M/s Education Park Society, Khargone V. The CIT-II, Khategaon

ITA 609/IND/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9571 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 16-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Gift; Charitable institution; Set aside
• Section: 80G; 12A; 12AA; 6; 12; 10; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC-I BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.609/IND/2010 EDUCATION PARK SOCIETY BHIKANGAON PAN AAATE-3675R APPELLANT VS COMMISSIONER OF INCOME TAX-II 1(1), INDORE RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE ALONGWITH SHRI BHARAT JHAVAR, CAS RESPONDENT BY : SHRI P.K. MITRA, SR. DR O R D E R THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 9 TH SEPTEMBER, 2010 PASSED BY THE COMMISSIONER OF INCO ME TAX, INDORE, HOLDING THAT RUNNING OF SCHOOL IS NOT A CHA RITABLE ACTIVITY AND AS SUCH THE ASSESSEE IS NOT ENTITLED TO APPROVAL U/S 8 0G(5) OF THE ACT. 2. WE HAVE HEARD SHRI S.S. DESHPANDE, LD. COUNSEL F OR THE ASSESSEE AND SHRI P.K. MITRA, LEARNED SENIOR DEPARTMENTAL RE PRESENTATIVE. THE 2 CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE TRUST IS REGISTERED UNDER THE MADHYA PRADESH SOCIETIES REGIS TRATION ACT, 1973 AND ITS MAIN OBJECT IS TO IMPART EDUCATION, ITS MAI N OBJECTS/ACTIVITIES ARE OF CHARITABLE NATURE AND THE ASSESSEE WAS GRANTED R EGISTRATION BY THE LEARNED CIT U/S 12A OF THE ACT BY FURTHER SUBMITTIN G THAT SPECIFIC PROVISION HAS BEEN MADE TO THE POORER PEOPLE OF THE SOCIETY LIKE MINORITY, SC, ST AND OBC FOR IMPARTING THEM EDUCATI ON AND THE BENEFIT OF ADMISSION WHICH IS PRESENTLY IS ABOUT 17% OF THE TOTAL STRENGTH OF THE STUDENTS ADMITTED IN THE SCHOOL BY CHARGING AS LOW AS RS.100/- PER MONTH AGAINST THE SCHEDULED RATES OF RS.500/600 PER MONTH CHARGED FROM CAPABLE SECTION OF THE SOCIETY. IT WAS CLAIMED THAT THE LIST OF STUDENTS ALONG WITH FEE CHARGED WAS FURNISHED BEFOR E THE LEARNED CIT ALONG WITH OTHER RELEVANT DOCUMENTS. 3. ON THE OTHER HAND, THE LEARNED SENIOR DEPARTMENT AL REPRESENTATIVE, SHRI P.K. MITRA, STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE HAS NOT FULFILLED T HE CONDITIONS AS REQUIRED UNDER SECTION 80G(5)(I) OF THE ACT BY FURT HER SUBMITTING THAT THE ASSESSEE HAS NOT SATISFIED THE LEARNED CIT WITH DOC UMENTARY EVIDENCE AND THE ACTIVITIES OF THE ASSESSEE ARE OF COMMERCIA L NATURE. THEREFORE, WITH THE INTENTION OF UNDUE ADVANTAGE OF THE PROVIS IONS OF SECTION 80G OF THE ACT, THE ASSESSEE HAS APPLIED FOR SUCH CONCESSI ON. 3 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. R EPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. BRIEF FACTS ARE THAT THE ASSESSEE TRUST WAS FORMED BY A TRUST DEED AND IS REGISTERED UNDER THE M.P. SOCIETIES REGISTRATION ACT, 1973. R EGISTRATION U/S 12A OF THE ACT WAS ALSO GRANTED TO THE ASSESSEE BY THE LEA RNED CIT VIDE ORDER DATED 29.1.2010. THE ASSESSEE MOVED AN APPLICATION IN FORM NO. 10G OF THE ACT FOR GRANT OF APPROVAL UNDER SECTION 80G( 5)(VI) OF THE ACT WHICH WAS DENIED AND THE SAME IS UNDER CHALLENGE BEFORE T HE TRIBUNAL. ADMITTEDLY, THE ASSESSEE ALSO FILED THE COPY OF THE AUDITED BALANCE- SHEET FOR THE YEAR ENDING ON 31 ST MARCH, 2009 AND 31 ST MARCH, 2010 ALONG WITH THE COMPUTATION OF INCOME FOR THE ASSESS MENT YEAR 2009-10 AND 2010-11. THE COPY