Bhai Gurdas Educational Trust, Patiala V. CIT, Patiala

ITA 878/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95504 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2015
• Assessment Year: misc
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: R AJIV SALDI
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MRS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 878/CHD/2014 ASSESSMENT YEAR: 2013-14 BHAI GURDAS EDUCATIONAL TRUST VS. THE CIT, B-50 D.L.F, COLONY PATIALA SIRHIND ROAD, PATIALA PAN NO. AAATB8146N (APPELLANT) (RESPONDENT) APPELLANT BY : SH RAJIV SALDI RESPONDENT BY : SH MANJIT SINGH DATE OF HEARING : 17/08/2015 DATE OF PRONOUNCEMENT : 26/08/2015 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT, PATIALA DT. 18/09/2014 UNDER SECTION 12AA OF THE I NCOME TAX ACT ,1961,REJECTING THE APPLICATION OF THE ASSESSE UNDER SECTION 12A(1) OF THE ACT IN FORM NO.10A IFILED ON 31-03-2014,FOR GRANTING REGISTRATION TO T HE ASSESSE TRUST. 2. STATED BRIEFLY THE FACTS RELEVANT FOR THE DISPOS AL OF THIS APPEAL ARE THAT THE ASSESSE TRUST HAD FILED AN APPLICATION IN FORM NO. 10 A FOR REGISTRATION UNDER SECTION 12AA ON 31/03/2014. THE APPLICATION WAS ACC OMPANIED WITH A COPY OF ITS TRUST DEED DATED 28-08-1998,COPIES OF AUDIT REP ORT AND OF ITS RETURN OF INCOME FOR THE A.YS 2011-12,2012-13 2013-14. 3. THE CIT ,VIDE HIS ORDER DT. 18/09/2014, REFUSED TO GRANT REGISTRATION TO THE TRUST ; FIRSTLY FOR THE REASON THAT THE AIMS AND OB JECTS OF THE TRUST INCLUDED RUNNING 2 OF COACHING CENTRE WHICH COULD NOT BE SAID TO BE I N THE NATURE OF PROVIDING EDUCATION. THE LD. CIT HELD THAT THE ASSESSEE HAD N ON- CHARITABLE ACTIVITIES AS PART OF ITS OBJECTS. RELYING UPON THE DECISION OF T HE APEX COURT IN YOGIRAJ CHARITY TRUST VS CIT 103 ITR 777 AND IN FAST INDIA INDUSTRI ES (MADRAS) (PVT) LTD. 65 ITR 611 HE HELD THAT IF THERE WERE SEVERAL OBJECTS OF THE TRUS T ,SOME OF WHICH WERE CHARITABLE AND SOME NON-CHARITABLE AND THE TRUSTEE S MIGHT APPLY THE INCOME TO ANY OF THE OBJECTS IN THEIR DISCRETION ,THE WHOL E TRUST WOULD FAIL AND NO PART OF ITS INCOME WOULD BE EXEMPT FROM TAX. SECONDLY THE LD. CIT HELD THAT THE ACCOUNTS OF THE ASSESSEE WERE NOT MAINTAINED CORREC TLY, SINCE THE ASSESSE HAD NOT SHOWN INTEREST ON FDRS AS PART OF ITS RECEIPTS SO AS TO AVAIL EXEMPTION U/S 10(23C)(IIIAD) BY SHOWING ITS TOTAL RECEIPTS TO BE BELOW RS. 1.00 CRORES AND THEREFORE THE ACTIVITY AND AFFAIRS OF THE ASSESSEE WERE NOT GENUINE. THE LD. CIT ALSO HELD THAT THE ASSESSEE HAD BEEN EARNING HUGE P ROFITS YEAR AFTER YEAR WHICH SHOWED THAT IT WAS NOT RUNNING FOR THE PURPOSE OF C HARITY .THE CIT STATED THAT IT BELIED ITS CLAIM OF HELPING POOR AND NEEDY STUDENT. THE LD. CIT THEREFORE REJECTED THE APPLICATION UNDER SECTION 12AA, BEING NOT SATISFIED ABOUT EITHER THE GENUINENESS OF THE OBJECTS OF THE ASSESSEE TRUS T OR OF ITS ACTIVITY. 4. AGGRIEVED BY THE SAME THE ASSESSEE FILED APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX PATIALA HAS WRONGLY AND ARBITRARILY REFUSED THE REGISTRATION U/S 12AA WHICH IS ILLEGAL, ARBITRARY AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT PATIALA WRONGLY PRESUMED THAT OBJECTS & ACTIVITIES OF THE TRUST ARE NOT GENUINE. THIS PRESUMPTION IS TOTA LLY AGAINST THE FACTS ON RECORD. 3. THAT THE LD. CIT PATIALA UNDER MISCONCEPTION OF FACTS PRESUMED THAT THE APPELLANT IS RUNNING A COACHING CENTRE WHICH IS FAC TUALLY WRONG AS THE LD. CIT PATIALA IN HIS ORDER U/S 12AA HAS CLEARLY MENTIONED THAT THE ASSESSEE IS RUNNING B.SC. NURSING, A.N.M NURSING & G.N.M. NURSING COLLE GE. 4. THAT THE LD. CIT PATIALA HAS WRONGLY STATED THE TRUST IS RUNNING FOR PROFIT ONLY AND APPLIED THE HONBLE UTTRAKHAND HIGH COURT REPORTED IN 315 ITR PAGE 428 WHICH HAS ALREADY BEEN OVER RULED BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE 3 CASE OF PINEGROW INTERNATIONAL CHARITABLE TRUST AND OTHER V/S UNION OF INDIA 327 ITR PAGE 73 (PAPER BOOK). SO MERELY BECAUSE THERE I S A PROFIT WILL NOT RENDER ITSELF INELIGIBLE FOR REGISTRATION. 5. THAT THE LD. CIT PATIALA HAS WRONGLY HELD THAT T HE INTEREST ON FDRS IS NOT SHOWN AS SUCH MAINTENANCE OF BOOKS IS NOT CORRECT. WHEREAS NO INTEREST WAS RECEIVED BUT THERE WAS ACCRUED INTEREST ONLY WHICH WAS NOT UTILIZED BUT REMAINED IN THE BANK AS SUCH COULD NOT BE INCLUDED IN THE IN COME EXPENDITURE STATEMENT. 6. THAT THE RECEIPT OF INTEREST ON FDRS IS NOT INCL UDABLE IN THE RECEIPT OF EDUCATION INSTITUTION AS THE ANNUAL RECEIPT OF EDUC ATION INSTITUTION WOULD BE ONLY RECEIPT OF EDUCATION. INCOME FROM INTEREST ON FDR W AS AN ADDITIONAL INCOME OF TRUST AND CANNOT BE CONSIDERED TO BE THE PART OF AN NUAL RECEIPT OF COLLEGE/INSTITUTION. 7. THAT THE OBJECTS OF THE TRUST ARE GENUINE AND AC TIVITY IS THAT RUNNING EDUCATIONAL INSTITUTE COVERED U/S 2(15). HENCE THE LD. CIT BE DIRECTED TO ALLOW REGISTRATION. 5. BEFORE US THE AR ARGUED THAT OBJECT OF THE TRUST AND ITS ACTIVITIES ARE GENUINE. THE AR SUBMITTED THAT THE APPLICANT TRUST IS RUNNING REGULAR RECOGNIZED PROFESSIONAL COLLEGE AND IMPARTING EDUCATION TO THE NURSING STUDENTS OF B.SC. NURSING, ANM AND GNM NURSING. THE ASSESSEE IS ALSO RUNNING RECOGNIZED NURSING COLLEGE UNDER THE PERMISSION OF INDIAN NURSING COUN CIL NEW DELHI AND GOVT. OF PUNJAB, DEPARTMENT OF MEDICAL EDUCATION & RESEARCH HEALTH. THE AR FILED NOC TO START GNM AND ANM COURSE GRANTED TO IT BY THE DE PARTMENT OF MEDICAL & RESEARCH AT PAGES 6 TO 8 &10 OF ITS PAPER BOOK. A LSO UNDER BABA FARID UNIVERSITY OF HEALTH SCIENCES FARIDKOT, DIPLOMA OR DEGREE IS GRANTED BY THE UNIVERSITY IN NURSING. GRANT OF CONSENT OF AFFILIAT ION CERTIFICATE OF THE SAME WAS FILED BY THE AR AT PAGE 9 & 11 OF THE PAPER BOOK. T HE AR ARGUED THAT THE SANCTIONED STRENGTH FOR ADMISSION OF STUDENT IS FIX ED BY THE INDIAN NURSING COUNCIL FOR DIFFERENT COURSES AND ALSO BY THE PUNJA B GOVT. RELEVANT DOCUMENT FILED AT PAGE 12 OF THE PAPER BOOK. THE STUDENTS FR OM THIS INSTITUTION ARE AT THE SAME LEVEL AS THAT OF TRAINING IN THE MEDICAL COLLE GE/HOSPITAL OF THE STATE/CENTRE GOVERNMENT. THE STUDENTS GET THE PRACT ICAL TRAINING IN THE NEARBY GOVT. HOSPITALS I.E. GOVT RAJINDRA HOSPITAL PATIALA , GOVT MATA KAUSHALYA HOSPITAL PATIALA, GOVT. CIVIL HOSPITAL RAJPURA, GOVT CIVIL H OSPITAL NABHA AND OTHER GOVERNMENT AND RECOGNIZED HEALTH INSTITUTES AS SANC TIONED BY THE GOVERNMENT 4 ITSELF, RELEVANT DOCUMENT FILED AT PAGE 13 & 14 OF THE PAPER BOOK. HE FURTHER STATED THAT THE TRUST HAD SUFFICIENT BUILDING AS RE QUIRED BY THE INDIAN NURSING COUNCIL AND BY THE STATE OF PUNJAB GOVERNMENT AND A LL OTHER FACILITIES AND WAS EQUIPPED WITH LAB EQUIPMENT, REQUIRED LIBRARY, HOST EL ACCOMMODATION. FURTHER HE STATED THAT IT WAS BEING REGULARLY INSPECTED BY THE INDIAN NURSING COUNCIL NEW DELHI AND OTHER GOVERNMENT DEPARTMENTS. THE AR PLEADED THAT THE ASSESSEE TRUST IS GOVT. RECOGNIZED INSTITUTE IMPART ING EDUCATION TO THE REGULAR STUDENTS AND WAS THUS CLEARLY COVERED UNDER SECTION 2(15) OF THE INCOME TAX ACT. THE AR FURTHER PLEADED THAT DESPITE THE FACT T HAT THERE ARE SEVERAL OBJECTS OF THE TRUST BUT FROM THE VERY BEGINNING THERE WAS NO ACTIVITY OTHER THAN EDUCATION ,AS SUCH THERE WAS NO APPLICATION OF INCO ME OF TRUST TILL DATE FOR ANY PURPOSE OTHER THAN EDUCATION. THE AR STATED THAT TH E CIT HAD PICKED UP ONLY ONE OBJECT OUT OF THE SEVERAL OBJECTS IN ITS TRUST DEED ,EMPHASIZED UPON THE SAME AND THEREBY HELD THE ACTIVITY OF THE TRUST TO BE NON CHARITABLE. HE STATED THAT COACHING MAY HAVE BEEN STATED TO BE ONE OF THE OBJECT FOR WHICH THE TRUST WAS ESTABLISHED BUT THE FACT IS THAT THE TRUST HAS BEEN CONDUCTING NO ACTIVITY OTHER THAN EDUCATION AND THEREFORE IT IS A CHARITAB LE TRUST AS PER THE DEFINITION PROVIDED UNDER SECTION 2(15) OF THE INCOME TAX ACT, 1961. THE AR STATED THAT THE CIT HAD ERRED BY TREATING IT AS A COACHING CENT RE. 6. THE AR PLEADED THAT MERELY BECAUSE IT DID NOT SH OW INTEREST ON FDRS IN ITS ANNUAL RECEIPTS, IT DID NOT TANTAMOUNT TO NON-MAINT ENANCE OF CORRECT BOOKS RESULTING TO REFUSAL OF REGISTRATION. THE AR STATED THAT IN FACT NO INTEREST WAS RECEIVED AND THE INTEREST ONLY ACCRUED ON FDRS . H E STATED THAT THE SAME WAS NOT INCLUDABLE IN THE EDUCATIONAL ANNUAL RECEIPTS B ECAUSE U/S 10(23C)(IIIAD) ONLY ANNUAL RECEIPT OF SCHOOL OR UNIVERSITY WOULD B E CONSIDERED FOR DECIDING EXEMPTION AND NOT INTEREST INCOME OF THE TRUST. MOR EOVER, THE AR PLEADED THAT 5 NON SHOWING OF ACCRUED INTEREST WAS ONLY A TECHNICA L FAULT AND DID NOT TANTAMOUNT TO NON-MAINTENANCE OF CORRECT BOOKS. THE AR FURTHER PLEADED THAT THE HUGE PROFIT EARNED BY IT FROM YEAR TO YEAR, WHICH HAD BEEN TAKEN AS ONE OF THE GROUND BY THE LD . CIT FOR REJECTING THE APPLICATION UNDER SECTION 12AA, HAD ACTUALLY BEEN U TILIZED FOR THE PURPOSE OF EXPANSION OF EDUCATIONAL ACTIVITY OF THE TRUST AND NOT FOR PERSONAL PROFIT. HE PLEADED THAT MERELY EARNING THE PROFIT WHICH WERE B EING UTILIZED FOR THE PURPOSE OF EDUCATION COULD NOT BE TAKEN AS A GROUND FOR TRE ATING THE ASESSEE AS INELIGIBLE FOR REGISTRATION. 7. LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF LD. CIT. 8. WE HAVE HEARD THE REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE DOCUMENTS PLACED BEFORE US. 9. SINCE THE PRESENT APPEAL RELATES TO THE PROVISI ONS OF SECTION 12AA, IT IS IMPERATIVE TO UNDERSTAND THE SCOPE OF THE POWERS O F THE LD. CIT FOR GRANTING OR REFUSING REGISTRATION U/S 12AA BEFORE ADJUDICATING ON THE ISSUE IN THE PRESENT APPEAL. 9.1 A READING OF PROVISIONS OF SUB-CLS. (A) AND (B ) OF S. 12AA MAKES IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUINENES S OF THE ACTIVITIES OF THE TRUST OF INSTITUTION AND ALSO ABOUT THE OBJECTS OF THE TRUST OR THE INSTITUTION . ON BEING SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES O F THE TRUST OR THE INSTITUTION AND ALSO ABOUT ITS OBJECTS, THE LD. CIT WOULD EITHER GR ANT THE CERTIFICATE OR WOULD REJECT THE PRAYER. IN ORDER TO SATISFY HIMSELF ABOU T THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, HE CAN CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR THE INSTITUTION, AS H E THINKS NECESSARY AND HE IS ALSO EMPOWERED TO MAKE SUCH ENQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF. THE OBJECTS OF THE TRUST CAN BE HAD FROM THE BYE-LA WS OR THE DEED OF TRUST, AS THE 6 CASE MAY BE AND UNLESS, OF COURSE, THE OBJECTS OF T HE TRUST APPARENTLY MAKE OUT THAT THEY WERE NOT IN CONSONANCE WITH THE PUBLIC PO LICY OR THAT THEY WERE NOT THE OBJECTS OF ANY CHARITABLE PURPOSE, REGISTRATION CANNOT BE REFUSED ACCORDINGLY ON THIS GROUND. IN REGARD TO THE GENUIN ENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRARY TO PUBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, THE L D. CIT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CASE THE ACTIVI TIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST/SOCIETY OR THE INSTITUTION, OR COURSE, THE REGISTRATION CAN AG AIN BE REFUSED. 9.2 IN THE PRESENT CASE, ONE OF THE REASONS FOR REJ ECTING THE APPLICATION OF THE ASSESEE FOR GRANTING REGISTRATION UNDER SECTION 12A A THAT HAS BEEN STATED BY THE LD. CIT IS THAT THE AIMS AND OBJECTS OF THE TRU ST INCLUDE RUNNING OF COACHING CENTRE WHICH CANNOT BE SAID TO BE IN THE NATURE OF PROVIDING EDUCATION AND HENCE IS NOT CHARITABLE. 9.3 A PERUSAL OF THE TRUST DEED OF THE ASSESSE TRUS T, FILED AT PAGE 19 OF THE PAPER BOOK , REVEALS THAT THE ASSESSEE TRUST WAS E STABLISHED ON 28/08/1998 WITH THE FOLLOWING AIMS AND OBJECTIVES: A) TO ESTABLISH A GURU NANAK MUSEUM AND A RESEARCH UNIVERSITY / CENTRE TO STUDY THE ANCIENT LITERATURE AT CHANDIGARH AND AT O THER CITIES OF PUNJAB AND OUTSIDE PUNJAB AND OTHER STATES OF INDIA. B) TO PROMOTE EDUCATION AMONT RURAL PEOPLE BY ESTAB LISHING THE COLLEGES, PROFESSIONAL COLLEGES, IAS, PCS COACHING CENTRE AND PUBLIC SCHOOLS AND BY GRANTING THE SCHOLARSHIPS TO THE POOR AND THE DESER VING STUDENTS. C) TO WORK FOR THE WELFARE OF DOWN-TRODDEN AND FOR THE CREATION OF CASTLESS SOCIETY AND TO START SHORT STAY HOMES FOR WOMEN AND GIRLS ON THE NAME OF MATA TRIPTA JI IN CHANDIGARH, PUNJAB AND OTHER PARTS OF THE COUNTRY AND TO MAKE PROGRAMMES FOR THE WELFARE AND DEVELOPMENT OF THE C HILDREN OF DESTITUTE CHILDREN AND FOR THOSE CHILDREN WHO BELONG TO THE W EAKER SECTIONS OF SOCIETY I.E. SC/ST/BC AND TO MAKE PROGRAMMES FOR EARLY CHILD-HOO D CARE AND EDUCATION FOR 3-6 AGE GROUP CHILDREN AND TO CONSTRUCT A WOMEN HOSTEL. D) TO HELP THE OLD PEOPLE BY ESTABLISHING THE HOME FOR SICK AND OLD TO CONSTRUCT GURU NANAK COMMUNITY CENTRE AND A BHAI GU RDAS NIWAS. E) TO ENLIGHTEN THE PEOPLE ABOUT THEIR FUNDAMENTAL RIGHTS. 7 F) TO WORK FOR THE RELIGIOUS, ECONOMIC AND SPECIAL UPL IFT OF THE PEOPLE. G) TO PROMOTE THE COMPARATIVE STUDY OF THE PREACHING O F GREAT GURUS, BHAGATS AND SUFI SAINTS THROUGH BOOKS, PAPERS JOURN ALS. H) TO PROMOTE A BETTER UNDERSTANDING OF THE RELIGION, HISTORY AND TADITION BY MEDIA. I) TO PROMOTE THE STUDY OF HISTORY AND CULTURE IN ITS TRUE FORM. J) TO PROPAGATE THE IDEAL OF BROTHERHOOD I.E. MANAS KI JAT SABE EKO PACHANBO THROUGH MEDIA. 9.4 CLEARLY ,AS PER THE TRUST DEED , TEN OBJECTS W ERE LISTED AS BEING THE PURPOSE FOR WHICH THE TRUST HAD BEEN CREATED. THE L D. CIT HAS PICKED UP ONE OBJECT OUT OF THE MANY LISTED BY THE ASSESSEE AND T REATING THE SAME AS NOT CHARITABLE, HAS REJECTED THE APPLICATION OF THE ASS ESSEE. WE FIND THAT MERELY BECAUSE ONE OF THE OBJECTS OF THE TRUST APPEARS TO BE NOT CHARITABLE ,IT CANNOT BE A GROUND FOR HOLDING THE OBJECTS OF THE TRUST AS BEING NOT IN THE NATURE OF CHARITY AND REFUSING TO GRANT REGISTRATION U/S 12AA . IN THE CASE OF YOGIRAJ CHARITY TRUST VS CIT 103 ITR 777, THE APEX COURT HAS HELD THAT IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST IS CHARITABLE ,ANOTHER OBJECT WH ICH BY ITSELF MAY NOT BE CHARITABLE BUT WHICH IS MERELY ANCILLARY OR INCIDEN TAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST FROM BEING A VA LID CHARITY. THE DECISIONS RELIED UPON BY THE LD. CIT IN SUPPORT OF HIS CONTEN TION THAT EVEN IF SOME OBJECTS OF THE TRUST ARE CHARITABLE WHILE SOME ARE NON-CHA RITABLE THE ASSESSE IS NOT ENTITLED TO REGISTRATION U/S 12AA ARE DISTINGUISHAB LE ON FACTS SINCE THOSE JUDGMENTS HAVE NOT BEEN RENDERED IN THE CONTEXT OF GRANT OF REGISTRATION U/S 12AA. IN FACT THOSE DECISIONS DEAL ONLY WITH THE IS SUE OF GRANT OF EXEMPTION U/S 4(3)(I) OF THE 1922 ACT. 9.5 IN THIS CASE ON FACTS WE ARE CONVINCED THAT THE OBJECTS ARE IN THE FIELD OF EDUCATION AND MERELY BECAUSE ONE OF THE OBJECTS IS RELATING TO COACHING WHICH HAS NOT BEEN PURSUED SO FAR DOES NOT MAKE THE OBJEC TS NON-CHARITABLE. 8 9.6 THEREFORE WE DO NOT FIND ANY INFIRMITY IN THESE OBJECTS AS CHARITABLE OBJECTS. 10. THE LD. CIT HAS ALSO REFUSED REGISTRATION U/S 1 2AA FOR THE REASON THAT SINCE THE ASSESSE HAD NOT SHOWN INTEREST ON FDRS AS PART OF ITS RECEIPTS, SO AS TO AVAIL EXEMPTION U/S 10(23C)(IIIAD) BY SHOWING ITS TOTAL R ECEIPTS TO BE BELOW RS. 1.00 CRORES, THE ACCOUNTS OF THE ASSESSEE WERE NOT MAINT AINED CORRECTLY AND THEREFORE THE ACTIVITY AND AFFAIRS OF THE ASSESSEE WERE NOT GENUINE. 11. AS STATED ABOVE , WHILE GRANTING OR REFUSING RE GISTRATION TO A TRUST THE LD. CIT IS ONLY REQUIRED TO EXAMINE WHETHER THE OBJECT S OF THE TRUST WERE FOR CHARITABLE PURPOSE AND WHETHER THE ACTIVITIES OF T HE TRUST WERE GENUINE . THE FINDING OF THE LD. CIT THAT THE ACCOUNTS OF THE ASS ESSE WERE NOT CORRECTLY MAINTAINED DOES NOT EFFECT THE GENUINENESS OF THE A CTIVITIES OF THE TRUST. GENUINENESS OF THE ACTIVITIES OF THE TRUST HAS TO B E SEEN KEEPING IN MIND THE OBJECTS OF THE TRUST. THE LD. CIT HAS TO SATISFY HI MSELF ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH THE O BJECTS OF THE TRUST. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CAN NOT BE STRETCHED BEYOND THIS. 12. WE THEREFORE FIND THAT THIS GROUND FOR REJECTIN G REGISTRATION U/S 12AA IS NOT CORRECT. HOWEVER AO IS NOT PRECLUDED FROM EXAMINING THIS ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE EXAMINING TH E ASSESSEES CLAIM FOR BENEFIT U/S 11 AND 12 OF THE INCOME TAX ACT,1961, I N ACCORDANCE WITH LAW. 13. THE LD. CIT ALSO HELD THAT THE ASSESSEE HAD BEE N EARNING HUGE PROFITS YEAR AFTER YEAR WHICH SHOWED THAT IT WAS NOT RUNNING FOR THE PURPOSE OF CHARITY .THE LD. CIT STATED THAT IT BELIED ITS CLAIM OF HELPING POOR AND NEEDY STUDENT. THE LD. 9 CIT THEREFORE REJECTED THE APPLICATION UNDER SECTIO N 12AA, BEING NOT SATISFIED ABOUT EITHER THE GENUINENESS OF THE OBJECTS OF THE ASSESSEE TRUST OR OF ITS ACTIVITY. 15. WE FIND THAT EVEN THIS GROUND DOES NOT JUSTIFY THE REFUSAL OF REGISTRATION AS PROFIT EARNING PER SE HAS NO REFLECTION ON THE GENU INENESS OF THE ACTIVITIES OF THE TRUST. IN FACT IT IS NOT THE EARNING OF SURPLUS WHI CH IS RELEVANT BUT ITS UTILIZATION FOR NON CHARITABLE PURPOSES WHICH EFFECTS THE GENUINENE SS OF THE ACTIVITIES OF THE TRUST. THE SUPREME COURT IN QUEENS EDUCATIONAL SOCI ETY VS. CIT, CIVIL APPEAL NO. 5167 OF 2008 DT. 16/03/2015 HAS STATED THAT MER E SURPLUS DOES NOT MEAN THAT THE INSTITUTION IS EXISTING FOR MAKING PROFIT. THE PREDOMINANT OBJECT TEST MUST BE APPLIED. THE RELIANCE PLACED BY THE LD. CIT ON THE DECISION IN THE CASE OF CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUC ATIONAL SOCIETY (2009) 315 ITR 428 (UTTARAKHAND) IS OF NO RELEVANCE, AS IT HAS BEE N OVERRULED BY THE APEX COURT DECISION(SUPRA). 16. IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF LD. CIT REJECTING THE APPLICATION OF THE ASSESSE FOR GRANT OF REGISTRATIO N U/S 12AA OF THE INCOME TAX ACT,1961 AND DIRECT THE LD. CIT TO GRANT REGISTRAT ION. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2015 SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26/08/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR