Aasho Charitable Trust, Moradabad V. CIT (Exemptions), Lucknow

ITA 5617/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3876 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 31-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Charitable institution; Opportunity of being heard; Question of law; Benefit of exemption
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH , JUDICIAL MEMBER ITA NO. 561 7 /DEL/201 6 AASHO CHARITABLE TRUST VS. THE C.I.T [E] B 96, GANDHI NAGAR LUCKNOW MORADABAD PAN : A AETA 4998 F [APPELLANT] [RESPONDENT] DATE OF HEARING : 0 4 . 0 1 .201 8 DATE OF PRONOUNCEMENT : 30 . 01 .201 8 ASSESSEE BY : SHRI PIYUSH KAUSHIK, ADV REVENUE BY : S MT. APARNA KARAN, CIT - DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21 . 07 .201 6 OF COMMISSI ONER OF INCOME TAX ( EXEMPTIONS ) , LUCKNOW PASSED U/S 12AA(1)(B)(II ) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. CIT(E) ERRED IN LAW AND ON FACTS IN REJECTING THE APPLICATION U/S 12AA(1)(B)(II) OF THE ACT. 2. THAT THE ASSESSEE WANTS TO APPEAR PERSON AL LY ON THE DATE FIXED FOR HEARING. BUT HE COULD NOT GET THE RESERVATION IN THE TRAIN TO LUCKNOW FROM MORADABAD. THEREFOR E , HE COULD NOT APPEAR ON THE D ATE FIXED FOR HEARING TO PR ODUCE THE REQUIRED DETAILS AND DOCUMENTS. THEREFORE, REJECTION OF APPLICATION U/S 12AA(1)(B)(II) OF THE ACT IS ARBITRARY, UNJUSTIFIED, ILLEGAL AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE SOCIETY FILED AN APPLICATION FOR REGISTR ATION U/S 12A(A) OF THE ACT ON 04.02.2016 WITH THE CIT(E), LUCKNOW. THE ASSESSEE WAS ACCORDED OPPORTUNITY OF BEING HEARD CALLING FOR SPECIFIC QUERIES AND THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. ACCORDINGLY, THE LD. CIT(E) PROCEEDED TO DECIDE THE ISSUE FOR REGISTRATION OF THE SOCIETY ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE LD. CIT(E) OBSERVED THAT THE ASSESSEE HAS MERELY SUBMITTED THE TRUST DEED AND NO INCOME AND EXPENDITURE ACCOUNTS, RECEIPT AND PAYMENT ACCOUNTS BY THE ASSESSEE AS CLAIMED IN THE TRUST DEED HAVE 3 BEEN PROVIDED TO FIND OUT WHETHER ANY ACTIVITY IS CHARITABLE OR NOT. IN THE ABSENCE OF ANY MATERIAL AVAILABLE ON RECORD, THE LD. CIT(E) REJECTED THE APPLICATION U/S 12A(A) OF THE ACT FILED BY THE ASSESSEE. 4. THE LD. CIT(E) , WHILE CONCLUDING OBSERVED THAT THE CIT HAS POWER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE TRUST OR INSTITUTION AS PER THE ACT AND IN THE ABSENCE OF SUCH SATISFACTION, THE APPLICANT LOSES ITS ELIGIBILITY FOR CONSIDERATION OR FOR ACCORDING REGISTRAT ION. THE LD. C IT(E) FURTHER OBSERVED THAT THE ASSESSEE IS NOT CARRYING OUT ANY CHARITABLE ACTIVITY AND ACCORDINGLY, THE APPLICANT SOCIETY HAS NOT MADE OUT A CASE FOR GRANTING REGISTRATION U/S 12AA(1)(B) OF THE ACT. THE LD. CIT(E) RELIED UPON THE DECISION OF VARIOUS COURTS OF LAW AS IN THE CASE OF CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATION SOCIETY REPORTED IN [2000] 181 TAXMAN 205 [UTTARAKHAND] WHEREIN IT HAS BEEN HELD THA T U/S 12AA(1)(A), THE CIT IS EMPOWERED TO SATISFY HIMSELF ABO UT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND HE MAY MAKE SUCH ENQUIRIES AS HE DEEMS NECESSARY. 