY THE DEPARTMENT HAD BEEN HELD TO BE ORDINARY RECEIPTS WHICH IS EVIDENT FROM READING OF PAGE 40 O F THE SETTLEMENT COMMISSION ORDER. 13. REGARDING INVESTMENT IN OMEGA TV CHANNEL, HE SUBMITTED THAT, IT WAS AS PER THE DECISION OF THE BOARD OF TR USTEES FOR EDUCATION OF THE STUDENTS IN THE FIELD OF RUNNING T HE TV CHANNEL AND NOT FOR RELAY OF EDUCATIONAL PROGRAMMES ON IT. IN P URSUANCE OF OBJECTS FOR PROVIDING EDUCATION ON PRODUCTION OF TV CONTENTS, FEATURE FILMS, JOURNALISM ETC. TO THE STUDENTS, ADV ANCE OF RS.3 29 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CRORES WERE GIVEN TO EARLIER SHAREHOLDERS. SINCE TH E OMEGA TV CHANNEL HAD NO LIQUID SOURCES, THEREFORE, IN ORDER TO SECURE THE AMOUNT OF ADVANCE SO GIVEN, SHARES WERE TRANSFERRED IN NAME OF NIMS. OMEGA TV IS SEPARATELY ASSESSED TO TAX AND NO PERSONAL BENEFIT FROM RUNNING OF TV CHANNEL WAS GAINED BY TH E TRUSTEES AS ALLEGED BY LD. PR. CIT. HAD ANY BENEFIT WAS GAINED BY ANY OF THE TRUSTEES, THEN ADDITIONS WOULD HAVE BEEN MADE IN TH E HANDS OF THE TRUSTEES IN THEIR ASSESSMENT ORDERS. EVEN THE ALLEG ATION OF THE LD. PCIT THAT RUNNING OF TV CHANNEL WAS FOR PUBLICITY O F DR. B.S. TOMAR IS WITHOUT ANY BASIS AND PROOF. BY RUNNING OF TV CH ANNEL, THE ASSESSEE IS PROVIDING DEGREES TO THE STUDENT AND TR AINING, BECAUSE IT IS RUNNING VARIOUS COURSES RELATING TO RUNNING OF T V CHANNELS, PRODUCTION OF TV CONTENTS, JOURNALISM, MASS COMMUNI CATION, ADVERTISEMENT ETC. AND ONCE IT IS PART OF CURRICULU M, WHICH IS RELATING TO THE OBJECTS, THEN RUNNING OF TV CHANNEL CANNOT BE A BASIS FOR CANCELLATION OF REGISTRATION. HE POINTED OUT THAT OMEGA TV IS SEPARATELY ASSESSED TO TAX AND THE ASSESSEE HAS ACQUIRED SHARES TO GET THE RIGHTS ONLY TO RUN THE CHANNEL FOR THE E DUCATIONAL PURPOSES AND NOT FOR ANY OTHER COMMERCIAL PURPOSE. 30 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 14. LD. COUNSEL HAS ALSO REFERRED AND RELIED U PON THE CBDT CIRCULAR NO. 21/2016 DATED 27/05/2016 WHEREIN CLARI FICATION HAS BEEN GIVEN FOR CANCELLATION OF REGISTRATION U/S 12A A OF THE ACT THAT IT IS NOT MANDATORY THAT THE REGISTRATION ALREADY G RANTED U/S 12AA ON THE GROUND THAT THE CUT-OFF SPECIFIED IN THE PROVISO TO SECTION 2(15) OF THE ACT HAS EXCEEDED IN A PARTICULAR YEAR AND WITHOUT THERE BEING ANY CHANGE IN THE NATURE OF ACTIVITIES OF THE INSTITUTION, THEN CANCELLATION OF REGISTRATION WITHOUT JUSTIFIABLE RE ASONS CAUSE ADDITIONAL HARDSHIP TO THE ASSESSEE. THEREFORE, KEE PING THE SPIRIT OF THE SAID CIRCULAR, HE PRAYED THAT CANCELLATION OF T HE REGISTRATION OF CHARITABLE INSTITUTION GRANTED U/S 12AA OF THE ACT IS NOT WARRANTED JUST BECAUSE OF PROVISO TO SECTION 2(15) OF THE ACT COMES INTO PLAY. 15. LASTLY, HE SUBMITTED THAT THE REGISTRATION G RANTED EARLIER COULD NOT BE CANCELLED WITH RETROSPECTIVE EFFECT ES PECIALLY IN THE CASE OF ASSESSEE, WHEN NO SHOW CAUSE NOTICE OR OPPO RTUNITY WAS GIVEN BY THE LD. PR. CIT THAT HE IS WITHDRAWING THE REGISTRATION/APPROVAL W.E.F. 01/4/2006. IN SUPPORT OF HIS CONTENTION THAT REGISTRATION CANNOT BE WITHDRAWN FR OM RETROSPECTIVE DATE, HE STRONGLY RELIED UPON THE JUDGMENT OF HONB LE ALLAHABAD 31 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT HIGH COURT IN THE CASE OF ACIT VS. AGRA DEVELOPMENT AUTHORITY (2018) 302 CTR (ALL) 308; CIT VS. MANAV VIKAS AVAM SEWA SANSTHAN (2011) 336 ITR 250 (ALL); AND ITAT MUMBAI BENCH DECISION IN THE CASE OF THE SOUTH INDIAN EDUCATION SOCIETY VS CIT IN ITA NO. 3288/MUM/2013. ARGUMENTS PLACED BY THE LD. CIT D.R.: 16. BEFORE US, THE LD. CIT-DR HAS FILED VOLUMIN OUS PAPER BOOK IN 3 VOLUMES CONTAINING ALL THE MATERIALS AND DOCUM ENTS FOUND DURING THE COURSE OF SEARCH. SOME OF THE PAGES WERE ALSO REFERRED TO BY HIM AT THE TIME OF HEARING. HE SUBMITTED THAT HE RE IN THIS CASE, SPECIFIC EVIDENCES AND MATERIALS WERE FOUND IN THE COURSE OF SEARCH AND ALSO IN THE POST SEARCH ENQUIRY WHICH REVEALED THAT THE ASSESSEE WAS CHARGING HUGE CAPITATION FEE FROM VARI OUS STUDENTS FOR THE COURSES OFFERED IN THE MEDICAL COLLEGES. SUCH C APITATION FEES WERE OVER AND ABOVE THE REGULAR FEES AND HOSTEL FEE S. THESE CAPITATION FEES HAVE NEITHER BEEN RECORDED IN THE B OOKS OF ACCOUNT NOR HAVE BEEN SHOWN OR REFLECTED IN THE AUDITED STA TEMENT OF INCOME AND EXPENDITURE. SUCH A CAPITATION FEE HAS B EEN QUANTIFIED BY THE ITSC AT MORE THAN RS. 21.00 CRORES. APART FR OM THAT, HE 32 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT SUBMITTED THAT THE ASSESSEE WAS RUNNING A NEWS TV C HANNEL ON COMMERCIAL LINES, WHICH WAS BEYOND THE OBJECTS OF T HE TRUST. THERE WERE OTHER INCRIMINATING MATERIALS FOUND DURING SEA RCH AND INVESTIGATION POINTING THAT THE TRUSTEES WERE MISUS ING THE FUNDS FOR THEIR PERSONAL BENEFITS. THIS ASPECT TOO HAS BEEN D EALT IN DETAIL IN THE ORDER OF THE SETTLEMENT COMMISSION. IT IS IN TH E LIGHT OF THESE BACKGROUNDS AND INCRIMINATING DOCUMENTS AND EVIDENC ES FOUND, THE LD. PR. CIT (CENTRAL), RAJASTHAN, JAIPUR HAS IN ITIATED THE CANCELLATION OF THE APPROVAL GRANTED U/S 10(23C), A S WELL AS REGISTRATION U/S 12AA OF THE ACT. IN SUPPORT OF HIS CONTENTIONS, HE STRONGLY REFERRED AND RELIED UPON TO THE VARIOUS OB SERVATIONS MADE IN THE IMPUGNED ORDER, WHICH WE HAVE ALREADY DISCUS SED ABOVE. HE FURTHER SUBMITTED THAT THE CANCELLATION OF REGISTRA TION HAS BEEN PROVIDED U/S 12AA (3) AND ALSO IN THE 14 TH PROVISO TO SECTION 10(23C) (VI) & (VIA) OF THE ACT, WHEREIN IT HAS BEE N CLEARLY PROVIDED THAT IF THE ASSESSEES ACTIVITIES ARE NOT GENUINE O R ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, THEN THE AUTHORITIES HAVE THE POWER TO CANCEL SUCH REGIS TRATION. THERE ARE TWIN CONDITIONS WHEREIN THE LD. PR. CIT CAN CAN CEL THE 33 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT REGISTRATION AND BOTH THE CONDITIONS ARE INDEPENDEN T AND MUTUALLY EXCLUSIVE TO EACH OTHER. IN OTHER WORDS, IF EITHER OF THE CONDITIONS IS VIOLATED, I.E., THE ACTIVITIES ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS; OR THE ACTIVITIES ARE NOT GENUINE, THE N THE STATUTE PROVIDES POWER TO RESCIND OR CANCEL THE APPROVAL/RE GISTRATION GRANTED EARLIER TO THE TRUST. HERE IN THIS CASE, BO TH THE CHARGES HAVE BEEN FRAMED AGAINST THE ASSESSEE TRUST AND ESP ECIALLY ON NON- GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST . HE THEN TRIED TO IMPRESS UPON AS TO WHAT KIND OF ACTIVITIES OF ANY T RUST OR INSTITUTION CAN BE RECKONED TO BE NON-GENUINE. THES E ARE, ACCORDING TO HIM ARE AS UNDER: - ACTIVITIES ARE NOT LEGAL AS IT HAS CAUSED SOME INFR INGEMENT OF LAW. ACCOUNTS ARE NOT PROPERLY MAINTAINED OR THE RECEIPT S ARE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE TRUST/SOCIETY IS NOT REGISTERED WITH COMPETENT AUTHORITY. IT HAS CAUSED SOME MISREPRESENTATION OF FACTS BEFOR E ANY AUTHORITY. IT HAS ENCROACHED PUBLIC PROPERTY. IT HAS GIVEN UNDUE BENEFITS TO THE TRUSTEES OR OFFI CE BEARERS. IT IS SELLING EDUCATION. IT IS DOING COMMERCIAL ACTIVITIES 34 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT HEREIN IN THIS CASE, HE SUBMITTED THAT SUCH KIND OF NON-GENUINE ACTIVITIES ARE CLEARLY BORNE OUT FROM THE MATERIAL ON RECORD AND THEREFORE, SUCH NON-GENUINE ACTIVITIES ENTAILS CANC ELLATION OF REGISTRATION AND THAT TO BE FROM RETROSPECTIVE DATE . HERE THE REGISTRATION/APPROVAL HAS NOT BEEN CANCELLED SINCE INCEPTION, I.E., FROM THE DATE OF REGISTRATION/APPROVAL, ALBEIT FROM THE YEAR OR PERIOD FOR WHICH INCRIMINATING DOCUMENTS OR EVIDENCES HAVE BEEN FOUND. THE SEIZED MATERIAL AND POST SEARCH ENQUIRIES HAVE REVEALED THAT CAPITATION FEE HAS BEEN RECEIVED BY THE ASSESSEE IN A SYSTEMATIC MANNER. SINCE THE INCRIMINATING MATERIALS FOUND REL ATES BACK ONLY FROM THE ASSESSMENT YEAR 2006-07 AND ONWARDS, THERE FORE, THE CANCELLATION OF REGISTRATION HAS BEEN MADE W.E.F. T HE ASSESSMENT YEAR 2006-07 ONWARDS. 17. IN SO FAR AS THE CONTENTION OF THE LD. COUNS EL FOR THE ASSESSEE THAT CAPITATION FEES ARE PURELY A VOLUNTARY DONATIO N, LD. CIT DR SUBMITTED THAT THE CONCEPT OF VOLUNTARY DONATION HA S A DIFFERENT CONNOTATION AND MEANING AND IN SUPPORT THEREOF, HE HAS REFERRED TO VARIOUS DICTIONARY MEANING OF THE TERM VOLUNTARY, WHICH ARE AS UNDER: 35 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT AS PER COLLINS DICTIONARY A VOLUNTARY DONATION MEA NS: PERFORMED, UNDERTAKEN, OR BROUGHT ABOUT BY FREE CH OICE, WILLINGLY, OR WITHOUT BEING ASKED AS PER MERRIAM WEBSTER DICTIONARY: PROCEEDING FROM THE WILL OR FROM ONE'S OWN CHOICE OR CONSENT HAVING POWER OF FREE CHOICE ACTING OR DONE OF ONE'S OWN FREE WILL WITHOUT VALUA BLE CONSIDERATION OR LEGAL OBLIGATION AS PER CAMBRIDGE ENGLISH DICTIONARY: DONE, MADE, OR GIVEN WILLINGLY, WITHOUT BEING FORCED OR PAID TO DO IT: THE WORD DONATION HAS TO BE SEEN FROM THE CONTEXT THAT IT HAS BEEN GIVEN BY FREE WILL. ON THE OTHER HAND, THE WORD FE E INDICATES COMPULSION, I.E., THERE IS SOME KIND OF FORCE TO CH ARGE FEES. THEREFORE, FEE AND VOLUNTARY DONATION CANNOT BE EQU ATED AND TREATED AT PAR. THE WORD FEE DOES NOT BEAR THE VO LUNTARY CHARACTER ALBEIT IT IS TO BE UNDERSTOOD AS FIXED CHARGE OR SUM PAID OR A CHARGE FOR A SERVICE, I.E., IT IS SOME SORT OF CONSIDERATI ON PAID COMPULSORILY FOR UTILIZATION OF SERVICES. THE ELEMENT OF VOLUNTA RINESS IS COMPLETELY MISSING IN THE TERM FEE. IN THE SEIZED DOCUMENTS FO UND, HE POINTED OUT THAT THERE ARE NOTING BY THE TRUSTEES IN THEIR OWN HANDWRITING FOR CHARGING OF CAPITATION FEE AND THAT TO BE INSTA LLMENTS HAVE BEEN 36 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT GRANTED. VOLUNTARY DONATION CANNOT BE CHARGED OR GI VEN IN SCHEDULE AND FIXED INSTALLMENTS. NOW WHETHER CAPITATION FEE CAN BE LEGALLY COLLECTED BY EDUCATIONAL INSTITUTION OR NOT, HE REF ERRED TO THE CONSTITUTIONAL BENCH JUDGMENT OF THE HON'BLE SUPREM E COURT IN THE CASE OF TMA PAI FOUNDATION VS. STATE OF KARNATAKA (2002) 8 SCC 481 . HE FURTHER SUBMITTED THAT A DISTINCTION HAS TO BE DRAWN BETWEEN THE DONATION TOWARDS CORPUS AND THE DONATIO N FOR EARMARKED PURPOSE. REFERRING TO THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF MUNICIPAL CORPORATION OF DELHI VS. CHILDREN BOOK TRUST (1992) 63 TAXMAN 385 , HE POINTED OUT THAT THE HONBLE COURT HAS HELD THAT TERM VOLUNTARY CONTRIB UTION TOWARDS THE CORPUS FUND MUST SATISFY TWIN TESTS VIZ., (I) I T SHOULD BE VOLUNTARY WITHOUT ANY QUID PRO QUO; AND (II) WITH A SPECIFIC DIRECTION TOWARDS CORPUS FUND OF THE TRUST. BENEFICIARYS CON TRIBUTION COULD NOT BE CALLED AS VOLUNTARY CONTRIBUTIONS, AS THERE WOULD BE SOME CONSIDERATION FOR THE CONTRIBUTION IN THE FORM OF C ERTAIN BENEFITS BEING DIRECT OR INDIRECT. HE SUBMITTED THAT SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE KARNATAKA HIGH COURT ON SI MILAR SET OF 37 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT FACTS IN THE CASE OF DIT VS. RAMAKRISHNA SEWA TRUST, 205 TAXMAN 26 WHEREIN FOLLOWING OBSERVATIONS HAVE BEEN MADE: THE CAPITAL OF AN ASSESSEE; A CAPITAL OF A SOCIETY , A CAPITAL OF A TRUST; A CAPITAL OF AN INSTITUTION. THEREFORE, IF V OLUNTARY CONTRIBUTION IS MADE WITH A SPECIFIC DIRECTION THAT IT IS FORMING PART OF CORPUS, THEN IT SHALL BE TREATED AS CAPITAL OF T HE TRUST FOR CARRYING ON ITS CHARITABLE OR RELIGIOUS ACTIVITIES. THUS, CORPUS DONATION IS A PERMANENT CAPITAL WHICH CANNOT BE USED EITHER AS AN APPLICATION OR FOR GIVING ANY LOAN OR ADVANCE TO ANY OTHER TRUST OR PARTY. HERE IN THIS CASE, SO CALLED VOLUNTARY DONATION WAS NOT FOR THE CORPUS BUT EXTRA MONEY FORCED FROM THE PARENTS OF THE STUDENTS. SUCH FORCEFUL MONEY CANNOT BE RECKONE D AS VOLUNTARY DONATION. 18. COMING TO THE ISSUE OF INVESTMENT IN NEWS CHANNEL, I.E., IN THE OMEGA TV MEDIA PVT. LTD., HE SUBMITTED THAT F IRST OF ALL, THERE IS NO SUCH OBJECT IN THE TRUST DEED SO AS TO AUTHOR IZE THE TRUST FOR RUNNING A TV CHANNEL ON COMMERCIAL LINES. ONCE SUCH A CHANNEL IS BEING RUN WITHOUT THERE BEING ANY OBJECT, THEN IT G OES TO SHOW THAT THE ASSESSEES ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. SECONDLY, HE POINTED OUT THAT A T RUST OF INSTITUTION 38 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CANNOT MAKE INVESTMENT IN SHARES OF A PRIVATE LIMIT ED COMPANY WHICH HAS BEEN SPECIFICALLY DEBARRED IN SUB-SECTION (5) OF SECTION 11 READ WITH SECTION 13(1)(D); AND SECTION 10(23C) CLAUSE (B) OF 3 RD PROVISO TO SECTION 10(23C) (VI)&(VIA) OF THE ACT. THUS, MAK ING SUCH INVESTMENT IN THE SHARES OF PRIVATE LIMITED COMPANY BY THE ASSESSEE TRUST, ITSELF ACTS AS A DETERRENT AND WHEN CE THERE IS A VIOLATION OF THE STATUTORY PROVISION, THEN IT CAN B E HELD THAT ITS ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING C ARRIED OUT AS PER THE STATUTORY PROVISION. IN THE SEARCH PROCEEDINGS, AN MOU WAS FOUND WHEREIN THE TRUSTEES NAMELY, DR. B.S. TOMAR A ND DR. JUHI TOMAR WERE PARTIES TO SUCH MOU AND THE ENTIRE FUNDS FOR ACQUIRING OF SHARES HAVE BEEN ROUTED THROUGH TRUST. HE ALSO D REW OUR ATTENTION TO THE SHARE HOLD PATTERN WHEREIN THE NIM S UNIVERSITY, RAJASTHAN WAS HELD 15,99,999 SHARES AT THE FACE VAL UE OF RS. 10 WITH PERCENTAGE OF HOLDING OF 99.9999%; AND DR. B.S . TOMAR WAS HAVING ONE SHARE OF FACE VALUE OF RS. 10 AND THE PE RCENTAGE OF HIS HOLDING WAS 0.0001%. ONCE THE TRUST IS THE OWNER OF A PRIVATE LIMITED COMPANY PRACTICALLY HAVING ALL THE SHARES, THEN IT IS A CLEAR-CUT VIOLATION OF SECTION 11(5) AND 10(23C) OF THE ACT. 39 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 19. REGARDING ALLEGATION OF CASH PAYMENTS TO TH E DOCTORS, HE POINTED OUT FROM THE SEIZED DOCUMENTS, WHICH HAS BE EN PLACED IN THE PAPER BOOK FILED BEFORE US, THAT THERE IS CLEAR CUT NOTING IN THE HANDWRITING OF THE TRUSTEES WHEREIN CASH PAYMENTS H AD BEEN MADE TO THE DOCTORS WHICH SHOWS THAT THE ASSESSEE HAS IN CURRED UNEXPLAINED EXPENDITURE OUTSIDE THE BOOKS, BECAUSE IN THE REGULAR BOOKS OF ACCOUNT ONLY CHEQUES PAYMENT HAVE BEEN REF LECTED. IF THE PAYMENTS HAVE BEEN MADE IN CASH THEN THERE MUST BE CASH EARNINGS WHICH ARE NOTHING BUT COMING FROM CAPITATI ON FEES RECEIVED IN CASH. FOR THIS REASON, ALSO IT CAN BE H ELD THAT THE ASSESSEES ACTIVITIES WERE NOT GENUINE. 20. LASTLY, COMING TO THE ISSUE WHETHER REGISTR ATION/APPROVAL CAN BE CANCELLED FROM A RETROSPECTIVE DATE, LD. DR SUBMITTED THAT HERE IN THIS CASE, REGISTRATION WAS GRANTED IN THE YEAR 2000, WHEREAS THE SAME HAS BEEN CANCELLED ONLY W.E.F. 200 6-07 WHICH ARE BASED ON DOCUMENTARY EVIDENCES FOUND. THUS, CANCELL ATION IS NOT FROM THE DATE OF INCEPTION BUT FROM THE DATE WHEN T HE DOCUMENTARY EVIDENCES/MATERIAL HAS BEEN FOUND THAT THE ASSESSEE S ACTIVITIES ARE NOT GENUINE AND IT HAS BEEN RECEIVING HUGE CAPITATI ON FEES. HE ALSO 40 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT REFERRED TO THE RELEVANT PROVISIONS OF SECTION 12AA (3) AND ALSO THE 14 TH PROVISO TO SECTION 10(23C) OF THE ACT THAT THE ACT ITSELF PROVIDES THAT THE CANCELLATION CAN BE DONE FROM THE TIME WHE N NON- GENUINENESS OF THE ACTIVITIES IS FOUND. IN SUPPORT OF HIS CONTENTION THAT THE REGISTRATION/APPROVAL CAN BE CANCELLED OR WITHDRAWN FROM THE RETROSPECTIVE DATE, HE RELIED UPON THE FOLLOWIN G THREE JUDGMENTS: (I) U.P. DISTILLERS ASSOCIATION (ITA 830/2017) (DEL HI HIGH COURT); (II) SRI VIDYARANYA SEWA SANGHA VS CIT, HUBLI (2016 ) 71 TAXMANN.COM 152 (BANGLORE TRIB); (III) NOVODAYA EDUCATION TRUST VS UNION OF INDIA (2 018) 90 TAXMANN.COM 148 (KAR.). DECISION: 21. WE HAVE CAREFULLY CONSIDERED THE ENTIRE GA MUT OF FACTS AND MATERIAL PLACED BEFORE US, SUBMISSIONS MADE BY BOTH THE PARTIES AND THE FINDINGS GIVEN IN THE IMPUGNED ORDER. WE HA VE ALREADY DISCUSSED THE FACTS AND BACKGROUND OF THE CASE AND THE CONTENTIONS RAISED BY THE PARTIES IN DETAIL. THE ASSESSEE IS AN INDIAN MEDICAL TRUST, WHICH WAS FORMED ON 23/2/2000 AND WAS REGIST ERED AS A CHARITABLE TRUST UNDER THE RAJASTHAN PUBLIC TRUST ACT. IT WAS NOT ONLY GRANTED APPROVAL U/S 10(23C) (VI) & (VIA) OF T HE ACT FROM TIME 41 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT TO TIME, BUT WAS ALSO GRANTED REGISTRATION U/S 12AA OF THE ACT W.E.F. 24/3/2000. THE REGISTRATION AND APPROVAL UNDER THE RELEVANT PROVISIONS OF THE ACT WAS GRANTED LOOKING TO THE FA CT THAT THE TRUST WAS CARRYING OUT EDUCATIONAL ACTIVITIES BY SETTING UP SEVERAL COLLEGES, SCHOOLS AND INSTITUTIONS FOR IMPARTING ED UCATION IN VARIOUS DISCIPLINES AND COURSES. A MEDICAL COLLEGE AND HOSP ITAL WERE ALSO OPENED IN THE NAME OF NIMS MEDICAL COLLEGE IN THE Y EAR 2004 AND LATER ON THE TRUST HAS BEEN EXTENDING ITS COURSES I N VARIOUS FIELDS OF MEDICAL SCIENCE AND HEALTH SERVICES. THE ASSESSEE H AS SET UP ITS OWN PRIVATE UNIVERSITY AS NIMS UNIVERSITY, RAJASTHA N, JAIPUR WHICH LATER ON WAS ENACTED BY THE LEGISLATURE OF RAJASTHA N THROUGH NIMS UNIVERSITY RAJASTHAN, JAIPUR ACT 2008. AFTER THE E STABLISHMENT OF NIMS UNIVERSITY, THE ASSESSEE TRUST THROUGH NIMS UN IVERSITY HAS EXTENDED ITS EDUCATIONAL ACTIVITIES ON A VERY LARGE SCALE. A GLOBAL SEARCH AND SEIZURE ACTION WERE CARRIED OUT BY THE I NCOME TAX DEPARTMENT AND INVESTIGATION WING OF THE DEPARTMENT ON 30/10/2014 AT VARIOUS PREMISES OF THE ASSESSEE TRUS T AS WELL AS THE RESIDENTIAL PREMISES OF THE TRUSTEES. THOUGH, V ARIOUS INCRIMINATING MATERIALS/DOCUMENTS AND UNEXPLAINED I NVESTMENTS 42 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT AND CASH WAS FOUND, HOWEVER, IN THE PRESENT CASE, W E ARE CONCERNED MOSTLY WITH THE DOCUMENTS AND SEIZED MATE RIAL WHICH INDICATES THAT THE ASSESSEE TRUST HAS BEEN RECEIVIN G CAPITATION FEE IN A VERY SYSTEMATIC AND ORGANIZED MANNER FROM VARI OUS STUDENTS RIGHT FROM THE A.Y. 2006-07 TILL THE DATE OF SEARCH . THE QUANTIFICATION OF THE CAPITATION FEE WHICH COULD BE UNEARTHED FROM THE SEARCH AND POST SEARCH ENQUIRY WERE QUANTIFIED TO 650 STUDENTS AS TABULATED BY THE DEPARTMENT WHICH IS ALSO FORMIN G PART OF THE IMPUGNED ORDER MARKED AS ANNEXURE-A . IN THE SAID ANNEXURE, DETAIL ANALYSIS OF UNACCOUNTED CAPITATION FEE RECEI VED BY THE ASSESSEE TRUST HAS BEEN GIVEN WHICH HIGHLIGHTS THE DETAILS OF SEIZED ANNEXURE NUMBER, PAGE NUMBER, FINANCIAL YEAR TO WHI CH CAPITATION FEES PERTAIN, DATE OF FEES RECEIVED, NAME OF THE ST UDENT, NAME OF THE FATHER/RELATIVE OF THE STUDENT, PROFESSIONAL COURSE S OPTED BY THE STUDENT, ADDRESS, MOBILE NUMBER, COURSES, AMOUNT RE CEIVED IN LACS, AND THE NAME OF THE TRUSTEE IN WHOSE HANDWRITING IT HAS BEEN WRITTEN AND OTHER DETAILS. THESE ENTIRE CAPITATION FEES HAVE BEEN RECEIVED IN CASH AND IT AN UNDISPUTED FACT THAT FRO M THE ASSESSMENT YEARS 2009-10 ONWARDS, SUCH CAPITATION FEES HAVE NE ITHER BEEN 43 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT RECORDED IN THE BOOKS OF ACCOUNT NOR HAVE THEY BEEN DISCLOSED IN THE AUDITED FINANCIAL STATEMENTS OR INCOME AND EXPE NDITURE ACCOUNT. THESE ENTRIES OF CAPITATION FEES HAVE BEEN FOUND FROM THE DIARY KEPT BY THE TRUSTEES IN THEIR OWN HANDWRITING . THE DEPARTMENT HAS QUANTIFIED THE AMOUNT OF CAPITATION FEE IN VARIOUS YEARS AT RS. 79.9 CRORES STARTING FROM THE FINANCIA L YEAR 2006-07 TO 2014-15. 22. THIS ISSUE OF UNACCOUNTED CAPITATION FEE HAD BEEN THE SUBJECT MATTER OF SETTLEMENT BEFORE THE ITSC WHEREI N THE SETTLEMENT COMMISSION HAS QUANTIFIED THE UNDISCLOSED CAPITATIO N FEE CHARGEABLE TO TAX AT RS. 21,63,46,000/- FROM A.Y. 2 009-10 TO 2015- 16. FOR THE A.Y. 2006-07 TO 2008-09, THE CAPITATION FEE HAS NOT BEEN QUANTIFIED BY THE ITSC FOR THE REASON THAT, FO R THESE THREE YEARS, THE CAPITATION FEE HAS BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT AND ALSO DISCLOSED AS A PART OF INCOME AND EXPENDITURE ACCOUNT WHEREIN THE DETAILS OF RECEIPTS AS WELL AS UTILIZATION HAS BEEN GIVEN. APART FROM THAT, THE INCOME AND EXPENDI TURE ACCOUNT WERE SUBJECTED TO SCRUTINY ASSESSMENTS U/S 143(3) O F THE ACT AND IN THE ASSESSMENT MADE, NO ADVERSE INFERENCE HAS BEEN DRAWN. EVEN 44 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT BEFORE US, THE DEPARTMENT COULD NOT ESTABLISH THAT THE CAPITATION FEE FROM THE PERIOD A.Y. 2006-07 TO 2008-09 FOUND FROM THE SEIZED DOCUMENT WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT; AND PERHAPS THAT IS THE REASON WHY THE ITSC ALSO HAS AL SO QUANTIFIED THE UNDISCLOSED CAPITATION FEE ONLY FROM THE A.Y. 2 009-10 ONWARDS. REGARDING ISSUE OF CAPITATION FEE, THE OBSERVATIONS OF THE SETTLEMENT COMMISSION IN ITS ORDER ONLY FOR THE SAKE OF REFERE NCE IS REPRODUCED HEREIN BELOW: - C) WE HAVE CONSIDERED THE ISSUES RAISED AND THE E VIDENCE PRESENTED BEFORE US BY THE DEPARTMENT AND THE CLARI FICATIONS GIVEN BY THE APPLICANT. ON THE BASIS OF THE EVIDENC E PRODUCED IT IS NOT POSSIBLE TO COME TO A DEFINITE CONCLUSION AB OUT THE VOLUNTARY NATURE OF THE DONATIONS OR OTHERWISE. THE MOST DAMAGING EVIDENCE WOULD APPEAR TO BE THE USE OF WOR D 'CAPITATION' ON A STATEMENT PREPARED BY THE APPLICA NT ITSELF WHICH WAS FOUND DURING THE SEARCH. HOWEVER, THE APP LICANT ARGUES THAT A MERE STATEMENT WHICH WAS PREPARED BY AN EMPLOYEE AND NOT BY A TRUSTEE AND IN WHICH WORD 'CA PITATION' IS USED ON A FEW ENTRIES CANNOT BE MADE THE BASIS TO T ERM THE ENTIRE DONATIONS RECEIVED BY IT DURING THE YEARS UN DER CONSIDERATION TO BE NOT VOLUNTARY IN NATURE. 45 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT D) WHETHER THE DONATIONS WERE VOLUNTARY OR OTHERWI SE IS OF RELEVANCE FOR THE PROCEEDINGS BEFORE US ONLY IN THE CONTEXT OF THE STAND TAKEN BY THE APPLICANT THAT THESE DONATIONS B EING VOLUNTARY CONTRIBUTIONS SHOULD BE TREATED AS 'CORPU S DONATIONS' WHICH ARE TO BE TREATED AS EXEMPT. SEC 11(1)(D) OF THE INCOME- TAX ACT PROVIDES THAT INCOME IN THE FORM OF VOLUNTA RY CONTRIBUTIONS ARE NOT BE INCLUDED IN THE TOTAL INCO ME OF A TRUST. HOWEVER, SEC. 11(1)(D) LAYS DOWN ANOTHER CONDITION: SUCH VOLUNTARY CONTRIBUTIONS ARE NOT TO BE TREATED AS EX EMPT UNLESS THE DONOR GIVES A SPECIFIC DIRECTION THAT THEY SHAL L FORM A PART OF THE CORPUS OF THE TRUST OR INSTITUTION. IT IS SEEN THAT IN NONE OF THE 638 DONATIONS RECEIVED BY THE APPLICANT THERE IS AN Y DECLARATION BY THE DONOR THAT THE AMOUNT IS TO BE F ORM A PART OF THE CORPUS OF THE APPLICANT TRUST. IN VIEW OF THIS NONE OF THIS DONATIONS CAN BE TREATED AS 'CORPUS DONATIONS' EXEM PT UNDER SEC 11(1)(D) AND ALL THESE ARE TO BE TREATED AS ORD INARY RECEIPTS WHICH SHALL FORM A PART OF APPLICANT'S INCOME AND T AXED SUBJECT TO THE CONDITIONS RELATING TO APPLICATION OF INCOME FOR THE OBJECTIVE OF THE TRUST. IN VIEW OF THIS WE ARE OF T HE VIEW THAT WHETHER THE DONATIONS WERE 'VOLUNTARY' OR 'INVOLUNT ARY BECOMES OF ACADEMIC NATURE AS FAR AS THE DETERMINATION OF T HE TOTAL INCOME OF THE APPLICANT. WHETHER THE AMOUNT IN QUES TION MAY BE TREATED AS 'CAPITATION CHARGES TOO IS A QUESTION T HAT WOULD BE RELEVANT TO THE PROHIBITION OF CAPITATION FEE ACT A ND NOT THE PRESENT PROCEEDINGS. THIS QUESTION MAY HOWEVER ASSU ME RELEVANCE IN THE CONTEXT OF WITHDRAWAL OF REGISTRAT ION GRANTED TO 46 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT THE APPLICANT UNDER SEC 12A AND WITHDRAWAL OF APPRO VAL UNDER SEC 10(23C)(VI) WHICH IS ALSO ONE OF THE ISSUES RAI SED BEFORE US. TO THAT EXTENT IT WOULD BE DEALT WITH WHEN WE DEAL WITH THAT ISSUE LITTLE LATER IN THIS ORDER. THE AFORESAID OBSERVATION OF THE SETTLEMENT COMMISS ION GOES TO SHOW THAT SOME OF THE ENTRIES OF CASH RECEIVED HAS BEEN CAPTIONED AS CAPITATION FEES, HOWEVER, THE ISSUE WHETHER CA PITATION FEES IS VOLUNTARY OR NOT HAS BEEN LEFT OPEN AS THEY HAVE HE LD THAT THIS ISSUE WOULD ASSUME RELEVANCE ONLY AT THE TIME OF CANCELLA TION/WITHDRAWAL OF THE REGISTRATION U/S 12AA/10(23C) OF THE ACT 23. FROM A CAREFUL ANALYSIS OF THE FINDINGS GIV EN IN THE IMPUGNED ORDER AS WELL AS THE SEIZED DOCUMENTS SHOWN BEFORE US, IT IS QUITE GLARING THAT THE ASSESSEE HAS BEEN RECEIVING HUGE M ONEY IN CASH OVER AND ABOVE THE REGULAR COURSE FEES AND HOSTEL F EES FROM THE PARENTS/GUARDIANS OF THE STUDENTS IN VARIOUS YEARS FOR THE VARIOUS COURSES RUN BY THE TRUST. THE LD. PR.CIT HAD GIVEN VARIOUS INSTANCES WHERE THE CAPITATION FEE HAS BEEN COLLECTED FROM VA RIOUS STUDENTS WHO WERE NOT FROM NRI OR MANAGEMENT QUOTA BUT WERE FROM GENERAL QUOTA. FOR VARIOUS MEDICAL COURSES, CASH HAS BEEN C HARGED FROM THE STUDENTS/PARENTS WHICH HAVE BEEN CLEARLY SPECIF IED AND NOT 47 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ONLY THAT, FIXED SCHEDULE OF INSTALLMENTS HAVE BEEN GRANTED FOR PAYMENT OF SUCH CASH. THERE IS VERY SYSTEMATIC AND ORGANIZED MANNER IN WHICH SUCH CASH FEES ARE BEING CHARGED FR OM THE STUDENTS FOR VARIOUS COURSES AND IN FACT TRUSTEES H AVE DEVISED A PACKAGE SYSTEM WHEREBY THE STUDENTS WERE GIVEN FI XED PACKAGES OF CAPITATION FEE, HOSTEL FEE AND ADMISSION FEE WHICH THIS CLEARLY GOES TO PROVE THAT THE STUDENTS WERE REQUIRED TO COMPULS ORILY PAY THE CAPITATION FEE TO RECEIVE THEIR DEGREES. ONLY WHEN SUCH CASH WAS RECEIVED, THE STUDENT WAS GIVEN NO DUES CERTIFICAT E. SUCH HUGE CASH RECEIVED OVER AND ABOVE THE REGULAR COURSE FEE S AND HOSTEL FEES, WHICH HAVE BEEN TERMED AS CAPITATION FEE BY THE DEPARTMENT AND VOLUNTARY DONATION BY THE ASSESSEE HAS NOT BE EN RECORDED IN THE BOOKS OF ACCOUNT AT ALL AND WHICH FACT HAS ALSO BEEN ADMITTED BY THE ASSESSEE TRUST RIGHT FROM THE A.Y. 2009-10. THE REASON GIVEN BY THE ASSESSEE FOR NOT RECORDING THESE CASH FEES/V OLUNTARY DONATION /CAPITATION FEES BEFORE THE AUTHORITIES BE LOW AND ALSO BEFORE US IS THAT, THE HEAD OF THE ACCOUNTS DEPARTM ENT HAS LEFT THE JOB AFTER ASSESSMENT YEAR 2008-09 AND THEREFORE, TH ESE AMOUNTS COULD NOT BE RECORDED IN THE REGULAR BOOKS OF ACCOU NT FOR ALL THE 48 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT SUBSEQUENT YEARS. SUCH A REASONING AND THE ARGUMENT OSTENSIBLY CANNOT APPEAL TO THE CONSCIENCE OF ANY COURT, BECAU SE IF THE ASSESSEE HAS RECORDED ALL OTHER RECEIPTS WHICH ARE RUNNING INTO HUNDRED OF CRORES OF RUPEES IN THE REGULAR BOOKS OF ACCOUNT THEN TO SAY THAT THESE CASH FEES/VOLUNTARY DONATIONS COULD NOT BEEN RECORDED DUE TO THE LACK OF HEAD OF ACCOUNTS IS VER Y VAGUE AND LAME EXCUSE. ONE OF THE REASON FOR NOT RECORDING SUCH HU GE CASH FEES IN THE BOOKS OF ACCOUNT, PERHAPS COULD BE DUE TO THE F ACT THAT BY THIS TIME, VARIOUS COURTS INCLUDING THE HON'BLE SUPREME COURT HAVE COME OUT VERY HEAVILY AGAINST THE PRIVATE EDUCATION AL INSTITUTIONS ESPECIALLY THE PRIVATE MEDICAL COLLEGES FOR RECEIVI NG SUCH HUGE CAPITATION FEES FROM THE STUDENTS AND SUCH JUDICIAL PRONOUNCEMENT LATER GOT RATIFIED BY SUBSEQUENT CONSTITUTIONAL BEN CH JUDGMENTS OF THE HONBLE APEX COURT IN SEVERAL CASES HOLDING IT TO BE ILLEGAL, WHICH WE SHALL BE DISCUSSING IN BRIEF IN SUCCEEDING PARAGRAPHS. IN SO FAR AS ASSESSEES CONTENTION THAT ONCE THE ASSES SMENTS HAVE BEEN COMPLETED U/S 143(3) FROM A.Y. 2009-10 TO A.Y. 2011-12, THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN, IS NOT TENABLE AT ALL, BECAUSE ADMITTEDLY THESE CASH DONATION/ CAPITA TION FEES HAVE 49 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT NEITHER BEEN RECORDED IN THE REGULAR BOOKS OF ACCOU NT NOR HAS BEEN DISCLOSED IN THE AUDITED FINANCIAL STATEMENTS AND E VEN THOUGH, THE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(3) EARLIER, BUT THE ISSUE OF CAPITATION FEES/CASH DONATION ONLY SURFACED AFTE R THE SEARCH AND SEIZURE WHEREIN HUGE INCRIMINATING MATERIAL AND EVI DENCE WERE FOUND, WHICH COULD NOT HAVE BE SUBJECT MATTER OF SC RUTINY, BECAUSE ASSESSMENTS WERE MADE MUCH PRIOR TO THE DATE OF SEA RCH ON THE BASIS OF ENTRIES MADE IN THE REGULAR BOOKS OF ACCOU NT AND AMOUNT SHOWN IN THE AUDITED INCOME AND EXPENDITURE ACCOUNT . THUS, SUCH A PLEA RAISED BY THE ASSESSEE LACKS MERITS. 24. NOW THE MOOT QUESTION BEFORE US IS THAT, WHETHER IN THE WAKE OF CLINCHING EVIDENCES FOUND DURING THE COURSE OF SEARCH AND CORROBORATED BY POST SEARCH ENQUIRY THAT THE ASSESS EE HAS BEEN RECEIVING HUGE CAPITATION FEES WHICH ADMITTEDLY WAS UNACCOUNTED MONEY, CAN IT BE HELD THAT THE ASSESSEES ACTIVITIE S ARE GENUINE OR NOT. FIRST OF ALL, SUCH HUGE CASH FEES HAVE BEEN RE CEIVED OVER AND ABOVE THE REGULAR FEES CLAIMED TO IN THE NATURE OF VOLUNTARY DONATION BY THE ASSESSEE, CANNOT BE TREATED AS VOL UNTARY AT ALL, BECAUSE THE CONCEPT OF VOLUNTARY ALLUDES TO THE C ONCEPT OF FREE WILL 50 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT AND CHOICE AND THERE CANNOT BE ANY ELEMENT OF FORCE . THE NATURE AND PATTERN OF AMOUNT OF CASH RECEIVED SHOWS THAT, FIRSTLY , THEY ARE OVER AND ABOVE THE REGULAR FEES AND HOSTEL FEE CHAR GED; AND SECONDLY , THERE IS A SYSTEMATIC PATTERN OF FIXING OF THE CA PITATION FEES COURSE WISE DEVISED IN A PACKAGE SYSTEM AND AL SO THERE IS A SCHEDULE FOR MAKING THE PAYMENTS OF SUCH FEES IN IN STALLMENTS. SUCH SYSTEMATIC WAY OF RECEIVING CASH FEES CANNOT B E HELD TO BE GIVEN BY CONSENT OR FREE CHOICE AND WILLINGLY, BECA USE THERE CANNOT BE ANY FIXED AMOUNT FOR A SUM WHICH IS GIVEN BY FRE E WILL AND CHOICE AND IT COMPLETELY LACKS ELEMENT OF VOLUNTARINESS. T HE DONATION HAS ELEMENT OF FREE WILL AND THERE CANNOT BE ANY FIXED AMOUNT AND HERE IN THIS CASE IT HAS BEEN BROUGHT ON RECORD BY THE D EPARTMENT THAT ONCE THIS AMOUNT IS GIVEN THEN ONLY NO DUES CERTIF ICATE HAS BEEN ISSUED TO THE STUDENTS BY THE TRUSTEES. THUS, UNDER NO CIRCUMSTANCES, SUCH A CASH FEES CAN BE HELD TO BE G IVEN VOLUNTARILY OR IS IN THE NATURE OF VOLUNTARY DONATION. IT IS UN DOUBTEDLY IN THE NATURE OF ENFORCED FEE CHARGED OVER AND ABOVE THE R EGULAR FEES BY THE ASSESSEE TRUST THROUGH ITS TRUSTEES WHICH HAS N EITHER ANY SANCTION OF LAW NOR HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT. 51 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 25. THIS ISSUE OF CHARGING OF CAPITATION FEE BY PRIVATE MEDICAL COLLEGES AND OTHER EDUCATIONAL INSTITUTIONS HAS REC EIVED JUDICIAL FROWN AND ADMONITION NOT ONLY BY THE VARIOUS HON'BL E HIGH COURTS BUT ALSO BY THE HON'BLE SUPREME COURT AND THAT TO B E BY THE CONSTITUTIONAL BENCH ON SEVERAL OCCASIONS. PROVIDIN G EDUCATION FOR VARIOUS LEVELS TO THE CITIZENS IS ONE OF THE PARAMO UNT GOALS OF A WELFARE STATE AND IS REGARDED AS THE FUNDAMENTAL DU TY OF THE STATE TO PROVIDE THE EDUCATION TO ITS CITIZENS. RATHER TH E CONSTITUTION OF INDIA HAS ENSHRINED SUCH A GOAL IN DIRECTIVE PRINC IPLES WHICH IS A MANDATE NOT ONLY FOR THE CENTRAL GOVERNMENT BUT ALS O UPON THE STATE GOVERNMENTS AND THAT IS WHY IT IS IN THE CON CURRENT LIST OF THE CONSTITUTION WHEREBY THE CENTRAL AND STATE GOVE RNMENT HAVE TO ENSURE THAT PROPER EDUCATION IN ALL THE FIELDS IS P ROVIDED TO ITS CITIZENS AS WELL AS THE CHILDREN. PROVIDING EDUCATI ON IS MOST SOLEMN DUTY OF THE GOVERNMENT AND TO ESTABLISH ADEQUATE NU MBER OF EDUCATIONAL INSTITUTIONS IN THE COUNTRY AT ALL LEVE LS INCLUDING TECHNICAL, SCIENTIFIC, PROFESSIONAL AND MEDICAL TO CATER TO THE VARIED SECTIONS OF THE SOCIETY. SINCE LOOKING TO THE SIZE OF OUR COUNTRY AND INCREASING NEED OF EDUCATION IN ALL WALK OF LIFE, T HE STATE HAS 52 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ENCOURAGED PRIVATE EDUCATIONAL INSTITUTIONS TO FULF ILL THE CONSTITUTIONAL GOAL OF PROVIDING EDUCATION, THEREFO RE, STATE HAS ALWAYS GIVEN A SEPARATE STATUS TO EDUCATION AND HAS TREATED IT DISTINCT WITH OTHER ECONOMIC ACTIVITIES. THAT IS WH Y THERE ARE VARIOUS REGULATIONS AND ACTS PASSED BY THE VARIOUS STATE GOVERNMENTS AND CENTRAL GOVERNMENT TO REGULATE AND CONTROL EDUCATIONAL ACTIVITIES BOTH FOR THE PRIVATE INSTITU TIONS AS WELL AS FOR STATE INSTITUTIONS. FOR THIS REASON ALONE, THE PROV IDING OF EDUCATION HAS BEEN TREATED TO BE ONE OF THE PARAMOUNT ACTIVIT IES OF CHARITY AND HAS BEEN ENSHRINED AS ONE OF THE CHARITABLE PU RPOSES U/S 2(15) OF THE ACT. CARRYING OUT SUCH CHARITABLE ACTI VITY BY ANY TRUST OR INSTITUTION HAS BEEN PROVIDED WITH CERTAIN BENEF ITS AND EXEMPTIONS UNDER CHAPTER III OF THE ACT, ESPECIALLY UNDER SECTION 10(23C) AND SECTIONS 11 TO 13 OF THE ACT. IF ANY TR UST OR INSTITUTION TRANSGRESSES SUCH A NOBLE ACTIVITY OF EDUCATION ON A COMMERCIAL LINE WHICH IS TAINTED WITH COMMERCIALITY AND FOR PROFITE ERING, THEN SAME HAS TO BE ADVERSELY VIEWED AND ANY SUCH BENEFITS EN JOYED BY THE TRUSTS OR INSTITUTIONS HAS TO BE WITHDRAWN OR THEY HAVE TO BE DERECOGNIZED FROM THE EXEMPTION PROVISIONS. A WHOLE PROCEDURE HAS 53 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT BEEN LAID DOWN UNDER THE INCOME TAX ACT NOT ONLY FO R PROVIDING BENEFIT FROM EXEMPTION OF TAX BUT ALSO IF ANY VIOLA TION IS FOUND, THEN THE ACT AUTHORIZES THE AUTHORITIES TO WITHDRAW SUCH BENEFIT. FOR INSTANCE, U/S 10 (23C) CLAUSES (VI) AND (VIA) READ WITH 13 TH PROVISO PROVIDES FOR RESCINDING AND WITHDRAWAL OF THE APPRO VAL GRANTED EARLIER. THE RELEVANT PROVISO READS AS UNDER: PROVIDED ALSO THAT WHERE THE FUND OR INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) IS NOTIFIED BY THE CENTRAL GOVERNMENT [OR IS APPROVED BY THE PRESCRIBED AUTHORITY, AS THE CASE MAY BE,] OR ANY U NIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CL AUSE (VI) OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO I N SUB-CLAUSE (VIA), IS APPROVED BY THE PRESCRIBED AUTHORITY AND SUBSEQU ENTLY THAT GOVERNMENT OR THE PRESCRIBED AUTHORITY IS SATISFIED THAT (I) SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION HAS NOT (A) APPLIED ITS INCOME IN ACCORDANCE WITH THE PROVISION S CONTAINED IN CLAUSE (A) OF THE THIRD PROVISO; OR (B) INVESTED OR DEPOSITED ITS FUNDS IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN CLAUSE (B) OF THE THIRD PRO VISO; OR (II) THE ACTIVITIES OF SUCH FUND OR INSTITUTION OR TRUST OR ANY 54 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT UNIVERSITY OR OTHER EDUCATIONAL INS TITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION (A) ARE NOT GENUINE; OR (B) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH IT WAS NOTIFIED OR APPROVED, IT MAY, AT ANY TIME AFTER GIVING A REASONABLE OPPOR TUNITY OF SHOWING CAUSE AGAINST THE PROPOSED ACTION TO THE CO NCERNED FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION, RESCIND THE NOTIFICATION OR, BY ORDER, WITHDRAW THE APPROVAL, A S THE CASE MAY BE, AND FORWARD A COPY OF THE ORDER RESCINDING THE NOTIFICATION OR WITHDRAWING THE APPROVAL TO SUCH FUND OR INSTITUTIO N OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION AND TO THE ASSESSING OFFI CER:] THUS, IF ANY TRUST OR INSTITUTIONS ACTIVITIES ARE FOUND TO BE NOT GENUINE OR ARE NOT BEEN CARRIED OUT IN ACCORDANCE W ITH OBJECTS OR ANY OF THE CONDITIONS FOR WHICH IT WAS NOTIFIED OR APPROVED, THEN SUCH NOTIFICATION CAN BE RESCINDED OR CAN BE WITHDR AWN. THERE IS NO SPECIFIC DATE PRESCRIBED UNDER THE SAID PROVISION F ROM WHICH SUCH APPROVAL CAN BE WITHDRAWN. FROM THE PLAIN READING O F AFORESAID PROVISION, IT CAN BE INTERPRETED THAT IF FROM A PAR TICULAR YEAR OR DATE 55 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT IT IS FOUND THAT THE ACTIVITIES ARE NOT GENUINE OR SUCH ACTIVITIES ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS THEN FROM THAT DATE/YEAR, APPROVAL/NOTIFICATION CAN BE WITHDRAWN. 26. SIMILARLY SECTION 12AA(3) PROVIDES FOR CANCELLA TION/WITHDRAWAL OF REGISTRATION GRANTED U/S 12A/12AA OF THE ACT, WH ICH FOR THE SAKE OF READY REFERENCE IS REPRODUCED HEREIN: [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) [OR HAS OBTAINE D REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996)]] AND SU BSEQUENTLY THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER IS SAT ISFIED 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 INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION: THE AFORESAID PROVISION THUS, CLEARLY PROVIDE S THAT PCIT/CIT HAS THE POWER TO CANCEL THE REGISTRATION GRANTED U/ S 12A OR 12AA, IF HE IS SATISFIED THAT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANCE WITH T HE OBJECTS. BOTH THE CONDITIONS ARE MUTUALLY EXCLUSIVE TO EACH OTHER AND IF ANY OF THE 56 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ONE CONDITION IS SATISFIED, THEN THE REGISTRATION G RANTED CAN BE CANCELLED. 27. NOW THE ISSUE IS, WHETHER RECEIVING OF A CAPITATION FEE CAN BE HELD TO BE GENUINE OR NOT; OR WHETHER IT IS FOR THE PURPOSE OF EDUCATION. ONE OF THE MAIN CONTENTIONS RAISED BY TH E ASSESSEE WAS THAT ALL SUCH CASH FEES RECEIVED, THOUGH NOT RECORD ED IN THE BOOKS HAS BEEN FULLY UTILIZED IN THE CONSTRUCTION OF COLL EGE/ HOSPITAL BUILDINGS AND BEING USED FOR EXPANDING THE INFRASTR UCTURE AND THEREFORE, NO ADVERSE INFERENCE CAN BE DRAWN REGARD ING NON- GENUINENESS. SUCH AN ARGUMENT IS DELUSIVE AND FLAWE D, FIRSTLY FOR THE REASON THAT IT IS PURELY BASED ON HYPOTHESIS AS NO EVIDENCE OR MATERIAL HAS BEEN BROUGHT ON RECORD OR HAS BEEN FOU ND DURING THE COURSE OF SEARCH THAT THESE CASH FEES HAS BEEN UTIL IZED FOR THE PURPOSE OF CONSTRUCTION OF BUILDING OR APPLIED FOR CHARITABLE PURPOSES; AND SECONDLY, SUCH ILLICIT CHARGING OF FE ES ENFORCED UPON THE STUDENTS CANNOT BE GENUINE EDUCATION ACTIVITY. IF THE ASSESSEE IS RECEIVING HUGE UNACCOUNTED CASH FEES, WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND NEITHER ITS APPLICATION HA S BEEN RECORDED THEN THERE CANNOT BE ANY PRESUMPTION THAT SUCH CASH RECEIVED 57 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT DEEMED TO HAVE BEEN APPLIED FOR CHARITABLE PURPOSES . AT NO STAGE ASSESSEE COULD SUBSTANTIATE SUCH UTILIZATION OF UNA CCOUNTED RECEIPTS WITH ANY EVIDENCE. IN ANY CASE, EVEN IF SO ME OF THE SUCH CAPITATION FEES HAS BEEN UTILIZED FOR CONSTRUCTION OF BUILDINGS, BUT THAT CANNOT JUSTIFY THE ILLICIT MONEY FROM STUDENTS . HERE THE END CANNOT JUSTIFY THE MEANS. THUS, WE REJECT THE CONTE NTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEES CANCEL LATION OF REGISTRATION IS NOT JUSTIFIED SIMPLY BECAUSE THE EN TIRE MONEY RECEIVED IN THE FORM OF CAPITATION FEE /DONATION HA S BEEN FULLY UTILIZED FOR THE PURPOSE OF EDUCATION. THE CAPITAT ION FEE PER SE HAS BEEN STRICTLY CONDEMNED AND CASTIGATED BY THE HONB LE CONSTITUTIONAL BENCH OF THE HON'BLE SUPREME COURT C OMPRISING OF SEVEN JUDGES IN THE CASE OF P.A. INAMDAR & ORS. VS STATE OF MAHARASHTRA (2005) 6 SCC 537, WHEREIN WHILE REFERRING THE PRINCIPLE LAID DOWN BY THE HONBLE CONSTITUTIONAL B ENCH OF 11 JUDGES IN T.M.A. PAI FOUNDATION & ORS. VS. STATE OF KARNATAK A (2002) 8 SCC 481 , THE HONBLE COURT HAD OBSERVED AS UNDER: CAPITATION FEES 140. CAPITATION FEE CANNOT BE PERMITTED TO BE CHARGED A ND NO SEAT CAN BE PERMITTED TO BE APPROPRIATED BY PAYMENT OF 58 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CAPITATION FEE. PROFESSION HAS TO BE DISTINGUISHE D FROM BUSINESS OR A MERE OCCUPATION. WHILE IN BUSINESS, AND TO A CERTAIN EXTENT IN OCCUPATION, THERE IS A PROFI T MOTIVE, PROFESSION IS PRIMARILY A SERVICE TO SOCIETY WHEREI N EARNING IS SECONDARY OR INCIDENTAL. A STUDENT WHO GETS A PROFE SSIONAL DEGREE BY PAYMENT OF CAPITATION FEE, ONCE QUALIFIED AS A PROFESSIONAL, IS LIKELY TO AIM MORE AT EARNING RATH ER THAN SERVING AND THAT BECOMES A BANE TO SOCIETY. THE CHARGING OF CAPITATION FEE BY UNAIDED MINORITY AND NON-MINORITY INSTITUTIONS FOR PROFESSIONAL COURSES IS JUST NOT PERMISSIBLE. SIMILARLY, PROFITEERING IS ALSO NOT PERMISSIBLE. DESPITE THE LEGAL POSITION, THIS COURT CANNOT SHUT ITS EYES TO THE HARD REALITIES OF COMMERCIALIS ATION OF EDUCATION AND EVIL PRACTICES BEING ADOPTED BY MANY INSTITUTIONS TO EARN LARGE AMOUNTS FOR THEIR PRIVAT E OR SELFISH ENDS. IF CAPITATION FEE AND PROFITEERING IS TO BE CHECKE D, THE METHOD OF ADMISSION HAS TO BE REGULATED SO THAT THE ADMISSIONS ARE BASED ON MERIT AND TRANSPARENCY AND THE STUDENTS ARE NOT EXPLOITED. IT IS PERMISSIBLE TO RE GULATE ADMISSION AND FEE STRUCTURE FOR ACHIEVING THE PURPO SE JUST STATED. FURTHER, IN THE JUDGMENT OF T.M.A. PAI FOUNDATION & ORS. VS. STATE OF KARNATAKA (SUPRA) , THE HONBLE APEX COURT HAD MADE A VERY IMPORTANT OBSERVATION WHICH READS AS UNDER: 59 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 57. WE, HOWEVER, WISH TO EMPHASIZE ONE POINT, AND THAT IS THAT INASMUCH AS THE OCCUPATION OF EDUCATION IS, IN A SENSE, REGARDED AS CHARITABLE, THE GOVERNMENT CAN PROVIDE REGULATIONS THAT WILL ENSURE EXCELLENCE IN EDUCATION, WHILE FORBIDDING THE CHARGING OF CAPITAT ION FEE AND PROFITEERING BY THE INSTITUTION. SINCE THE OBJECT OF SETTING UP AN EDUCATIONAL INSTITUTION IS BY DEFINIT ION 'CHARITABLE, IT IS CLEAR THAT AN EDUCATIONAL INSTI TUTION CANNOT CHARGE SUCH A FEE AS IS NOT REQUIRED FOR THE PURPOSE OF FULFILLING THAT OBJECT. TO PUT IT DIFFERENTLY, IN THE ESTABLISHMENT OF AN EDUCATIONAL INSTITUTION, THE OB JECT SHOULD NOT BE TO MAKE A PROFIT, INASMUCH AS EDUCATION IS E SSENTIALLY CHARITABLE IN NATURE. THERE CAN, HOWEVER, BE A REAS ONABLE REVENUE SURPLUS, WHICH MAY BE GENERATED BY THE EDUC ATIONAL INSTITUTION FOR THE PURPOSE OF DEVELOPMENT OF EDUCA TION AND EXPANSION OF THE INSTITUTION. [EMPHASIS IN BOLD IS OURS] 28. THUS, THE LAW AS ITS STANDS IS VERY CLEAR THAT THE EDUCATIONAL INSTITUTION CANNOT CHARGE CAPITATION FEES AND ARE N OT PERMITTED TO CHARGE ANY SUCH FEE. STRONG CONTEMPT AND OBLOQUY HA VE BEEN EXPRESSED BY THE SUPREME COURT OF LAND THAT THE CAP ITATION FEE AND PROFITEERING BY THE EDUCATIONAL INSTITUTION DEFEATS THE NOBLE CAUSE OF EDUCATION AND IT HAS TO BE CHECKED AND REGULATED. I F AN EDUCATIONAL 60 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT INSTITUTION IS CHARGING CAPITATION FEES, THEN EDUCA TIONAL INSTITUTIONS ACTIVITY CANNOT BY ANY MEANS BE RECKONED TO BE GENU INE. THUS, THIS REASON ALONE IS SUFFICIENT TO HOLD THAT THE ACTIVIT IES OF THE ASSESSEE TRUST ARE NOT GENUINE AND ACCORDINGLY, WE HOLD THAT THE LD. PR.CIT IS JUSTIFIED IN LAW AND ON FACTS IN CANCELLING THE APPROVAL/NOTIFICATION ISSUED U/S 10(23C) OF THE ACT AND ALSO REGISTRATION GRANTED U/S 12AA OF THE ACT. 29. NOW COMING TO THE ISSUE WHETHER RUNNING OF TV CHANNEL BY THE NIMS UNIVERSITY WHICH IS CONTROLLED AND MANAGED BY THE ASSESSEE TRUST CAN BE HELD TO BE IN ACCORDANCE WITH OBJECTS OF THE TRUST OR UNDER THE LAW. BEFORE US, THE LD AR OF THE ASSESSEE HAS HARPED UPON THE FACT THAT ONE OF THE CURRICULUMS RU N BY THE NIMS UNIVERSITY IS THAT, IT IS PROVIDING COURSE OF MASS COMMUNICATION, JOURNALISM, TV PRODUCTION, FEATURE FILM ETC. AND IT IS FOR THIS PURPOSE, THE UNIVERSITY HAS DESIRED TO HAVE ITS OWN TV CHANNEL FOR THE BENEFIT OF ITS STUDENTS. THE LD. COUNSEL HAS AL SO SHOWN US THE VARIOUS COURSES AND CURRICULUM WHEREIN THE STUDENTS WERE REQUIRED TO PARTICIPATE IN THE ACTIVITIES OF THE TV CHANNEL. HOWEVER, ONE OF THE MOST NOTICEABLE FACT IS THAT OMEGA TV MEDIA PVT . LTD. WHICH 61 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT OWNS AND HAS THE RIGHTS TO RUN A NEWS CHANNEL IS AN INDEPENDENT ASSESSEE SEPARATELY ASSESSED TO TAX, HOWEVER, THE E NTIRE INVESTMENT IN THE SAID PRIVATE LIMITED COMPANY HAS BEEN MADE B Y THE TRUST. SUCH AN INVESTMENT MADE IN THE SHARES OF THE PRIVAT E LIMITED COMPANY IS CLEARLY PROHIBITED U/S 11(5) OF THE ACT AND ALSO UNDER 3 RD PROVISO TO SECTION 10(23C) (VI) & (VIA) OF THE ACT WHEREIN IT HAS BEEN PROVIDED THAT A TRUST OR INSTITUTION CANNOT IN VEST IN THE SHARES OF PRIVATE LIMITED COMPANY. THIS HAS BEEN SPECIFICA LLY PROVIDED IN SUB-SECTION (5) OF SECTION (11) OF THE ACT. ONCE TH ERE IS A CLEAR-CUT BAR UPON A TRUST OR INSTITUTION CARRYING OUT CHARIT ABLE ACTIVITY TO INVEST IN THE SHARES OF PRIVATE LIMITED COMPANY, TH EN IF SUCH A TRUST OR INSTITUTION VIOLATES SUCH PROVISION THEN IT HAS TO BE HELD THAT THE ACTIVITIES OF THE TRUST IS NOT GENUINE AS IT IS NOT IN ACCORDANCE WITH THE LAW GOVERNING BENEFIT GIVEN TO THE CHARITABLE T RUST OR INSTITUTION. ON THIS POINT ALSO, WE HOLD THAT THE ASSESSEES ACT IVITIES ARE NOT GENUINE. 30. LASTLY, IN SO FAR AS THE ISSUE OF CASH PAYME NT TO THE DOCTORS OUTSIDE THE BOOKS, WE FIND FROM PERUSAL OF THE SEIZ ED DOCUMENTS THAT THE REVENUE HAS NOT BEEN ABLE TO PROPERLY CORR ELATE OR ESTABLISH 62 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT THAT SUCH PAYMENTS HAVE BEEN MADE OUTSIDE THE BOOKS OR SUCH CASH HAS ACTUALLY BEEN MADE. IN ANY CASE, EVEN IT I S TREATED AS SOME ADVERSE MATERIAL, HOWEVER, WE ARE NOT DWELLING UPON THIS ASPECT AS WE HAVE ALREADY HELD ON TWO COUNTS THAT THE ASSESSE ES ACTIVITIES ARE NOT GENUINE AND THEREFORE, WE ARE NOT ADJUDICATING THIS ALLEGATION OF THE REVENUE. 31. ANOTHER MOOT QUESTION HERE IN THIS CASE IS, WHETHER SUCH AN APPROVAL U/S 10(23C) OR REGISTRATION U/S 12AA GRANT ED EARLIER CAN BE WITHDRAWN FROM A RETROSPECTIVE DATE; AND IF THE ANSWER IS YES, THEN WHAT WOULD BE THE RELEVANT DATE/PERIOD FROM WH ICH SUCH CANCELLATION BE MADE EFFECTIVE. IN SO FAR AS THE WI THDRAWAL OF APPROVAL /NOTIFICATION U/S 10(23C) IS CONCERNED, WE HAVE ALREADY OBSERVED IN THE FOREGOING PARAGRAPHS THAT THERE IS NO SUCH PROVISION WHICH SPECIFICALLY PROVIDES THAT WITHDRAW AL CANNOT BE MADE FROM RETROSPECTIVE DATE AS THE STATUTES PROVID ES THAT THE AUTHORITIES HAVE THE POWER TO WITHDRAW THE APPROVAL ONCE IT IS FOUND THAT THE ACTIVITIES OF THE TRUST OR INSTITUTI ON ARE NOT CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS OR ITS ACTIVITIE S ARE NOT GENUINE. 63 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT IF, SUCH NON-GENUINENESS IS FOUND FROM A PARTICULAR DATE THEN SUCH APPROVAL CAN BE WITHDRAWN FROM THAT DATE. 32. IN SO FAR AS THE LANGUAGE USED IN SECTION 12 AA (3), THE CONDITIONS FOR CANCELLING THE REGISTRATION IS THAT, FIRSTLY , THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE; OR SECONDLY , ITS ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDA NCE WITH ITS OBJECTS. PRIOR TO 1.04.1997 THE REGISTRATION WAS GRANTED U/S 12A AND AFTER THE AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 W.E. F. 1.04.1997, THE REGISTRATION IS GRANTED U/S 12AA. ASSESSEE TRUS T WAS GRANTED REGISTRATION ON 24/3/2000 U/S 12AA. IN SUB-SECTION (3) TWO AMENDMENT HAVE BEEN BROUGHT, ONE WHICH HAS BEEN BRO UGHT W.E.F. 01/10/2004 BY WHICH SUB-SECTION (3) WAS INTRODUCED WHEREIN THE CIT WAS GIVEN POWER TO CANCEL THE REGISTRATION WHIC H WAS GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1) OF SECTION 12AA OF THE ACT. SUCH GRANTING OF REGISTRATION AS DISCUSSED ABOVE U/S 12A A WAS BROUGHT IN THE STATUTE W.E.F. 01/4/1997. THUS, ANY REGISTRA TION GRANTED AFTER 01/4/1997, WAS U/S 12AA AND PRIOR TO THIS DAT E, THE REGISTRATIONS WERE GRANTED U/S 12A OF THE ACT. IF T HE REGISTRATION WAS GRANTED UNDER THE EARLIER PROVISION OF SECTION 12A, THEN IF SUCH 64 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT A REGISTRATION IS CANCELLED BY INVOKING THE PROVISI ONS OF SECTION 12AA (3) THEN IN THAT CASE THE COURTS HAVE HELD THA T THE CIT CANNOT CANCEL SUCH REGISTRATION FROM THE RETROSPECTIVE DAT E, BECAUSE THESE PROVISIONS WERE MEANT ONLY TO CANCEL THE REGISTRATI ON GRANTED U/S 12AA OF THE ACT AND NOT FOR THE EARLIER REGISTRATIO N GRANTED U/S 12A WITH RETROSPECTIVE DATE. IN ORDER TO EXAMINE THE CO NDITIONS FOR CANCELLATION OF REGISTRATION GRANTED U/S 12A, THE P ARLIAMENT BROUGHT AN AMENDMENT BY THE FINANCE ACT, 2010 W.E.F . 01/6/2010, WHEREIN IT HAS BEEN PROVIDED THAT THE REGISTRATION GRANTED AT ANY TIME U/S 12A CAN ALSO BE CANCELLED BY THE PR.CIT OR CIT. THE INTENTION OF THE LEGISLATURE WAS THUS TO BEREFT ANY CHARITABLE TRUST FOR ENJOYING BENEFIT OF EXEMPTIONS IF ITS ACTIVITIE S ARE FOUND TO BE NON-GENUINE OR IS NOT CARRIED OUT IN ACCORDANCE WIT H OBJECTS FOR WHICH IT WAS GRANTED REGISTRATION. THOUGH THE SECTI ON DOES NOT PROVIDE CLEARLY FROM WHICH DATE REGISTRATION CAN BE CANCELLED, HOWEVER ON PLAIN READING IT IS QUITE PALPABLE THAT THE CANCELLATION CAN BE DONE FROM THE TIME WHEN THE ACTIVITIES ARE F OUND TO BE NON- GENUINE OR IS FOUND NOT BEING CARRIED OUT IN ACCORD ANCE WITH OBJECTS. IF NON-GENUINENESS IS NOT FOUND FROM AN EA RLIER DATE BUT 65 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT FROM THE PRESENT DATE THEN CANCELLATION CANNOT BE M ADE FROM BACK DATE, HOWEVER IF THE TRUST OR INSTITUTION BASED ON ANY MATERIAL OR INFORMATION IS FOUND TO BE CARRYING NON-GENUINE ACT IVITY FROM THE EARLIER PERIOD THEN FROM THAT PERIOD REGISTRATION C AN BE CANCELLED. THE DATE FROM WHEN THE NON-GENUINENESS IS FOUND IS THE DECISIVE AND DETERMINATIVE FACTOR. THERE ARE SET OF JUDGMENT S AS CITED BY THE LD. DR LIKE U.P. DISTILLERS ASSOCIATION (ITA 830/20 17) (DELHI HIGH COURT); SRI VIDYARANYA SEWA SANGHA VS CIT, HUBLI (2 016) 71 TAXMANN.COM 152 (BANGLORE TRIB); AND NOVODAYA EDUCA TION TRUST VS UNION OF INDIA (2018) 90 TAXMANN.COM 148 (KAR), WHEREIN THE COURTS HAVE HELD THAT THE CANCELLATION CAN BE MADE FROM THE RETROSPECTIVE DATE. HOWEVER, THERE ARE OTHER SET OF JUDGMENTS WHICH HAS BEEN RELIED UPON BY THE LD. COUNSEL WHEREIN THE COURTS HAVE HELD THAT THE REGISTRATION CANNOT BE CANCELLED FROM THE DATE OF INCEPTION. HERE IN THIS CASE, WE HAVE HELD THAT THE NON-GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST HAS BEEN FO UND FROM A.Y. 2009-10 WHEN THE ASSESSEE HAD RECEIVED HUGE CAPITAT ION FEE IN CASH WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT AND FROM THIS DATE ONWARDS I.E. A.Y. 2009-10, THE NON-GENUINENESS OF THE 66 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ACTIVITIES IS WRIT AT LARGE AND THEREFORE, THE CANC ELLATION OF REGISTRATION OR WITHDRAWAL OF APPROVAL HAS TO BE GI VEN FROM A.Y. 2009-10 AND NOT FROM THE DATE OF INCEPTION. THOUGH, THE REVENUES CASE IS THAT THE WITHDRAWAL/CANCELLATION SHOULD BE MADE FROM A.Y. 2006-07 ONWARDS, HOWEVER, BEFORE US, THE REVENUE HA S FAILED TO ESTABLISH THAT THE CAPITATION FEE WHICH HAS BEEN FO UND DURING THE COURSE OF SEARCH IS OVER AND ABOVE WHAT HAS BEEN RE CORDED IN THE REGULAR BOOKS OF ACCOUNT AND DULY ACCEPTED IN THE S CRUTINY PROCEEDINGS U/S 143(3) OF THE ACT. PERHAPS THAT IS THE REASON WHY THE SETTLEMENT COMMISSION ALSO HAS QUANTIFIED THE U NDISCLOSED CAPITATION FEE FROM A.Y. 2009-10 ONWARDS AND NOT FO R THE EARLIER YEARS. IF THE REVENUE SEEKS TO CANCEL REGISTRATION W.E.F. A.Y. 2006- 07, THEN THE ONUS WAS UPON THE REVENUE TO SHOW THAT THE CAPITATION FEE RECEIVED BY THE ASSESSEE IS OUTSIDE THE BOOKS OF ACCOUNT. ACCORDINGLY, WE HOLD THAT THE CANCELLATION OF REGISTRATION U/S 12AA (3) OR WITHDRAWAL OF APPROVAL U/S 10(23C) SHOULD BE ONLY FROM THE A.Y. 2009-10 ONWARDS AND NOT FROM THE A.Y. 2006-07. 33. IN SO FAR AS THE JUDGMENTS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE CANCELLATION SHOULD NOT BE MA DE FROM 67 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT RETROSPECTIVE EFFECT, ESPECIALLY THE JUDGMENT OF TH E HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ACIT VS. AGRA D EVELOPMENT AUTHORITY (SUPRA), ON PERUSAL OF THE SAID JUDGMENT, IT IS SEEN THAT IT WAS A CASE OF REGISTRATION OF A DEVELOPMENT AUTHORI TY, WHICH WAS GRANTED REGISTRATION U/S 12AA OF THE ACT W.E.F. 01/ 4/2003. THE REGISTRATION WAS CANCELLED BY THE LD. CIT U/S 12AA (3) VIDE ORDER DATED 04/4/2012 FROM THE DATE OF REGISTRATION. THE REASON FOR CANCELLATION OF REGISTRATION WAS THAT A PROVISO WAS INSERTED IN SECTION 2(15) W.E.F. 01/4/2009 AND THEREFORE, THE A CTIVITIES OF THE AUTHORITY WAS VIOLATING THE CONDITIONS OF SUCH PROV ISO AND THEREFORE, THE ASSESSEES REGISTRATION WAS CANCELLED FROM THE DATE OF INCEPTION. IN THIS BACKGROUND, THE HON'BLE HIGH COURT HELD THA T THE REGISTRATION CANNOT BE CANCELLED FROM THE RETROSPEC TIVE DATE. HOWEVER, THE HON'BLE HIGH COURT BY WAY OF OBITER DICTA DID OBSERVE THAT EVEN AFTER THE AMENDMENT IN SECTION 12AA (3), IT DOES NOT INDICATE THAT THE LD. CIT CAN CANCEL THE REGISTRATI ON WITH RETROSPECTIVE EFFECT. AT THE SAME, THERE IS A JUDGM ENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF NAVODAYA EDUCAT ION TRUST VS UNION OF INDIA (SUPRA) WHEREIN IT HAS BEEN HELD THA T WITHDRAWAL CAN 68 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT BE MADE FROM RETROSPECTIVE DATE IF THE EVIDENCE AND MATERIAL HAS BEEN FOUND ABOUT THE NON-GENUINENESS OF THE ACTIVIT IES OF THE TRUST. SIMILARLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF U.P. DISTILLERS ASSOCIATION (SUPRA) HAVE OPINED THAT THE CANCELLATI ON OF REGISTRATION ON THAT PARTICULAR CASE CAN RELATE BACK FROM THE DA TE OF INTRODUCTION OF SECTION 12AA (3) OF THE ACT W.E.F. 01/10/2004. S INCE IN THIS CASE, THE CANCELLATION HAS NOT BEEN DONE FROM THE DATE OF GRANTING OF REGISTRATION, ALBEIT WE HAVE HELD THAT SUCH A CANCE LLATION OR WITHDRAWAL OF APPROVAL SHOULD BE DONE FROM A.Y. 200 9-10 ONWARDS, BECAUSE THERE ARE SPECIFIC MATERIAL AND EVIDENCES T O SHOW THAT THE ASSESSEES ACTIVITIES FROM THAT PERIOD HAS BEEN NON -GENUINE. ACCORDINGLY, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. PR.CIT WAS JUSTIFIED IN CANCELLING THE REGISTRATION U/S 12AA AND ALSO WITHDRAWING THE APPROVAL U/S 10(23C) OF THE ACT, BUT WITH A RIDER THAT SUCH CANCELLATION/ WITHDRAWAL WOULD BE FROM THE A.Y. 2009-10 ONWARDS AND NOT FROM THE EARLIER Y EARS. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE D ISMISSED IN THE MANNER INDICATED ABOVE. 69 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT APPEALS OF NIMS UNIVERSITY 34. NOW WE WILL TAKE THE APPEALS OF NIMS UNIVERS ITY IN ITA NO.736/JP/2017 & ITA NO. 545/JP/2018 FOR THE A.Y. 2 017-18. BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT (EXEMPTIONS), JAIPUR DATED 29/08/2017 AND 19/03/2018 RESPECTIVELY. IN BOTH THE SE APPEALS, THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: GROUNDS OF ITA NO. 736/JP/2017 (1) LD. CIT(EXEMPTIONS) WAS NOT JUSTIFIED IN DENYI NG REGISTRATION U/S 12AA OF INCOME TAX ACT TO THE ASSE SSEE UNIVERSITY MERELY ON BASIS THAT CERTAIN KHASARA OF LAND WERE NOT IN OWNERSHIP OF THE SPONSORING BODY (M/S I NDIAN MEDICAL TRUST- THOUGH THE SPONSORING BODY WAS ALREA DY GRANTED REGISTRATION U/S 12AA BY LD. CCIT, JAIPUR A ND WAS CARRYING OUT EDUCATIONAL ACTIVITIES FROM THE YEAR 2 000) (2) THE LD. CIT(EXEMPTIONS) WAS NOT JUSTIFIED IN IG NORING THE CHARITABLE OBJECTS OF THE ASSESSEE UNIVERSITY FOR T HE PURPOSE OF GRANTING REGISTRATION U/S 12AA OF IT ACT (392 IT R 285 RAJ), TO ASSESSEE UNIVERSITY WHO CAME INTO EXISTENC E BY AN ACT PASSED BY RAJASTHAN LEGISLATIVE ASSEMBLY AND ACCORDINGLY STARTED ITS EDUCATIONAL ACTIVITIES AFTE R TRANSFER OF ALL THE ASSETS AND LIABILITIES OF THE SPONSORING BODY- INDIAN MEDICAL TRUST. GROUNDS OF ITA NO. 545/JP/2018 70 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 1. LD. CIT(EXEMPTION) WAS NOT JUSTIFIED IN DENYING APPROVAL UNDER SECTION 10(230) (VI) AND (VIA) INCOME TAX ACT TO THE ASSESSEE UNIVERSITY SOLELY THAT CERTAIN KHASARAS OF LAND MENTIONED IN ENACTMENT PASSED BY RAJASTHAN LEGISLAT IVE ASSEMBLY WERE NOT IN OWNERSHIP OF THE SPONSORING BO DY (M/S. INDIAN MEDICAL TRUST) THOUGH THE ASSESSEE UNI VERSITY IS RUNNING ITS CHARITABLE AND HOSPITAL ACTIVITIES ON A BOUT 90 BIGHAS OF LAND WHICH IS SUFFICIENT TO RUN SUCH TYPE OF CHARITABLE ACTIVITIES. 2. THAT ID. CIT (EXEMPTION) WAS NOT JUSTIFIED IN RE FUSING APPROVAL U/S. 10(23C)(V) & (VIA) OF IT ACT TO THE A SSESSEE UNIVERSITY BY TAKING PRETEXT OF THE FOLLOWINGS: (A) ACTION U/S. 132 OF IT ACT IN CASE OF SPONSORIN G BODY (INDIAN MEDICAL TRUST) IN WHICH NO EXTRA CASH, NO UNEXPLAIN ED JEWELLERY, NO UNEXPLAINED FOREIGN CURRENCY OR NO OT HER INCRIMINATING DOCUMENTS OR MATERIAL WAS FOUND EXCEP T RECORDED DONATIONS IN DIARIES (USED FOR CONSTRUCTIO N OF EDUCATIONAL BUILDINGS) WHEREAS NO MISUSE OF FUNDS B Y TRUSTEES OR RELATIVES WAS FOUND, RATHER TRUSTEES HA D DEPOSITED THEIR OWN INTEREST FREE FUNDS WITH IT, DI D NOT CHARGE ANY RENT OR OTHER EXPENSES FOR CITY OFFICE A ND ALWAYS PROVIDED VOLUNTARY SERVICES WITHOUT CHARGING ANY REMUNERATION. (B) COMMON APPLICATION MADE FOR THE PURPOSE OF APP ROVAL UNDER SECTION 10(23C) (VI) AND FOR 10 (23C) (VIA) O F IT ACT. (C) TV CHANNEL, WHICH IS BEING RUN BY AN INDEPENDE NT COMPANY BY THE NAME M/S. OMEGA TV MEDIA PVT. LTD. W ITH DIFFERENT PAN. (D) REFUSAL OF REGISTRATION UNDER SECTION 12AA/10( 23C) OF IT ACT TO THE APPLICANT UNIVERSITY. 71 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 35. THE AFORESAID APPEALS HAVE BEEN FILED BY THE N IMS UNIVERSITY, RAJASTHAN, JAIPUR AGAINST THE REFUSAL OF GRANT OF R EGISTRATION U/S 12AA OF THE ACT AND REFUSE TO GRANT APPROVAL FOR NO TIFICATION U/S 10(23C) (VI) & (VIA) OF THE ACT. THE FACTS AND THE REASONING GIVEN BY THE LD. CIT(E) TO DENY THE SAME ARE EXACTLY SAME, T HEREFORE, OUR FINDING WOULD BE APPLICABLE FOR BOTH THE APPEALS. 36. AS DISCUSSED IN THE EARLIER APPEALS, THE ASS ESSEE TRUST HAD SET UP ITS OWN PRIVATE UNIVERSITY UNDER THE AEGIS O F NIMS UNIVERSITY, RAJASTHAN, JAIPUR. SUCH UNIVERSITY WAS ENACTED BY THE NIMS UNIVERSITY RAJASTHAN ACT, 2008 BY THE LEGISL ATURE OF THE RAJASTHAN WHICH GOT ASCENT FROM THE HONBLE GOVERNO R ON 29/03/2008. THUS, THE NIMS UNIVERSITY WAS ESTABLISH ED IN THE YEAR 2008. THE INDIAN MEDICAL TRUST WAS RUNNING AND CONT ROLLING THE SAID UNIVERSITY. LATER ON, AN AGREEMENT WAS ENTERED INTO BETWEEN THE INDIAN MEDICAL TRUST AND NIMS UNIVERSITY, VIDE AGREEMENT DATED 30/09/2016, WHEREIN IT WAS AGREED THAT TRUST WILL TRANSFER ALL THE ASSETS AND LIABILITIES TO THE NIMS UNIVERSITY W .E.F. 01/10/2016 AND ALL THE ACTIVITIES OF EDUCATION AND MEDICAL HOS PITAL WOULD HENCEFORTH BE RUN BY THE NIMS UNIVERSITY ONLY. ALL THE ASSETS OWNED 72 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT BY THE INDIAN MEDICAL TRUST WAS TRANSFERRED IN THE OWNERSHIP OF THE NIMS UNIVERSITY INCLUDING ALL THE LIABILITIES. HOWE VER, NO REGISTRATION OF THE PROPERTIES/ASSETS HELD BY THE T RUST HAS BEEN TRANSFERRED BY REGISTERED DOCUMENTS BY WAY REGISTRY OR BY PAYING THE STAMP DUTY. SIMILARLY, THE LIABILITIES HAVE ALS O NOT BEEN ASSIGNED SPECIFICALLY TO THE ASSESSEE BY WAY OF REGISTERED A GREEMENT. THE SPONSORING BODY CONTINUED TO BE THE INDIAN MEDICAL TRUST BY SAME TRUSTEES. ALL THE RECOGNITION AND APPROVAL BY THE S TATE AND CENTRAL GOVERNMENT FOR RUNNING THE EDUCATIONAL AND OTHER CO URSES AND MEDICAL HOSPITAL RUN BY THE INDIAN MEDICAL TRUST WA S TO BE TREATED AND CONSIDERED AS TAKEN BY THE NIMS UNIVERSITY. THE OBJECTS OF THE NIMS UNIVERSITY CONTINUED TO BE THE SAME. 37. AN APPLICATION WAS FILED U/S 12AA (1) (AA) O F THE ACT ON 16/2/2017 BEFORE THE LD. CIT(E). HOWEVER, SUCH AN A PPLICATION FOR GRANTING REGISTRATION U/S 12AA HAS BEEN DENIED BY T HE LD. CIT(E) MAINLY ON THE GROUND THAT CERTAIN KHASRA NOS. OF LAND ALLOTTED AS PER THE NOTIFICATION OF THE GOVERNMENT WAS NOT IN T HE OWNERSHIP OF THE SPONSORING BODY, I.E., INDIAN MEDICAL TRUST. IN THE IMPUGNED 73 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ORDER, THE LD CIT(E) IN THE SHOW CAUSE NOTICE TO TH E ASSESSEE HAS MADE FOLLOWING OBSERVATIONS: IN THIS CONNECTION, SPOT VISIT & VERIFICATION REPO RT OF INSPECTOR OF THIS OFFICE IS SUBMITTED HEREWITH FOR KIND PERUSAL & NECESSARY ACTION. AS PER THE SPOT VISIT REPORT & OTHER INFORM ATIONS GATHERED, THE NIMS UNIVERSITY IS ENGAGED IN EDUCATI ONAL AND MEDICAL ACTIVITIES, IN ADDITION TO THE ABOVE, FOLLO WING FACTS ARE SUBMITTED HEREWITH: - 1. AS PER THE GAZETTE NOTIFICATION ISSUED DATED 29 -03-2008 BY THE RAJASTHAN GOVERNMENT AS WELL AS PROSPECTUS OF T HE UNIVERSITY. THE UNIVERSITY HAVING 60.67 ACRES OF LA ND COMPRISING IN KHASARA NOS. 152, 514, 515, 516, 517, 518, 519, 528, 529, 530, 531, 532, 519/666, 519/ 668, 39 6, 397, 398 & 520 OF VILLAGE JUGALPURA, TEHSIL- AMER. SHOBHA NAGAR, DISTT.- JAIPUR (RAJASTHAN). DURING VERIFICAT ION OF THE SAME, FOLLOWING DISCREPANCIES HAVE BEEN NOTICE. 1.1 THE KHASARA NO. 152 (KHATA SANKHYA-32) PERTAINS TO GOVERDHAN S/O GHASI RAM, CAST - MEENA. 1.2 KHASARA NO. 514 (KHATA SANKHYA- 169) PERTAINS T O PUBLIC WORKS DEPARTMENTS. 1.3 KHASARA NO. 515 (KHATA SANKHYA- 02) PERTAINS TO AGARWAL FARMS PVT. LTD. REGISTERED OFFICE RAJA RAOJI KA KHU RRA, RAMGANJ BAZAR, JAIPUR DIRECTOR SH. GIRISH CHANDRA S /O HARI PRASAD, PART 14 F 35 GHIYA MARG, BANI PARK, JA IPUR, 74 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT M/S BHOLARAM & SONS INVESTMENT PVT. LTD. THROUGH DI RECTOR SHRI VINOD KASHERA POST- PANITOLA AASAM PART 1/2. 1.4 KHASRA NO. 516 (KHATA SANKHYA -01) PERTAINS TO GOVERNMENT OF RAJASTHAN. KHASRA NO. 518 (KHATA SANK HYA- 165) PERTAINS TO JAIPUR DEVELOPMENT AUTHORITY, JAIP UR. 1.5 KHASRA NO. 528 (KHATA SANKHYA-165) PERTAINS TO JAIPUR DEVELOPMENT AUTHORITY, JAIPUR. 1.6 KHASRA NO. 531 & 532 (KHATA SANKHYA - 165) PERT AINS TO JAIPUR DEVELOPMENT AUTHORITY, JAIPUR. 1.7 KHASRA NO. 519 (KHATA SANKHYA - 1) PERTAINS TO INDIAN MEDICAL TRUST REGISTERED OFFICE 4 GOVIN.D MARG, ADA RSH NAGAR, JAIPUR THROUGH TRUSTEE SMT. RAJESHWARI DEVI W/O LATE HOTAM. SINGH TOMAR PART. 306/490 SAJJAN KUMAR S/O CHATURBHUJ AGARWAI PART 138/490 MAHANDRA KUMAR FAHHER CHATURBHUJ AGARWAL PART 46/490 RESIDENCE 20, IN FRONT OF SAWAI JAI SINGH HIGHWAY TAGORE, BANI PARK, JAIPUR. 1.8 KHASRA NO. 396/397/398 (KHATA SANKHYA- 89) PERT AINS TO MADHUSUDAN HUF S/O RAM RATAN AGARWAL KARTA MADHUSUDAN PART MADHUSUDAN SON RAMRATAN PART SUSHILA W/O RAMRATAN CAST AGARWAL, RESIDENCE RUIYAWALAN POST- TOPKHANA HUJURI, JAIPUR. 75 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT FROM THE ABOVE, IT APPEARS THAT MAJOR PART OF THE LAND WHICH IS OCCUPIED BY THE APPLICANT I.E. NIMS, UNIVERSITY, JAIPUR DOES NOT PERTAIN TO IT. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, THE ASSE SSEE SUBMITTED THAT THE KHASRA NOS. AS BEEN MENTIONED IN THE NOT ICE WAS NEVER IN THE OWNERSHIP OF THE INDIAN MEDIAL TRUST NOR WAS TR ANSFERRED TO NIMS UNIVERSITY. FURTHER THE NIMS UNIVERSITY HAD NO T YET BECOME THE OWNER OF THE LAND BEARING SAID KHASRA NUMBERS . HOWEVER, THE LD. CIT (E) NOTED THAT, AS PER THE NOTIFICATION ISS UED BY THE GOVERNMENT, SCHEDULE-1 PROVIDED THAT THE UNIVERSITY WILL HAVE 60.67 ACRES OF LAND COMPRISING OF VARIOUS KHASRA NUMBERS, BUT SOME OF THE KHASRA NUMBERS WERE NOT FOUND TO BE IN THE OWNERSHIP OF THE UNIVERSITY. THUS, HE CONCLUDED THAT THERE IS A CLEAR-CUT CONTRADICTION FROM THE GOVT GAZETTE NOTIFICATION AN D THE REPLY FILED BY THE ASSESSEE THAT THE OWNERSHIP OF THE LAND INTE NDED TO BE VESTED IN THE UNIVERSITY IS NOT ESTABLISHED. ACCORD INGLY, HE HAS REFUSED TO GRANT REGISTRATION AFTER OBSERVING AS UN DER: - 11. ONCE IT IS FOUND THAT THE OWNERSHIP OF LAND IN TENDED TO BE VESTED IN UNIVERSITY IS NOT WITH THE SPONSORING BOD Y, THE NEXT QUESTION COMES WHETHER SUCH ISSUE CAN BE EXAMINED W HILE 76 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT GRANTING REGISTRATION U/S 12AA OF THE IT ACT, 1964 IN PRESENT CASE WHERE UNIVERSITY CAME INTO EXISTENCE IN 2008, ALMOST 9 YEARS BACK. SECTION 12AA CLEARLY EMPOWERS COMMISSIO NER OF INCOME TAX TO EXAMINE OBJECTS OF THE UNIVERSITY AS WELL AS GENUINENESS OF THE ACTIVITIES. BOTH THE PHRASES OB JECTS OF THE INSTITUTION AND GENUINENESS OF ITS ACTIVITIES US ED IN THE ACT ARE COUPLED WITH THE WORD AND WHICH CLEARLY INDIC ATES THAT THEY SHOULD BE SATISFIED SIMULTANEOUSLY AS WELL AS INDEPENDENTLY. AS IN THE PRESENT CASE, THE OWNERSHI P OF LAND WHICH IS INTENDED TO BE TRANSFERRED FROM THE SPONSO RING BODY TO THE UNIVERSITY IS IN DOUBT, IT CANNOT BE HELD AS GE NUINE ACTIVITY. AS THE ACTIVITIES OF TRANSFER TO ASSETS FOR CREATIO N OF UNIVERSITY DOES NOT SEEMS TO BE GENUINE, IT IS NOT A FIT CASE FOR REGISTRATION U/S 12AA OF THE ACT. 12. IN THE LIGHT OF THE ABOVE FACTS THE APPLICATIO N SEEKING REGISTRATION U/S 12AA IS HEREBY REJECTED AND FILED. 38. ON THE SAME REASONING ALSO, APPROVAL U/S 10( 23C) HAS BEEN REFUSED BY THE LD. CIT (E) BY HOLDING AS UNDER: - THUS FROM 1.10.2016 THE APPLICANT TOOK OVER ALL TH E ASSETS AND LIABILITIES OF X 1MT ALONGWITH ALL OF ITS ACTIVITIE S. THEREFORE, IT BECOMES IMPERATIVE TO EXAMINE THE GENUINENESS OF AC TIVITIES OF 1MT. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE IN THE CASE OF M/S INDIAN MEDICAL TRUST, JAIPUR, WHICH IS THE SPON SORING BODY THE APPLICANT, A SEARCH OPERATION U/S 132(1) OF THE I.T. ACT WAS 77 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT CARRIED OUT ON 30.10.2014. DURING THE SEARCH PROCEE DINGS - UNACCOUNTED CASH, JEWELLERY, FOREIGN CURRENCY AND V ARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. AFTE R EXAMINING THE DOCUMENTS AND VARIOUS EVIDENCES COLLE CTED DURING THE COURSE OF SEARCH, AND CONSIDERING ASSESS EES SUBMISSIONS THE APPROVAL GRANTED TO THE TRUST U/S 1 0(23C)(VI) AND 10(23C)(VIA) HAS BEEN WITHDRAWN BY THE PR.CIT(C ENTRAL), JAIPUR VIDE ORDER DATED 16.01.2018. THE APPROVAL OF THE TRUST HAS BEEN WITHDRAWN DUE TO FOLLOWING IRREGULARITIES AND FACTS NOTICED IN THE FUNCTIONING OF THE TRUST- 7.1 THE TRUST IS PROFITEERING BY TAKING UNACCOUNTE D CAPITATION FEE FROM THE STUDENTS AND PARENTS. IT CANNOT HELD TO BE GENUINE, AND IN THE ACCORDANCE WITH THE OBJECTIVES AS PER TH E TRUST DEED. 7.2 THE TRUST HAS VIOLATED THE CONDITION LAID DOWN IN 10 TH PROVISO TO SEC. 10(23C)(VI) AND (VIA) OF THE I.T. ACT ,AS THE RECEIPTS OF RS. 21.6 CRORES WERE NOT ACCOUNTED BY THE ASSESSEE. SUF FICIENT EVIDENCE OF MISUSE OF TRUST FUNDS HAS BEEN FOUND DU RING THE SEARCH PROCEEDINGS. 7.3 THE TRUST IS OPERATING A NEWS CHANNEL NAMELY N EWS INDIA AT NIMS UNIVERSITY, SHOBHA NSGAR, JAIPUR, WHOSE CITY O FFICE IS AT SAHAKAR MARG, JAIPUR. IT IS CLEAR THAT THE TRUST HA S UTILIZED ITS FUNDS IN CONTRAVENTION OF ITS OBJECTIVES AS RUNNING A COMMERCIAL NEWS CHANNEL IS NOT AS PER THE STATED OBJECTIVES OF THE TRUST. HENCE, IT HAS VIOLATED THE 3 RD PROVISO TO SECTION 10(23C) OF THE ACT. 78 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 7.4 THE TRUST HAS ALSO MADE UNACCOUNTED CASH PAYMEN T OF SALARIES TO DOCTORS/STAFF, OVER AND ABOVE THE SALARIES GIVEN TO THESE DOCTORS/STAFF BY WAY OF CHEQUE. IN VIEW OF THE ABOVE FACTS, THE APPROVAL GRANTED U/ S 10(23C)(VI) & (VIA) TO THE INDIAN MEDICAL TRUST HAS BEEN WITHDR AWN W.E.F. 01.04.2006. THUS, IT CAN BE CONCLUDED, WHEN ACTIVIT IES OF THE SPONSORING BODY TAKEN OVER BY NIMS UNIVERSITY ARE N OT GENUINE, THE ACTIVITIES OF THE SPONSORED BODY I.E. NIMS UNIV ERSITY CANNOT BE INDEPENDENTLY CONSIDERED AS GENUINE. THUS, THE A CTIVITIES OF THE APPLICANT ARE HELD AS NON-GENUINE. 8. IT IS ALSO IMPORTANT TO NOTE THAT THE APPLICANT UNIVERSITY APPLIED FOR APPROVAL UNDER BOTH THE SEC./CLAUSES 10(23C)(VI ) & 10(23C)(VIA) BY FILING COMMON FORM. ON GIVING SHOW CAUSE REGARDING CORRECT SECTION UNDER WHICH APPROVAL IS S OUGHT THE APPLICANT REPLIED- IT IS THEREFORE REQUESTED THAT SINGLE APPLICATION MAY PLEASE TREATED AS APPLICATION FOR APPROVAL UNDER SECTION 1 0(23C) (VI) AS WELL AS UNDER SECTION 10 (23C) (VIA) OF IT ACT. THE SECTION 10(23C)(VI) & 1O(23C)(VIA) ARE MUTUALLY EXCLUSIVE BECAUSE OF WORLD SOLELY USED IN BOTH THE CLAUSES. THE APPLICANT CAN SEEK APPROVAL UNDER ONE CLAUSE ONLY. SEEKING APPROVAL UNDER BOTH THE CLAUSES IS TECHNICALLY AND LEGALLY WRONG. THE RELIANCE IN THIS REGARD HAS BEEN PLACED ON THE JUDGEMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CA SE OF C1T VS MAHARAJA SAWAI MANSINGH JI MUSEUM TRUST (1988) 1 69 1TR 79 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT 379(RAJ.) WHEREIN IT WAS HELD THAT IT IS AMPLY CLEA R FROM A BARE READING OF SEC. 10(22) THAT THE EDUCATIONAL INSTIT UTIONS MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES. SOLELY M EANS EXCLUSIVELY AND NOT PRIMARILY. THE EMPHASIS IN SEC. 10(22) IS ON WORD SOLELY. SECTION 10(22) HAS BEEN INHERITED BY SECTION 10(23C) AND DECISIONS APPLICABLE ON ERSTWHILE SEC. 10(22) HOLDS GOOD FOR THE PRESENT SECTION OF 10(23C). 9. IN LIGHT OF THE DISCUSSIONS AS HELD HEREIN EARLI ER PARAS OF THIS ORDER, THE APPLICATION FILED BY THE APPLICANT FOR G RANT OF APPROVAL OF EXEMPTION U/S 10(23C)(VI)& (VIA) OF THE INCOME T AX ACT IS HEREBY REJECTED. 39. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONLY GROUND TAKEN FOR REJECTING THE APPLICATIO N OF THE ASSESSEE U/S 12AA IS THAT, SOME OF THE LAND AS PER THE GOVER NMENT NOTIFICATION WAS NEITHER IN THE OWNERSHIP OF THE IN DIAN MEDICAL TRUST NOR COULD BE TRANSFERRED TO NIMS UNIVERSITY, RAJASTHAN. IT HAS NOT BEEN DOUBTED THAT THE UNIVERSITY HAS BEEN CARRY ING OUT VARIOUS EDUCATIONAL ACTIVITIES AND IS RUNNING A HOSPITAL. H E FURTHER SUBMITTED THAT WHAT IS REQUIRED TO BE SEEN WHILE GR ANTING REGISTRATION U/S 12AA OF THE ACT IS WHETHER THE ASS ESSEES OBJECTS AE CHARITABLE IN NATURE OR NOT AND WHETHER ITS ACTI VITIES ARE GENUINE 80 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT OR NOT. IN SUPPORT OF THIS CONTENTION HE STRONGLY R ELIED UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF COMMISSIONER OF INCOME-TAX, BIKANER V. GOPI RAM GOYAL CHARITABLE TRUST 392 ITR 285 (RAJ). HE FURTHER SUBMITTED THAT THE GOVERNMENT HAD ISSUED A NOTIFICATION ONLY WHEN VERI FICATION WAS DONE THAT THE HOSPITAL AND EDUCATION ACTIVITIES OF THE INDIAN MEDICAL TRUST WAS BEING RUN AND WAS DULY APPROVED BY THE VA RIOUS AUTHORITIES AT CENTRAL AND STATE GOVERNMENT. THUS, THE OWNERSHIP OF CERTAIN LAND BEARING CERTAIN KHASRA NUMBERS IS IRRELEVANT CONSIDERATION FOR REFUSING THE REGISTRATION U/S 12A A OF THE ACT. 40. ON THE OTHER HAND, THE LD. CIT-DR SUBMITTED THAT, IF ONCE IT IS FOUND THAT THE ASSESSEE HAS NOT FOUND TO BE RUNN ING ITS HOSPITAL AND EDUCATIONAL ACTIVITIES ON THE LAND WHICH HAS BE EN NOTIFIED BY THE GOVERNMENT, THEN IT CANNOT BE SAID THAT ITS ACT IVITIES ARE GENUINE. HE, THUS STRICTLY RELIED UPON THE ORDER OF THE LD. CIT (E). 41. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE MATERIAL FACTS PLACED ON RECORD, WE FIND THAT T HE NIMS UNIVERSITY, RAJASTHAN, JAIPUR HAS BEEN NOTIFIED BY AN ENACTMENT PASSED BY THE LEGISLATURE OF RAJASTHAN. THE SAID UN IVERSITY WAS 81 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ENACTED TO PROVIDE HIGHER EDUCATION IN VARIOUS FIEL DS. THE SPONSORING BODY OF THE UNIVERSITY WAS INDIAN MEDICA L TRUST. THEREAFTER IN THE GAZETTE NOTIFICATION, SCHEDULE-1 PROVIDED THAT THE UNIVERSITY WILL HAVE 60.67 ACRES OF LAND COMPRISING OF VARIOUS KHASRAS NUMBERS IN VILLAGE JUGALPURA, TESHIL- AMBER , DISTRICT- JAIPUR. THE SAID SCHEDULE ALSO ENLISTS VARIOUS BUIL DINGS, ACADEMIC FACILITIES AND VARIOUS KINDS OF DEGREES RUN BY THE SAID UNIVERSITY. IN AN ENQUIRY CONDUCTED BY THE LD. CIT (E), IT WAS FOU ND THAT CERTAIN KHASRA NUMBER AS MENTIONED IN THE GOVERNMENT NOTI FICATION FOR THE ALLOTMENT OF LAND TO THE UNIVERSITY WAS NOT IN THE OWNERSHIP OF THE INDIAN MEDICAL TRUST OR NIMS UNIVERSITY. SOLELY ON THIS GROUND, HE HAS REFUSED TO GRANT REGISTRATION. NO WHERE HE H AS DISCUSSED THE OBJECTS FOR WHICH THE SAID UNIVERSITY IS RUNNING; NOR THERE IS ANY WHISPER ABOUT THE GENUINENESS OF THE ACTIVITIES QUA THE OBJECTS. IT IS WELL SETTLED POSITION OF LAW THAT AT THE TIME OF GR ANTING REGISTRATION U/S 12AA, THE LD CIT(E) IS REQUIRED TO EXAMINE THE OBJECTS OF THE TRUST OR INSTITUTION AS TO WHETHER THEY ARE FOR THE CHARITABLE PURPOSES OR NOT AND ALSO TO SEE THE GENUINENESS OF THE ACTIVITIES QUA THE OBJECTS. IF CERTAIN KHASRA NUMBERS AS NOTIFI ED BY THE 82 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT GOVERNMENT HAS NOT BEEN ACQUIRED OR IS NOT OWNED BY THE INDIAN MEDICAL TRUST OR BY THE NIMS UNIVERSITY AND IT IS S TANDING ON SOME DIFFERENT LAND BEARING DIFFERENT KHASRA NUMBERS, BUT THAT DOES NOT MEAN THAT ITS ACTIVITIES ARE NOT GENUINE OR IS NOT CARRYING OUT CHARITABLE ACTIVITIES. EVEN IF THERE IS SOME TECHNI CAL BREACH OR VIOLATION OF THE NOTIFICATION PERTAINING TO LAND TH AT THE SAID UNIVERSITY IS NOT STANDING ON A PARTICULAR KHASRA NOTIFIED, THEN THAT WOULD BE A SUBJECT MATTER OF ISSUE OF DISPUTE WITH STATE AUTHORITIES AND NOT THE INCOME TAX DEPARTMENT. WHAT IS REQUIRED TO BE SEEN IN TERMS OF SECTION 12AA IS, ONLY THE O BJECTS AND THE GENUINENESS OF THE ACTIVITIES. ACCORDINGLY, THE REA SONS GIVEN BY THE LD. CIT (E) FOR REFUSING THE REGISTRATION CANNOT BE UPHELD. SINCE THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES HAVE NOT BEEN EXAMINED, THEREFORE, WE ARE REMITTING THE ISSUE OF GRANT OF REGISTRATION BACK TO THE FILE OF THE LD. CIT (E), W HO SHALL EXAMINE THE OBJECTS OF THE INSTITUTION WHETHER THEY ARE FOR E DUCATIONAL OR CHARITABLE PURPOSES OR NOT; AND WHETHER ITS ACTIVIT IES ARE BEING CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS INCLUDI NG THE GENUINENESS OF THE ACTIVITIES QUA THAT OBJECTS. WITH THIS DIRECTION, 83 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT THE ENTIRE MATTER IS RESTORED BACK TO THE LD. CIT ( E) WHO SHALL DECIDE AND EXAMINE THE ISSUE OF REGISTRATION U/S 12AA AFRE SH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE AND EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE TO SUBSTANTIATE ITS CASE. A CCORDINGLY, THE APPEAL RELATING TO REFUSAL OF REGISTRATION U/S 12AA OF THE ACT IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 42. LASTLY, COMING TO THE ADDITIONAL REASON GIVE N BY THE LD. CIT(E) WHILE REFUSING THE APPROVAL U/S 10(23C) OF T HE ACT THAT, FIRSTLY , DURING THE COURSE OF SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT, IT WAS FOUND THAT THE INDIAN MEDICAL TR UST WAS PROFITEERING BY TAKING UNACCOUNTED CAPITATION FEE A ND SUCH FEE WAS NOT ACCOUNTED BY THE ASSESSEE IN VIEW OF THE 10 TH PROVISO TO SECTION 10(23C)(VI) & (VIA); AND SECONDLY, THE TRUST WAS OP ERATING NEWS CHANNEL, NAMELY, NEWS INDIA AT NIMS UNIVERSITY WHIC H IS NOT GENUINE. WHILE COMING TO THIS CONCLUSION HE HAS REF ERRED TO THE DECISION AND FINDING GIVEN BY PR. CIT IN HIS ORDER FOR WITHDRAWAL OF APPROVAL U/S 10(23C) IN THE CASE OF INDIAN MEDICAL TRUST AND ON THAT BASIS, HE HAS REFUSED TO GRANT APPROVAL TO NIM S UNIVERSITY ALSO. IN SO FAR AS THE ISSUE OF MATERIAL FOUND DURI NG THE COURSE OF 84 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT SEARCH IN THE CASE OF INDIAN MEDICAL TRUST THAT IT WAS RECEIVING UNACCOUNTED CAPITATION FEE, THE SAME WAS APPLICABLE TILL THE DATE OF SEARCH AND THAT TO BE IN THE CASE OF INDIAN MEDICAL TRUST FOR WHICH WE HAVE ALREADY GIVEN OUR FINDING WHILE DECIDING TH E CASE OF THE INDIAN MEDICAL TRUST. HOWEVER, THE SAME CHARGE OR A LLEGATION CANNOT BE IMPORTED IN THE CASE OF NIMS UNIVERSITY A LSO UNTIL AND UNLESS THERE IS SOME INCRIMINATING MATERIAL OR ANY KIND OF ENQUIRY HAS BEEN CONDUCTED LEADING TO ANY ADVERSE INFERENCE , FOR INSTANCE, RECEIVING OF UNACCOUNTED CAPITATION FEE IS STILL CO NTINUING OR IS PERMEATING IN THE SUBSEQUENT YEARS ALSO, THAT IS, F ROM THE DATE WHEN NIMS UNIVERSITY HAS TAKEN OVER BY ENTIRE ASSET S AND LIABILITIES OF THE TRUST AND ALSO THE EDUCATIONAL ACTIVITIES. W E ARE OF OPINION THAT THE ISSUE OF GRANT OF APPROVAL U/S 10(23C) NEE DS TO BE EXAMINED AFRESH. ON THE ISSUE OF RUNNING OF A NEWS CHANNEL ALSO, THE ISSUE NEEDS TO BE EXAMINED UNDER THE SCOPE OF 3 RD PROVISO TO SECTION 10(23C) (VI) & (VIA) AND SECTION 11(5) OF T HE ACT. THE LD. CIT (E) SHALL EXAMINE THIS ASPECT ALSO WITHOUT GETTING PREJUDICE WITH THE FINDING GIVEN IN THE APPEALS OF THE INDIAN MEDICAL TRUST AS DECIDED ABOVE FOR THE REASON THAT HERE THE ACTIVITIES OF TH E NIMS UNIVERSITY 85 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT HAD ONLY STARTED AFTER 01/10/2016 WHEN ALL THE ASSE TS AND LIABILITIES OF THE INDIAN MEDICAL TRUST HAS BEEN TR ANSFERRED TO NIMS UNIVERSITY BY WAY OF AN AGREEMENT BETWEEN THE INDIA N MEDICAL TRUST AND NIMS UNIVERSITY. THE GENUINENESS OF THE A GREEMENT WHEREBY ENTIRE ASSETS AND LIABILITIES HAVE BEEN TRA NSFERRED FROM THE INDIAN MEDICAL TRUST TO NIMS UNIVERSITY ALSO CAN BE EXAMINED WHETHER IT IS IN ACCORDANCE WITH RELEVANT PROVISION S OF LAW AND THERE IS ACTUAL TRANSFER OF ASSETS AND LIABILITY OR IT IS MERE PAPER ENTRY OR IS JUST A FAADE. ACCORDINGLY, THE ISSUE OF APPROVA L U/S 10(23C) OF THE ACT IS ALSO REMANDED BACK TO THE FILE OF THE LD . CIT(E) TO BE EXAMINED DENOVO AND AFRESH AND IN ACCORDANCE WITH L AW AFTER EXAMINING THE OBJECTS AND GENUINENESS OF THE ACTIVI TIES. NEEDLESS TO SAY, THE LD. CIT (E) SHALL GIVE DUE AND PROPER OPPO RTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. ACCORDINGLY, THIS APP EAL OF THE ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSES ONLY. 43. IN THE RESULT THE APPEALS OF THE INDIAN MEDI CAL TRUST IN ITA NO. 252 & 253/JP/2018 ARE DISMISSED; AND THE APPEAL S OF NIMS UNIVERSITY IN ITA NO. 736/JP/2017 & 545/JP/2018 ARE ALLOWED FOR STATISTICAL PURPOSES. 86 ITA 252 & 253/JP/2018, 736/JP/2017 & 545/JP/2018 INDIAN MEDICAL TRUST VS. PR.CIT ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2018. SD/- SD/- (OM PRAKASH KANT) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 12 TH OCTOBER, 2018 *RANJAN COPY OF THE ORDER FORWARDED TO: 1.THE APPELLANT- (I) INDIAN MEDICAL TRUST, JAIPUR. (II) THE NIMS UNIVERSITY, RAJASTHAN, JAIPUR 2. THE RESPONDENT- (I) THE PR.CIT (CENTRAL), JAIPUR . (II) THE CIT (EXEMPTIONS), JAIPUR. 3. CIT 4. THE CIT (A) 5. DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 252 & 253/JP/2018, 736/JP/2 017 & 545/JP/2018) BY ORDER, ASST. REGISTRAR