M/s. Meritta Welfare Trust, Haridwar V. CIT, Dehradun

ITA 5481/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8881 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-02-2015
• Assessment Year: misc
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12; 11

Judgement Text

DELHI BENCH E : NEW DELHI BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 5481 /DEL/ 2013 MERITTA WELFARE TRUST NATH HOUSE, DEVPURA, HARIDWAR, PAN : AADTM2778C VS. CIT DEHRADUN (APPELLANT) (RESPONDENT) DATE OF HEARING 02.02.2015 DATE OF PRONOUNCEMENT 27 . 02..2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL ARISES FROM AN ORDER DATED 26.07.2013 OF CIT, DEHRADUN U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) . 2. THE FACTUAL MATRIX IS THAT THE APPELLANT - ASSESSEE IS A PUBLIC CHARITABLE TRUST FORMED UNDER THE DEED OF TRUST DATED 11.06.2012 W ITH A PRIMARY OBJECT OF PURSUING EDUCATION AL ACTIVITIES. IT HAD FILED APPLICATION DATED 15. 0 6 .2013 FOR REGISTRATION U/S 12A(A) OF THE ACT. THE LD CIT HAS DECLINED THE SAID APPLICATION ON THE GROUND THAT THE APPELLANT TRUST HAS ENTERED INTO THE FRANCHISE AG REEMENTS WITH MOUNT LITRA ZEE SCHOOL , WHEREBY THE APPLICANT TRUST HAS GIVEN RS. 33,70,800/ - AS FRANCHISEE FEE TO ZEE LEARN LTD. IT HAS BEEN HELD THAT UNDER THE AGREEMENT, THE SCHOOL WILL BE RUN UNDER THE GUIDELINES AND SPECIFICATION F R O M FRANCHIS O R AND THER EFORE THERE IS NO SCOPE WITH THE ASSESSEE TO GET INTO ANY CHARITABLE ACTIVIT Y AND THIS VENTURE IN EDUCATION IS PURELY COMMERCIAL. HE THUS CONCLUDED THAT EARNING PROFIT SEEMS THE MAIN APPELLANT BY : SH. GAUTAM JAIN, ADV RESPONDENT BY : GUJAN PRASA D, CIT DR PAGE 2 OF 8 MOTIVE OF THE ASSESSEE TRUST ; AND THE GENUINENESS OF THE ACTIVITIES AND CHARITABLE CONTENT OF OBJECTIVES IS NOT ASCERTAINABLE . THEREFORE THE APPELLANT TRUST HAS PREFERRED THE INSTANT APPEAL BEFORE US . 3. THE LD AR SHRI GAUTAM JAIN SUBMITTED THAT IN THE INSTANT CASE, THE LD CIT HAS AD MITTED THAT THE TRUST HAS BEEN FORMED TO SET UP SCHOOLS WHICH IS AN EDUCATIONAL ACTIVIT Y AND THEREFORE OBJECTIVE OF THE APPELLANT TRUST S ARE CHARITABLE. HE CONTENDED THAT THE EDUCATION PER SE IS A CHARITABLE OBJECT U/S 2(15) OF THE ACT. HE PLACED RELI ANCE ON THE FOLLOWING JUDGEMENT ARYAN EDUCATIONAL SOCIETY VS. CIT 93 ITD 546, (DEL) SHAVAK SHIKSHA SAMITY VS. CIT 104 TTJ 127(DEL) CIT VS. RED ROSE SCHOOL 212 CTR 394 (ALL) DIT VS. GARDEN CITY EDUCATIONAL TRUST 330 ITR 480 (KARN) DDIT VS. SHANTI DEVI PROGRE SSIVE EDUCATION SOCIETY 340 ITR 322 (DEL) OP JINDAL GLOBAL UNIVERSITY VS. CIT 127 ITD 164 (DEL) 4. HE FURTHER SUBMITTED THAT MERE ENTERING INTO A FRANCHISE AGREEMENT WITH FRANCHISOR TO SET UP SCHOOL CANNOT BE A GROUND TO CONCLUDE THAT EARNING PROFIT IS THE MAIN MOTIVE OF THE ASSESSEE TRUST. HE SUBMITTED THAT LD CIT AT THE TIME OF REGISTRATION H AS TO RESTRICT HIMSELF ABOUT THE OBJECT OF THE TRUST AND GENUINENESS OF THE ACTIVITIES AND SINCE IN THE INSTANT CASE , THERE IS N O DISPUTE ABOUT THE CHARITABLE NATURE OF THE OBJECT OF EDUCATIONAL ACTIVIT IES, THE REJECTION OF APPLICATION FOR REGISTRATION IS NOT IN ACCORDANCE WITH LAW. HE FURTHER SUBMITTED THE JUDGEMENT OF UTTRAKHAN D HIGH COURT IN THE CASE OF CIT VS. NATIONAL INSTITUT E AERONAUTICAL ENGINEERING SOCIETY REPORTED IN 315 ITR 428 , AND RAJAH SIR ANNAMALAI CHETTAIR VS. DIT 48 SOT 502 ARE NOT APPLICABLE TO THE FACT OF THE APPELLANT TRUST. HE PLACED RELIANCE ON THE FOLLOWING JUDGEMENT S: - PAGE 3 OF 8 (A.) CIT VS. RED SCHOOL REPORTED IN 212 CTR 394 (ALL ) , (B.) AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATION VS. CBDT 301 ITR 86 (SC), (C.) ITA NO. 142/2007 (UTTRAKHAND) DATED 27.112012 CIT VS. HIGHLANDER EDUCATIONAL ACAD EMY (PAGES 94 - 95 OF PAPER BOOK) , ( D. ) CIT VS. JYOTI PRABHA SOCIETY 310 ITR 162. 5. HE ALSO CONTENDED THAT AMENDED PROVISION SECTION 2(15) OF THE ACT CLEARLY PROVIDE THAT EDUCATION ACTIVITIES CANNOT BE CLASSIFIED AS COMMERCIAL AND THEREFORE THE DENIAL OF REGISTRATION TO THE CHARITABLE TRUST WAS INVALID . ON THE OTHER HAND THE LD CIT DR SUPPORTED AND RELIED ON THE ORDER OF THE LD CIT AND DOES NOT WANT US TO INTERFERE IN THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IN INSTANT CASE WE FIND THAT THE APPELLANT WAS FORMED UNDER A TRUST DEED DATED 11.06.2012 AS A PUBLIC CHARITABLE TRUST. THE TRUST DEED PROVIDES THAT TRUST HAS BEEN FORMED FOR PUBLI C EDUCATIONAL AND CULTURAL PURPOSE. IT FURTHER STIPULATES IN CLAUSE 27 AND 29 AS UNDER: - 27. APPLICATION OF THE PROPERTIES OF THE TRUST: THE PROPERTIES AND FUNDS OF THE TRUST SHALL BE APPLIED ONLY FOR THE PURPOSE OF THE TRUST AND FOR THE DUE ADMINISTRATI ON OF ITS BUSINESS AFFAIRS, PROVIDED HOWEVER, THAT THIS SHALL NOT PRECLUDE PAYMENT OF ANY REMUNERATION OR ALLOWANCE OR GIVING, OF RESIDENTIAL ACCOMMODATION OR ANY PERQUISITES TO ANY TRUSTEE IN CONNECTION WITH THE WORK CARRIED OUT BY HIM/HER FOR THE PURPOSE OF THE TRUST. 29. DISSOLUTION/AMALGAMATION / WINDING UP IN THE EVENT OF DISSOLUTION OR AMALGAMATION OR WINDING UP OF THE TRUST, THE ASSETS REMAINING AS ON THE DATE OF DISSOLUTION SHALL UNDER NO CIRCUMSTANCES BE DISTRIBUTED AMONGST THE TRUSTEES BUT THE S AME SHALL BE TRANSFERRED TO SOME OTHER SIMILAR TRUST/ORGANIZATION, WHOSE OBJECTS ARE SIMILAR TO THOSE OF THIS TRUST WITH THE PRIOR PERMISSION OF THE CHARITY COMMISSIONER/ COURT / ANY OTHER LAW AS MAY BE APPLICABLE FOR THE TIME BEING. 7. AS SUCH UNDER THE TRUST DEED NO PART OF THE INCOME AND PROPERTY OF THE TRUST EITHER DURING THE OPERATIONAL EXISTENCE OF THE TRUST OR ON ITS DISSOLUTION SHALL BE FOR BENEFIT ITS TRUSTEES BUT ALL THE RECEIPTS/ INCOME SHALL BE APPLIED FOR THE OBJECTS OF THE TRUST. THE CIT HAS ALSO FURTHER FOUND AS MATTER OF FACT THAT PAGE 4 OF 8 PURSUANT TO THE ABOVE OBJECT S THE TRUST HAD ENTERED INTO A FRANCHISE E AGREEMENT WITH THE ZEE LEARN LTD FOR SET TING UP SCHOOL. FURTHER SINCE THE FRANCHISE E AGREEMENT PROVIDES THAT THE SCHOOL WOULD BE RUN UNDER THE GUIDELINES AND SPECIFICATION OF THE FRANCHISOR THEREFORE HE HELD THAT THE VENTURE IN EDUCATION IS PURELY COMMERCIAL. TO APPRECIATE THE ABOVE WE CONSIDER IT APPROPRIATE TO KNOW THE PROVISIONS CONTAINED IN SECTION 2(15) OF THE A CT WHICH REPRODUCED AS UNDER: - 2 (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION , MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESE RVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE O F USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [ PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS [TWENTY - FIVE LAKH RUPEES] OR LESS IN THE PREV IOUS YEAR;] 8. SECTION 2(15) DEFINES CHARITABLE PURPOSE TO INCLUDE EDUCATION. THERE IS NO RESTRICTION IMPOSED IN THE MANNER AND MODE OF EDUCATION UNDER THIS ACT . FURTHER THE PROVISO TO SECTION 2(15) OF THE ACT PROVIDES THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE , COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE , COMMER CE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION , IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY. THUS THE AB OVE PROVISO STIPULATES THAT THE ASPECT OF PAGE 5 OF 8 COMMERCIAL ITY WILL BE CONFINED TO THE LAST LI MB OF SECTION 2(15) I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND NOT TO ANY OTHER LIMB NAMELY RELIEF OF THE POOR , EDUCATION OR MEDICAL RELIEF , PRESERVATION OF ENVIRONMENT AND PRESERVATION OF MONUMENTS OR PLACE OR OBJECT OF ARTISTIC OR HISTORICAL INTEREST. CIRCULAR NO.11 OF 2008 DATED 19.12.2008 FURTHER AMPLIFIES THE ABOVE POSITION WHEREBY IT HAS BEEN PROVIDED THAT THE INSERTION OF PROVISO TO SECTION 2(15) OF THE ACT BY FINANCE ACT 20 10 WILL NOT APPLY TO THE FIRST THREE LIMBS I.E. REL IEF OF THE POOR, EDUCATION OR MEDICAL RELIEF EVEN IF IT INDEPENDENTLY INVOLVES CARRYING ON COMMERCIAL ACTIVITY. IT HAS BEEN STATED IN THE SAID CIRCULAR AS UNDER: THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL APPLY TO ENTITIES WHOSE PURPOSE IS ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E. THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE CONTAINED IN SECTION 2(15). HENCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OR UNDER SECTION 10(23C) OF THE ACT IF TH EY CARRY ON COMMERCIAL ACTIVITIES. WHETHER SUCH AN ENTITY IS CARRYING ON AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS IS A QUESTION OF FACT WHICH WILL BE DECIDED BASED ON THE NATURE, SCOPE, EXTENT AND FREQUENCY OF THE ACTIVITY. 9. IN VIEW OF THE ABOVE WE FIND FORCE IN THE CONTENTION OF THE LD COUNSEL FOR THE APPELLANT THAT COMMERCIALITY IS NOT A TEST TO DETERMINE THE GENUINENESS OF THE CHARITABLE NATURE OF EDUCATION ACTIVITIES OF A TRUST OR INSTITUTION UNDER THE AMENDED PROVISION OF SECTION 2(15) OF THE ACT. THE APEX C OURT IN THE CASE OF AMERICAN HO TEL AND LODGING ASSOCIATION EDUCATION INSTITUTION VS. CBDT REPORTED IN 301 ITR 86 HAS HELD AS UNDER: - 30. IN DECIDING THE CHARACTER OF THE RECIPIENT, IT IS NOT NECESSARY TO LOOK AT THE PROFITS OF EACH YEAR, BUT TO CONSIDER THE NATURE OF THE ACTIVITIES UNDERTAKEN IN INDIA. IF THE INDIAN ACTIVITY HAS NO CO - RELATION TO EDUCATION, EXEMPTION HAS TO BE DENIED, (SEE JUDGMENT OF THIS COURT IN OX FORD UNIVERSITY PRESS CASE (SUPRA). THEREFORE, THE CHARACTER OF THE RECIPIENT OF INCOME MUST HAVE CHARACTER OF EDUCATIONAL INSTITUTION IN INDIA TO BE ASCERTAINED FROM THE NATURE OF THE ACTIVITIES, IF AFTER MEETING EXPENDITURE, SURPLUS REMAINS INCIDENTALLY FROM THE ACTIVITY PAGE 6 OF 8 CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL NOT CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES. IN OTHER WORDS, EXISTENCE OF SURPLUS FROM THE ACTIVITY WILL NOT MEAN ABSENCE OF EDUCATIONAL PURPOSE (SEE JUDGMENT OF THIS COU RT IN ADITANAR EDUCATIONAL INSTITUTION VS. ADDL. CIT [1997] 224 ITR 310 . THE TEST IS THE NATURE OF ACTIVITY. IF THE ACTIVITY LIKE RUNNING A PRINTING PRESS TAKES PLACE IT IS NOT EDUCATIONAL. BUT WHETHER THE INCOME/PROFIT HAS BEEN APPLIED FOR NON - EDUCATIONA L PURPOSE HAS TO BE DECIDED ONLY AT THE END OF THE FINANCIAL YEAR. 10. HAVING REGARD TO THE ABOVE WE HOLD THAT THE CONCLUSION OF THE LD CIT THAT APPELLANT IS NOT ENGAGED IN CHARITABLE ACTIVITIES UNDER SECTION 2(15) OF THE ACT IS INCORRECT. 11. THE APPL ICATION FOR REGISTRATION CANNOT BE REJECTED ON PRESUMPTIONS AND SURMISES THAT THE INCOME OF THE TRUST WILL NOT BE UTILIZED FOR CHARITABLE PURPOSE . THE CONDITIONS OF THE FRANCHIS ER UNDER THE FRANCHISOR AGREEMENT CANNOT BE A GROUND TO ASSUME THAT THE INCOME OF THE TRUST WILL NOT BE APPLIED FOR EDUCATIONAL ACTIVITY WHICH IS CHARITABLE ACTIVITY U/S 2(15) OF THE ACT OR OBJECT S OF THE TRUST. WE CONSIDER IT APPROPRIATE TO EMPHASI Z E HERE THAT CIT AT THE STAGE OF REGISTRATION IS NOT REQUIRE D TO EXAMINE THE APPLICATION OF UNDER SECTION 11 AND 12 OF THE ACT. THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE (SUPRA) HAS HELD SUFFICIENT SAFEGUARDS HAVE BEEN GIVEN IN SECTION 11, 12 AND 13 FOR ASSESSING THE INCOME WHICH HAS NOT BEEN APPLIED FOR THE PURPOSE OF THE TRUST OR INSTITUTION. IT HAS BEEN HELD IN THE JUDGEMENT AS UNDER: - 44. IT IS SIGNIFICANT TO MENTION THAT REGISTRATION UNDER SECTION 12AA, DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET THE INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOSE OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY BY THE COMMISSIONER SHALL REMAIN RESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MOVED THE APPLICATION FOR REGISTRATION UNDER SECTION 12A, IS ACTUALLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION HAS TO BE SEEN, KEEPING IN MIND THE OB JECTS THEREOF, WHICH NECESSARILY MEANS THAT THE COMMISSIONER SHALL SATISFY HIMSELF ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH THE OBJECTS PAGE 7 OF 8 OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABLISHING AND RUNNING A SCHOOL IS TH E OBJECT OF THE SOCIETY, AS GIVEN IN ITS BYE - LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHOOL, WHERE EDUCATION IS BEING IMPARTED AS PER RULES AND THE FACTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIVITY. THE ENQUIRY REGA RDING GENUINENESS OF THE ACTIVITIES CANNOT BE STRETCHED BEYOND THIS. 12. IN THE IMPUGNED ORDER THE LD CIT HAS RELIED ON THE JUDGMENT IN THE CASE OF CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING 314 ITR 428 TO HOLD THAT MERE IMP A RTING EDUCATION FOR PRIMARY PURPOSE OF EARNING PROFIT CAN N OT SAID TO BE A CHARITABLE ACTIVITY. THE SAID JUDGEMENT H AS NO APPLICATION TO THE FACTS OF THE APPELLANT TRUST. THERE IS NO EVIDENCE TO SHOW THAT THIS TRUST HAS BEEN SET UP WITH THE PRIMARY PURPOSE EARNING PROFIT A ND IN ANY CASE , AS HELD ABOVE UNDER THE AMENDED PROVISIONS , TRADE OR COMMERCE CANNOT BE A CONSIDERATION TO HOLD THAT EDUCATION ACTIVITIES ARE NOT A CHARITABLE ACTIVITIES U/S 2(15) OF THE ACT. ON THE CONTRARY , WE FIND THAT THE DECISION OF UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. HIGHLANDERS EDUCATIONAL ACADEMY IN 142/2007 DATED 27.11.2012 AS HELD H AS UNDER: - 3. THE ASSESSING OFFICER OBSERVED THAT THE SAID OBJECTS OF THE SOCIETY MAKE IT CLEAR THAT THE SOCIETY HAS BEEN ESTABLISHED TO EAR N PROFIT AS EXCESS OF RECEIPT OVER EXPENDITURE WILL BE UTILIZED FOR RELIGIOUS AND CHARITABLE PURPOSES. ONLY A PRUDENT PERSON AS THAT OF THE ASSESSING OFFICER COULD COME TO THAT CONCLUSION. THE PRUDENCE THAT HE HAD USED, HOWEVER, IS NOT ACCEPTABLE IN THE PR UDENT WORLD AS IS KNOWN IN LAW. A LOOK AT EACH OF THOSE CIAUSES WILL SHOW THAT TO FULFIL ANY OF THEM, THE ASSESSEE WILL UNDERTAKE ONLY EDUCATIONAL ACTIVITY AND ACCORDINGLY, THE CONCLUSION WOULD BE THAT THE WHOLE PURPOSE OF ESTABLISHMENT OF THE ASSESSEE WAS TO ENGAGE IT SOLELY FOR EDUCATIONAL PURPOSES. IT WILL FURTHER BE SEEN FROM THOSE OBJECTS THAT THE ASSESSEE WAS NOT ESTABLISHED FOR THE PURPOSE OF PROFIT. NONE OF THE SAID 12 OBJECTS WOULD SHOW THAT THE ACTIVITIES CONTEMPLATED THEREIN SUGGESTED EVEN A HIDD EN INTENT OF MAKING PROFIT. AT THE SAME TIME, THOSE OBJECTS WILL ALSO NOT SHOW THAT WHILE CARRYING OUT THOSE OBJECTS, THE ASSESSEE WILL BE DISCHARGING ANY RELIGIOUS OR CHARITABLE ACTIVITY. THE CONCLUSION, THEREFORE, WOULD BE THAT THE OBJECT OF ESTABLISHMEN T OF THE ASSESSEE WAS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT. HOWEVER, OBJECT OF ESTABLISHING THE ASSESSEE WAS OF NO CONSEQUENCE IN THE INSTANT CASE. WHAT THE ASSESSING OFFICER WAS REQUIRED TO SEE WAS, WHETHER THE ASSESSEE WAS E XISTING SOLELY FOR EDUCATIONAL PURPOSE, INASMUCH AS, THE STATUTE IMPOSES SUCH OBLIGATION ON THE PART OF THE PAGE 8 OF 8 ASSESSING OFFICER AND NOT AN OBLIGATION TO DETERMINE THE OBJECTS, FOR WHICH THE ASSESSEE WAS ORIGINALLY ESTABLISHED. THE ASSESSING OFFICER HAS MEREL Y RECORDED THAT THE RECEIPTS OF THE ASSESSEE WERE MORE THAN ITS EXPENDITURE. HE DID NOT RECORD A FINDING THAT THE ASSESSEE USED OR IS USING ANY PART OF THE EXCESS OF RECEIPT OVER EXPENDITURE FOR ANY OTHER PURPOSE. THE ASSESSING OFFICER HELD THAT THE ASSESS EE IS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSES, BUT, AT THE SAME TIME, IT CLEARLY AND IN NO UNCERTAIN TERMS RECORDED A FINDING THAT THE ASSESSEE IS RUNNING A SCHOOL WITH NURSERY AND KINDERGARTEN CLASSES. NO OTHER EXISTENCE OF THE ASSESSEE WAS NOTICED. THEREFORE, THE CONCLUSION WOULD BE THAT THE ASSESSEE WAS EXISTING FOR THE PURPOSE OF RUNNING THE SAID SCHOOL WITH NURSERY WITH KINDERGARTEN CLASSES AND, ACCORDINGLY, WAS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. IF THE EXISTE NCE OF THE ASSESSEE WAS NOT FOR THE PURPOSES OF PROFIT, BUT SOLELY FOR EDUCATIONAL PURPOSE, THEN THE RECEIPTS OF THE ASSESSEE, IF THE SAME DID NOT EXCEED RS.1 CRORE PER ANNUM, WILL BE OUTSIDE THE PURVIEW OF TOTAL INCOME AS IS THE MANDATE CONTAINED IN SECTI ON 10(23C)(IIIAD) OF THE ACT. THAT HAVING NOT BEEN HELD BY THE ASSESSING OFFICER WAS REVERSED BY THE COMMISSIONER OF APPEALS AND THE SAME HAVING BEEN AFFIRMED BY THE TRIBUNAL, THERE IS NO SCOPE OF INTERFERENCE. 13. THEREFORE FOLLOWING THE ABOVE JUDGEMENT WE HOLD THAT THE BASIS ADOPTED BY THE CIT TO DECLINE REGISTRATION WAS NOT IN ACCORDANCE WITH LAW AND IN VIEW THEREOF , CIT IS DIRECTED TO GRANT THE REGISTRATION TO APPELLANT TRUST U/S 12AA(1)(B) OF THE ACT. 14. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 02.2015 . - S D / - - S D / - (N.K.SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 7 / 02 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTR AR ITAT, NEW DELHI