5. HE FURTHER RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF KIRTI CHANDRA TARAWATI CHARITABLE SOCIETY VS. DIT [EXEMPTION] REPORTED IN 232 ITR 11 [DEL] WHEREIN IT HAS BEEN HELD THAT 4 THERE IS NO OBLIGATION ON THE LD. CIT TO GRANT REGISTRATION TO A SOCIETY MERELY BY LOOKING AT THE INSTRUMENT CREATING THE SOCIETY AND SHUTTING HIS EYES TO TH E ACTUAL ACTIVITIES CARRIED OUT BY IT. 6. HE FURTHER RELIED ON THE ORDER OF THE ITAT LUCKNOW BENCH IN ITA NO. 809/LKW/2014 ORDER DATED 26.02.2014 WHEREIN IT HAS BEEN HELD THAT THE MATERIAL REQUIRED FOR FORMATION OF THE SATISFACTION MANDATED BY THE ASSESSE E IS NOT AVAILABLE AND ACCORDINGLY THE ASSESSEE FAILED TO FULFILL THE CONDITIONS FOR GRANT OF REGISTRATION U/S 12A OF THE ACT. FURTHER, THE LD. CIT OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVIDE SUFFICIENT MATERIAL TO CORROBORATE THE CHARITABLE NATURE O F THE OBJECTS AND GENUINENESS OF THE ACTIVITIES. ACCORDINGLY, HE REJECTED THE CLAIM OF THE ASSESSEE. 7. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT AT THE STAGE OF GRANTING OF REGISTRATION U/S 12AA OF THE ACT, THE LD. CIT IS NOT SUPPOSED TO EXAMINE THE APPLICATION OF INCOME BUT HE HAS TO EXAMINE ONLY THE OBJECTS OF THE SOCIETY WHETHER THE SAME ARE CHARITABLE OR NOT. IN THE PRESENT CASE, THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY EVEN TILL TODAY AS PER THE COPIES OF THE BALANCE SHEET PLACE D ON RECORD IN THE PAPER BOOK AND, THEREFORE, THERE IS NO QUESTION OF ANY 5 GENUINENESS OF THE ACTIVITY OR SATISFACTION OF THE LD. CIT WITH REGARD TO THE ACTIVITIES REFERRED TO BY THE LD. CIT(E) 8. AS REGARDS THE APPLICATION OF INCOME, IT IS THE DUTY OF TH E ASSESSING OFFICER ON YEAR TO YEAR BASIS TO EXAMINE THE SAME. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON A CATENA OF DECISIONS ESPECIALLY ON THE IDENTICAL ISSUE, THE DECISION OF THE COORDINATE BENCH OF ITAT DELHI IN THE CASE OF VDIYADAYANI SHIKSHA SAMITI VS. CIT(E) IN ITA NO. 309/2016. HE ALSO RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE ITAT DELHI BENCH IN THE CASE OF BHARTIYA KISAN SANGH REPORTED IN [2017] 59 ITR [TRIB] 228 , WHICH IS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE ON IDENTICAL ISS U E. HE FURTHER RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ARGUMENTS : DE DE CISION OF ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS CIT 185 ITR 6347' DE DE CISION OF KARNATAKA HIGH_JCOURT IN THE CASE OF CIT VS A.S.KUPPARAJU BROTHERS CHARITABLE FOUNDATION TRUST (2012) 205 TAXMAN 9. Y DE DEC ISION OF MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS D.P.R. CHARITABLE TRUST 61 DTR410. DECISION OF KERALA HIGH COURT IN THE CASE OF SREE ANJANEYA 'MEDICAL TRUST VS CIT (2016) 382 ITR 399. DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS B.K.K. MEMORIAL TRUST [ 2 0 13 ] 231 TAXMAN 1. 