OF REGISTRATION CERTIFICATE ISSUED BY THE ASSISTANT REGISTRAR, FIRMS & SOCIETIES, INDORE, ALONG WITH TH E COPY OF MEMORANDUM AND BYE-LAWS OF THE SOCIETY WERE ALSO FI LED BEFORE THE LEARNED CIT WHICH HAVE BEEN MADE PART OF THE PAPER BOOK BEFORE THE TRIBUNAL ALSO. THE SUBMISSIONS OF THE ASSESSEE BEF ORE THE LEARNED CIT ARE REPRODUCED HEREUNDER :- (II) AFTER GETTING REGISTRATION, SOCIETY STARTED SU RVEYING THE PRESENT STATUS OF EDUCATION IN VARIOUS VILLAGES IN KHARGONE DISTT. THE RESULT OF THE SURVEY PROMPTED IT TO START ITS ACTIVITIES F ROM BHIAKANGAON TEHSIL. THE LAND WAS ACQUIRED THROUGH PURCHASES AND ALSO GOT IN GIFT IN VILLAGE VIZ. KADATA WHICH IS APPROX 4 KM AW AY FROM TAHSIL PLACE BHIKANGAON. THE LAND WAS GOT REGISTERED IN TH E NAME OF APPLICANT SOCIETY (COPY OF LAND DOCUMENTS ARE ENCLO SED WITH REGISTERED VALUERS REPORT) 4 (3) ALL THE 7 MEMBERS OF GOVERNING BOARD/DIRECTOR T HEMSELVES FIRST CONTRIBUTED MONEY IN THE FORM OF MEMBERSHIP F EE, DONATION AND ALSO INTEREST FREE LOANS TO PROCEED FURTHER FOR CONSTRUCTION THE SCHOOL BUILDING. LATER ON MANY DONORS FROM AGRICUL TURE COMMUNITY, BUSINESSMEN, ETC. JOINED HANDS AND MADE GENEROUS CO NTRIBUTION TO CONSTRUCT THE BUILDING. WITHIN A RECORD TIME OF AL MOST ONE YEAR SOCIETY COULD COMPLETE THE CONSTRUCTION WORK AND CO ULD START RUNNING SCHOOL W.E.F. 01/07/2010 (LIST OF DONORS AL READY FILED ALONG WITH PREVIOUS SUBMISSION) 4) AS IS APPARENT FROM THE OBJECT CLAUSE OF THE MEM ORANDUM, SOCIETY WORKS FOR ALL SECTION OF SECTION OF SOCIETY IRRESPECTIVE OF THEIR CASTE, CREED AND GENDER. PEOPLE FROM ALL COMMUNITI ES BE IT MAJORITY, MINORITY, SC, ST, OBC EVERYONE HAS BEEN G IVEN THE BENEFIT OF ADMISSION AND ALSO SUBSIDY IN SCHOOL FEE S WHERE EVER NEEDED AN IN GENUINE CASES. PRESENTLY, ALMOST 17% OF TOTAL STRENGTH OF 263 STUDENTS ADMITTED IN THE SCHOOL HAV E BEEN GRANTED SUBSIDY 80% IN THEIR SCHOOL FEE BY CHARGING AS LOW AS RS.100/- PER MONTH AGAINST THE SCHEDULED RATE OF 500/600 PER MON TH CHARGED FROM THE CAPABLE SECTION OF THE SOCIETY (LIST OF ST UDENT ALONG WITH FEE CHARGED FROM THEM IS ENCLOSED). 5) TO ACHIEVE ONE MORE OBJECTIVE OF THE APPLICANT S OCIETY I.E. TO LEARN THE LESSON OF ENERGY CONSERVATION AND ALSO AB OUT THE RENEWABLE SOURCE OF ENERGY SOLAR ENERGY PANELS AND DEVICES HAVE BEEN INSTALLED IN THE SCHOOL BUILDING ITSELF WHICH INSPITES STUDENTS TO NOT ONLY TO CONSERVE OUR AVAILABLE ENERGY SOURCES B UT ALSO TO MAKE USE OF RENEWABLE SOURCE OF ENERGY E.G. SOLAR ENERGY . THE PRESIDENT OF THE SOCIETY VIZ. DR. CHETAN SINGH SOLA NKI WORKING AS ASSOCIATE PROFESSOR IN ENERGY DEPARTMENT IIT BOMBAY HIMSELF IS INSTRUMENTAL IN IMPARTING THIS VALUABLE KNOWLEDGE T O THE STUDENTS AND THEIR PARENTS THOUGH SCHOOL TEACHER. 6) THE APPLICANT SOCIETY BELIEVES THAT APART FROM G OOD INFRASTRUCTURE LIKE SCHOOL BUILDING AND TEACHING TO OLS/TECHNIQUES IT IS THE QUALIFIED AND DEDICATED TEACHERS ONLY THROUGH W HOM OBJECTIVES OF OVERALL DEVELOPMENT OF STUDENT CAN BE ACHIEVED A ND FOR THIS IT IS OF UTMOST IMPORTANCE THAT THEY SHOULD BE KEPT UPDAT ED THROUGH REGULAR TRAINING. SOCIETY HAS RECRUITED TRAINED TE ACHERS ON GOOD SALARY BASIS AND IS PROVIDING THEM REGULAR TRAINING UNDER THE GUIDANCE OF ESTEEMED PROFESSIONALS IN THE FIELD OF SCHOOL EDUCATION LIKE SHRI MADHAV PRANJPE AND DR. B.K. PASI OF INDO RE. SIR, MANY OF THE OBJECTIVES WE HAVE THOUGHT OF ARE YOU WORKED ON WHICH WE HOPE WE WILL BE ABLE TO ACHIEVE WITH THE H ELP OF SOCIETY AT LARGE. THE SOCIETY HAS JUST BEGUN TO WORK A YEAR B ACK AND HIS LONG WAY TO GO SERVE THE VILLAGE STUDENTS BY IMPARTING T HEM QUALITY EDUCATION AND SERVE THE COUNTRY AND GOVT. AS WELL I N IMPLEMENTING THE RIGHT TO EDUCATION ACT, 2009. 5 5. THE CONCLUSION DRAWN IN THE IMPUGNED ORDER IS AS UNDER :- 10. IN REPLY TO ORDER SHEET QUERY DTD. 20.08.10, THE SO CIETY FILED A WRITTEN REPLY ON 03.09.10 GIVING DETAILS OF CONSTRU CTION WORK AND ACTIVITIES OF THE SOCIETY. ON PAGE 3 OF THE LETTER , IN LAST BUT ONE PARA, THE SOCIETY HAS MADE IT CLEAR THAT THE OBJECT OF TH E SOCIETY HAS TO IMPART QUALITY EDUCATION TO THE STUDENTS AND NOT TO PROVIDE EDUCATION FREE OF COST AS A PART OF ITS SO CALLED CHARITABLE ACTI VITIES. SO FAR ASA THE QUESTION OF SERVING THE COUNTRY AND GOVT. IN IM PLEMENTING THE RIGHT TO EDUCATION ACT, 2009 IS CONCERNED, FIRSTLY THERE IS NO PROVISION IN IT ACT UNDER WHICH A SOCIETY CLAIMING TO IMPLEMENT THE RIGHT TO EDUCATION ACT, 2009 IS AUTOMATICALLY ENTIT LED FOR APPROVAL U/S 80G OF THE IT ACT. SECONDLY, ASN PER PROVISIONS OF RIGHT TO EDUCATION ACT, 2009 FREE EDUCATION IS TO BE IMPARTED TO EACH AND EVERY CHILD UP TO THE AGE OF 14 YEARS. THUS, NOT ONLY THE SOCIETY HAS FAILED TO COMPLY WITH THE REQUIREMENTS OF SECTION 80G, IT HAS ALSO VIOLATED THE PROVISIONS OF RIGHT TO EDUCATION ACT, 2009 BY CHARG ING FEES FROM THE CHILDREN BELOW THE AGE OF 14 YEARS. AS SUCH, THE C LAIM OF THE APPLICANT SOCIETY FOR REGISTRATION U/S 80G(5) IS BA SED ON A CLEAR BREACH OF THE RIGHT TO EDUCATION ACT, 2009 BY THE A PPLICANT SOCIETY ITSELF. 11. AFTER HAVING CONSIDERATION OF THE AFORESAID PRO VISION OF LAW AND SUBMISSION MADE BY THE ASSESSEE I AM SATISFIED THAT THERE IS NO CASE FOR GRANTING APPROVAL U/S 80G(5) OF THE ACT. FOR THE REASONS ABOVE, APPROVAL U/S 80G(5) OF THE INCOME TAX ACT, 1961 CANNOT BE GRANTED. IF THE ASSESSEE HAPPE NS TO CONDUCT ANY CHARITABLE ACTIVITY IN FUTURE, IT MAY APPLY AFR ESH FOR GRANTING APPROVAL, IF SO ADVISED. IF THE SUBMISSIONS OF THE ASSESSEE PREFERRED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX, TRIBUNAL, CO NCLUSION DRAWN IN THE IMPUGNED ORDER AND THE SUBMISSIONS OF THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ARE KEPT IN JUXT APOSITION AND ANALYSED, IT IS SEEN THAT THE ASSESSEE SOCIETY IS REGISTERED WITH THE MADHYA PRADESH SOCIETIES REGISTR ATION ACT, 1973 AND REGISTRATION U/S 12A OF THE INCOME TAX ACT A LSO HAS BEEN GRANTED BY THE DEPARTMENT TO THE ASSESSEE SOCIETY. F OR GRANTING APPROVAL 6 UNDER SECTION 89G(5)(VI) OF THE ACT, THE APPLICATIO N IS REQUIRED TO BE ACCOMPANIED BY NECESSARY DOCUMENTS WHICH ARE ADMITT EDLY FILED BY THE ASSESSEE. AS PER THE TRUST DEED, THE MAIN ACTIVITIE S OF THE ASSESSEE SOCIETY ARE (I) TO ESTABLISH AND CONDUCT THE SCHOOL AND COLLEGE ESPECIALLY IN A RURAL AREA; (II) TO PROMOTE THE AWARENESS OF SOCIAL ACTIVITIES AND CULTURE (III) PHYSICAL AND MENTAL DEVELOPMENT OF CHILDREN T HROUGH SCIENTIFIC METHOD (IV) TO ESTABLISH LIBRARIES AND TO PROVIDE BOOKS TO POOR STUDENTS, ETC. (V) TO PROVIDE QUALITY EDUCATION TO THE STUDENTS OF NEARBY VILLAGES (VI) TO EDUCATE THE CHILDREN ABOUT THE INDIAN CULTU RE AT MINIMUM FEES FOR THEIR ALL ROUND DEVELOPMENT (VII) TO MINIMIZE THE CRIMINAL ACTIVITIES IN THE CH ILDREN AND TO EDUCATE THEM TO FOLLOW THE ALL RELIGIONS AND TO DEV ELOP QUALITY EDUCATION IN THEM. (VIII) TO EDUCATE THE TEACHER AND OFFICIALS OF THE AREAS AND TO ORGANIZE CAMPS TO GENERATE AWARENESS FOR PROMOTING WORK CULTURE AMONG THE RURAL AREA, ETC. 7 6. IF THE OBJECTS OF THE ASSESSEE SOCIETY ARE ANALY SED, NONE OF THE OBJECTS IS OF COMMERCIAL NATURE. SO FROM THIS ANGLE THE ASSESSEE IS HAVING A STRONG CASE IN ITS FAVOUR FOR THE GRANT OF APPROVAL U/S 80G. SO FAR AS FULFILMENT OF REQUIRED CONDITIONS FOR GETTIN G APPROVAL U/S 80G OF THE ACT IS CONCERNED, I FIND THAT EVEN THERE IS NO ALLE GATION IN THE IMPUGNED ORDER THAT THE CONDITIONS WERE NOT FULFILLED MEANIN G THEREBY THE NECESSARY CONDITIONS AS STIPULATED U/S 80G(5)(I) FO R EXEMPTION U/S 11 AND 12 OF THE ACT HAVE BEEN DULY COMPLIED WITH. TO PROPERLY ADJUDICATE THE ISSUE IN APPEAL, IT IS NECESSARY TO FIRST APPRE CIATE THE SCHEME OF THE ACT SO FAR AS APPROVAL U/S 80G IS CONCERNED. SECTI ON 80G(2)(A)(IV) PROVIDES THAT IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, IN ACCORDANCE WITH THE PROVISIONS OF THE SAID SECTION, THERE SHALL BE DEDUCTED, AN AMOUNT EQUIVALENT TO 50% OF ANY SUM PA ID BY THE ASSESSEE IN THE PREVIOUS YEAR, AS A DONATION, TO AN Y FUND OR ANY INSTITUTION OTHER THAN THE ONES SPECIFIED IN SECTIO N 80G, TO WHICH THIS SECTION APPLIES. SECTION 80G(5)(VI) PROVIDES THAT THAT IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S 80G(2)(A)(IV), THE INSTI TUTION OR FUND TO WHICH THE AMOUNT IS PAID AS DONATION, IT IS FOR THE TIME BEING APPROVAL BY THE CIT IN ACCORDANCE WITH RULES FRAMED IN THIS BEHALF. RULE 11AA OF THE IT RULES PROVIDES FOR REQUIREMENTS FOR APPROVAL OF ANY INSTITUTION OR FUND U/S 80G. AN INSTITUTION OR FUND SEEKING APPROVAL U /S 80G IS TO MOVE AN APPLICATION TO THE LEARNED CIT CONCERNED, IN THE PR ESCRIBED PROFORMA 8 AND ALONG WITH COPY OF (A) REGISTRATION GRANTED U/S 12A OR COPY OF NOTIFICATION ISSUED U/S 10(23) OR SECTION 10(23C), (B) NOTES ON THE ACTIVITIES OF THE INSTITUTION OR FUND FOR THE LAST THREE YEARS OR SINCE INCEPTION, WHICHEVER IS LESS AND (C) COPIES OF ACCO UNTS OF THE INSTITUTION OR FUND FOR THE LAST THREE YEARS OR SINCE INCEPTION WHICHEVER IS LESS. THE LEARNED CIT IS ALSO EMPOWERED TO CALL FOR FURTHER D OCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION OR CAUSE SUCH INQUIRIES TO BE MADE AS HE DEEMS FIT IN ORDER TO SATISFY HIMSELF AB OUT THE GENUINENESS OF ACTIVITIES OF SUCH TRUST OR INSTITUTION. WHERE THE LEARNED CIT IS SATISFIED THAT ALL THE CONDITIONS AS LAID DOWN IN C LAUSES (I) TO (V) OF SECTION 80G(5) ARE FULFILLED BY THE APPLICANT, TRUS T OR INSTITUTION, THE LEARNED CIT IS TO GRANT APPROVAL SPECIFYING THE YEA R OR YEARS FOR WHICH SUCH APPROVAL IS VALID. IN CASE THE CIT IS NOT SAT ISFIED ABOUT THESE CONDITIONS, BEING UNSATISFIED, HE SHALL REJECT THE APPLICATION FOR APPROVAL AFTER RECORDING REASONS OF SUCH REJECTION IN WRITIN G. THE PROVISIONS OF SECTION 80G(5)(I) TO (V) ON THE BASIS OF WHICH THE CIT HAS TO GRANT OR REJECT THE APPLICATION SEEKING APPROVAL U/S 80G ARE AS FOLLOWS - ( I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME , SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDE R ANY OF THE PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE (23AA) OR CLAUSE (23C) OF SECTION 10 PROVIDED NOT RELEVANT (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TI ME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUNDS FOR ANY PURPOSES OTHER THAN THE CHARITABLE PURPOSES, 9 (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGION OR CASTE, (IV) THE INSTITUTION OR FUNDS MAINTAINS REGULAR AC COUNTS OF ITS RECEIPTS AND EXPENDITURE AND (V) THE INSTITUTION OR FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 OR ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF I NDIA (HERE FOR THIS APPEAL PURPOSES REGISTRATION UNDER M.P. SOCIETIES ACT, 197 3) OR U/S 25 OF THE COMPANIES ACT, 1956 OR IS A UNIVERSITY ESTABLISHED BY LAW OR ANY OTHER EDUCATIONAL INSTITUTION RECOGNISED BY GOVERNMENT OR UNIVERSITY ESTABLISHED BY LAW OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED UNDER LAW OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVERNMENT OR A LOCAL AUTHORITY. 7. A PLAIN LOOK AT THE PROVISIONS OF SECTION 80G OF THE ACT READ WITH RULE 11AA OF THE IT RULES, THUS MAKES IT CLEAR THAT THE DECISION WHETHER TO GRANT OR NOT TO GRANT APPROVAL UNDER SECTION 80G ESSENTIALLY REST ON THE SATISFACTION OF THE LEARNED CIT THAT THE ABOVE FIVE CONDITIONS ARE SATISFIED BY THE APPLICANT. EACH CASE MUST, THEREF ORE, BE EXAMINED ON THE TOUCH STONE OF AFOREMENTIONED FIVE TESTS WHICH ARE FAIRLY OBJECTIVE AND UNAMBIGUOUS. I ALSO FIND THAT UNDER RULE 11AA( 3) THE LEARNED CIT HAS THE POWER TO RECALL FOR SUCH FURTHER INFORMATIO N AND DOCUMENTS AND TO HAVE SUCH INQUIRIES CONDUCTED, AS HE CONSIDERED APPROPRIATE TO SATISFY HIMSELF ABOUT GENUINENESS OF ACTIVITIES OF TRUST OR INSTITUTION BUT THEN THERE IS NO FURTHER ELABORATION ABOUT THE CONN OTATIONS OF EXPRESSION GENUINENESS. IN THIS CONTEXT, THAT CRITERIA DOES NOT FIND ANY PLACE IN THE TESTS ON WHICH THE LEARNED CIT MUST SATISFY HIMSELF BEFORE GRANTING THE APPROVAL UNDER SECTION 80G. 10 8. AT THIS STAGE, IT IS NOTED THAT THE LEARNED CIT VIDE ORDER DATED 29.1.2010 (PAGE 45 OF THE PAPER BOOK) HAS ALREADY G RANTED REGISTRATION U/S 12A TO THE ASSESSEE W.E.F. THE ASSESSMENT YEAR 2010-11 SUBJECT TO EXAMINATION ON MERITS OF CLAIM OF EXEMPTION AFTER T HE FILING OF THE RETURN MEANING THEREBY THAT THE LEARNED CIT WAS HIMSELF SA TISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST AND THE OBJECTS OF THE ASSESSEE SOCIETY. 9. SUB-SECTION (5) APPLIES TO DONATION TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A) OF SUB -SECTION (2) ONLY IF IT IS ESTABLISHED IN INDIA FOR CHARITABLE PURPOSES AND IF IT FULFILS THE FOLLOWING CONDITIONS :- WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER TH E PROVISIONS OF SECTIONS 11 AND 12 3 [* * *] 4 [ 5 [***]] 6 [OR CLAUSE ( 23AA )] 7 [OR CLAUSE ( 23C )] OF SECTION 10 : 8 [ PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CO NDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME UNDER THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN RELATION TO SUCH INCOME, IF ( A ) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS; ( B ) THE DONATIONS MADE TO THE INSTITUTION OR FUND ARE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; A ND ( C ) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKING THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTAINS SEPARAT E BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS AND THAT THE DONATIONS REC EIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF S UCH BUSINESS;]] ( II ) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUN D IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TI ME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE; ( III ) THE INSTITUTION OR FUND IS NOT EXPRESSED TO BE FO R THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; 11 ( IV ) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCOUNT S OF ITS RECEIPTS AND EXPENDITURE; 9 [* * *] ( V ) THE INSTITUTION OR FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRA TION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT I N FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 10 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUC ATIONAL INSTITUTION RECOGNISED BY THE GOVERNMENT OR BY A UNIVERSITY EST ABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, 11 [ 12 [***]] OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVER NMENT OR A LOCAL AUTHORITY; 13 [ *** ] 14 [( VI ) IN RELATION TO DONATIONS MADE AFTER THE 31ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMIS-SIONER IN ACCORDANCE WITH THE RULES 15 MADE IN THIS BEHALF 15A [ ; AND ] 16 [ *** ] ] 15A [ ( VII ) WHERE ANY INSTITUTION OR FUND HAD BEEN APPROVED U NDER CLAUSE ( VI ) FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2007 AND ENDING ON THE 31ST DAY OF MARCH, 2008, SUCH INS TITUTION OR FUND SHALL, FOR THE PURPOSES OF THIS SECTION AND NOTWITHSTANDIN G ANYTHING CONTAINED IN THE PROVISO TO CLAUSE ( 15 ) OF SECTION 2 , BE DEEMED TO HAVE BEEN, ( A ) ESTABLISHED FOR CHARITABLE PURPOSES FOR THE PREVI OUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST D AY OF MARCH, 2009; AND ( B ) APPROVED UNDER THE SAID CLAUSE ( VI ) FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST D AY OF MARCH, 2009. ] 10. IF THE TOTALITY OF FACTS ARE ANALYSED IN THE LI GHT OF THE PROVISIONS OF THE ACT, UNDISPUTEDLY THE ACCOUNTS ARE PROPERLY MAINTAINED BY THE ASSESSEE AS EVEN THERE IS NO WHISPER IN THE IMPUGNE D ORDER THAT THE SAME ARE MANIPULATED IN ANY MANNER AND THE VARIOUS DOCUMENTS WHICH HAVE BEEN MADE PART OF THE PAPER BOOK CLEARLY DEMON STRATE THAT THE ALLEGATIONS ON THE BASIS OF WHICH THE APPLICATION O F THE ASSESSEE WAS REJECTED, IT IS SEEN THAT SUCH REJECTION IS BASED U PON INCORRECT ASSUMPTION OF MATERIAL FACTS BECAUSE WHILE GRANTING APPROVAL ALL THAT REQUIRED TO BE SEEN BY THE LEARNED CIT IS WHETHER O R NOT THE CONDITIONS SET OUT IN SECTION 80G(5)(I) TO (V) ARE SATISFIED A ND ONCE THE OBJECTIVE 12 TEST CONTEMPLATED IN THIS TEST IS SATISFIED, IT IS NOT OPEN TO THE CIT TO DECLINE APPROVAL U/S 80G ON THE BASIS OF HIS SUBJEC TIVE PERCEPTIONS ABOUT GENUINENESS OF THE CHARITABLE ACTIVITIES OR O N THE BASIS OF HIS APPREHENSIONS ABOUT POSSIBLE NON FULFILMENT OF THE CONDITIONS SUBJECT TO WHICH EXEMPTION FROM INCOME, IF GRANTED. AT THE SAME TIME, THE OBJECTIVE AND JUDICIOUS APPRECIATION OF FACTS/SATIS FACTION IS THE BASIC CONDITION UNDER THE PROVISIONS OF THE ACT. THE FIR ST AND FOREMOST THING IS TO BE SEEN IS WHETHER OR NOT ANY INCOME EARNED BY T HE ASSESSEE IS NOT BEING LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER ANY OF THE PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE (23AA) OR CLAUSE (23C) OF SECTION 10. IT HAS TO BE BORNE IN MIND THAT SINCE THE ASSESSEE HAS BEEN GRANTED APPROVAL FOR THE FUTURE YEARS AND SINCE THERE IS NO WAY THAT ANYONE CAN HAVE THE CLAIRVOYANCE OF KNOWING WHETHER OR NOT THE ASSESSEE WILL BE ABLE EVENTUALLY TO COMPLY WITH THE CONDITIONS, IF A NY, ATTACHED TO THE EXEMPTIONS, AS LONG AS THE EXEMPTION IS AVAILABLE I N PRINCIPLE AND AS LONG AS THE ASSESSEE CAN REASONABLY CLAIM TO BE ABL E TO SATISFY THE CONDITIONS ATTACHED TO SUCH EXEMPTION, ONE HAS TO P ROCEED ON THE BASIS THAT THE CONDITIONS LAID DOWN U/S 80G(5)(I) ARE SAT ISFIED. IN PRINCIPLE, ELIGIBILITY FOR EXEMPTION AND EXISTENCE OF CONDITIO NS, IF ANY, ATTACHED TO THE EXEMPTION, WHICH CAN BE REASONABLY COMPLIED WIT H, IN MY CONSIDERED VIEW, IS SUFFICIENT TO SATISFY SECTION 8 0G(5)(I) OF THE ACT. THE NEXT SITUATION IS TO BE ENSURED BY THE LEARNED CIT IS NON-EXISTENCE IN THE 13 INSTRUMENT, CONSTITUTION, OBJECTIVES OR RULES GOVER NING THE INSTITUTION OF ANY PROVISION FOR THE TRANSFER OR APPLICATION AT AN Y TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OR THE INSTITUTION OR FUND FOR ANY PURPOSES OTHER THAN THE CHARITABLE PURPOSES. THAT CAN OF-COURSE BE DONE BY EXAMINING THE PROVISIONS IN INSTRUMENT AND RULES OF THE INSTITUTION. THE ASSESSEE HAS DULY FURNISHED THE D OCUMENTS BEFORE THE LEARNED CIT AND NO SUCH DISCREPANCY WAS NOTED THERE IN, THUS THE PROVISIONS OF SECTION 80G(5)(III) ARE ALSO SATISFIE D. THE NEXT SITUATION IS TO BE ENSURED THAT THE INSTITUTION OR FUND IS NOT EXPR ESS TO BE FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. THA T IS NOT THE CASE BEFORE ME, THEREFORE, THERE IS NO DISPUTE ON THAT A SPECT. AS REGARDS THE REQUIREMENTS OF SECTION 80G(5)(IV) ALL THAT IS TO B E SEEN IS THAT THE ASSESSEE MAINTAINS ACCOUNTS OF ITS RECEIPTS AND EXP ENDITURE. NO SUCH DISCREPANCY WAS POINTED OUT BEFORE ME BY THE REVENU E, THEREFORE, SINCE ALL THE REQUIREMENTS AND CORRECTNESS OF THE ACCOUNT ING TREATMENT ARE FULFILLED BY THE ASSESSEE, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS MANIPULATED ITS ACCOUNTS AS THE BOOKS OF ACCOUN TS ARE DULY MAINTAINED AND WERE PRODUCED BEFORE THE LEARNED CIT . THE COPY OF REGISTRATION CERTIFICATE GRANTED U/S 12AA ISSUED BY THE LEARNED CIT, NOTES ON ACTIVITIES OF THE INSTITUTION, COPY OF AUD ITED BALANCE-SHEET AND COMPUTATION OF INCOME FOR THE ASSESSMENT YEARS 2009 -10 AND 2010-11 WERE DULY FILED BEFORE HIM. FINALLY, IN TERMS OF PR OVISIONS OF SECTION 14 80G(5)(V) OF THE ACT THE LEARNED CIT HAS TO ENSURE THAT THE ASSESSEE INSTITUTION OR FUND HAS THE NATURE OF ONE OF THE OR GANIZATIONS SPECIFIED IN THAT CLAUSE. THE SOCIETY IS REGISTERED UNDER THE S OCIETIES REGISTRATION ACT, 1960 (HERE FOR THE PURPOSES OF THE ASSESSEE TH E M.P. SOCIETIES REGISTRATION ACT, 1973). ADMITTEDLY THE ASSESSEE IS ONE SUCH FORM OF ORGANIZATIONS, THUS, THIS CONDITION IS ALSO, THEREF ORE, SATISFIED. THEREFORE, BASED ON THESE FINDINGS, ONE CANNOT COME TO THE CON CLUSION THAT THE CHARITABLE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT GENUINE IN ANY EVENT AS I HAVE STATED EARLIER AS WELL, ALL THAT TH E LEARNED CIT HAS TO SEE, FOR THE PURPOSE OF DECIDING WHETHER OR NOT THE APPR OVAL IS TO BE GRANTED FOR THE PURPOSE OF SECTION 80G IS WHETHER OR NOT TH E CONDITIONS OF SECTION 80G(5)(I) TO (V) ARE SATISFIED AND AS PER THE MANDA TE OF RULE 11AA(4) OF THE RULES, ONCE THESE CONDITIONS ARE SATISFIED, HE HAS TO GRANT THE APPROVAL. GENUINENESS OF THE CHARITABLE ACTIVITY, I N THE ABSENCE OF ANY SPECIFIC MENTION ABOUT CONNOTATION OF THAT EXPRESS ION IN THE IT ACT OR IT RULES, MUST REMAIN CONFINED TO THE ASPECT THAT THE CHARITABLE ACTIVITIES ARE ACTUALLY CARRIED OUT BY THE ASSESSEE. THE ACCO UNTING TREATMENT OF RECEIPT AND FIXATION OF FEE IN EXCESS OF THE NORMS LAID DOWN BY THE CONTROLLING BODIES, EVEN IF THAT BE SO, DO NOT DECI DE THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. 11. IN THE PRESENT APPEAL, IT IS SEEN THAT ALL THE SEVEN MEMBERS OF THE GOVERNING BOARD/DIRECTORS THEMSELVES CONTRIBUTE D MONEY IN THE 15 FORM OF MEMBERSHIP FEE, DONATIONS AND ALSO INTEREST FREE LOANS FOR CONSTRUCTION OF THE SCHOOL BUILDING AND LATER ON MA NY DONORS FROM AGRICULTURAL COMMUNITIES, BUSINESSMEN, ETC. JOINED HANDS AND MADE CONTRIBUTIONS TO CONSTRUCT THE BUILDING. THE LIST OF DONORS WAS ALSO FILED BEFORE THE LEARNED CIT. AS PER THE OBJECT CLAUSE O F MEMORANDUM THAT THE ASSESSEE SOCIETY DID SOMETHING FOR ALL SECTIONS OF THE SOCIETY IRRESPECTIVE OF THEIR CASTE, CREED AND GENDER, OUT OF 263 STUDENTS ADMITTED IN THE SCHOOL ABOUT 17% OF THE TOTAL STREN GTH WAS GRANTED SUBSIDY TOWARDS THEIR FEE BY CHARGING RS. 100/- PER MONTH AGAINST THE SCHEDULED RATE OF RS. 500/600 PER MONTH CHARGED FRO M OTHER CAPABLE SECTIONS OF THE SOCIETY (THIS LIST ALONG WITH CHARG ED FEE FROM THEM WAS ALSO FILED BEFORE THE LEARNED CIT). DURING HEARING , IT WAS ALSO CLAIMED THAT A WELL QUALIFIED STAFF WAS EMPLOYED BY THE ASS ESSEE TO IMPART QUALITY EDUCATION ON GOOD SALARY BASIS. THE CONTEN TION OF THE LEARNED CIT THAT THE ASSESSEE TRUST MAINLY INCURRED EXPENSE S FOR BUILDING CONSTRUCTION WHICH IS ABOUT RS. 34 LACS ITSELF IS N OT A GOOD GROUND FOR DENYING EXEMPTION BECAUSE A GOOD BUILDING IS ALSO T HE BASIC REQUIREMENT FOR THE HEALTHY ENVIRONMENT FOR THE STU DENTS. EVEN OTHERWISE IF, AT A LATER STAGE, IT IS FOUND THAT TH E ASSESSEE IS INVOLVED IN COMMERCIAL CONSIDERATIONS CONTRARY TO THE OBJECTS OF THE ASSESSEE SOCIETY, THE DEPARTMENT IS FREE TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH LAW. SO FAR AS THE CONTENTION OF THE REVENUE R EGARDING CONVERSION OF 16 AGRICULTURAL LAND FOR COMMERCIAL USE (HERE FOR CONS TRUCTING SCHOOL BUILDING) IS CONCERNED, IT SUPPORTS THE CASE OF THE ASSESSEE AS THE PERMISSION FOR SUCH CONVERSION, FOR CONSTRUCTING TH E SCHOOL BUILDING, WAS DULY OBTAINED FROM THE OFFICE OF THE DIRECTOR OF TO WN & COUNTRY PLANNING, SDO, PUBLIC WORKS DEPARTMENT AND LOCAL GRAM PANCHAY AT, ETC. EVEN IF THE LAND WAS OBTAINED THROUGH REGISTERED GIFT DEED ITSELF IS NOT A GOOD GROUND FOR DENYING EXEMPTION TO THE ASSESSEE. 12. IN VIEW OF THE ABOVE DISCUSSION, IN MY CONSIDER ED VIEW, EFFECTIVELY ALL THE NECESSARY REQUIREMENTS UNDER RU LE 11AA(4) AND CONDITIONS OF SECTION 80G(5)(I) TO (V) ARE SATISFIE D, THEREFORE, THE LEARNED CIT OUGHT TO HAVE GRANTED APPROVAL U/S 80G(2)(IV) O F THE ACT TO THE ASSESSEE. ACCORDINGLY, I SET ASIDE THE ORDER OF TH E LEARNED CIT AND DIRECT HIM TO GRANT APPROVAL U/S 80G OF THE ACT TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MARCH, 2011 (JOGINDER SINGH) JUDICIAL MEMBER 9 TH MARCH, 2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-