6 DECISION OF CO - ORDINATE BENCH OF DELHI ITAT IN THE CASE OF SHREE BALAJI EDUCATIONAL TRUST VS CIT (2016) 47 ITR (TRIB.) 595 ITAT (DEL.). 9. HE ALSO DREW OUR ATTENTION TO THE OBJECTS OF THE SOCIETY REFLECTED IN THE PAPER BOOK AT PAGES 5 AND 6 AND ARGUED THAT ALL THE OBJECTS ARE CHARITABLE IN NATURE AND NO DEFECTS IN THE OBJECTS OF THE SOCIETY HAVE BEEN POINTED OUT BY THE LD. CIT(E). 10. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF THE LD. CIT(E) AND THE DECISIONS RELIED UPON BY THE LD. CIT(E) IN HIS ORDER, 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED UPON BY BOTH THE S IDES. AT THE OUTSET, WE WOULD LIKE TO REPRODUCE THE PROVISIONS CONTAINED IN SECTION 12AA(1) OF THE ACT WHICH READ AS UNDER: 7 1) THE PRINCIPAL COMMISSIONER PR COMMISSIONER , ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB - SECTION (1)] OF SECTION 12A , SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INS TITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE - (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT . 12. FROM A BARE READING OF THE ABOVE PROVISIONS OF THE ACT CONTAINED IN SECTION 12AA(1) OF THE ACT, IT IS EVIDENT THAT THE CIT HAS TO EXAMINE THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF THE ACTIVITIES. SINCE IN THE PRESENT CASE THERE IS NO ACTIVITY CARRIED OUT BY THE ASSESSEE, THEREFORE, THERE IS NO QUESTION OF GENUINENESS AN D SATISFACTION OF THE LD. CIT . ACCORDINGLY, THE SAID CONDITIONS OF SECTION 8 12AA(1 ) OF THE ACT BECOME INFRUCTUOU S. THE ONLY CONDITION LEFT IS SATISFYING ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION WHICH HAVE BEEN REPRODUCED IN THE PRESENT CASE. THE LD. CIT(E) HAS NOT BROUGHT AN IOTA OF EVIDENCE TO PROVE THAT THE SAID OBJECTS OF THE ASSESSEE SOCIETY ARE NOT OF CHARITABLE IN NATURE. THEREFORE, IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(E) HAS TO EXAMINE THE OBJECTS OF THE TRUST AND IF THEY ARE FOUND TO BE CHARITABLE, THE ASSESSEE DESERVES TO BE GRANTED REGISTRATION U/S 12AA(1) OF THE ACT. THE ISSUE IS DIRECTLY COVERED ON IDENTICAL ISSUE BY THE DECISION OF THE CO O RDI N ATE BENCH OF THE ITAT DELHI IN THE CASE OF VIDYADAYANI SHIKSHA SAMITI [SUPRA]. THE RELEVANT OPERATIVE PAR T OF THE ORDER IS REPRODUCED HEREINBELOW: 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDER OF THE LD. CIT AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE U S. WE FIND THE ASSESSEE IN THE INSTANT CASE IS A SOCIETY RUNNING CERTAIN SCHOOLS AND COLLEGES. IT APPLIED FOR REGISTRATION U/S 12A OF THE I.T. ACT IN FORM NO.10A. A PERUSAL OF THE OBJECTIVES OF THE SOCIETY AS PER MEMORANDUM OF ASSOCIATION, COPY OF WHICH IS PLACED AT PAGE 30 OF THE PAPER BOOK SHOWS THE FOLLOWING OBJECTS OF THE SOCIETY : - (I) TO IMPART EDUCATION OF INDIAN CULTURE, LANGUAGES, ART, SCIENCE AND TECHNOLOGY AND IN OTHER AREAS IRRESPECTIVE OF CASTE AND CREED. (II) TO DEVELOP AND ENCOURAGE AND INDIG ENOUS SYSTEM OF 9 EDUCATION BASED ON LATEST SCIENTIFIC RESEARCHES. (III) TO CREATE AND PROVIDE FACILITIES FOR ALL ROUND DEVELOPMENT OF THE CHILD. (IV) TO ORGANIZE CULTURAL ACTIVITIES FOR PROMOTION OF VARIOUS ASPECTS OF INDIA CULTURE. (V) TO PROVIDE FACILITIE S FOR SOCIAL AND ECONOMIC DEVELOPMENT FOR THE POOR AND NEEDY WHO DESERVE. 8 ITA NO.309/DEL/2016 (VI) TO ESTABLISH LIBRARIES WITH BOOKS ON RELIGIOUS, LIFE HISTORIES AND TEACHINGS OF GREAT PERSONALITIES. (VII) TO EVOLVE AND ENCOURAGE INTEREST IN PHYSICAL AND MENTAL UPLIFTMENT THROUGH GAME, YOGA, ASANS AND PHYSICAL EXERCISES. (VIII) TO ENCOURAGE STUDIES AND LECTURES ON RELIGIONS, CULTURE, ETHICS AND SPIRITUALITY. (IX) TO START, ESTABLISH AND MAINTAIN SCHOOLS OR COLLEGES OR TECHNICAL INSTITUTIONS ETC. (X) TO ES TABLISH AND MAINTAIN CHARITABLE HOSPITALS, PUBLIC HEALTH CENTRE, AND SOCIAL UP - LIFT CENTRES. 12. SINCE THE ASSESSEE TRUST DID NOT PRODUCE THE BOOKS AND VOUCHERS IN RESPECT OF EXPENSES CLAIMED BY THE SOCIETY FOR VERIFICATION OF THE ACTIVITIES OF THE TRUST, THE LD. CIT HELD THAT THE ASSESSEE TRUST IS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES AND, THEREFORE, THE GENUINENESS OF THE ACTIVITIES COULD NOT BE VERIFIED. RELYING ON VARIOUS DECISIONS, THE LD. CIT REJECTED THE CLAIM OF REGISTRATION SOUGHT BY THE SOCIE TY U/S 12A(1) OF THE I.T. ACT. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT AT THE TIME OF GRANTING OF REGISTRATION THE LD. CIT IS REQUIRED ONLY TO EXAMINE THE OBJECTS OF THE TRUST AND IS NOT REQUIRED TO EXAMINE THE BOOKS OF ACCOUNT OF THE TRUST AND IT IS ONLY DURING THE CLAIM OF EXEMPTION U/S 11 THE ASSESSING OFFICER WILL EXAMINE THE SAME AND ALLOW OR DISALLOW THE SAME AS THE CASE MAY BE. IT IS ALSO HIS SUBMISSION THAT SINCE THE ASSESSEE TRUST IS IMPARTING EDUCATION BY RUNNING VARIOUS SCHO OLS AND 10 COLLEGES, THEREFORE, IT IS DOING CHARITABLE ACTIVITIES AS ACCORDING TO HIM EDUCATION PER SE IS CHARITABLE ACTIVITY. 13. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. SO FAR AS WHETHER EDUCATION PER SE IS CHARITABLE OR NOT, WE FIND THE DELHI BENCH 9 ITA NO.309/DEL/2016 OF THE TRIBUNAL IN THE CASE OF SHAVAK SHIKSHA SAMITI (SUPRA) AT PARA 3 HAS OBSERVED AS UNDER : - 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. SECTION 2(15) DEFINES THE TERM 'CHARITAB LE PURPOSE' IN AN INCLUSIVE MANNER AND INCLUDES WITHIN ITS AMBIT RELIEF OF POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. WHILE, THERE COULD BE SOME DISPUTE IN INTERPRETATION OF THE WORDS 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY', THERE IS NO DISPUTE THAT EDUCATION PER SE IS A CHARITABLE PURPOSE JUST LIKE RELIEF OF POOR OR MEDICAL RELIEF. THE SOCIETY ALSO DOES NOT EXIST FOR PROFIT AS THERE IS NO CLAUSE FOR DISTRIBUTION OF PROFITS OR NET ASSETS IN CASE OF DI SSOLUTION TO MEMBERS. THE PRECONDITION FOR GRANT OF REGISTRATION UNDER SECTION 12AA IS THAT OBJECTS ARE CHARITABLE IN NATURE AND ACTIVITIES ARE GENUINE. WE HAVE SEEN THAT OBJECTS ARE CHARITABLE. THE SOCIETY IS TRYING TO SET UP A SCHOOL IN PURSUANCE OF ITS MAIN OBJECT, WHICH IS A GENUINE ACTIVITY. THE LEARNED CIT HAS ALSO NOT REFERRED TO ANY MATERIAL TO SHOW THAT THE ACTIVITIES ARE NOT GENUINE. IT IS NO DOUBT TRUE THAT INCOME OF THE SOCIETY CAN ALSO BE EXEMPTED UNDER SECTION 10(23C), BUT WHEN TWO RECOURSES A RE AVAILABLE TO A PERSON UNDER THE LAW, IT IS FOR HIM TO CHOOSE ONE, THE OTHER OR BOTH THE RECOURSES. THE ASSESSEE APPLIED FOR ITS REGISTRATION, TO WHICH IT WAS ENTITLED. WE ARE OF THE VIEW THAT UNDER THE CIRCUMSTANCES, 11 IT HAS TO BE REGISTERED. THE LEARNED CIT IS DIRECTED TO GRANT REGISTRATION TO THE SOCIETY. 14. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHANTI EDUCATION AND WELFARE SOCIETY VS. CIT IN ITA NO.5970/DEL/2017 ORDER DATED 16.01.2015 HAS ALSO HELD SIMILAR VIEW BY OBSERVING AS UNDER : - 8. APPLYING THE FOREGOING RATIO, IT IS EVIDENT THAT THE RELEVANT DETERMINATIVE FACTOR FOR CONFERRING REGISTRATION IS THE OBJECT OF THE SOCIETY AND THE QUANTUM OF PROFITS/ SURPLUS IS AN IRRELEVANT FACTOR. IN THE PRESENT CASE, ADMITTEDLY AND UNDISPUTEDLY A PPELLANT SOCIETY IS IMPARTING EDUCATION. AND EDUCATION PER - SE IS A CHARITABLE OBJECT U/S 2(15) OF THE ACT. THE BASIS OF IMPUGNED ACTION TO REGARD THE SOCIETY AS COMMERCIAL AT THE STAGE OF REGISTRATION ON THE BASIS OF EXPENDITURE INCURRED ON ADVERTISEMENT A ND PUBLICITY IS UNWARRANTED AND AGAINST THE SETTLED INTERPRETATION OF THE STATUTE. BEFORE CONCLUDING WE ALSO TAKE NOTICE THAT THE LD CIT HAS RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT VS. QUEEN EDUCATIONAL SOCIETY, WHICH IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, FOR THE REASON THAT THE EXAMINATION AT THE STAGE OF REGISTRATION IS TO BE CONFINED TO THE OBJECTS AND MOREOVER AS HELD BY THE APEX COURT IN AMERICAN HOTEL & LODGING ASSOCIATION EDUCATIONAL INSTITUTE (SUP RA) THE CHARACTER OF THE RECIPIENT OF THE INCOME MUST HAVE THE CHARACTER OF EDUCATIONAL INSTITUTION IS TO BE DETERMINED IRRESPECTIVE OF THE PROFITS. IN VIEW OF THE ABOVE WE REVERSE THE ORDER OF THE CIT AND DIRECT IT TO GRANT REGISTRATION U/S 12A OF THE ACT . 10 ITA NO.309/DEL/2016 15. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK ALSO SUPPORTS THE VIEW THAT EDUCATION PER SE IS A CHARITABLE 12 ACTIVITY. 16. NOW, COMING TO THE POWERS OF THE COMMISSIONER AS TO WHETHER WHILE GRANTING REGISTRATION U/S 12A HE IS REQUIRED TO EXAMINE THE BOOKS OF ACCOUNT ETC. OR HE IS ONLY TO SATISFY HIMSELF REGARDING THE OBJECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST, WE FIND VARIOUS COURTS HAVE HELD THAT WHILE GRANTIN G REGISTRATION U/S 12A THE LD. CIT IS REQUIRED TO SEE ONLY THE OBJECTS OF THE ASSESSEE TRUST/SOCIETY AND NOT TO EXAMINE THE APPLICATION OF INCOME. HE IS NOT REQUIRED TO EXAMINE WHETHER THE INCOME DERIVED BY THE TRUST IS BEING SPENT FOR CHARITABLE PURPOSES OR THE TRUST IS EARNING PROFIT WHILE GRANTING REGISTRATION. HE IS ONLY REQUIRED TO EXAMINE THE OBJECTS OF THE TRUST. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF BHARTIYA KISAN SANGH SEWA NIKETAN (SUPRA). IN THE SAID CASE ALSO THE ASSESSEE TRUST DID NOT PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS ETC. FOR VERIFICATION OF THE LD. CIT FOR WHICH THE LD. CIT HELD THAT THE ASSESSEE SOCIETY IS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES. DUE TO NON - COMPLIANCE OF ASSESSEE SOCIETY, THE GENUINENESS OF THE ACTIVITIES COULD NOT BE VERIFIED. THE LD. CIT, THEREFORE, RELYING ON VARIOUS DECISIONS INCLUDING THE DECISIONS WHICH HAVE BEEN RELIED ON BY THE LD. CIT IN THE PRESENT CASE, REJECTED THE CLAIM OF REGISTRATION U/S 12A(1) OF THE I.T. ACT. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL, THE TRIBUNAL ALLOWED THE CLAIM OF REGISTRATION 11 ITA NO.309/DEL/2016 BY HOLDING THAT AT THIS STAGE ON GRANTING REGISTRATION U/S 12A THE LD. CIT IS REQUIRED TO SEE THE OBJECTS OF THE SOCIETY AND NOT REQUIRED TO EX AMINE THE APPLICATION OF INCOME WHICH WILL HAVE TO BE UNDERTAKEN BY THE ASSESSING OFFICER ON A YEAR TO YEAR BASIS AFTER THE ASSESSEE FILES THE RETURN 13 OF INCOME CLAIMING EXEMPTION U/S 11 OF THE I.T. ACT. 17. WE FIND THE HONBLE ALLAHABAD HIGH COURT IN THE C ASE OF FIFTH GENERATION EDUCATION SOCIETY (SUPRA) HAS OBSERVED AS UNDER : - 2. A READING OF THE SECTION SHOWS THAT THE REGISTRATION UNDER SECTION 12A IS A PRE - CONDITION FOR AVAILING OF THE BENEFIT UNDER SECTIONS 11 AND 12. SECTION 11 PROVIDES FOR EXEMPTION OF INCOME WHICH IS APPLIED FOR CHARITABLE PURPOSES. SECTION 12 IS IN THE NATURE OF AN EXPLANATION TO SECTION 11. BEFORE A PERSON CAN CLAIM THE BENEFIT OF SECTION 11, OR SECTION 12, AS THE CASE MAY BE, HE MUST OBTAIN REGISTRATION UNDER SECTION 12A. THE APP LICATION FOR REGISTRATION UNDER SECTION 12A HAS TO BE MADE IN FORM NO. 10A PRESCRIBED BY RULE 17A BEFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATER. IT HAS TO BE MADE BY THE PER SON IN RECEIPT OF THE INCOME OF THE TRUST. 3. IT IS EVIDENT THAT, AT THIS STAGE, THE COMMISSIONER IS NOT TO EXAMINE THE APPLICATION OF INCOME. ALL THAT HE MAY EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 12A REA D WITH RULE 17A AND WHETHER FORM NO. 10A HAS BEEN PROPERLY FILLED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. AT THIS STAGE, IT IS NOT PROPER TO EXAMINE THE APPLICATION OF INCOME. 4. THE ORDER IMPUGNED DOES NOT SAY THAT THE OBJECTS OF THE SOCIETY ARE NOT CHARITABLE IN NATURE ; IT MERELY SAYS THAT THEY ARE GENERAL IN NATURE. JUST BECAUSE THEY ARE GENERAL, THEY DO NOT CEASE TO BE CHARITABLE. THE COMMISSIONER HAS ALSO OBSERVED THAT NO ACTIVITY HAS BEEN CARRIED ON BY THE SOCIETY. IT IS ALSO NOT THE REQUIREMENT OF SECTION 12A OF THE ACT. NOR HAS SECTION 80GANY RELEVANCE AT THIS STAGE. THE IMPUGNED ORDER 14 CANNOT, THEREFORE, BE SUSTAINED AND IT IS QUASHED. 18. WE FIND THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF A.S. KUPPARAJI BRO THERS CHARITABLE FOUNDATION TRUST (SUPRA) HAS OBSERVED AS UNDER : - 12 ITA NO.309/DEL/2016 THE CERTIFICATE OF REGISTRATION IS ONLY AN ENABLING PROVISION TO CLAIM EXEMPTION. BY MERELY GRANTING A CERTIFICATE INCOME IS NOT EXEMPTED. THAT IS ONLY A FIRST STAGE TO CLAIM EXEMPTION. THE COMMISSIONER OF APPEALS SHOULD NOT HAVE CONFUSED THESE TWO ASPECTS AND SEEMS TO THINK AS THE TRUSTEES AND HIS FAMILY MEMBERS ARE TREATING THE PROPERTY AS THEIR OWN AND MISUTILISING THE PROPERTY IT IS NOT A GENUINE TRUST. WHEN ONCE IT IS ADMITTED THAT IN PURSUANCE OF THE TRUST DEED AND IN TERMS OF THE OBJECTS SET OUT THEREIN, SCHOOLS AND COLLEGES ARE BEING RUN AND EDUCATIONAL INSTITUTIONS ARE BEING RUN AS RIGHTLY HELD BY THE TRIBUNAL, NOTHING MORE REQUIRES TO BE ESTABLISHED TO SHOW T HAT THE TRUST IN QUESTION IS A GENUINE TRUST AND THEREFORE, THE ASSESSEE IS ENTITLED TO THE REGISTRATION UNDER SECTION 12AA OF THE ACT. AS SET OUT ABOVE, EVEN IF THE REGISTRATION IS GRANTED, THE EXEMPTION FROM THE PROVISIONS OF THE INCOME TAX ACT IN PARTIC ULAR SECTIONS 11 AND 12 IS NOT AUTOMATIC. IT IS ONLY WHEN THE ASSESSEE SATISFIES THE REQUIREMENT OF SECTION 13, HE WOULD BE ELIGIBLE FOR EXEMPTION. THAT IS A MATTER TO BE GONE INTO BY THE ASSESSING AUTHORITY IN RESPECT OF THE RETURNS FILED EVERY YEAR AND I F ACCORDING TO THEM THERE IS MISAPPROPRIATION OF FUNDS AND IT IS HIT BY SECTION 13 OF THE ACT, CERTAINLY, THEY CAN DENY THE BENEFIT OF EXEMPTION. BUT THAT IS NOT A GROUND TO DENY THE REGISTRATION IN THE INSTANT CASE UNDER SECTION 12AA, WHEN ADMITTEDLY THE TRUST HAS BEEN ESTABLISHED TO RUN SCHOOLS AND COLLEGES FOR IMPARTING EDUCATION, WHICH IS A 15 CHARITABLE PURPOSE. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL. THE SUBSTANTIAL QUESTION OF LAW FRAMED IN THIS APPEAL IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE APPEAL IS DISMISSED. 19. WE FIND THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF D.P.R. CHARITABLE TRUST (SUPRA) HAS OBSERVED AS UNDER : - 8. SEC. 12A OF THE ACT PRESCRIBES CONDITIONS FOR REGIS TRATION OF THE TRUST WHEREAS S. 12AA OF THE ACT PRESCRIBES THE PROCEDURE FOR REGISTRATION. A CAREFUL READING OF THE RELEVANT PROVISIONS WOULD REVEAL THAT APPLICATION FOR REGISTRATION UNDER S. 12A HAS TO BE MADE IN FORM NO.10A PRESCRIBED BY R. 17A BEFORE TH E EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR ESTABLISHMENT OF THE INSTITUTION WHICHEVER IS LATER. THE APPLICATION HAS TO BE MADE BY A PERSON IN RECEIPT OF INCOME OF THE TRUST. THUS WHILE DEALING WITH THE APPLICATION FOR REGISTRATION THE C IT HAS TO EXAMINE WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH S. 12A R/W R. 17A AND WHETHER FORM NO.10A HAS BEEN PROPERLY FILLED UP. HE MAY ALSO EXAMINE WHETHER OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. SEC. 12AA NOWHERE PROVIDES THAT CIT WHILE CO NSIDERING THE APPLICATION FOR REGISTRATION IS ALSO REQUIRED TO EXAMINE WHETHER THE INCOME DERIVED BY THE TRUST IS BEING SPENT FOR CHARITABLE PURPOSES OR THE TRUST IS EARNING PROFIT. THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN S. 12AA ONLY REQUIRES THAT ACT IVITIES OF THE TRUST OR INSTITUTION MUST BE GENUINE WHICH SHOULD BE IN CONSONANCE WITH THE OBJECT OF THE TRUST. AT THIS STAGE, THE CIT IS NOT REQUIRED TO EXAMINE THE APPLICATION OF INCOME. ALL THAT HE MAY EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCOR DANCE WITH THE REQUIREMENTS OF S. 12A R/W R. 17A 16 AND WHETHER FORM NO.10A HAS BEEN PROPERLY FILLED UP. HE HAS ALSO TO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. OUR VIEW FUNDS SUPPORT FROM THE DIVISION BENCH DECISION OF THE ALLAHABAD HIGH C OURT RENDERED IN THE CASE OF RED ROSE SCHOOL (SUPRA) AND THE DECISIONS IN THE CASE OF NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION (SUPRA), FIFTH GENERATION EDUCATION SOCIETY (SUPRA) AND SHANTAGAURI RAMNIKLAL TRUST (SUPRA). 13 ITA NO.309/DEL/2016 9. IN THE BACKDROP OF AFORESAID LEGAL POSITION FACTS OF THE CASE MAY BE SEEN. ADMITTEDLY THE APPLICATION SUBMITTED BY THE RESPONDENT WAS IN CONSONANCE WITH THE PROCEDURAL REQUIREMENT PRESCRIBED IN THIS REGARD. FROM THE TRUST DEED WHICH WAS FILED BEFORE THE CIT THE O BJECTS OF THE TRUST COULD BE ASCERTAINED. FROM PERUSAL OF CL. (3) OF THE TRUST DEED WE FIND THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND ARE IN TUNE WITH S. 2(15) OF THE ACT AND, THEREFORE, THE TRIBUNAL RIGHTLY OPINED THAT THE ORDER OF THE CI T REJECTING THE APPLICATION UNDER S. 12A WAS UNJUSTIFIED. 20. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK ALSO SUPPORT HIS CASE. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE LD. CIT WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF REGISTRATION U/S 12A. WE, THEREFORE, SET - ASIDE THE ORDER OF THE LD. CIT AND DIRECT HIM TO ALLOW REGISTRATION U/S 12A OF THE I.T. ACT. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 17 13. SINCE THE ISSUE IN THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF ITAT DELHI IN THE CASE OF VIDYADAYANI [SUPRA] , WE SET ASIDE THE ORDER OF THE LD. CIT(E) AND DIRECT HIM TO GRANT REGISTRATION U/S 12AA(1) OF THE ACT. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 14. . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 561 7 /DEL/201 6 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 . 01.2018 . SD / - SD/ - [ KULDIP SINGH ] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JANUARY, 2018 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI