Appeal Details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 7154 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 year(s) 9 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-02-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
02-01-2017
Assessment Year
2002-2003
Appeal Filed On
09-05-2012
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.915 TO 920/PUN/2012 '% % / ASSESSMENT YEARS : 1999-2000 TO 2004-05 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO.124, EX-SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411 029 PAN :AAAAM1206F . / APPELLANT V/S DCIT, CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK & SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI A.S. SINGH / ORDER PER R.K.PANDA, AM : THE ABOVE BATCH OF 6 APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 29-02-2012 OF THE CI T(A)-III, PUNE RELATING TO ASSESSMENT YEARS 1999-2000 TO 2004-05 R ESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE I N ALL THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. / DATE OF HEARING : 03.01.2017 / DATE OF PRONOUNCEMENT: 10 .02.2017 2 ITA NOS.915 TO 920/PUN/2012 2. FIRST WE TAKE UP ITA NO.915/PUN/2012 FOR A.Y. 19 99-2000 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT T HE ASSESSEE IS A TRUST INCORPORATED IN THE YEAR 1983 AND IS REGISTERED UND ER THE BOMBAY PUBLIC TRUST ACT, 1950. THE TRUST RUNS SEVERAL EDU CATIONAL INSTITUTIONS. FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE TRUST FILED ITS RETURN OF INCOME ON 30-06-2000 DISCLOSING NIL INCOME. ACCORD ING TO THE ASSESSEE THE INCOME OF THE TRUST IS EXEMPT U/S.10(2 3C)(VI) OF THE I.T ACT, 1961. IN THE RETURN OF INCOME, THE ASSESSEE HAS SH OWN INCOME FROM OTHER SOURCES OF RS.17,97,33,097/-. THE TRUST IS AL SO REGISTERED U/S.12AA(1) OF THE I.T. ACT, 1961. IT WAS CLAIMED THAT THE ENTIRE INCOME FROM OTHER SOURCES OF RS.17,97,33,097/- WHICH ARE T HE GROSS RECEIPTS OF THE TRUST FOR THE IMPUGNED ASSESSMENT YEAR IS EXEMP T U/S.11 OF THE I.T. ACT. 3. THE ASSESSING OFFICER OBSERVED THAT THERE WAS A SEARCH U/S.132 OF THE I.T. ACT, 1961 IN THE CASE OF TWO OF THE TRU STEES NAMELY SHRI VISHWANATH D. KARAD AND SHRI BHASKAR E. AVHAD. SU RVEY ACTION U/S.133A OF THE I.T. ACT WAS CONDUCTED IN THE CASE OF THE TRUST ON 20-07- 2005. DURING THE COURSE OF SEARCH AT THE RESIDENCE OF SHRI VISHWANATH D. KARAD, JEWELLERY WORTH RS.4,49,562/- AND CERTAIN DOCUMENTS WERE SEIZED. SIMILARLY, IN THE CASE OF SHRI B.E. AVHAD J EWELLERY WORTH RS.41,01,317/- AND CASH OF RS.28,49,350/- AND CERTA IN DOCUMENTS WERE SEIZED. ACTION U/S.133A OF THE I.T. ACT, 1961 WAS AGAIN TAKEN IN THE CASE OF THE TRUST ON 26-08-2005 DURING WHICH CASH O F RS.8 LAKHS AND AN INCRIMINATING DOCUMENT INDICATING ON-MONEY PAYMENT ON ACCOUNT OF PURCHASE OF LAND WAS FOUND. SINCE THE CASH FOUND A T THE TIME OF SURVEY COULD NOT BE EXPLAINED, ONE OF THE EXECUTIVE DIRECT OR SHRI MANGESH KARAD ADMITTED THE SAME AS HIS INCOME. HOWEVER, AF TER COUPLE OF MONTHS THE EXECUTIVE DIRECTOR RETRACTED FROM HIS CO MMITMENT REGARDING UNEXPLAINED CASH FOUND DURING SURVEY. DURING THE C OURSE OF SURVEY AND 3 ITA NOS.915 TO 920/PUN/2012 THE POST SEARCH/SURVEY ENQUIRY SEVERAL DISCREPANCIE S WERE NOTICED. ACCORDINGLY, THE ASSESSING OFFICER ISSUED NOTICE U/ S.148 OF THE ACT TO THE ASSESSEE TRUST ON 29-03-2006 WHICH WAS SERVED ON TH E ASSESSEE ON 01- 04-2006. THE ASSESSEE OBJECTED TO THE ISSUE OF NOT ICE U/S.148 OF THE I.T. ACT AND SUCH OBJECTIONS WERE DISPOSED OF BY TH E ASSESSING OFFICER VIDE SEPARATE ORDER DATED 01-08-2008. 4. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTIC E U/S.143(2) AND 142(1) TO WHICH THE ASSESSEE FILED VARIOUS DETAILS FROM TIME TO TIME. THE ASSESSING OFFICER NOTED THE FOLLOWING IRREGULARITIE S AS PER PAGES 3 TO 5 OF HIS ORDER WHICH WERE NOTICED DURING THE COURSE OF P OST SURVEY ENQUIRIES CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTME NT AND THE ENQUIRIES DONE BY HIM DURING THE COURSE OF ASSESSME NT PROCEEDINGS : 1. THE TRUST HAD TAKEN DONATION FOR ADMISSION FROM VA RIOUS PERSONS WHICH IS FOR RESERVATION OF SEATS UNDER MANAGEME NT QUOTA PROHIBITED UNDER MAHARASHTRA EDUCATIONAL INSTITUTES (P ROHIBITION OF CAPITATION FEES) ACT, 1987. 2. MAJOR PORTION OF DONATION WAS IN CASH AND AGAINST M ANY SUCH DONATIONS THERE WAS NO ADDRESSES. 3. OUT OF THE CASES WHEREIN THERE WAS ADDRESSES, THERE WE RE INSTANCES WHEREIN DONORS DENIED TO HAVE GIVEN THE DONA TION. 4. THERE WERE INSTANCES WHEREIN DONATION FOR A BIGGER AMOUNT OBVIOUSLY RECEIVED IN LIEU OF ADMISSION OUT OF MANAGE MENT QUOTA WAS SPLIT INTO DONATIONS OF SMALLER DENOMINATIONS AND MU LTIPLE RECEIPTS WERE ISSUED TO THE DONORS WHO WERE NOT TRACEAB LE. E.G. ON 25-08-2001 RS.5,00,000/- IN CASH WAS TAKEN FROM DR. AH MAD SHAIKH BELGAM BAZAR, HYDERABAD AND 12 RECEIPTS WERE ISSUED. DR. AHMAD SHAIKH IS NOT TRACEABLE AS PRACTICALLY NO ADDRESSES WER E GIVEN. 5. THERE WERE INSTANCES WHERE IN LIEU OF ADMISSION DONA TION WAS TAKEN, BUT IT WAS SPLIT UP IN VARIOUS NAMES TO HIDE THE NAME OF THE DONOR. E.G. (A) FOR THE ADMISSION OF SON OF DAULATRAO JADHAV DONATION OF RS.7,00,000/- WAS TAKEN IN THE NAME OF 16 UNRELATE D PERSONS TO WHOM RECEIPTS FOR DONATION ENTITLING THEM TO GET DED UCTION U/S.80G WERE ISSUED. (B) IN THE CASE OF BANSIDHAR D. PATIL, SHIRPUR A DONA TION OF RS.15,00,000/- WAS RECEIVED FOR THE ADMISSION OF VAIBHA V PATIL AND 14 RECEIPTS IN DIFFERENT NAMES WERE ISSUED, ENTITLING DIFFERENT DONORS TO GET DEDUCTION U/S.80G OF THE I.T .ACT, 1961 . 4 ITA NOS.915 TO 920/PUN/2012 6. THERE WERE INSTANCE OF DONATIONS BELOW RS.10,000/- IN CASH IN THE NAME OF VARIOUS FAR OFF OUT STATION DONORS SUCH AS FROM DELHI, KANPUR, LONI, HYDERABAD ETC. WITHIN A SPAN OF COUPLE OF DAYS WHICH WAS MOST IMPROBABLE. THESE ARE AS PER ANNEXURES III,, I V AND V, AND VI TO THE ORDER U/S.12AA(3) DTD.31-10-2007 PASSED BY T HE CIT (C), PUNE WHICH ARE ANNEXED. 7. MAJORITY OF THE DONATIONS CREDITED TO THE CORPUS O F THE TRUST AND CLAIMED TO BE ELIGIBLE FOR EXEMPTION U/S.11 OF T HE I.T. ACT, 1961 WERE NOT VOLUNTARY. 8. AN INSTANCE WAS DETECTED WHEREIN THE ASSESSEE TRUST PAI D MONEY TO THE TUNE OF OVER RS.69,50,000/- IN CASH FOR THE PURCHASE OF PROPERTY AT KELGAON OVER AND ABOVE THE PURCHASE CONSI DERATION STATED IN THE REGISTRATION DEED THEREBY EVADING BOTH THE INCOME TAX AND STAMP DUTY. 9. THERE WERE INSTANCES WHEREIN EITHER RECEIPT FOR C ASH DONATION WAS NOT GIVEN OR THE RECEIPT WAS GIVEN FOR P ART OF THE DONATION RECEIVED. DETAILED DISCUSSION IN THIS REGARD IS CONTAINED IN ORDER U/S.12AA(3) OF CIT (C), PUNES DTD.31-10-2007 W HICH MAY PLEASE BE READ AS PART OF THIS ORDER. E.G. (A) IN THE CASE OF SHRI YASHWARDHAN SHARMA NO RECEIPT WAS GIVEN FOR CASH DONATION OF RS.4 LAKH. (B) IN THE CASE OF KASHINATH SARODE RECEIPT FOR ONLY RS.4 LAKH WAS GIVEN AGAINST CASH DONATION OF RS.5 LAKHS. (C) IN THE CASE OF MOHD. IQBAL MOHD OF HYDERABAD REC EIPT FOR ONLY RS.5.5 LAKH WAS GIVEN AGAINST CASH DONATION R ECEIVED OF RS.14 LAKHS. 10. THERE WAS AN INSTANCE WHERE PAYMENT OVER AND ABOV E REGULAR FEE WAS DEMANDED AND ADMISSION WAS DENIED FOR N OT FULFILLING THE DEMAND E.G. STATEMENT OF SHRI BHIVAR AO DHAMALE DISCUSSED IN ORDER U/S.12AA(3) DTD. 31-10-2007. 11. THE ASSESSEE HAS GOT DONATION RECEIPT BOOKS PRINTED O N WHICH EVEN ON BLANK PAGES IT HAS PUT A STAMP THAT THE DONATION IS ON ACCOUNT OF CORPUS AND THE DONATION IS ELIGIBLE FO R DEDUCTION U/S.80G OF THE I.T. ACT, 1961. 12. THERE WERE VIOLATIONS OF SECTION 13 OF I.T. ACT, 1961. 5. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE LD.CIT CENTRAL, PUNE WHILE CANCELLING THE REGISTRATION U/S.12AA(3) OF THE ACT HAS DEALT WITH THE ABOVE ISSUES IN DETAIL. HE NOTED THAT ALT HOUGH THE TRUST WAS CONSTITUTED ON 24-10-1983, IT FILED AN APPLICATION FOR REGISTRATION U/S.12A(A) OF THE I.T. ACT FOR THE FIRST TIME ON 24 -02-1999. THE CIT-II, 5 ITA NOS.915 TO 920/PUN/2012 PUNE HAD GRANTED REGISTRATION U/S.12A(1) OF THE I.T . ACT, 1961 FOR THE FIRST TIME W.E.F.01-04-1998. THE ASSESSEE TRUST HAD ALSO APPLIED FOR APPROVAL FOR EXEMPTION U/S.10(23C)(VI) OF THE I.T. ACT, 1961 FOR A.YRS. 1999-2000 TO 2001-02 AND THE APPROVAL WAS GRANTED VIDE ORDER DATED 09-03-2004. IN VIEW OF THE APPROVAL FOR EXEMPTION U/S.10(23C)(V I) GRANTED BY CBDT, NEW DELHI AND THE REGISTRATION GRANTED BY THE CIT-I I, PUNE THE ASSESSEE ENJOYED THE BENEFITS OF EXEMPTION U/S.10(23C)(VI) O F THE I.T. ACT, 1961 W.E.F. 01-04-1998. THE CIT-II, PUNE WAS NOT AWARE OF THE TRUE AFFAIRS OF THE TRUST. THEREFORE, THE FACTS WHICH CAME TO THE NOTICE OF THE DEPARTMENT DURING POST SURVEY PROBE WERE BROUGHT TO THE NOTICE OF THE CIT CENTRAL, PUNE. THE LD.CIT CENTRAL, PUNE AFTER CONSIDERING THE FACTS OF THE CASE AND SUBMISSION OF THE ASSESSEE CANCELLE D THE REGISTRATION GRANTED TO THE TRUST VIDE HIS ORDER DATED 31-10-200 7. 6. SIMILARLY, THE CBDT WHILE GRANTING EXEMPTION TO THE TRUST U/S.10(23C)(VI) VIDE ITS ORDER DATED 09-03-2004 WAS NOT AWARE OF THE TRUE AFFAIRS OF THE TRUST. THEREFORE, THE FACTS TH AT CAME TO THE NOTICE OF THE DEPARTMENT DURING POST SEARCH/SURVEY PROBE WERE REPORTED TO THE DGIT (INVESTIGATION), PUNE. THE DGIT (INVESTIGATIO N), PUNE VIDE HIS ORDER U/S.10(23C)(VI) R.W. 13 TH PROVISO OF THE I.T. ACT, 1961 ORDER DATED 08-02-2008 HAS WITHDRAWN EXEMPTION GRANTED U/S.10(2 3C)(VI) OF THE I.T. ACT, 1961. SINCE THE ASSESSEE TRUST HAS LOST EXEMP TION U/S.12AA AS WELL AS EXEMPTION GRANTED U/S.10(23C)(VI) R.W. 13 TH PROVISO OF THE I.T. ACT, 1961 THE ASSESSING OFFICER HELD THAT THE ASSESSEE H AS TO BE ASSESSED LIKE ANY OTHER ASSESSEE AND PROVISIONS OF SECTION 1 0(23C)(VI) AND 11 AND 12 ARE NOT APPLICABLE IN THE CASE OF THE ASSESS EE. HE ACCORDINGLY PROCEEDED TO ASSESS THE INCOME OF THE ASSESSEE LIKE AN AOP TO WHOM TOTALLY DIFFERENT SETS OF INCOME TAX PROVISIONS ARE APPLICABLE. IN VIEW OF THE COMPLEXITIES INVOLVED IN COMPUTING THE INCOME O F THE ASSESSEE AOP, THE CIT CENTRAL, PUNE APPROVED SPECIAL AUDIT FOR TH E A.YRS. 1999-2000 TO 6 ITA NOS.915 TO 920/PUN/2012 2006-07. ACCORDINGLY, THE ASSESSEE WAS DIRECTED TO GET ITS ACCOUNTED AUDITED BY THE AUDITOR APPOINTED BY THE CIT CENTRAL , PUNE. THE ASSESSEE FILED THE AUDIT REPORT FOR THE YEAR UNDER CONSIDERATION ON 13-06-2008. 7. THE ASSESSING OFFICER EXAMINED THE OBJECTS OF TH E TRUST WHICH HE INCORPORATED AT PAGES 7 TO 9 OF THE ASSESSMENT ORD ER. HE OBSERVED THAT ALTHOUGH THE OBJECTS ARE PREDOMINANTLY EDUCATIONAL IN NATURE, HOWEVER, THE ASSESSEE TRUST HAS SUBSEQUENTLY AMENDED THE TRU ST DEED ON ITS OWN AND INCLUDED 3 MORE OBJECTS, VIDE RESOLUTION OF MAN AGING COMMITTEE DATED 20-07-1997. ACCORDING TO HIM OBJECT NO.13 IS SIGNIFICANT WHICH READS AS UNDER : 13. THE INSTITUTION AIMS TO WORK TOWARDS THE NOBLE CA USE OF WORLD PEACE AND HARMONY. IT ALSO AIMS AND INTENDS TO ESTABLISH THE WORLD PEACE UNIVERSITY/WORLD PEACE CENTRE AND SIMILAR INSTITUTIONS SINGULARLY OR JOINTLY/AT VARIOUS PLACES IN INDIA AND A LL OVER THE WORLD. 8. THE ASSESSING OFFICER NOTED THAT AN APPLICATION WAS MOVED TO GET THE ADDITIONAL OBJECT REGULARISED FROM THE CHARITY COMMISSIONER ON 30- 08-1999. THE TRUST APPLIED FOR REGISTRATION FOR TH E FIRST TIME TO THE CIT-II, PUNE ON 24-02-1999. ACCORDING TO THE ASSESSING OFF ICER IF THE CLAIM OF THE TRUST THAT THE ADDITIONAL OBJECT APPROVED VIDE RESOLUTION OF MANAGING COMMITTEE ON 20-07-1997 IS TRUE, THEN IN THAT CASE, THE ASSESSEE SHOULD HAVE COMMUNICATED TO THE CIT REGARDING THE AMENDMEN T OF THE OBJECT WHILE APPLYING FOR REGISTRATION ON 20-02-1999. NO I NTIMATION WAS GIVEN TO THE CIT-II, PUNE WHICH IS THE AUTHORITY GRANTING RE GISTRATION U/S.12AA(1) OF THE I.T. ACT. THEREFORE, HE WAS OF THE OPINION THAT THE INTRODUCTION OF 13 TH OBJECT IS AFTER THE GRANT OF REGISTRATION U/S.12AA (1) OF THE I.T. ACT. HE NOTED THAT THE ADDITIONAL OBJECT WAS MADE OPERAT IONAL EVEN BEFORE FILING THE APPLICATION BEFORE THE CHARITY COMMISSIO NER TO INCLUDE THIS CLAUSE IN THE TRUST DEED. FROM THE BOOKS OF ACCOUN T OF THE ASSESSEE, HE 7 ITA NOS.915 TO 920/PUN/2012 OBSERVED THAT TILL 31-03-1999, I.E. EVEN BEFORE THE COMMUNICATION OF THE 13 TH OBJECT TO THE CHARITY COMMISSIONER THE ASSESSEE HA D ALREADY SPENT A SUM OF RS.1,11,41,532/- ON THIS OBJECT. THE CHAR ITY COMMISSIONER ALLOWED THIS CLAUSE TO BE INCLUDED IN THE TRUST DEE D WITH RETROSPECTIVE EFFECT VIDE APPROVAL DATED 06-04-2005. THE ASSESSI NG OFFICER HELD THAT FOR UNILATERALLY AMENDING THE TRUST DEED AND WITHOU T GETTING THE APPROVAL OF THE DEPARTMENT TO THIS AMENDMENT THE ASSESSEE HA S TO BE DENIED REGISTRATION. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF AGRICUL TURAL INSTITUTE AND OTHERS VS. UOI REPORTED IN 291 ITR 116. HE FURTHER OBSERVED THAT THE PURPOSE OF THIS AMENDMENT WAS APPARENTLY FOR INCREA SING THE SOCIAL STATUS OF THE TRUSTEES. HE NOTED THAT THERE WERE H UGE EXPENSES ON WORLD PHILOSOPHERS MEET (IN SHORT WPM) AT GENEVA EVEN PRIOR TO COMMUNICATING THE OBJECTS TO THE CHARITY COMMISSION ER AND THE AUTHORITY GRANTING REGISTRATION. FURTHER DURING WP M AT GENEVA HEAVY EXPENDITURE WAS INCURRED OUTSIDE INDIA FOR WHICH NO APPROVAL WAS OBTAINED FROM CBDT AS LAID DOWN IN PROVISO TO SECTI ON 11(1)(C) OF THE I.T. ACT. IN VIEW OF THE ABOVE FACTS, THE ASSESSIN G OFFICER HELD THAT SINCE THE OBJECT NO.13 WAS NOT APPROVED EVEN BY THE CHARI TY COMMISSIONER, THE EXPENSES INCURRED IS NOT ON THE OBJECTS OF THE TRUST. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S.12AA(1) AS EDUCATIONAL INSTITUTION. THE CBDT H AD ALSO GRANTED EXEMPTION U/S.10(23C)(VI) AS EDUCATIONAL INSTITUTIO N. HOWEVER, CLAUSE NO.13 WHICH WAS INCLUDED HAS NO EDUCATION PURPOSE W HATSOEVER. THUS THE ASSESSEE HAS VIOLATED NOT ONLY THE PROVISIONS O F SECTION 12AA(1) BUT ALSO THE PROVISIONS OF SECTION 10(23C)(VI) OF THE I .T. ACT. 9. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASS ESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13 ON ACCOUNT OF THE FOLLOWING FACTS : 8 ITA NOS.915 TO 920/PUN/2012 A. SHRI B.E. AVHAD AND HIS FAMILY MEMBERS, I.E. MRS . KAMAL AVHAD, MR. A.B. AVHAD, MS. A.B. AVHAD AND MS. P.B. AVHAD WENT TO GENEVA DURING THE PERIOD 15-08-1998 TO 30-08-199 8 FOR WHICH EXPENDITURE ON AIR FARE OF RS.1,60,000/- AND EXPENS ES ON FOREIGN EXCHANGE TO THE TUNE OF RS.4,40,000/- WERE INCURRED . THE ABOVE EXPENDITURE WAS SPONSORED BY THE ASSESSEE TRUST AND THE EXPENSES WERE DEBITED IN THE BOOKS OF THE TRUST. O N BEING CONFRONTED THE TRUST CAME OUT WITH ALTOGETHER A NEW VERSION THAT B.E. AVHAD IS A TRUSTEE AND SO IS HIS WIFE. HIS CH ILDREN WERE TAKEN AS VOLUNTEERS FOR HOLDING THE CONFERENCE ON W ORLD PEACE CENTRE AT GENEVA FOR 15 DAYS. FURTHER, HE NOTED TH AT NO EXPLANATION WAS GIVEN AS TO HOW THE FOREIGN EXCHANG E OF RS.4,40,000/- WAS SPENT OUTSIDE INDIA. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HELD THAT THIS IS A VIOLATION OF SECTION 13(1)(C) OF THE I.T. ACT. B. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE TRUST HAS EXTENDED SEVERAL FACILITIES TO B.E. AVHAD, PRESIDEN T OF THE TRUST BY INCURRING SUBSTANTIAL EXPENDITURE ON ACCOUNT OF THE FOLLOWING : A. EXPENSES ON TOYOTA CAMRY CAR B. CREDIT CARDS EXPENSES C. VISIT TO FOREIGN COUNTRIES D. LOCAL VISITS E. HIRING OF TAXIS 10. ON BEING ASKED BY THE ASSESSING OFFICER TO JUST IFY THE INCURRENCE OF ABOVE EXPENDITURE, IT WAS STATED BY THE ASSESSEE TRUST THAT SHRI B.E. AVHAD HAS BEEN CARRYING OUT LOT OF FUNCTIONS RELATI NG TO THE TRUST. HOWEVER, THE ASSESSING OFFICER OBSERVED FROM THE ST ATEMENT RECORDED OF SHRI AVHAD DURING THE COURSE OF SEARCH U/S.132(4 ) THAT HE IS THE HONORARY PRESIDENT AND NOT ACTIVELY INVOLVED IN THE DAY TO DAY ACTIVITIES OF THE TRUST. IN THE SAID STATEMENT HE HAS ADMITTE D THAT THE DAY TO DAY ADMINISTRATIVE ACTIVITIES OF THE TRUST ARE ATTENDED BY SHRI VISHWANATH KARAD WHO IS THE EXECUTIVE PRESIDENT. THE ACTIVITI ES AT THE LEVEL OF INDIVIDUAL INSTITUTIONS ARE LOOKED AFTER BY A COMMI TTEE HEADED BY THE PRINCIPAL AND STAFF. THE ROLE OF SHRI B.E. AVHAD IS LIMITED TO CONDUCTING 9 ITA NOS.915 TO 920/PUN/2012 OF BOARD MEETINGS AND TRANSACTIONS WHICH ARE MAINLY FOR TAKING POLICY DECISIONS. THE ASSESSING OFFICER FURTHER OBSERVED THAT SHRI B.E. AVHAD IS AN EMINENT LAWYER PRACTICING IN VARIOUS COURTS I NCLUDING THE HONBLE SUPREME COURT OF INDIA. THE ASSESSEE IN ITS CLARIF ICATION EXPLAINED THAT SHRI AVHAD WAS LOOKING AFTER THE COURT MATTERS RELA TING TO THE TRUST IN TOTO. IN ORDER TO VERIFY THIS CLAIM, THE ASSESSING OFFICER EXAMINED THE LEGAL EXPENDITURE INCURRED BY THE ASSESSEE WHICH AR E AS UNDER : 11. LOOKING AT THE MAGNITUDE OF EXPENDITURE INCURRE D BY THE ASSESSEE ON LEGAL CHARGES AND ALSO THE STATEMENT OF SHRI B.E . AVHAD THE ASSESSING OFFICER WAS OF THE OPINION THAT SHRI B.E. AVHAD CANNOT BE SAID TO HAVE BEEN ACTIVELY ENGAGED IN THE DAY TO DAY FUN CTIONING OF THE TRUST. THE ASSESSING OFFICER FURTHER NOTED THAT BESIDES TH E CAR PROVIDED TO THE HONORARY PRESIDENT, THE ASSESSEE TRUST HAS ALSO PRO VIDED FACILITIES SUCH AS PERSONAL COMPUTERS, DRIVES ETC. THE TRUST BEARS THE DAY-TO-DAY MAINTENANCE OF THE CAR BESIDES THE INTEREST ON BORR OWED CAPITAL. FURTHER, THE ASSESSEE TRUST HAS BEEN REIMBURSING T HE CREDIT CARD EXPENDITURE ON ACCOUNT OF TWO CREDIT CARDS HELD BY SHRI B.E. AVHAD THE DETAILS OF WHICH ARE AS UNDER : SR.NO. ASST.YEAR EXPENDITURE 1 1999 - 00 1,33,891.71 2 2000 - 01 1,42,529.03 3 2001 - 02 91,054.38 4 2002 - 03 2,42,566.85 5 2003 - 04 2,79,298.68 6 2004 - 05 1,78,264.29 7 2005 - 06 2,28,839.73 ASST.YEAR LEGAL EXPENSES (RS.) 1999 - 00 5,12,640 2000 - 01 2,91,450 2001 - 02 2,26,200 2002 - 03 8,37,439 2003 - 04 20,45,423 2004 - 05 1,50,819 2005 - 06 3,60,283 2006 - 07 15,20,785 10 ITA NOS.915 TO 920/PUN/2012 8 2006 - 07 2,10,636.97 TOTAL 15,07,081.64 12. HE OBSERVED THAT THE AMOUNTS OF THE CREDIT CARD EXPENSES ARE ON ACCOUNT OF HOTEL BILLS FOR STAYING IN MUMBAI AND DE LHI WHERE HIGH COURT AND SUPREME COURT ARE LOCATED. HE OBSERVED THAT TH E ASSESSEE HAS ALSO DEBITED THE AIR FARE EXPENSES OF SHRI B.E. AVH AD. LOOKING AT THE EXPENDITURE INCURRED FOR HIRING THE LEGAL PROFESSIO NALS AND THE STATEMENT OF SHRI B.E. AVHAD AND ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PRODUCE TOUR-WISE JUSTIFICATION FOR HOTEL BILLS AND TRAVEL BILLS HE WAS OF THE OPINION THAT THE EXPENDITURE INCURRED AS SHOWN ABOVE CANNOT BE SAID TO HAVE BEEN INCURRED ON/FOR THE OBJECTS OF THE TRUST. HE FURTHER NOTED THAT SALARY OF RS.75,000/- WAS BEING PAID TO THE PRESIDENT FROM 01-06-2006 WHICH CLEARLY INDICATES THAT THE PRESIDENT WAS NOT INVOLV ED IN THE DAY TO DAY ACTIVITIES OF THE TRUST ATLEAST PRIOR TO 01-01-2006 . SIMILARLY, HE OBSERVED THAT THE CREDIT CARD EXPENSES ALSO INCLUDED PERSONA L EXPENSES LIKE INSURANCE PREMIUM, PURCHASE OF CLOTHES ON VARIOUS D ATES AGGREGATING TO RS.37,605/-. LIKE-WISE OTHER EXPENSES LIKE TRAVELL ING EXPENSES FOR HIRING VEHICLES TO MUMBAI WAS ALSO FOUND TO HAVE BEEN INCU RRED BY THE TRUST FOR SHRI B.E. AVHAD. HE, THEREFORE, CAME TO THE CONCLU SION THAT ALL THESE EXPENSES CLEARLY POINT TO THE INEVITABLE CONCLUSION THAT THERE ARE GROSS VIOLATIONS OF THE PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT. 13. THE ASSESSING OFFICER OBSERVED FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE THAT THE TRUSTEES AND THE MEMBERS O F THEIR FAMILY HAVE UNDERTAKEN NUMEROUS TRIPS TO FOREIGN COUNTRIES. HE NOTED THAT THE TRUST HAD GIVEN FOREIGN CURRENCY TO THE TRUSTEES/THEIR FA MILY MEMBERS AT THE TIME OF THEIR VISIT. HOWEVER, NO SUCH DETAILS REGA RDING THE MANNER IN WHICH SUCH FOREIGN CURRENCY WAS SPENT WERE PRODUCE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO FAILED TO PROVE THAT THE FOREIGN CURRENCY TAKEN ABROAD WAS SPENT ON THE OBJECTS OF THE 11 ITA NOS.915 TO 920/PUN/2012 TRUST. SINCE THE EXPENDITURE INCURRED ON FOREIGN T OUR WAS UNDER THE WORLD PEACE CENTRE ACTIVITIES AND SINCE THE OBJECT OF WORLD PEACE WAS NOT APPROVED TILL 06-04-2005, THEREFORE, HE WAS OF THE OPINION THAT THE EXPENDITURE INCURRED ON THE FOREIGN TOUR CANNOT BE CALLED AS INCURRED FOR THE OBJECTS OF THE TRUST. THUS, THERE WAS CLEAR VI OLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT. 14. VISIT TO KATHMANDU THE ASSESSING OFFICER FURTHER NOTED THAT SHRI RAHUL KARAD, SON OF THE PRINCIPAL TRUSTEE HAS UNDER TAKEN VISIT TO KATHMANDU, THE EXPENSES OF WHICH WERE INCURRED BY T HE ASSESSEE TRUST. ON BEING QUESTIONED BY THE ASSESSING OFFICER IT WAS EXPLAINED THAT THE PURPOSE OF THE VISIT WAS TO PROMOTE THE BRAND NAME OF MIT IN NEPAL IN THE COURSE OF EDUCATIONAL EXHIBITION THERE. SIMILA RLY, ANOTHER VISIT WAS UNDERTAKEN BY SHRI RAHUL KARAD AT THE EXPENSES OF T HE TRUST. THIS ACCORDING TO THE ASSESSING OFFICER WAS IN CLEAR VIO LATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT. 15. VISIT TO AUSTRALIA THE ASSESSING OFFICER NOTED THAT SHRI RAHUL KARAD AND MANAGING TRUSTEE SHRI VISHWANATH KARAD VI SITED AUSTRALIA DURING THE PERIOD JULY TO AUGUST 2002 FOR WHICH AIR FARE EXPENSES OF RS.1,02,909/- AND OTHER EXPENDITURE OF RS.1,50,245/ - WAS INCURRED BY THE ABOVE TWO PERSONS. INSTANCES OF PERSONAL PURC HASE BY SHRI RAHUL WERE ALSO NOTICED BY THE ASSESSING OFFICER. ON BEI NG QUESTIONED BY THE ASSESSING OFFICER IT WAS EXPLAINED THAT THESE EXPE NSES WERE MET BY THE SISTER OF SHRI RAHUL KARAD. HOWEVER, ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE COULD NOT SUBSTANTIATE THE SAME. HE F URTHER NOTED THAT ALTHOUGH FOREIGN CURRENCY TO THE TUNE OF RS.1,50,24 5/- WAS GIVEN BY THE TRUST, HOWEVER, NO DETAILS AS TO HOW SUCH FOREIGN EXCHANGE WAS UTILIZED WAS FURNISHED DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER FURTHER OPINED THAT SINCE THE DAU GHTER OF THE MANAGING TRUSTEE STAYS IN AUSTRALIA, THEREFORE, THIS TOUR W AS UNDERTAKEN TO MEET 12 ITA NOS.915 TO 920/PUN/2012 HER BY HER BROTHER AND FATHER. THIS VIEW OF THE ASS ESSING OFFICER WAS FURTHER STRENGTHENED BY THE FACT THAT NO DETAILS OF FULL STAY AND OTHER ARRANGEMENTS ETC WERE FURNISHED BY THE ASSESSEE TRU ST. HE, THEREFORE, CONCLUDED THAT THIS EXPENDITURE IS ALSO INCURRED IN VIOLATION OF SECTION 13. 16. THE ASSESSING OFFICER FURTHER NOTED ON PERUSAL OF THE ACCOUNTS THAT EXPENDITURE OF RS.29,022/- HAS BEEN INCURRED F OR PURCHASING 5 DAYS EURO RAIL PASS FOR SHRI VISHWANATH D. KARAD. MANAGI NG TRUSTEE WHICH ACCORDING TO HIM IS SOLELY FOR SITE SEEING PURPOSES AND CANNOT BE SAID TO HAVE BEEN INCURRED FOR THE OBJECT OF THE TRUST. TH EREFORE, THIS ACCORDING TO THE ASSESSING OFFICER IS ALSO VIOLATION OF PROVI SIONS OF SECTION 13(1)(C). 17. THE ASSESSING OFFICER NOTED THAT SHRI MANGESH K ARAD AND SMT. SUNITA KARAD HAVE TRAVELLED TO EUROPE FROM 25-11-20 00 TO 04-12-2000. THE EXPENDITURE PERTAINING TO SHRI MANGESH KARAD WA S MET BY THE TRUST. VISIT OF SMT. SUNITA KARAD WAS STATED TO BE AS A RE PRESENTATIVE OF UNESCO CHAIR. ACCORDING TO THE ASSESSING OFFICER, VISIT OF SHRI MANGESH KARAD ALONG WITH SMT. SUNITA KARAD HAS NOTH ING TO DO WITH THE ACTIVITIES OF THE TRUST AND THEREFORE THE EXPENDITU RE INCURRED ON THE VISIT OF SHRI MANGESH KARAD CANNOT BE SAID TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE TRUST. THIS ACC ORDING TO THE ASSESSING OFFICER IS ANOTHER INSTANCE OF VIOLATION OF SECTION 13(1)(C) OF THE I.T. ACT. 18. THE ASSESSING OFFICER FURTHER NOTED THAT THE TR USTEES AND THE MEMBERS OF THEIR FAMILY HAVE UNDERTAKEN TOURS TO VA RIOUS PLACES LIKE SHIRDI, GONDAVALE, COCHIN, MADURAI AND UDAIPUR ETC. EXPENSES FOR WHICH WERE BORNE BY THE TRUST. THE ASSESSING OFFICE R ANALYSED THE EXPENSES INCURRED FOR SUCH LOCAL TOURS AT PAGE 22 O F THE ASSESSMENT ORDER WHICH COMES TO RS.1,30,762/-. IN ABSENCE OF ANY JUSTIFICATION WHATSOEVER GIVEN BY THE ASSESSEE AS TO HOW THESE VI SITS SERVE FOR THE 13 ITA NOS.915 TO 920/PUN/2012 PURPOSE OF THE OBJECTS OF THE TRUST THE ASSESSING O FFICER HELD THAT THIS IS ALSO A POSSIBLE VIOLATION OF SECTION 13(1)(C) OF TH E I.T. ACT. 19. THE ASSESSING OFFICER NOTED THAT INTEREST FREE LOAN OF RS.18 LAKHS TO SHRI RAHUL KARAD, SON OF PRINCIPAL TRUSTEE, SHRI VISHWANATH KARAD WAS GIVEN WITHOUT ANY SECURITY. NO OTHER PERSON WA S FOUND TO HAVE BEEN EXTENDED SUCH FACILITY. ACCORDING TO THE ASSE SSING OFFICER HIGHER EDUCATION IN A FOREIGN COUNTRY HAS ONLY FETCHED PER SONAL GAIN TO SHRI RAHUL KARAD AND SHRI VISHWANATH KARAD AND NO PURPOS E OF THE TRUST IS SERVED AS SUCH. THIS EXPENDITURE ACCORDING TO THE A SSESSING OFFICER IS IN CLEAR VIOLATION OF SECTION 13(1)(C) OF THE I.T. ACT. 20. THE ASSESSING OFFICER FURTHER NOTICED THAT THE TRUST HAS BEEN GIVING BENEFITS TO THE CHILDREN/RELATIVES OF THE TR USTEES IN THE FORM OF CONCESSION IN FEES FOR VARIOUS COURSES. IN ORDER T O VERIFY AND QUANTIFY SUCH CONCESSIONS THE SPECIAL AUDITOR APPOINTED BY T HE DEPARTMENT WAS ASKED TO FURNISH SUCH DETAILS. THE SPECIAL AUDITOR GAVE SUCH DETAILS WHICH HAVE BEEN INCORPORATED BY THE ASSESSING OFFIC ER AT PAGES 23 AND 24 OF THE ASSESSMENT ORDER FOR A.YRS. 1999-2000 ACC ORDING TO WHICH SUBSTANTIAL CONCESSION IN FEE WAS GRANTED TO THE W ARDS OF THE TRUSTEES IN VARIOUS COURSES. ON BEING QUESTIONED BY THE ASSESSI NG OFFICER, IT WAS EXPLAINED THAT IT IS THE APPROVED POLICY OF THE TRU ST FROM ITS INCEPTION TO GRANT CONCESSION TO DESERVING CHILDREN INCLUDING TH E CHILDREN OF THE FOUNDER TRUSTEES AND OTHER TRUSTEES AND MEMBERS OF THE MANAGING COMMITTEE WHO ARE CONSTANTLY ENGAGED IN THE OVERALL DEVELOPMENT IN DAY TO DAY ACTIVITIES OF THE TRUST. ACCORDING TO T HE ASSESSING OFFICER ALTHOUGH SUCH POLICY OF THE TRUST IS LAUDABLE, HOWE VER, THIS IS IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT. 14 ITA NOS.915 TO 920/PUN/2012 21. THE ASSESSING OFFICER OBSERVED THAT DURING THE SEARCH OPERATION IT WAS FOUND THAT THE ASSESSEE WAS ALLEGEDLY TAKING DONATIONS AGAINST ADMISSIONS IN MANY CASES. SUCH INSTANCES HAVE BEEN BROUGHT OUT IN THE ORDER PASSED BY THE CIT CENTRAL, PUNE WHILE CAN CELLING REGISTRATION GRANTED U/S.12AA(1). SUBSEQUENT ENQUIRIES WERE ALS O REVEALED NAMES OF OTHER PERSONS FROM WHOM DONATIONS WERE ACCEPTED. THE ASSESSING OFFICER OBSERVED THAT 15 PERSONS HAVE ADMITTED TO H AVE GIVEN DONATION FOR SECURING ADMISSION. THE ASSESSING OFFICER ANAL YSED THE DONATION RECEIVED BY THE ASSESSEE TRUST FOR THE LAST 10 YEAR S AT PAGES 28 AND 29 OF THE ASSESSMENT ORDER. HE OBSERVED THAT THERE IS SUDDEN SHARP DECREASE IN THE RECEIPT OF DONATION FROM RS.10,05,2 4,966/- IN A.Y. 2006- 07 TO RS.9,60,000/- IN A.Y. 2007-08. ACCORDING TO THE ASSESSING OFFICER THIS SUDDEN REDUCTION STRIKINGLY COINCIDES WITH THE INTRODUCTION OF SECTION 115BBC WHICH PROPOSES TO TAX ANONYMOUS DONATIONS AN D WHICH CAME INTO EFFECT FROM A.Y. 2007-08. ACCORDING TO THE AS SESSING OFFICER THE ASSESSEE STOPPED BRINGING DONATIONS IN ITS BOOKS SI NCE THE INTRODUCTION OF THE SAID PROVISION WHICH CASTS DOUBT ON THE GENU INENESS OF THE DONATIONS ALREADY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE RECEIPT OF DONATION ACCORDING TO THE ASSESSING OFFI CER ARE NOT VOLUNTARY AND THUS THERE IS A CLEAR VIOLATION OF THE PROVISIO NS OF SECTION 11(1)(D) OF THE I.T ACT. 22. IN VIEW OF THE ABOVE, I.E. CANCELLATION OF REGI STRATION U/S.12AA, WITHDRAWAL OF APPROVAL U/S.10(23C(VI), VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND 11(1)(D) THE ASSESSING OFFICER ADOPTED THE PROFIT OF RS.2,47,35,518/- AS PER THE RECASTED INCOME AND EXP ENDITURE ACCOUNT PREPARED BY THE SPECIAL AUDITOR AS THE PROFIT OF TH E ASSESSEE FOR COMPUTATION OF ITS TAXABLE INCOME. 15 ITA NOS.915 TO 920/PUN/2012 23. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E IS RUNNING VISHWA SHANTI KENDRA AS PART OF THE TRUST ACTIVITIE S AND A LOT OF EXPENDITURE ON THIS ACCOUNT HAS BEEN DEBITED IN THE BOOKS OF ACCOUNT. IN ORDER TO VERIFY THE DETAILS OF THIS EXPENDITURE A SEPARATE REFERENCE WAS MADE TO THE AUDITOR DOING SPECIAL AUDIT WHO QUANTIF IED SUCH EXPENDITURE AT RS.1,11,41,532/- FOR THE IMPUGNED ASSESSMENT YEA R. THEY HAVE ALSO OBSERVED THAT VOUCHERS FOR AN AMOUNT OF RS.79,06,69 1/- FOR THE IMPUGNED ASSESSMENT YEAR WAS NOT PRODUCED. THE ASSE SSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE COPY OF VOUCHERS IN SUPPORT OF THE ABOVE EXPENSES TO WHICH THE ASSESSEE PRODUCED ALL T HOSE VOUCHERS. THE ASSESSING OFFICER NOTED THAT OUT OF THE EXPENSE S OF RS.1,11,41,532/- INCURRED IN F.Y. 1998-99 RELEVANT TO A.Y. 1999-2000 EXPENDITURE TO THE TUNE OF RS.60,75,006/- IS ON AC COUNT OF WORLD PHILOSOPHERS MEET (WPM) HELD AT GENEVA. FURTHER, T HE VOUCHERS IN SUPPORT OF EXPENSES ON ACCOUNT OF WPM AT GENEVA WAS NOT IN THE NAME OF THE TRUST. SINCE THE WORLD PEACE WAS NOT ONE OF THE OBJECTS AS ON 31- 03-1999 THE ASSESSING OFFICER ASKED THE ASSESSEE TO CLARIFY AS TO HOW EXPENDITURE OF WORLD PEACE ACTIVITIES WAS ON THE OB JECTS OF THE TRUST. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASS ESSEE THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE ON THE UNAPPROVE D OBJECT OF WORLD PEACE TO THE TUNE OF RS.1,11,41,532/-. SIMILARLY, FOR VIOLATION OF MAKING CASH PAYMENT IN EXCESS OF RS.20,000/- AMOUNTING TO RS.1,62,850/- AND DELAYED PAYMENT OF PROVIDENT FUND TO THE TUNE OF RS .12,58,017/- THE ASSESSING OFFICER MADE ADDITION OF THE ABOVE 2 AMOU NTS U/S.40A(3) AND 43B RESPECTIVELY. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.37,72,249/- ON ACCOUNT OF UNEXPLAINED CREDITS TH AT APPEARED IN THE BOOKS OF ACCOUNT. THUS, THE ASSESSING OFFICER COMPU TED THE TOTAL INCOME OF THE ASSESSEE AT RS.4,10,70,270/- FOR A.Y. 1999-2000. THE ASSESSING OFFICER HAS SIMILARLY COMPUTED THE INCOME OF THE ASSESSEE FOR THE OTHER YEARS WHICH ARE AS UNDER : 16 ITA NOS.915 TO 920/PUN/2012 ASST. YEAR ASSESSED INCOME 2000 - 2001 RS.6,59,57,175/ - 2001 - 2002 RS.8,11,20,720/ - 2002 - 2003 RS.1,98,62,618/ - 2003 - 2004 RS.1,00,40,587/ - 2004 - 2005 RS.8,16,49,733/ - 24. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT AFTER THE FILING OF THE APPEALS FOR DIFFERENT ASSESSMENT YEARS, LOT OF DEVE LOPMENTS HAVE TAKEN PLACE. IT WAS ARGUED THAT THE ASSESSEE IS AN OTHE R EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOS ES AS CONTEMPLATED U/S.10(23C)(VI) OF THE I.T. ACT AND WAS GRANTED EXE MPTION BY THE CBDT U/S.10(23C)(VI) OF THE ACT VIDE ITS ORDER DATED 09- 03-2004 FOR A.YRS. 1999-2000 TO 2001-02. IT WAS LATER WITHDRAWN BY TH E DGIT (INVESTIGATION), PUNE VIDE HIS ORDER UNDER THE 13 TH PROVISO TO SECTION 10(23C) OF THE ACT DATED 08-02-2008. A WRIT PETITI ON NO.7708 OF 2008 FILED BY THE ASSESSEE BEFORE THE HONBLE BOMBAY HIG H COURT AGAINST THE ORDER OF THE DGIT HAS BEEN DISPOSED OF BY THE HONB LE HIGH COURT VIDE ITS ORDER DATED 28-07-2009 WHEREIN THE HONBLE HIGH COURT HAS QUASHED/SET ASIDE THE ORDER OF THE DGIT. IT WAS SU BMITTED THAT AFTER SETTING ASIDE/QUASHING OF THE IMPUGNED ORDER OF THE DGIT, THE EXEMPTION GRANTED TO THE ASSESSEE U/S.10(23C)(VI) G ETS FULLY RESTORED. AS A RESULT, THE ASSESSMENT OF THE TRUST IS REQUIRE D TO BE MADE BY TREATING ITS INCOME AS EXEMPT U/S.10(23C)(VI) OF TH E ACT FOR A.YRS. 1999- 2000 TO 2001-02. 25. AS REGARDS THE POSITION WITH REFERENCE TO THE A PPEALS FOR OTHER YEARS ARE CONCERNED IT WAS SUBMITTED THAT THE APPLI CATIONS FOR THE RENEWAL OF EXEMPTION U/S.10(23C)(VI) FOR A.YRS. 200 3-04 TO 2004-05 DATED 24-12-2012 WAS FILED IN FORM 56D BEFORE THE P RESCRIBED AUTHORITY. HOWEVER, SO FAR NO ORDER EITHER GRANTING OR REFUSIN G THE RENEWAL OF THE EXEMPTION U/S.10(23C)(VI) OF THE ACT HAS BEEN PASSE D. IT WAS SUBMITTED THAT LATER ON, A LETTER DATED 19-08-2007 WAS FURNIS HED BEFORE THE 17 ITA NOS.915 TO 920/PUN/2012 PRESCRIBED AUTHORITY, I.E. DGIT (INVESTIGATION), PU NE BRINGING TO HIS NOTICE THAT APPLICATIONS IN FORM 56D FOR THE RENEWAL OF EX EMPTION U/S.10(23C)(VI) OF THE ACT FOR THE PERIOD IN RELATI ON TO A.YRS. 2002-03 TO 2004-05 AND 2005-06 TO 2007-08 WERE FILED AND THE DGIT WAS FURTHER REQUESTED TO PASS THE ORDERS FOR THE RENEWAL OF THE EXEMPTION U/S.10(23C)(VI) FOR THE AFORESAID PERIOD. IT WAS P OINTED OUT THAT NO ORDER EITHER GRANTING OR REFUSING THE RENEWAL OF EXEMPTIO N U/S.10(23C)(VI) HAS YET BEEN PASSED. IT WAS ACCORDINGLY ARGUED THAT SI NCE THE ASSESSEE HAS APPLIED FOR RENEWAL OF EXEMPTION U/S.10(23C)VI) IN FORM 56D FOR THE A.YRS. 2002-03 TO 2004-05 BEFORE THE PRESCRIBED AUT HORITY AND ALSO REQUESTED DGIT TO DISPOSE OF THE AFORESAID APPLICAT IONS AND SINCE NO ORDER WAS PASSED EITHER GRANTING OR REFUSING THE EX EMPTION U/S.10(23C)(VI) WITHIN A PERIOD OF 12 MONTHS FROM T HE END OF THE MONTH IN WHICH SUCH APPLICATION WAS RECEIVED, THEREFORE, SUC H EXEMPTION U/S.10(23C)(VI) IS DEEMED TO HAVE BEEN GRANTED AS N O ORDER IS PASSED IN RESPECT OF THE AFORESAID APPLICATION. 26. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT THE PROVISIONS OF 9 TH PROVISO TO SECTION 10(23C)(VI) AND THE PROVISIONS OF SECTION 12AA(2) ARE PARI MATERIA SINCE BOTH THE PROVISIONS LAY DOWN THAT THE NECESSARY ORDER EITHER GRANTING OR REJECTING THE APPLICATION MADE UNDER THE RESPECTIVE SECTIONS SHALL BE PASSED WITHIN 12 MONTH S AND 6 MONTHS RESPECTIVELY FROM THE END OF THE MONTH IN WHICH THE APPLICATIONS WERE MADE. IT WAS THUS VEHEMENTLY ARGUED THAT IN THE LI GHT OF THE VARIOUS LEGAL PRECEDENTS RELIED UPON THE LIMITATION LAID DO WN IN THE 9 TH PROVISO TO SECTION 10(23C) WILL APPLY TO BOTH THE AFORESAID AP PLICATIONS DATED 24- 12-2002 AND 22-02-2005 MADE UNDER IST PROVISO AND T HE SAID APPLICATIONS HAVING NOT BEEN DISPOSED OF WITHIN THE PERIOD OF LIMITATION LAID DOWN UNDER THE 9 TH PROVISO, THE EXEMPTION U/S.10(23C)(VI) IS DEEMED TO HAVE BEEN GRANTED. 18 ITA NOS.915 TO 920/PUN/2012 27. IT WAS SUBMITTED THAT THE ASSESSMENT ORDER FOR A.Y. 2003-04 IN THE CASE OF THE TRUST HAS BEEN PASSED U/S.143(3) OF THE ACT AFTER DUE ENQUIRIES RELATING TO ALL THE ASPECTS OF THE INCOME OF THE TRUST. IT WAS POINTED OUT THAT IN THE SAID YEAR EXEMPTION WAS CLA IMED BY THE ASSESSEE U/S.10(23C)(VI) AND ALSO U/S.11 WITHOUT PREJUDICE T O THE CLAIM U/S.10(23C) AND THE ASSESSING OFFICER HAS ACCEPTED THE AFORESAID CLAIM OF THE TRUST AND ACCORDINGLY COMPUTED THE INCOME OF THE TRUST AT NIL VIDE ORDER DATED 20-03-2006. IT WAS ACCORDINGLY ARGUED THAT THE ABOVE POSITION STRENGTHENS THE ARGUMENT OF THE ASSESSEE T HAT THE EXEMPTION U/S.10(23C)(VI) IS DEEMED TO HAVE BEEN GRANTED TO T HE TRUST FOR THE SUBSEQUENT YEAR ALSO AND THUS ALL THE CONDITIONS FO R EXEMPTION OF INCOME OF THE TRUST U/S.10(23C)(VI) HAS BEEN FULFIL LED FOR ALL THE ASSESSMENT YEARS, I.E. A.Y. 1999-2000 TO 2004-05. THE ASSESSEE SUBMITTED THAT ALL THE CONDITIONS LAID DOWN IN THE ORDER U/S.10(23C)(VI) PASSED BY THE CBDT DATED 09-03-2004 FOR THE A.YRS. 1999-2000 TO 2001-02 ALSO STAND SATISFIED BY THE ASSESSEE FOR TH E RELEVANT ASSESSMENT YEARS AND THEREFORE THE INCOME OF THE TR UST HAS TO BE TREATED AS EXEMPT FOR ALL THE AFORESAID ASSESSMENT YEARS. 28. THE ASSESSEE FURTHER SUBMITTED THAT THE EXEMPTI ON AVAILABLE UNDER CLAUSE 10(23C) OF THE ACT IS SEPARATE FROM AN D IN ADDITION TO THE EXEMPTION GRANTED U/S.11 OF THE ACT. IT WAS ACCORD INGLY ARGUED THAT IN RESPECT OF THE INCOME COVERED U/S.10(23C), THE TRUS T OR INSTITUTION WILL BE ENTITLED TO EXEMPTION THEREUNDER EVEN IF THE SAME I NCOME ALSO FALLS U/S.11 AND THE CONDITIONS FOR EXEMPTION U/S.11 ARE FULFILLED. FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED ON THE DECIS ION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. RAO BAHADU R C.C. CHETTY CHARITIES REPORTED IN 135 ITR 485. THE ASSESSEE FU RTHER ARGUED THAT THE ASSESSMENT OF THE INCOME OF THE ASSESSEE TRUST AS A N AOP IS WRONG 19 ITA NOS.915 TO 920/PUN/2012 SINCE THE SAME IS AB-INITIO VOID FOR ALL THE AFORES AID ASSESSMENT YEARS AS THE ASSESSEE TRUST IS ENTITLED TO EXEMPTION U/S.10( 23C)(VI) OF THE ACT. 29. SO FAR AS THE VALIDITY OF NOTICE U/S.148 IS CON CERNED IT WAS ARGUED THAT THE REOPENING OF ASSESSMENT FOR A.YRS. 1999-20 00 TO 2004-05 IS BAD IN LAW. IT WAS ARGUED THAT THE ASSESSEE HAS RA ISED OBJECTIONS REGARDING THE RECEIPT OF RENTAL INCOME BY THE TRUST WHICH ACCORDING TO THE ASSESSEE DOES NOT IN ANY MANNER AFFECT THE EXEMPTIO N U/S.10(23C)(VI) OF THE I.T. ACT. THE OBJECTION DEALT WITH BY THE ASSE SSING OFFICER WAS BROUGHT TO THE NOTICE OF THE CIT(A) AND IT WAS SUBM ITTED THAT THE ARGUMENTS OF THE ASSESSING OFFICER ARE NOT ONLY RID ICULOUS BUT ALSO HIGHLY OBJECTIONABLE. 30. THE ASSESSEE ALSO STATED THAT THE PROVISIONS OF SECTION 13 ARE NOT AT ALL APPLICABLE TO AN EDUCATIONAL INSTITUTION WHI CH IS ENTITLED TO EXEMPTION U/S.10(23C)(VI) OF THE ACT. IT WAS CONTE NDED THAT THE EXEMPTION U/S.10(23C) IS SEPARATE FROM AND IN ADDIT ION TO THE EXEMPTION U/S.11, THEREFORE, THE ASSESSEE TRUST WILL BE ENTIT LED TO EXEMPTION U/S.10(23C)(VI) OF THE ACT IRRESPECTIVE OF THE FACT WHETHER THE TRUST IS REGISTERED U/S.12AA OF THE ACT OR NOT. IT WAS ARGU ED THAT THE PROVISIONS OF SECTION 13 OF THE ACT ARE APPLICABLE ONLY WHEN A TRUST IS CLAIMING THE BENEFIT UNDER SECTIONS 11 AND 12 OF THE ACT AND THE REFORE THE PROVISIONS OF SECTION 13 WILL NOT AT ALL BE APPLICABLE TO AN E DUCATIONAL INSTITUTION LIKE THAT OF THE ASSESSEE. IT WAS CONTENDED THAT AS PER CIRCULAR NO.557 DATED 19-03-1990 ISSUED BY THE CBDT PROVISIONS OF S ECTION 11 AND 13 ARE NOT APPLICABLE TO INSTITUTIONS COVERED UNDER CL AUSE (IV) AND (V) OF SECTION 10(23C) OF THE ACT. 31. THE ASSESSEE SUBSEQUENTLY BROUGHT TO THE NOTICE OF THE CIT(A), THE ORDER OF THE TRIBUNAL, PUNE BENCHES, PUNE WHILE DECIDING THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT CENTRAL, PUNE DATED 20 ITA NOS.915 TO 920/PUN/2012 31-10-2007 CANCELLING THE REGISTRATION GRANTED TO T HE ASSESSEE U/S.12A OF THE ACT WHEREIN THE TRIBUNAL HAS QUASHED THE ORD ER OF THE CIT CENTRAL, PUNE. IT WAS ACCORDINGLY SUBMITTED THAT I N VIEW OF THE ORDER OF THE TRIBUNAL RESTORING THE REGISTRATION GRANTED EAR LIER U/S.12A OF THE ACT, THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE TRU ST AS AN AOP IS AB- INITIO NULL AND VOID FOR ALL THE ASSESSMENT YEARS, I.E A.Y.1999-2000 TO 2004-05 AND THE SAME NEEDED TO BE ANNULLED/CANCELLE D. IT WAS BROUGHT TO THE NOTICE OF THE CIT(A) THAT THE TRIBUNAL IN TH E SAID ORDER HAS CLEARLY HELD THAT THE CIT CENTRAL HAS FAILED TO ESTABLISH T HAT ANY PART OF THE INCOME/RECEIPT OF THE TRUST WAS, IN ANY MANNER, MIS UTILISED BY THE TRUSTEES FOR THEIR PERSONAL BENEFIT, I.E. NOT IN TH E FULFILLMENT OF THE OBJECTS OF THE TRUST. IT WAS ACCORDINGLY ARGUED THAT THE F INDINGS OF THE TRIBUNAL HAS ESTABLISHED THAT THE CASE OF THE TRUST FALLS TO TALLY OUT OF THE PURVIEW OF SECTION 13 OF THE ACT WHICH BY IMPLICATION SUGGESTS THAT THE ASSESSING OFFICER HAS PRECLUDED FROM INVOKING THE PROVISIONS OF SECTION 13 OF THE I.T. ACT AND IN THE CASE OF THE ASSESSEE TRUST IN A NY MANNER WHATSOEVER. IT WAS HOWEVER POINTED OUT THAT THE ASSESSING OFFIC ER HAS NOT MADE ANY ADDITION IN ANY OF THE AFORESAID ASSESSMENT YEARS I N THE LIGHT OF THE PROVISIONS OF SECTION 13 OF THE I.T. ACT. 32. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSES SING OFFICER. THE ASSESSING OFFICER IN COMPLIANCE TO THE LETTER ADDRE SSED BY THE CIT(A) FORWARDED HIS COMMENTS STATING THAT THOUGH THE EXEM PTION U/S.10(23C) HAS BEEN RESTORED TO THE ASSESSEE FOR THE A.Y. 1999 -2000 TO 2001-02, THAT DOES NOT BY ITSELF MAKE THE ASSESSEE AUTOMATIC ALLY ELIGIBLE FOR EXEMPTION U/S.11 AND 12. HE STATED THAT CANCELLATI ON OF REGISTRATION U/S.12A WAS ONLY ONE OF THE GROUNDS ON WHICH EXEMPT ION U/S.11 WAS DENIED TO THE ASSESSEE AND SUCH EXEMPTION IS FURTHE R GOVERNED BY THE PROVISIONS OF SECTION 13 OF THE I.T. ACT. HE STATE D THAT THOUGH DURING THE 21 ITA NOS.915 TO 920/PUN/2012 ASSESSMENT PROCEEDINGS THE ASSESSING OFFICERS HAVE POINTED OUT SEVERAL INSTANCES OF VIOLATIONS OF PROVISIONS OF SE CTION 13 NO DISALLOWANCE ON THIS COUNT WERE MADE WHILE PASSING THE ASSESSMENT ORDERS. IT WAS ACCORDINGLY ARGUED THAT SUCH VIOLA TIONS NEED TO BE CONSIDERED WHILE DECIDING THE ISSUES. 33. THE LD.CIT(A) CONFRONTED THE COMMENTS OF THE AS SESSING OFFICER TO THE ASSESSEE WHO MADE ELABORATE SUBMISSIONS ON T HE ISSUES RAISED BY THE ASSESSING OFFICER. AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE ASSESSING OFFICER AN D REJOINDER OF THE ASSESSEE TO SUCH REMAND REPORT THE LD.CIT(A) NOT ON LY DISMISSED THE APPEALS FILED BY THE ASSESSEE BUT ALSO ENHANCED THE INCOME FOR A.Y. 1999-2000 TO 2003-04. WHILE DOING SO, THE LD.CIT(A ) UPHELD THE VALIDITY OF REOPENING OF ASSESSMENT U/S.147 OF THE ACT FOR T HE A.YRS. 1999-2000 TO 2004-05. THE ARGUMENT OF THE ASSESSEE THAT THER E WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND T HE ASSESSING OFFICER HAS GOT NO POWER TO REVIEW THE ASSESSMENT A ND SUCH REOPENING WAS MERELY MADE ON THE BASIS OF CHANGE OF OPINION W AS REJECTED BY THE CIT(A) AS NOT LEGALLY TENABLE. ACCORDING TO HIM NO ASSESSMENT WAS MADE EITHER UNDER U/S.143(3) OR SECTION 147 BEFORE ISSUE OF NOTICE U/S.148 TO THE ASSESSEE FOR THE YEARS IN A.YRS. 199 9-2000 TO 2002-03 AND A.Y. 2004-05. ACCORDING TO HIM UNDER THE PROVI SO TO SECTION 147, WHERE AN ASSESSMENT WAS MADE U/S.143(3) OR U/S.147 FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN U/S.147 AF TER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S.139 O R TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. 22 ITA NOS.915 TO 920/PUN/2012 34. REFERRING TO THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. REP ORTED IN 291 ITR 500 HE OBSERVED THAT THE HONBLE APEX COURT HAS CATEGOR ICALLY HELD THAT THE INTIMATION U/S.143(1)(A) IS NOT AN ORDER OF ASSESSM ENT AND THEREFORE THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. SINC E IN THE INSTANT CASE THE RETURN OF INCOME FOR THE YEARS UNDER APPEAL EXC EPT FOR A.Y. 2003-04 WAS PROCESSED ONLY U/S.143(1) AND NO ASSESSMENT WAS MADE U/S.143(3) PRIOR TO THE ISSUE OF NOTICE U/S.148, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSMENT WAS REOPENED ON MERE CHANGE OF OPINION. 35. SO FAR AS A.Y. 2003-04 IS CONCERNED HE OBSERVED THAT AN ASSESSMENT WAS ORIGINALLY MADE U/S.143(3) PRIOR TO ISSUE OF NOTICE U/S.148 BUT THE ASSESSMENT WAS REOPENED ON 12-11-20 07, I.E. WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, FOR THIS YEAR ALSO, THE FIRST PROVISO TO SECTION 147 HAS NO APPLICATION. ACCORDING TO HIM, EVEN OTHERWISE ALSO IT IS WELL SETTLED THAT MERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS ACCEPTED IN ORIGINAL ASSE SSMENT FOR THE RELEVANT ASSESSMENT YEAR, IT WOULD NOT PRECLUDE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT OF THAT YEAR ON THE BASIS OF HIS FINDING OF FACT MADE OUT OF FRESH MATERIAL GATHERED AFTER THE COMPL ETION OF THE ASSESSMENT SUGGESTING THAT A PARTICULAR CLAIM IS NO T CORRECT. HE OBSERVED THAT IN THE INSTANT CASE DURING THE SURVEY OPERATION AND POST SURVEY ENQUIRIES CONDUCTED BY THE DEPARTMENT, NEW M ATERIAL HAD COME ON RECORD SUGGESTING THAT ALL IS NOT WELL WITH THE CLAIM MADE BY THE ASSESSEE FOR EXEMPTION OF ITS INCOME U/S.10(23C)(VI ) OR SECTION 11. THE ASSESSING OFFICER, WHO COMPLETED THE ORIGINAL ASSES SMENT U/S.143(3), DID NOT HAVE ACCESS TO THE ADVERSE FINDINGS OF THE SURVEY ACTION IN THE CASE OF THE ASSESSEE AND WHEN SUCH FINDINGS BECAME KNOWN TO HIM SUBSEQUENTLY THE ASSESSING OFFICER TOOK DUE NOTE OF THE SAME AND REOPENED THE ASSESSMENT. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT 23 ITA NOS.915 TO 920/PUN/2012 IT WAS MERELY A FRESH APPLICATION OF MIND BY THE AS SESSING OFFICER TO THE SAME SETS OF FACTS. THEREFORE, FOR A.Y. 2003-04 AL SO IT CANNOT BE SAID THAT THE ASSESSMENT WAS REOPENED ON MERE CHANGE OF OPINION. 36. SO FAR AS THE ASSESSMENT RECORD FOR OTHER YEARS ARE CONCERNED HE NOTICED THAT MORE OR LESS SIMILAR REASONS WERE RECO RDED BY THE ASSESSING OFFICER FOR A.YRS 2000 - 01, 2 002-03, 200 3 - 0 4 A N D 200 4- 05. F O R T HE ASSESSMENT YEAR 1999-00, THE ASSESSMENT WAS REOPENE D ON THE GROUND THAT THE ASSESSEE WAS RECEIVING RENTAL INCOM E, WHICH IS TO BE TAXED AS INCOME FROM HOUSE PROPERTY/BUSINESS INCOME SEPARATELY AS THE OBJECT OF THE ASSESSEE WAS NOT LETTING OUT THE PROP ERTIES ON RENT. HE OBSERVED THAT I N THE PRESENT CASE, AS IS EVIDENT FROM THE REASONS RECORDED, THE ASSESSING OFFICER NOTICED FROM THE MA TERIAL FOUND DURING THE SURVEY AND THE POST SURVEY ENQUIRIES CONDUCTED BY THE DEPARTMENT THAT THE TRUST WAS INVOLVED IN COMMERCIALIZATION OF EDUCATION AND TAKING DONATIONS FOR ADMISSION INTO COURSES IN THE INSTITU TIONS RUN BY THE ASSESSEE AND ALSO CHARGING CAPITATION FEES, WHICH A RE PROHIBITED UNDER MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION O F CAPITATION FEES) ACT. IT WAS ALSO FOUND BY THE ASSESSING OFFICER THA T THE ASSESSEE WAS DERIVING SUBSTANTIAL RENTAL INCOME FROM LETTING OUT ITS PROPERTIES, WHICH IS CONTRARY TO ITS CONTENTION THAT THE TRUST EXISTS SO LELY FOR EDUCATIONAL PURPOSES, CONSEQUENTLY, THE ASSESSING OFFICER ISSUE D NOTICE U/S. 148 OF THE I.T. ACT FOR THE ABOVE YEAR AS HE HAD PRIMA-FAC IE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T WITHIN THE MEANING OF SEC. 147 OF THE I.T. ACT. THUS, THERE WA S CAUSE OR JUSTIFICATION FOR THE ASSESSING OFFICER TO INVOKE PROVISIONS OF S EC.147 AND ISSUE NOTICE U/S.148 AND THERE WERE NOT ONLY REASONS FOR FORMATION OF BELIEF THAT INCOME ESCAPED ASSESSMENT BUT ALSO THE REASONS HAVE RATIONAL CONNECTION OR INTELLIGIBLE NEXUS WITH THE MATERIAL THAT HAS COME TO THE NOTICE OF THE A.O. FOR FORMATION OF THE BELIEF. REF ERRING TO VARIOUS 24 ITA NOS.915 TO 920/PUN/2012 DECISIONS HE WAS OF THE OPINION THAT AT THE INITIAT ION STAGE, WHAT IS REQUIRED TO BE SEEN IS WHETHER THERE ARE PRIMA-FACI E 'REASONS TO BELIEVE' BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOM E. THE JUSTIFICATION FOR AO'S BELIEF IS NOT TO BE JUDGED FROM THE STANDA RD OF PROOF REQUIRED FOR COMING TO A FINAL DECISION. HE NOTED THAT THE ASSES SING OFFICER IN THE INSTANT CASE HAS RECORDED PROPER REASONS FOR FORMAT ION OF THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THUS, ALL THE CONDIT IONS NECESSARY FOR REOPENING OF THE ASSESSMENT UNDER THE PROVISIONS OF SECTION 147 AND FOR ISSUE OF NOTICE U/S.148 ARE SATISFIED IN THE CASE O F THE ASSESSEE FOR THE RESPECTIVE YEARS. 37. SO FAR AS THE CONTENTION OF THE ASSESSEE THAT A SSESSING OFFICER HAS NOT FOLLOWED THE PROCEDURE FOR ASSUMING JURISDI CTION U/S.148 IN THE LIGHT OF THE DECISION IN THE CASE OF GKN DRIVE SHAF TS (INDIA) PVT. LTD. REPORTED IN 259 ITR 19 IS CONCERNED THE LD.CIT(A) D ISMISSED THE CONTENTION ON THE GROUND THAT THE ASSESSING OFFICER , BEFORE PASSING THE ASSESSMENT ORDERS VIDE SEPARATE ORDER DATED 01-08-2 008 FOR A.YRS. 1999-2000 TO 2002-03 AND FOR A.Y. 2004-05, HAS CONS IDERED AND DEALT WITH THE PRELIMINARY OBJECTIONS RAISED BY THE ASSES SEE BY PASSING A DETAILED SPEAKING ORDER. 38. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER ERRED IN EXPANDING THE SCOPE OF REASSESSMEN T BEYOND THE REASONS RECORDED FOR REOPENING THE ASSESSMENT IS CO NCERNED THE LD.CIT(A) DISMISSED THE SAME ALSO ON THE GROUND THA T WHEN THE ASSESSMENT IS REOPENED ON A VALID GROUND U/S.147 TH E ASSESSING OFFICER CAN ASSESS NOT ONLY THE ESCAPED INCOME WHICH FORMED THE BASIS FOR REOPENING BUT ALSO ANY OTHER INCOME CHARGEABLE TO T AX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDING TO HIM , REASSESSMENT PROCEEDINGS ARE NOT CONFINED TO THE GROUNDS ON WHIC H THE ASSESSMENT 25 ITA NOS.915 TO 920/PUN/2012 WAS REOPENED. SINCE IN THE INSTANT CASE THE ASSESS MENT WAS REOPENED ON VALID GROUNDS AND IN THE COURSE OF ASSESSMENT PR OCEEDINGS THE ASSESSING OFFICER SCRUTINIZED THE SEIZED MATERIALS AND OTHER DOCUMENTS AND OTHER ISSUES WHICH CAME TO HIS KNOWLEDGE DURING SUCH SCRUTINY WERE ALSO CONSIDERED AND DEALT WITH IN THE ASSESSMENT OR DER, THEREFORE, THE CONTENTION OF THE ASSESSEE IS NOT LEGALLY TENABLE. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSESSEE AND RELYING ON VA RIOUS DECISIONS, THE LD.CIT(A) DISMISSED THE GROUNDS RELATING TO VALIDIT Y OF REASSESSMENT PROCEEDINGS. 39. SO FAR AS THE OBJECTION RAISED BY THE ASSESSEE THAT THE DIRECTIONS ISSUED BY THE ASSESSING OFFICER FOR SPECIAL AUDIT U /S.142(2A) ARE ILLEGAL AND WITHOUT JURISDICTION IS CONCERNED HE ALSO REJEC TED THE SAME ON THE GROUND THAT THE REFERENCE U/S.142 (2A) WAS MADE BY THE ASSESSING OFFICER AFTER DULY RECORDING THE REASONS AND AFTER CONSIDERING THESE REASONS THE CIT CENTRAL HAS PASSED A DETAILED ORDER DATED 05-12-2007 GRANTING APPROVAL FOR THE REFERENCE. SINCE THE PRO POSAL OF THE ASSESSING OFFICER FOR REFERENCE TO SPECIAL AUDIT U/S.142(2A) WAS DULY APPROVED BY THE CIT CENTRAL HE HELD THAT THE SAME CANNOT BE AGI TATED IN GROUND OF APPEAL BEFORE THE CIT(A). 40. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSING OFFICER IS NOT LEGALLY JUSTIFIED IN DENYING THE BENEFIT OF EXEMPTION OF INCOME CLAIMED BY THE ASSESSEE U/S.10(23C)(VI) IS CONCERNE D HE REJECTED THE SAME ON THE GROUND THAT BEFORE AVAILING EXEMPTION U NDER THE ABOVE SECTION THE ASSESSEE MUST OBTAIN APPROVAL FROM THE PRESCRIBED AUTHORITY. HE EXAMINED THE DETAILS AND NOTED THAT AS ON DATE, I.E. THE DATE OF PASSING THE ORDER THE ASSESSEE IS NOT AN APPROVED I NSTITUTION U/S.10(23C)(VI) AND IN THE ABSENCE OF APPROVAL FROM THE PRESCRIBED AUTHORITY FOR THE A.YRS. 1999-2000 TO 2004-05 THE A SSESSEE IS NOT ENTITLED TO THE BENEFIT OF EXEMPTION OF ITS INCOME U/S.10(23C)(VI). HE 26 ITA NOS.915 TO 920/PUN/2012 ALSO REFERRED TO THE DECISION OF THE HYDERABAD BENC H OF THE TRIBUNAL IN THE CASE OF VODITHALA EDUCATION SOCIETY REPORTED IN 20 SOT 353 WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSEE HAD NOT OB TAINED THE APPROVAL OF THE PRESCRIBED AUTHORITY AS REQUIRED U/S.10(23C) (VI) AND IT ALSO EXISTED FOR PROFIT AND NOT SOLELY FOR EDUCATIONAL PURPOSE, THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S.10(23C)(VI). HE ACCORDIN GLY UPHELD THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION OF ITS INCOME U/S.10(23C)(VI). 41. SO FAR AS THE ISSUE RELATING TO WHETHER THE ASS ESSEE IS ENTITLED TO EXEMPTION OF ITS INCOME U/S.11 OF THE ACT FOR THE Y EARS UNDER APPEAL IS CONCERNED IN VIEW OF THE VIOLATION OF PROVISIONS OF SECTION 13 OF THE ACT THE LD.CIT(A) REFERRED TO THE VARIOUS FINDINGS GIVE N BY THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER SUCH AS : (A) EXPENDITURE IN PROVIDING FACILITIES TO SHRI B.E . AVHAD, HONARARY PRESIDENT OF THE TRUST. (B) CREDIT CARD EXPENSES OF SHRI B.E. AVHAD. (C) SALARY TO SHRI B.E. AVHAD. (D) EXPENDITURE OF FOREIGN TOURS OF SHRI B.E. AVHAD . AND HIS FAMILY MEMBERS AND THE VARIOUS MEMBERS OF KARAD FAMILY (E) CONCESSIONAL EDUCATION TO WARDS OF TRUSTEES ETC . (F) EXPENDITURE OF VISHWA SHANTI KENDRA HE CONCLUDED THAT THE ASSESSEE IS APPLYING OR USING ITS FUNDS FOR THE INDIVIDUAL BENEFIT OF THE TRUSTEES AND THEIR RELATI VES IN VIOLATION OF THE PROVISIONS OF SECTION 13. ACCORDING TO HIM SECTION 13 RENDERS THE ENTIRE INCOME OF THE TRUST OR CHARITABLE INSTITUTION LIABL E TO TAX EVEN IF ONLY PART OF INCOME IS APPLIED FOR THE BENEFIT OF THE SPECIFI ED PERSONS. IN SUCH CIRCUMSTANCES THE ASSESSING OFFICER IS JUSTIFIED IN DENYING THE EXEMPTION U/S.11 OF THE ACT TO THE ASSESSEE TRUST AND BRINGIN G ITS SURPLUS INCOME/PROFITS TO TAX BY TREATING THE ASSESSEE LIKE ANY OTHER ASSOCIATION OF PERSONS. 27 ITA NOS.915 TO 920/PUN/2012 42. SO FAR AS ISSUE RELATING TO DONATIONS WHICH WER E CREDITED TO THE INCOME AND EXPENDITURE ACCOUNT AND PARTLY CREDITED TO VARIOUS DEVELOPMENT FUNDS AND DIRECTLY REFLECTED IN THE BAL ANCE SHEET IS CONCERNED THE LD.CIT(A) NOTED THAT THE POST SURVEY ENQUIRIES CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT AND THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER INDICATED THAT THE ASSESSE E USED TO TAKE DONATIONS IN CASH AGAINST ADMISSION IN MANY CASES. IT WAS FOUND THAT THERE IS LARGE NUMBER OF DONATIONS WHERE ONLY NAMES OF DONORS WERE WRITTEN EITHER IN INCOMPLETE ADDRESS OR NO ADDRESSE S. THEREFORE, IN THESE CASES, IT IS DIFFICULT TO ESTABLISH THE IDENT ITY OF THE DONORS. HE OBSERVED THAT IN THE COURSE OF ENQUIRIES OUT OF THE CASES WHERE THERE WERE ADDRESSES, 15 PERSONS ADMITTED THAT THEY HAVE GIVEN DONATIONS TO SECURE ADMISSIONS. ALTHOUGH THE ASSESSEE FILED THE CONFIRMATION LETTERS SUBSEQUENTLY FROM THESE PERSONS THAT DONATIONS WERE GIVEN VOLUNTARILY YET THE LETTERS DO NOT CONCLUSIVELY ESTABLISH THAT DONATIONS WERE GIVEN VOLUNTARILY. HE OBSERVED THAT IN THE FOLLOWING CAS ES DONORS HAVE DENIED TO HAVE GIVEN DONATIONS : SR.NO. NAME OF THE DONOR RECEIPT NO. DATE OF DONATION AMOUNT 1. RUSHIKUMAR V. LOKRE 7847 11223 2 9 - 04 - 1998 04-05-1999 15,000 10,000 2. M.D. BAUSKAR 7771 22 - 08 - 1998 10,000 HE OBSERVED THAT THERE WERE INSTANCES WHERE DONATIO NS FOR A BIGGER AMOUNT WAS RECEIVED IN LIEU OF ADMISSION UNDER MANA GEMENT QUOTA BUT THE SAME WAS SPLIT INTO DONATIONS OF SMALLER DENOMI NATIONS AND MULTIPLE RECEIPTS WERE ISSUED TO THE DONORS WHO WERE NOT TRA CEABLE. SIMILARLY, THERE WERE INSTANCES OF DONATIONS ALL IN THE RANGE OF RS.20,000/- TO 22,000/- AND JUST BELOW RS.10,000/- IN CASH IN THE NAMES OF VARIOUS FAR OFF DISTANT DONORS SUCH AS DELHI, KANPUR, LONI ETC. WITHIN A SPAN OF COUPLE OF DAYS WHICH ACCORDING TO HIM WAS IMPROBABL E. THE LD.CIT(A) GAVE CERTAIN INSTANCES AT PARA 18.2 AND 18.3 OF HIS ORDER. HE FURTHER 28 ITA NOS.915 TO 920/PUN/2012 NOTED THAT THE ASSESSEE HAS CONSIDERED THE ENTIRE D ONATIONS CREDITED IN ITS BOOKS AS DONATIONS RECEIVED FOR THE CORPUS OF T HE TRUST. HE NOTED THAT THE ASSESSEE HAS GOT RECEIPT BOOK PRINTED ON WHICH IT HAS PUT A STAMP THAT THE DONATION IS ON ACCOUNT OF CORPUS OF THE TR UST. HOWEVER, ACCORDING TO THE LD.CIT(A) THE SAME IS NOT SUPPORTE D BY ANY DOCUMENTARY EVIDENCE. ACCORDING TO HIM MERELY BY I SSUING RECEIPT FOR A PARTICULAR AMOUNT IT DOES NOT BECOME DONATION AND F URTHERMORE BY AFFIXING A STAMP ON IT DOES NOT BECOME CORPUS DONAT ION. HE OBSERVED THAT THE ENQUIRIES CONDUCTED BY THE DEPARTMENT REVE ALED THAT THE DONATIONS ARE LINKED TO ADMISSIONS AND SUCH DONATIO NS CANNOT BE TERMED AS VOLUNTARY. HE FURTHER NOTED THAT FROM A. Y. 2007-08 THERE WAS A STEEP DECLINE IN THE AMOUNT OF DONATIONS SHOWN IN THE BOOKS OF ACCOUNT WHICH ACCORDING TO HIM IS IN VIEW OF THE IN TRODUCTION OF THE NEW SECTION 115BBC. 43. SO FAR AS THE DONATIONS CLAIMED TO HAVE BEEN RE CEIVED TOWARDS DEVELOPMENT FUNDS IS CONCERNED HE OBSERVED FROM THE RECEIPT BOOKS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS FOR A.Y. 2001-02 THAT (A) AL L THE DONATIONS WERE EXACTLY FOR RS.10,000/- AND THERE IS A STRIKING SIM ILARITY IN ALL THE RECEIPTS (B) IN ALL THE RECEIPTS ONLY THE NAME OF THE SO CAL LED DONOR IS WRITTEN, NO ADDRESS OF THE DONOR IS GIVEN (C) ALL THE DONATIONS ARE IN CASH ONLY. HE OBSERVED THAT THE ASSESSEE ALSO EXPRESSED ITS INABI LITY TO PROVIDE THE ADDRESS OR WHEREABOUTS OF THE PERSONS WHOSE NAME AP PEARS AS DONORS. ACCORDING TO HIM WHEN THE ASSESSEE HAS RECEIVED DON ATIONS IN CASH OF RS.10,000/- IN EACH CASE IT IS VERY STRANGE THAT TH E ASSESSEE DOES NOT NOTE THE ADDRESS OR WHEREABOUTS OF THE PERSONS DONA TING TO IT. THIS ACCORDING TO HIM CLEARLY INDICATE THAT THE DONATION S ARE NOT VOLUNTARY AND NOT TOWARDS CORPUS AND NOT RECEIVED BY VIRTUE OF PR OPERTY HELD BY THE TRUST. SINCE THE TRUST IS TO BE ASSESSED AS ANY OT HER ENTITY HE HELD THAT 29 ITA NOS.915 TO 920/PUN/2012 THESE ARE TO BE TREATED AS REVENUE RECEIPT AND TO B E TAXED IN THE HANDS OF THE TRUST LIKE ANY OTHER RECEIPT SINCE THE PROVI SIONS OF SECTION 11(1)(D) ARE NOT APPLICABLE TO SUCH CONTRIBUTIONS. HE ACCOR DINGLY UPHELD THE ACTION OF THE ASSESSING OFFICER IN BRINGING THE DON ATIONS SHOWN BY THE ASSESSEE TO TAX IN THE ASSESSMENT YEARS FOR THE RES PECTIVE YEARS. 44. BASED ON THE ABOVE OBSERVATIONS THE LD.CIT(A) F INALLY SUMMARIZED THE CONCLUSIONS ON MAIN ISSUE AT PAGES 1 24 AND 125 OF THE ORDER WHICH READ AS UNDER : (I) THE APPELLANT UNILATERALLY AMENDED THE TRUST D EED ON ITS OWN BY INCLUDING THREE MORE OBJECTS, INCLUDING AFORESAID OBJECT NO . 13. FOR UNILATERALLY AMENDING THE TRUST DEED WITHOUT GET TING THE APPROVAL OF THE COMMISSIONER OF INCOME TAX, THE REGI STRATION WHICH WAS GRANTED EARLIER ON THE BASIS OF A PARTICULAR REPRE SENTATION OR SET OF OBJECTS NO LONGER HOLDS GOOD. (291 ITR 116) (II) THE APPELLANT HAS PASSED ON VARIOUS BENEFITS TO THE TRUSTEES AND THEIR RELATIVES IN VIOLATION OF PROVISIONS OF SEC. 13 OF THE I.T. ACT . THERE A RE SEVERAL INSTANCES AS DISCUSSED ABOVE TO SHOW THAT PRIVAT E EXPENSES OF TRUSTEES HAVE BEEN DEBITED TO THE ACCOUNTS O F THE TRUST AND THE TRUST HAS BEEN EFFECTIVELY RUN AS A PRIVATE TR UST OR A CLOSELY HELD BUSINESS ENTITY. SECTION 13 RENDERS THE ENTIRE INC OME OF TRUST OR CHARITABLE INSTITUTION LIABLE TO TAX EVEN IF ONLY PA RT OF INCOME IS APPLIED ' FOR THE BENEFIT OF THE SPECIFIED PERSONS. (III) THE EVIDENCES FOUND DURING THE SEARCH AND SURV EY OPERATIONS INDICATE RECEIPT OF DONATIONS BY THE APPEL LANT AT THE TIME OF GIVING ADMISSION, WHICH CLEARLY SHOWS THAT THE PAYME NT THEREOF WAS NOT MADE VOLUNTARILY BY THE DONORS BUT AS A QUID P RO QUO FOR SECURING ADMISSION . THE DONATIONS RECEIVED ARE NOT VOLUNTARY, NOT TOWARDS CORPUS OF THE TRUST AND NOT RECEIVED BY VIRTUE OF PROPERTY HELD BY THE TRUST. SUCH DONATIONS ARE TO BE TREATED A S REVENUE RECEIPTS AND BROUGHT TO TAX AS BUS I NESS INCOME OF THE APPELLANT. EVEN IF THE APPELLANT IS TO BE ASSESSED AS TRUST , THE DONATIONS SO RECEIVED IN LIEU OF ADMISSIONS ARE TO BE TAXED IN THE HANDS OF THE TRUST LIKE ANY OTHER RECEIPT IN THE NATURE OF INCOME AS THERE IS CLEAR VIOLATION OF PROVISIONS OF SEC. 11(1)(D) . (IV) THE APPELLANT EARNED SUBSTANTIAL SURPLUS OF INCOM E OVER EXPENDITURE OVER THE YEARS FROM RUNNING OF ITS INSTITU TIONS . DESPITE SUCH PROFITS, THE TRUST HAS NOT DEMONSTRATED ANY CHARITA BLE INTENT THROUGH REDUCTION OF FEES. THIS CLEARLY INDICATES THAT THE ACTIVITY OF THE APPELLANT WAS A COMMERCIAL ACTIVITY WITH A PROFI T MOTIVE AND THEREFORE THE SAME CANNOT BE SAID TO BE OF A CHARITAB LE NATURE. IT IS WELL SETTLED THAT NOT ONLY THE OBJECTS OF THE TRUST AS MENTIONED IN THE TRUST DEED BUT ALSO ITS REAL ACTIVITIES SHOULD BE EX AMINED BEFORE THE TRUST IS CONSIDERED AS CHARITABLE. THIS IS NOT A CASE WHERE SURPLUS IS ONLY INCIDENTAL TO THE CHARITABLE ACTIVITY. 30 ITA NOS.915 TO 920/PUN/2012 (V) FOR THE YEARS UNDER CONSIDERATION, THE APPELLANT IS NOT AN APPROVED INSTITUTION BY THE PRESCRIBED AUTHORITY A S SPECIFIED U NDER SEC. 10(23C)(VI). THE APPROVAL GRANTED EARLIER FOR A .Y.S 1999-00 TO 2001-02 WAS SINCE WITHDRAWN BY THE PRESCRIBED AUTHORIT Y. (VI) THE APPELLANT IS THEREFORE NOT ENTITLED TO THE BENEFIT OF EXEMPTION EITHER UNDER SEC. 11 OR SEC. 10(23C)(VI) AN D THE ACTION OF THE ASSESSING OFFICER IN DENYING THE EXEMPTION CLAIMED UNDER THESE SECTIONS IN RESPECT OF ITS PROFITS/SURPLUS AS SHOWN IN THE R ECAST INCOME AND EXPENDITURE ACCOUNT AND DONATIONS RECEIVE D IN CASH OR KIND FOR THE RESPECTIVE YEARS UNDER APPEAL IS UPHELD. 45. SO FAR AS THE DISALLOWANCE OF EXPENDITURE ON AC COUNT OF WORLD PEACE CENTRE IS CONCERNED THE LD.CIT(A) HELD THAT S UCH EXPENDITURE IS NOT TOWARDS APPROVED OBJECTS OF THE TRUST. HE OBSE RVED THAT THE WORLD PEACE CENTRE ACTIVITIES AND THE EXPENDITURE INCURRE D ABROAD IN NO WAY FURTHER THE INTEREST OF THE OBJECTS OF THE TRUST IN INDIA NOR CAN IT CAN BE SAID THAT THE EXPENDITURE WAS INCURRED SOLELY FOR E DUCATIONAL PURPOSES. THUS, THE ASSESSEE HAS VIOLATED NOT ONLY THE MANDAT E OF SECTION 12AA(1) BUT ALSO PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT. HE FURTHER NOTED THAT THE ASSESSEE HAD COMMENCED WORLD PEACE C ENTRE ACTIVITIES EVEN PRIOR TO COMMUNICATING THE ADDITIONAL OBJECT O F WORLD PEACE TO THE CHARITY COMMISSIONER. THE CHARITY COMMISSIONER APPR OVED THE ADDITIONAL OBJECTS ONLY ON 06-04-2005 AND TILL THAT TIME HUGE EXPENDITURE HAD BEEN INCURRED ON WORLD PEACE ACTIVITIES WITHOUT ANY APPROVAL. NO INTIMATION WAS GIVEN TO THE CIT CONCERNED REGARDING THE INCLUSION OF ADDITIONAL OBJECT AND THE AMENDMENT TO THE TRUST DE ED. THUS THE OBJECT OF THE TRUST WAS AMENDED WITHOUT THE KNOWLEDGE OF T HE COMMISSIONER GRANTING REGISTRATION, I.E. CIT-II, PUNE. THEREFOR E SUCH HUGE EXPENDITURE INCURRED ON THE ACTIVITIES WAS NOT IN ACCORDANCE WI TH THE OBJECTS OF THE TRUST. FURTHER THE ASSESSEE HAS NOT OBTAINED ANY A PPROVAL FROM CBDT, NEW DELHI FOR THE EXPENSES INCURRED OUTSIDE INDIA O N ACCOUNT OF WORLD PEACE CENTRE AS LAID DOWN IN THE PROVISO TO SECTION 11(1)(C) OF THE I.T. ACT, 1961. HE ACCORDINGLY UPHELD THE ACTION OF THE ASSESSING OFFICER IN 31 ITA NOS.915 TO 920/PUN/2012 DISALLOWING THE EXPENDITURE AND ADDED THE SAME TO T HE TOTAL INCOME OF THE ASSESSEE FOR THE RESPECTIVE YEARS. 46. THE LD.CIT(A) ALSO UPHELD THE ACTION OF THE ASS ESSING OFFICER IN MAKING DISALLOWANCE U/S.40A(3), 43B, UNEXPLAINED CR EDIT, DISALLOWANCE U/S.40A(7), DISALLOWANCE OF CAPITAL EXPENSES, MISAP PROPRIATION OF FUNDS OF EMPLOYEES, EXCESS PROVISION OF REFUND OF FEES, U NRECORDED DONATIONS ETC. AS PER HIS FINDINGS IN PAGES 137 TO 147 OF HIS ORDER. HE ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDIT ION UNDER THE HEAD CAPITAL GAINS ON PROTECTIVE BASIS FOR A.Y. 2004-05, ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION PERTAI NING TO EARLIER YEARS FOR A.Y. 2004-05, ADDITION ON ACCOUNT OF ON-MONEY P AYMENT FOR PURCHASE OF PROPERTY. 47. THE LD. CIT(A) FURTHER NOTED THAT THOUGH THE AS SESSING OFFICER HAS DISCUSSED THE VIOLATIONS OF SECTION 13 IN DETAI L UNDER VARIOUS HEADS IN THE RESPECTIVE ASSESSMENT YEARS, HOWEVER, HE HAS NOT DISALLOWED THE CORRESPONDING EXPENDITURE IN THE RESPECTIVE ASSESSM ENT YEARS EVEN AFTER THE CLAIM OF EXEMPTION U/S.11 OR SECTION 10(2 3C)(VI) WAS DENIED TO THE ASSESSEE. HE, THEREFORE, ISSUED A SHOW CAUSE N OTICE U/S.251(2) OF THE I.T. ACT CALLING UPON THE ASSESSEE TO EXPLAIN A S TO WHY THE DEDUCTION CLAIMED IN RESPECT OF VARIOUS EXPENDITURE SHOULD NO T BE DISALLOWED TO THE EXTENT WORKED OUT IN THE SHOW CAUSE NOTICE FOR THE RESPECTIVE ASSESSMENT YEARS AND WHY THE INCOME SO DETERMINED B Y THE ASSESSING OFFICER SHOULD NOT BE ENHANCED. THE ASSESSMENT YEA R-WISE, QUANTIFICATION FOR SUCH DISALLOWANCE AS WORKED OUT IN THE SAID SHOW CAUSE NOTICE WAS AS UNDER : 32 ITA NOS.915 TO 920/PUN/2012 A.Y. EXPENDITURE INCURRED ON WPC EXPENDITURE ON PROVIDING FACILITIES TO SHRI B.E. AVHAD EXPENDITUR E ON FOREIGN TOURS CONCESSIONAL EDUCATION PROPORTIONATE INTEREST ON LOAN GIVEN TO RAHUL KARAD & SUBSIDY (SCHOLARSHIP) 1999 - 00 1,11,41,532 133891 671273 307845 2000 - 01 20,21,204 14259 0 213205 2001 - 02 42,80,000 91054 130492 154720 2002 - 03 47,81,702 5 57847 24700 88680 2003 - 04 43,28,098 640486 266154 91100 2004 - 05 12,95,304 861844 357442 0 2005 - 06 29,84,595 888294 71325 0 2006 - 07 51,69,521 906884 1057333 0 544797 2007 - 08 720000 0 0 48. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE REI TERATED ITS SUBMISSIONS MADE EARLIER THAT THE ENTIRE EXPENDITUR E WAS INCURRED FOR CHARITABLE OBJECTS OF THE TRUST AND SOLELY FOR EDUC ATIONAL PURPOSES AND THEREFORE THE ASSESSEE IS ENTITLED TO THE BENEFIT O F EXEMPTION U/S.11 OR SECTION 10(23C) OF THE ACT. IT WAS FURTHER ARGUED THAT ASSESSING OFFICER HAS NOT MADE ANY ADDITIONS IN THE RESPECTIVE ASSESS MENT ORDER UNDER APPEAL AND THEREFORE THE APPELLATE AUTHORITY CAN ON LY ADJUDICATE UPON THE ISSUES/ADDITIONS COVERED IN THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THERE WILL BE NO OCCASION FOR THE CIT(A) TO ADJUDICATE UPON THE ISSUE IN RELATION TO THE SO CALLED ADDITIONS U/ S.13 OF THE I.T. ACT. HOWEVER, THE CIT(A) REJECTED THE ABOVE CONTENTION O F THE ASSESSEE ON THE GROUND THAT THE POWER OF THE CIT(A) IS COTERMIN OUS WITH THAT OF THE ASSESSING OFFICER AS HELD IN THE CASE OF JUTE CORPO RATION LTD. REPORTED IN 180 ITR 688, 693 (SC) AND THE DECISION OF HONBLE A PEX COURT IN THE CASE OF CIT VS. NIRBHERAM DALURAM REPORTED IN 224 ITR 610. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND CONSIDERING THE DISALLOWANCE ALREADY MADE IN THE ASSESSMENT ORDER T HE LD.CIT(A) ENHANCED THE INCOME OF THE ASSESSEE BY DISALLOWING THE FOLLOWING EXPENDITURE INCURRED FOR OTHER THAN CHARITABLE ACTI VITIES, THE DETAILS OF WHICH ARE AS UNDER : 33 ITA NOS.915 TO 920/PUN/2012 A.Y. EXPENDITURE ON PROVIDING FACILITIES TO SHRI B.E. AVHAD EXPENDITURE ON FOREIGN TOURS CONCESSIONAL EDUCATION PROPORTIONATE INTEREST ON LOAN GIVEN TO RAHUL KARAD & SUBSIDY TOTAL ENHANCEMENT 1999 - 00 133891 671273 307845 1113009 2000 - 01 14259 0 213205 355734 2001 - 02 NIL 130492 62,320 1,92,812 2002 - 03 557847 24700 88680 671227 2003 - 04 640486 266154 91100 997740 2004 - 05 861844 357442 0 1219286 2005 - 06 888294 71325 0 959619 2006 - 07 906884 1057333 0 544797 2509014 2007 - 08 720000 0 0 720000 49. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER -- ON THE FACTS AND IN LAW, 1] THE REASST. U/S 147 BE HELD TO BE NULL AND VOID A S THE NOTICE U/S 148 IS ILLEGAL AND THE REASONS DO NOT JUSTIFY REOPEN ING OF THE ASST. 2] THE REASST. BE HELD TIME BARRED AS THE LIMITATION COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER FOR SPECIAL AU DIT U/S 142(2A). 3] THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARI OUS ADDITIONS MADE BY THE A.O. AND ALSO ERRED IN ENHANCING THE INC OME ON CERTAIN ISSUES AND AS A RESULT, ERRED IN COMPUTING THE TOTAL INC OME OF RS. 4,21,83,275/- AS AGAINST THE RETURNED INCOME OF RS. NIL. 4] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT TRUST WAS NOT ENTITLED TO THE EXEMPTION U/S 10(23C)(VI) OF IT ACT. 5] THE LEARNED CIT(A) ERRED IN DENYING EXEMPTION U /S 11 TO THE APPELLANT TRUST. 6] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AC TIVITY OF THE APPELLANT IS A COMMERCIAL ACTIVITY WITH A PROFIT MOT IVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND THEREFORE, ERRED IN DENYING THE EXEMPTION U/S 10(23C)/11. 7] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EX PENDITURE ON WORLD PEACE CENTRE IS NOT AN EXPENDITURE ON THE OBJ ECTS OF THE TRUST AND THE SAME DOES NOT QUALIFY FOR DEDUCTION AND ACCOR DINGLY, ERRED IN DISALLOWING THIS EXPENDITURE. 8] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT VIOLATED THE CONDITIONS OF SECTION 13 OF IT ACT AND A CCORDINGLY, ERRED IN DENYING EXEMPTION U/S 11 ON THE ENTIRE INCOME OF THE APPELLANT. 34 ITA NOS.915 TO 920/PUN/2012 9] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TIONS OF RS.37,72,249/- MADE BY THE LD. AO ON ACCOUNT OF THE ALLEGED UNEXPLAINED ENTRIES. 10] THE LEARNED CIT(A) ERRED IN CONFIRMING VARIOUS A DDITIONS U/S.43B, 40A(7) AND 40A(3) ETC. 11] THE LEARNED CIT(A) ERRED IN ENHANCING THE INCOM E OF THE APPELLANT BY THE FOLLOWING AMOUNTS : A. CREDIT CARD EXPENSES OF SHRI B.E. AVAD OF RS.1,33,891/ - B. FOREIGN TOUR EXPENSES OF RS.6,71,273/- C. CONCESSIONAL EDUCATION TO THE TRUSTEES RELATIVES RS.3,07,845/- 12] THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE GROUNDS OF APPEAL. 50. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJEC TED TO THE ORDER OF THE CIT(A). SO FAR AS VALIDITY OF REOPENING OF ASSESSMENT IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE REFERRI NG TO PAGE 2 OF THE ASSESSMENT ORDER FOR A.Y. 1999-2000 DREW THE ATTENT ION OF THE BENCH TO THE NOTICE ISSUED U/S.148 ON 29-03-2006. REFERRING TO PAGE 249 OF THE PAPER BOOK VOL.2 THE LD. COUNSEL FOR THE ASSESSEE D REW THE ATTENTION OF THE BENCH TO THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT U/S.147 WHICH READ AS UNDER : RETURN OF INCOME FOR A.Y.1999-2000 WAS FILED 30-06- 2000 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED U/S.1 43(1) OF THE I.T. ACT ON 18-09-2000. ON PERUSAL OF RETURN OF INCOME IT WAS SEEN THAT THE ASSESSEE HAS FILED THE INCOME AND EXPENDITU RE ACCOUNT AND BALANCE SHEET ALONG WITH RETURN. THE ASSESSEE HAS SHOWN THE INCOME FROM OTHER SOURCES OF RS.17,97,33,097/-, WHICH INCLUDES RENT INCOME OF RS.1,92,34,679/-. THE OBJECT OF THE ASSESSEE TRUST IS TO RUN EDUCATIONAL INSTITUTE AND NOT GIVING THE PROP ERTIES ON RENT. THE RENT INCOME IS TO BE TAXED AS INCOME FORM HOUSE PROPERTY/BUSINESS INCOME SEPARATELY. FOR THE ABOVE REASON THERE BEING ESCAPEMENT OF THE IN COME, THE INCOME OF THE ASSESSEE IS TO BE REASSESSED. HENCE THE ASSESSM ENT FOR A.Y. 1999-2000 IS TO BE REOPENED ISSUED NOTICE U/S. 148 FOR A.Y. 1999-2000, AFTER GETTING APPROVAL OF ADDL.CIT. 35 ITA NOS.915 TO 920/PUN/2012 51. REFERRING TO PAGES 250 TO 259 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE NOTICE U/S.148 OF THE I .T. ACT VIDE ITS LETTER DATED 14-03-2007 ADDRESSED TO THE ASSESSING OFFICER . REFERRING TO PAGE 397 OF THE PAPER BOOK VOL.2 HE DREW THE ATTENTION O F THE BENCH TO THE ORDER PASSED BY THE ASSESSING OFFICER DISPOSING OF THE OBJECTIONS AGAINST ISSUE OF NOTICE U/S.148 OF THE I.T. ACT VID E ORDER DATED 01-08- 2008. REFERRING TO SCHEDULE NO.18 OF THE BALANCE S HEET, COPY OF WHICH IS PLACED AT PAGE 260 OF THE PAPER BOOK VOL.2 THE L D. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE DET AILS OF RENT RECEIVED BY THE ASSESSEE FOR A.Y. 1999-2000. REFERRING TO PA GE 261 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE STAT EMENT SHOWING RENT ADJUSTMENT ENTRIES FOR THE F.Y. 1998-99. REFERRING TO PAGES 287,303,311,319,346, 333,356,362,370 AND 378 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE INDIVIDUAL B ALANCE SHEETS OF THE RESPECTIVE UNITS. REFERRING TO PAGE 427 OF THE PAP ER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT ORDER FOR A.Y. 2003-04 PASSED U/S.143(3) ON 13-08-2006 IN WHICH THE ASSESSING OFFICER HAS NOT MADE ANY ADDITI ON ON ACCOUNT OF RENT FOR A.Y. 2003-04 WHICH IS THE NEXT DAY AFTER R ECORDING THE REASONS U/S.147 FOR A.Y. 1999-2000. 52. REFERRING TO THE ASSESSMENT ORDER FOR A.Y. 1999 -2000 HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT MADE A NY ADDITION ON ACCOUNT OF RENTAL INCOME FOR WHICH THE ASSESSMENT W AS REOPENED. THEREFORE, THE ASSESSING OFFICER COULD NOT HAVE MAD E ANY OTHER ADDITIONS. REFERRING TO THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS LTD. REPORTED IN 331 IT R 236 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HA S HELD THAT IF THE ASSESSING OFFICER, AFTER ISSUING A NOTICE U/S.148, ACCEPTS THE CONTENTION 36 ITA NOS.915 TO 920/PUN/2012 OF THE ASSESSEE AND HOLDS THAT INCOME, FOR WHICH HE HAD INITIALLY FORMED A REASON TO BELIEVE THAT IT HAD ESCAPED ASSESSMENT, HAS, AS A MATTER OF FACT, NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEPENDENTLY ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE U/S.148 IS NECESSARY. THE POWER TO ASSESSEE SUCH OTHER INC OME IS AVAILABLE ONLY IF INCOME REFERRED TO IN NOTICE OF REASSESSMEN T HAS BEEN ASSESSED . 53. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. VS. CIT REPORTED IN 33 6 ITR 137 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT THE ASSESSING OFFICER CANNOT MAKE ADDITION ON ISSUE S OTHER THAN ISSUES ON WHICH REASSESSMENT PROCEEDINGS WERE INITIATED IF SUCH ITEMS OF INCOME SAID TO HAVE ESCAPED ASSESSMENT ON WHICH REA SSESSMENT WAS PROPOSED WAS NOT ADDED TO THE TOTAL INCOME OF THE A SSESSEE. 54. REFERRING TO THE DECISION OF HONBLE CHATTISGAR H HIGH COURT IN THE CASE OF ACIT VS. MAJOR DEEPAK MEHTA REPORTED IN 346 ITR 641 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT WHEN THE INCOME MENTIONED IN THE NOTICE ISSUED U/S. 148 HAS NOT ESCAPED ASSESSMENT THEN IN THAT CASE THE REASSESSME NT PROCEEDINGS ARE NOT VALID. 55. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. SHRI VISHWAKALYAN JIVRAKSH A PRATISHTHAN AND VICE VERSA VIDE ITA NO.2013/PN/2014 AND CO NO.18/PN /2016 ORDER DATED 22-07-2016 FOR A.Y. 2011 HE SUBMITTED THAT TH E TRIBUNAL, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF JET AIRWAYS INDIA LTD. (SUPRA), HAS HELD THAT THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW WHEN THE ASSESSING OFFICER HAS ADDED SOME OT HER INCOME OTHER THAN THE INCOME WHICH ACCORDING TO THE ASSESSING OF FICER HAD ESCAPED 37 ITA NOS.915 TO 920/PUN/2012 ASSESSMENT FOR WHICH REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE U/S.148. HE ALSO RELIED ON THE FOLL OWING DECISIONS : 1. CIT VS. ICICI BANK LTD. REPORTED IN 349 ITR 482 (BOM .) 2. HINDUSTAN LEVER LTD. VS. R.B. WADKAR REPORTED IN 268 ITR 332 (BOM.) 3. VIJAYKUMAR M. HIRAKHANWALA HUF VS. ITO REPORTED IN 287 ITR 443 4. ACIT VS. MAJOR DEEPAK MEHTA REPORTED IN 344 ITR 641 5. CIT VS. JET SPEED AUDIO PVT. LTD. REPORTED IN 372 IT R 762 (BOM.) 56. SO FAR AS GROUND OF APPEAL NO.2 IS CONCERNED TH E LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEPARTMENT ORDERED SPECIAL AUDIT U/S.142(2A) IN THIS CASE FOR ALL THE YEARS. HOWEVE R, NO OPPORTUNITY OF BEING HEARD WAS GIVEN BY THE ASSESSING OFFICER AND OPPORTUNITY OF BEING HEARD U/S.142(2A) WAS GIVEN BY THE LD.CIT. REFERRI NG TO PAGE 136 AND 137 OF THE PAPER BOOK NO.1 HE SUBMITTED THAT LD. CI T IN HIS NOTICE DATED 23-11-2007 HAS MENTIONED THAT HE HAS RECEIVED A PRO POSAL FROM THE ASSESSING OFFICER RECOMMENDING COMPULSORY AUDIT IN CASE OF THE ASSESSEE AND THEREBY HE HAS GIVEN AN OPPORTUNITY IN VIEW OF PROVISO TO SECTION 142(2A) TO SHOW CAUSE AS TO WHY COMPULSORY AUDIT SHOULD NOT BE ORDERED IN CASE OF THE ASSESSEE. HE SUBMITTED T HAT IN THE ASSESSMENT ORDER ALSO THE ASSESSING OFFICER DOES NO T MENTION THAT HE HAS GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE. 57. REFERRING TO PAGES 140 TO 158 OF THE PAPER BOOK NO.1 THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE DETAILED REPLY GIVEN TO THE CIT CENTRAL VIDE LETTER DATED 03 -12-2007 OBJECTING TO THE SPECIAL AUDIT. REFERRING TO PAGES 156 TO 160 O F THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ORDER DATED 05-12-2007 PASSED BY THE LD.CIT GRANTIN G APPROVAL U/S.142(2A) OF THE I.T. ACT. REFERRING TO THE SAID ORDER HE SUBMITTED THAT THE CIT REFERS TO THE PROPOSAL OF THE ASSESSING OFF ICER WHICH DOES NOT 38 ITA NOS.915 TO 920/PUN/2012 STATE ANYWHERE THAT THE ASSESSING OFFICER HAS GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. REFERRING TO PAGES 16 1 TO 163 OF THE PAPER BOOK NO.1 THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ORDER PASSED BY THE ASSESSING OFFICER IN WHICH HE HAS ASKED THE ASSESSEE TO GET THE ACCOUNTS AUDITED THRO UGH THE NOMINATED AUDITOR U/S.142(2A) OF THE ACT. THE LD. COUNSEL FO R THE ASSESSEE FURTHER SUBMITTED THAT IN THE ORIGINAL ORDER THE CIT AND TH E ASSESSING OFFICER HAD NOT INCLUDED A.Y. 2001-02 AND THEY HAVE PASSED SEPARATE ORDER FOR A.Y. 2001-02, A COPY OF WHICH IS PLACED AT PAGES 16 4 TO 167 OF THE PAPER BOOK. HE SUBMITTED THAT FOR THIS YEAR ALSO THE ASS ESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY OF HEARING TO THE ASSESSEE UN DER THE PROVISO TO SECTION 142(2A). 58. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT UNDER THE PROVISO TO SECTION 142(2A) THE ASSESSING OFFICER HA S TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HOWEVE R, IN THE INSTANT CASE THE CIT HAS GIVEN AN OPPORTUNITY BUT THE ASSES SING OFFICER HAS NOT GIVEN ANY SUCH OPPORTUNITY. REFERRING TO THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH KUMAR AND OTHER S VS. DCIT REPORTED IN 287 ITR 91 AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. V S. ACIT REPORTED IN 364 ITR 6 HE SUBMITTED THAT THE ORDER PASSED U/S.14 2(2A) IS ILLEGAL. THEREFORE, THE LIMITATION FOR COMPLETION OF ASSESSM ENT COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER U/S.142(2A) O F THE I.T. ACT. HE SUBMITTED THAT THE DATE OF ASSESSMENT ORDER IS 08-0 8-2008 WHEREAS THE ASSESSMENTS FOR A.Y. 1999-2000, 2000-01 AND 2005-06 WERE GETTING TIME BARRED U/S.153(2) (2 ND PROVISO) ON 31-12-2007. THEREFORE, THE ASSESSMENTS ARE TIME BARRED. REFERRING TO THE DECI SION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. VILSON S PARTICLE BOARD INDUSTRIES LTD. VS. ITO VIDE ITA NOS. 448 & 449/PN/ 2013 ORDER DATED 39 ITA NOS.915 TO 920/PUN/2012 21-12-2016 THE LD. COUNSEL FOR THE ASSESSEE DREW TH E ATTENTION OF THE BENCH TO THE FINDINGS OF THE TRIBUNAL FROM PARA 21 ONWARDS AND SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION AT PARA 41 HAS HELD THAT WHERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSE E BEFORE MAKING THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT U/S.14 2(2A) OF THE ACT AND THE CIT HAVING APPROVED THE SAID PROPOSAL THOUGH AF TER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE ORD ER IS VITIATED BECAUSE OF NON COMPLIANCE WITH THE PRINCIPLES OF NATURAL JU STICE. ACCORDINGLY IT WAS HELD THAT THE ASSESSMENT ORDER PASSED WAS BEYO ND THE PERIOD OF LIMITATION AND HENCE THE SAME WAS HELD AS INVALID A ND BAD IN LAW. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. DCIT VS. MUTHOOTTU MINI KURIES REPORTED IN 266 ITR 21 3 (KERALA) 2. RAJENDRA C. SINGH VS. JCIT REPORTED IN 117 TTJ 885 ( MUM. TRIB.) 3. KAKA CARPETS VS. CIT REPORTED IN 266 CTR 485 (ALLAHAB AD HC) 59. SO FAR AS GROUND OF APPEAL NO.3 IS CONCERNED TH E LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME IS GENERAL IN NATURE AND THEREFORE DOES NOT REQUIRE ANY ARGUMENT. 60. SO FAR AS GROUND OF APPEAL NO.4 IS CONCERNED TH E LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGES 88 OF THE PAPER BOO K DREW THE ATTENTION OF THE BENCH TO THE APPROVAL GRANTED BY THE CBDT U/ S.10(23C)(VI) FOR A.Y. 1999-2000 AND 2001-02 VIDE ORDER DATED 09-03-2 004. HE SUBMITTED THAT THE DGIT (INVESTIGATION), PUNE THERE AFTER WITHDREW THIS EXEMPTION AND THE ASSESSEE IT WENT IN WRIT PETITION TO HONBLE BOMBAY HIGH COURT ON THE GROUND THAT THE EXEMPTION GRANTED BY THE BOARD CANNOT BE WITHDRAWN BY THE DGIT. REFERRING TO PAGE S 89 TO 100 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO TH E ORDER PASSED BY THE HONBLE BOMBAY HIGH COURT IN WRIT PETITION NO.7 708/2008 ORDER DATED 28-07-2009 WHEREIN THE HONBLE HIGH COURT ALL OWED THE CONTENTION OF THE ASSESSEE THAT EXEMPTION GRANTED B Y THE BOARD CANNOT 40 ITA NOS.915 TO 920/PUN/2012 BE WITHDRAWN BY THE DGIT. REFERRING TO PAGE 101 OF THE PAPER BOOK HE SUBMITTED THAT THE HONBLE SUPREME COURT DISMISSED THE SLP FILED BY THE DEPARTMENT. REFERRING TO PAGE 103 OF THE PAPER BOOK HE SUBMITTED THAT THE CBDT AGAIN WITHDREW THE EXEMPTION ON 30-01 -2012 AND THE ASSESSEE HAS AGAIN GONE IN WRIT BEFORE THE HONBLE HIGH COURT WHICH IS STILL PENDING AS ON DATE. HE ACCORDINGLY SUBMITTED THAT AS ON DATE THE ASSESSEE DOES NOT HAVE 10(23C)(VI) APPROVAL AND THE REFORE THIS GROUND OF APPEAL NO.4 HAS TO BE DECIDED AGAINST THE ASSESS EE. 61. SO FAR AS GROUND OF APPEAL NO.5 IS CONCERNED HE SUBMITTED THAT PROVISIONS OF SECTION 11 FLOWS FROM REGISTRATION U/ S.12A. HE SUBMITTED THAT AFTER THE SEARCH THE REGISTRATION GRANTED EARL IER WAS CANCELLED VIDE ORDER DATED 31-10-2007 PASSED U/S.12AA(3). REFERRI NG TO PAGES 35 TO 83 OF THE PAPER BOOK NO.1 HE SUBMITTED THAT THE TRI BUNAL VIDE ITA NO.1669.PN/2007 ORDER DATED 08-09-2009 HAS RESTORED THE REGISTRATION. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN DENYING EXEMPTION U/S.11 TO THE ASSESSEE TRUST. 62. SO FAR AS GROUND OF APPEAL NO. 6 IS CONCERNED T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST HAS RECEIVED CERTAIN DONATIONS TOWARDS BUILDING FUND ETC. WHICH WERE CLA IMED AS EXEMPTION U/S.11(1)(D) AS CORPUS DONATION. REFERRING TO PAGE 120 OF THE ORDER OF THE CIT(A) HE DREW THE ATTENTION OF THE BENCH TO TH E YEAR-WISE DONATIONS RECEIVED BY THE ASSESSEE FROM A.YRS. 1997-98 TO 200 7-08. HE SUBMITTED THAT ALL THESE DONATIONS ARE DULY ACCOUNT ED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. REFERRING TO THE ASSESSME NT ORDER FOR A.Y. 2000-01 HE DREW THE ATTENTION OF THE BENCH TO PAGE 4 OF THE ORDER WHEREIN THE ASSESSING OFFICER HAS STATED THAT FEW P ERSONS HAVE ADMITTED TO HAVE GIVEN DONATIONS IN CASH FOR SECURI NG ADMISSION TO THE ASSESSEE TRUST IN THE STATEMENTS RECORDED BY INVEST IGATION WING OF THE DEPARTMENT. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.4 41 ITA NOS.915 TO 920/PUN/2012 LAKHS AND RS.1 LAKH IN A.Y. 2004-05 AND 2005-06 RES PECTIVELY AS THESE DONATIONS ARE NOT RECORDED IN THE BOOKS OF THE ASSE SSEE. HE SUBMITTED THAT THESE DONATIONS BEING CORPUS DONATIONS ARE CRE DITED TO VARIOUS FUNDS IN THE BALANCE SHEET AND NOT ROUTED THROUGH T HE INCOME AND EXPENDITURE ACCOUNT. HE SUBMITTED THAT THE ASSESSE E HAS ISSUED THE RECEIPTS TO ALL THE DONORS WHEREIN THE DETAILS LIKE NAME, ADDRESS OF THE DONOR ARE CLEARLY MENTIONED. REFERRING TO PAGES 26 TO 30 OF THE ASSESSMENT ORDER FOR A.Y. 2000-01 HE SUBMITTED THAT THE ASSESSING OFFICER IN THE SAID ORDER HAS ALLEGED THAT THESE DO NATIONS ARE NOTHING BUT CAPITATION FEE COLLECTED BY THE TRUST FROM STUDENTS FOR GRANTING ADMISSION IN VARIOUS INSTITUTES OF THE TRUST. FOR THE ABOVE PURPOSE THE ASSESSING OFFICER RELIED UPON THE STATEMENTS OF PARENTS OF FE W STUDENTS WHO HAVE ADMITTED TO HAVE GIVEN DONATIONS FOR SECURING ADMIS SION IN VARIOUS INSTITUTES OF THE ASSESSEE TRUST. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE DONATIONS ACCORDING TO THE ASS ESSING OFFICER ARE NOTHING BUT CAPITATION FEE FOR WHICH THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE TREATED THESE DONATIONS AS REVENUE RECE IPT. THEY HAVE ALSO HELD THAT SINCE THE ASSESSEE IS COLLECTING DONATION S FOR GIVING ADMISSION IT HAS VIOLATED THE MAHARASHTRA EDUCATIONAL INSTIT UTES (PROHIBITION OF CAPITATION FEES) ACT, 1987. FURTHER, THEY HAVE HEL D THAT THE ASSESSEE TRUST EXISTS FOR PROFIT MAKING ACTIVITY AND NOT FOR CHARITY AND THEREFORE THE EXEMPTION IS NOT ALLOWABLE. 63. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAS TAKEN DONATIONS WHICH ARE DULY ACCOUNTED IN THE BOOKS OF ACCOUNT AND IT IS NOT A CASE THAT THE DONATIONS ARE NOT ACCOUNTED FOR. A LL THESE DONATIONS ARE CREDITED TO THE EARMARKED FUNDS ACCOUNT AND HAS NOT ROUTED THE DONATION THROUGH INCOME AND EXPENDITURE ACCOUNT. S INCE THE DONORS HAVE GIVEN DONATIONS FOR SPECIFIC PURPOSES FOR CONS TRUCTION OF BUILDING, PURCHASE OF EQUIPMENTS ETC., THEREFORE, THE DONATIO NS ARE CAPITAL 42 ITA NOS.915 TO 920/PUN/2012 RECEIPTS AND ACCORDINGLY EXEMPT U/S.11(1)(D). HOWE VER, HE ADMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY LETTER FROM THE DONORS TO THE EFFECT THAT THE DONATIONS ARE CORPUS DONATION. 64. THE LD. COUNSEL FOR THE ASSESSEE WITHOUT PREJUD ICE TO THE ABOVE SUBMITTED THAT EVEN IF THE DONATIONS ARE TREATED AS REVENUE RECEIPTS THE ASSESSEE HAS SPENT SUBSTANTIAL AMOUNTS EVERY YEAR O N THE OBJECTS OF THE TRUST AND THE EXPENDITURE IS MORE THAN THE AMOUNT O F RECEIPTS AND THEREFORE THE INCOME BEING EXEMPT U/S.11, THERE IS NO TAX LIABILITY WHICH IS ATTRACTED FOR ANY OF THESE YEARS, I.E. A.YRS. 19 99-2000 TO 2004-05. HE SUBMITTED THAT THE ASSESSEE HAS CONSIDERED THE CAPI TAL EXPENDITURE INCURRED FOR THESE YEARS AS EXPENDITURE ON THE OBJE CTS OF THE TRUST. THEREFORE, THE CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE EXISTS FOR PROFIT IS NOT CORRECT AS CONSIDERING THE DONATIONS AS REVENUE RECEIPTS, THERE IS ALWAYS DEFICIT FOR EVERY YEAR AF TER CONSIDERING THE CAPITAL EXPENDITURE. 65. AS REGARDS THE CONTENTION OF THE ASSESSING OFFI CER AND THE CIT(A) THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF MA HARASHTRA EDUCATIONAL INSTITUTES (PROHIBITION OF CAPITATION F EES) ACT, 1987 HE SUBMITTED THAT THE SAME IS NOT CORRECT. HE SUBMITT ED THAT THE DONATIONS ARE TAKEN AND THEY ARE DULY RECORDED IN THE BOOKS. THE EDUCATIONAL AUTHORITIES LIKE PUNE UNIVERSITY, UGC AND AICTE, DI RECTOR OF TECHNICAL EDUCATION WHO HAVE A CONTROL ON THE ACTIVITY OF TH E ASSESSEE TRUST HAVE NOT RAISED ANY OBJECTION IN ANY OF THESE YEARS SO F AR. HE SUBMITTED THAT THE ASSESSING OFFICER AND THE CIT(A) ARE NOT THE AU THORITIES UNDER THE ANTI CAPITATION FEE ACT TO HOLD THAT THAT THE ASSES SEE HAS VIOLATED THE PROVISIONS OF THAT ACT. REFERRING TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1669/PN/2007 ORDER DA TED 08-09-2009 HE SUBMITTED THAT THE TRIBUNAL IN THE ORDER PASSED WHILE RESTORING REGISTRATION U/S.12AA(3) HAS OBSERVED THAT THE REVE NUE HAS NOT SAID 43 ITA NOS.915 TO 920/PUN/2012 ABOUT ANY IMMORAL ACTIVITY OF THE APPELLANT OR THE COLLECTION OF FEES WAS BY WRONGFUL MEANS. ACCORDINGLY, THEY HAVE RESTORED THE REGISTRATION. 66. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFIC ER THAT THE DONATION OF RS.4 LAKHS AND RS.1 LAKH RECEIVED FROM THE STUDE NTS WERE NOT RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IS CONCERNED HE SUBMITTED THAT THE ASSESSEE TRUST HAS NOT RECEIVED ANY SUCH DONATIONS FROM THE SAID STUDENTS. THE ALLEGATION OF THE ASSE SSING OFFICER IS COMPLETELY INCORRECT AS THE SOCALLED STUDENTS/THEIR PARENTS HAVE DENIED TO HAVE GIVEN ANY SUCH DONATIONS TO THE ASSESSEE TR UST IN CASH. REFERRING TO PAGES 904 TO 909 OF PAPER BOOK NO.4 TH E LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE RETRACTION LETTERS OF SHRI KASHINATH SARODE AND SHRI YASHOVARDHAN SHARMA. 67. THE LD. COUNSEL FOR THE ASSESEEE WITHOUT PREJUD ICE TO THE ABOVE ARGUMENTS SUBMITTED THAT ASSUMING WITHOUT ADMITTING THAT THE ASSESSEE HAS TAKEN DONATIONS FOR ADMISSIONS AS PER THE CHART S MADE BY THE ASSESSING OFFICER AS ANNEXURES TO THE ASSESSMENT OR DERS STILL THE SAME IS PERMISSIBLE. HE SUBMITTED THAT THE DONATIONS AC CORDING TO THE ASSESSING OFFICER ARE RELATING TO STUDENTS WHO ARE GIVEN ADMISSION IN THE MANAGEMENT QUOTA. REFERRING TO PAGES 1011 TO 1013 OF THE PAPER BOOK NO. 5 WHICH IS THE GOVERNMENT CIRCULAR RELATING TO GRANTING OF ADMISSION AND CHARGING OF TUITION FEES UNDER MANAGEMENT QUOTA , HE SUBMITTED THAT THE ASSESSEE IS AUTHORIZED TO ACCEPT FEE FROM THE S TUDENT ADMITTED UNDER THE MANAGEMENT QUOTA TO THE EXTENT OF 5 TIMES OF THE ANNUAL FEES. REFERRING TO THE CHART PREPARED BY THE ASSESSING OF FICER, COPY OF WHICH IS PLACED AT PAGE 1037 OF THE PAPER BOOK NO.5 HE SU BMITTED THAT THE SAME ITSELF INDICATES THAT THE FEE INCLUDING THE DO NATIONS DOES NOT EXCEED THIS FIGURE IN ANY CASE AND THEREFORE THE AS SESSEE HAS NOT VIOLATED ANY LAW ON THIS ISSUE. AGAIN REFERRING TO THE COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WHILE RESTORING REGISTRATION 44 ITA NOS.915 TO 920/PUN/2012 U/S.12AA HE SUBMITTED THAT THE TRIBUNAL HAS ELABORA TELY DISCUSSED THIS ISSUE AND HELD THAT ASSESSEE HAS CHARGED DONATIONS WITHIN THE LIMIT PRESCRIBED UNDER MANAGEMENT QUOTA AND THERE IS NO M IS-UTILISATION OF FUNDS. FURTHER, THE CIT IS NOT AUTHORIZED TO DEAL WITH SUCH OFFENCES, IF ANY, UNDER THE ANTI CAPITATION FEE ACT. ACCORDINGL Y THE TRIBUNAL HAS RESTORED THE REGISTRATION U/S.12A TO THE ASSESSEE T RUST. HE SUBMITTED THAT SIMPLY BECAUSE THE ASSESSEE TRUST HAS ACCEPTED DONATIONS FROM A FEW STUDENTS, IT DOES NOT MEAN THAT THE ASSESSEE TR UST EXISTS FOR PROFIT MAKING ACTIVITY AND NOT FOR PURPOSES OF EDUCATION. HE SUBMITTED THAT THE TRIBUNAL IN ORDER HAS STATED THAT THERE ARE ABOUT 2 7000 STUDENTS IN THE VARIOUS INSTITUTES OF THE ASSESSEE TRUST AND THE AC TIVITIES OF THE TRUST ARE GOVERNED AND APPROVED BY AICTE, PUNE UNIVERSITY, ME DICAL COUNCIL OF INDIA, DIRECTOR OF TECHNICAL EDUCATION ETC. AND THU S IT CANNOT BE HELD THAT ASSESSEE HAS VIOLATED ANY LAW OR IT EXISTS AS PROFI T MAKING BODY. REFERRING TO PAGES 1006 TO 1008 OF THE PAPER BOOK N O.5 HE DREW THE ATTENTION OF THE BENCH TO THE CHART WHICH INDICATES THAT THE ASSESSEE HAS UTILIZED ENTIRE SURPLUS EVERY YEAR ON ITS OBJECTS A ND THE EXPENDITURE IS MORE THAN THE RECEIPTS INCLUDING THE DONATIONS. RE FERRING TO THE SAID CHART HE SUBMITTED THAT THE ASSESSEE DOES NOT WORK AS A PROFIT MAKING BODY BUT IT GENERATES PROFIT TO SUB SERVE ITS OBJEC TS. REFERRING TO THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DECCAN EDUCATION SOCIETY VS. ADDL.CIT VIDE ITA NO.1480/PN/2014 ORDE R DATED 13-07- 2015, COPY OF WHICH IS PLACED AT PAGES 187 TO 248 O F THE PAPER BOOK (LEGAL COMPILATION) VOL.1 HE SUBMITTED THAT UNDER I DENTICAL CIRCUMSTANCES THE TRIBUNAL HAS HELD THAT THE ASSESSEE TRUST IS EN TITLED TO EXEMPTION AS A CHARITABLE TRUST AND THERE IS NO VIOLATION OF THE INCOME-TAX LAW BY THE TRUST. 45 ITA NOS.915 TO 920/PUN/2012 68. NOW COMING TO THE GROUND OF APPEAL NO.7 WHICH R ELATES TO THE EXPENSES ON WORLD PEACE CENTRE (WPC) IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS INCURR ED VARIOUS EXPENSES ON TOUR AND TRAVEL OF THE TRUSTEES, OFFICIALS, FACU LTIES OF THE TRUST FOR ATTENDING VARIOUS SEMINARS ON WORLD PEACE ACTIVITIE S ABROAD. SOME OF THE SEMINARS ARE ARRANGED BY THE ASSESSEE TRUST ALS O. HE SUBMITTED THAT ACCORDING TO THE ASSESSING OFFICER THESE ACTIVITIES DO NOT FALL IN THE CATEGORY OF EDUCATION FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP. IT IS ALSO HIS ALLEGATION THAT THE ACTIVITY OF WPC IS NOT AN EDUCATIONAL ACTIVITY. HE, THEREFORE, DISALLOWED ALL THESE EXPENSES AND HA S ALSO HELD THAT THE OBJECT OF WORLD PEACE CENTRE BEING NOT AN EDUCATION AL ACTIVITY, THE EXPENDITURE THERE ON IS NOT AN ALLOWABLE EXPENDITUR E. HE ACCORDINGLY DENIED EXEMPTION U/S.11 TO THE TRUST. THE ASSESSIN G OFFICER WHILE DOING SO FURTHER HELD THAT THIS OBJECT HAS BEEN INTRODUCE D IN THE TRUST DEED BY THE ASSESSEE AND ASSESSEE HAS NOT INTIMATED THE AME NDED TRUST DEED TO THE ASSESSING OFFICER. FURTHER IT IS ALSO HIS ALLE GATION THAT THE ASSESSEE HAS INCURRED EXPENSES ABROAD WITHOUT PERMISSION FRO M CBDT. 69. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBJECTS OF WORLD PEACE CENTRE IS VERY MUCH PART OF EDUCATIONAL ACTIVITIES FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP. REFERRING TO PA GES 602 TO 728 OF PAPER BOOK NO.3 AND PAGES 729 TO 780 OF PAPER BOOK NO.4 HE DREW THE ATTENTION OF THE BENCH TO VARIOUS SEMINARS AND PROG RAMMES ARRANGED BY THE ASSESSEE ON THIS TOPIC, THE LIST OF WELLKNOWN S PEAKERS WHO ADDRESSED THE PARTICIPANTS, THE APPRECIATION BY THE GOVERNMENT OF MAHARASHTRA, THE ACTIVITIES CONDUCTED AND THE GUIDE LINES BY UGC FOR HUMAN RIGHTS EDUCATION ETC. HE SUBMITTED THAT THES E DOCUMENTS CLEARLY INDICATE THAT THE WORLD PEACE STUDIES FORM PART OF EDUCATIONAL ACTIVITIES AND EVEN IF THE OBJECT WAS NOT INTRODUCED SEPARATEL Y, STILL SUCH ACTIVITY COULD BE A PART OF THE OBJECTS OF THE ASSESSEE TRUS T. HE SUBMITTED THAT 46 ITA NOS.915 TO 920/PUN/2012 THE ASSESSEE ARRANGED SEMINARS AND SENT ITS FACULTI ES, TRUSTEES FOR SUCH SEMINARS IN ORDER TO UPGRADE THEIR KNOWLEDGE IN THI S FIELD SO THAT THEY CAN CONDUCT THE TEACHING OF THE SUBJECT AND ENHANCE THEIR AWARENESS FOR SUCH COURSES BEING CONDUCTED ABROAD. THEREFORE, TH E EXPENDITURE WAS NOT PERSONAL IN NATURE BUT FOR THE EXPENDITURE ON O BJECTS OF THE TRUST AND THEREFORE IS AN ALLOWABLE DEDUCTION. 70. AS REGARDS THE OBJECTION OF THE ASSESSING OFFIC ER THAT THE EXPENDITURE IS INCURRED OUTSIDE INDIA AND THEREFORE IT IS NOT ALLOWABLE AND IT IS FOR THE PERSONAL BENEFIT OF THE TRUSTEES ON T HEIR VISITS TO FOREIGN COUNTRIES IS CONCERNED, HE SUBMITTED THAT THE EXPEN DITURE IS VERY MUCH ON THE OBJECTS OF THE TRUST IN INDIA AS THE COURSES ON PEACE STUDIES ARE TO BE STARTED BY THE ASSESSEE IN INDIA AND THE EXPENDI TURE WAS ON TRAINING OF THE FACULTIES INCLUDING THE TRUSTEES. UNLESS TH E MANAGEMENT AND THE FACULTY ARE FULLY AWARE OF THE SUBJECT AND ARE WELL VERSED WITH THE SUBJECT THE ASSESSEE COULD NOT START THE EDUCATIONAL PROGRA MME. THEREFORE, THIS EXPENDITURE IS ON THE OBJECT OF THE TRUST AND NOT F OR THE PERSONAL BENEFIT OF THE TRUSTEES/FACULTY. 71. AS REGARDS THE OBJECTION OF THE ASSESSING OFFIC ER THAT THE OBJECT WAS INTRODUCED BY THE TRUSTEES ON 20-07-1997 AND TH E ASSESSEE TRUST DID NOT INFORM THE DEPARTMENT ABOUT THE AMENDED TRU ST DEED IS CONCERNED HE SUBMITTED THAT IN REALITY THIS BEING A PART OF EDUCATIONAL OBJECTS THERE WAS NO NEED EVEN TO AMEND THE TRUST D EED AND THEREFORE BY AMENDING THE TRUST DEED NOTHING HAS VIRTUALLY BE EN CHANGED IN THE OBJECTS OF THE TRUST. HE SUBMITTED THAT SINCE THE OBJECT IS PART OF EDUCATIONAL OBJECTS ONLY, NON INTIMATION THEREOF TO THE DEPARTMENT HAS NOT RESULTED IN ANY VIOLATION SO AS TO DENY THE EXE MPTION U/S.11. 72. REFERRING TO THE DECISION OF MUMBAI BENCH OF TH E TRIBUNAL IN THE CASE OF ITO VS. BHANSALI TRUST REPORTED IN 155 IT D 736 HE SUBMITTED 47 ITA NOS.915 TO 920/PUN/2012 THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THA T MERE NON-INTIMATION OF AMENDMENTS IN TRUST DEED TO DEPARTMENT CANNOT IPSO FACTO LEAD TO CANCELLATION OF REGISTRATION BECAUSE STATUTORY REQU IREMENT OF CANCELLATION OF REGISTRATION CONTAINED IN SECTION 12AA(3) OF THE ACT PRESCRIBES THAT CANCELLATION OF REGISTRATION CANNOT BE EFFECTUATED UNLESS A CASE IS MADE OUT THAT THE NEW OBJECTS DID NOT FIT IN THAT EXISTI NG OBJECTS OR THAT ACTIVITIES ARE INGENUINE. 73. REFERRING TO THE DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF KRIPANIDHI EDUCATIONAL TRUST VS. DIT (E XEMPTIONS) REPORTED IN 152 TTJ 673 HE SUBMITTED THAT THE TRIBUNAL IN TH E SAID DECISION HAS HELD THAT MERE FINDING THAT THE OBJECTS OF THE EDUC ATIONAL TRUST HAVE BEEN AMENDED WITHOUT THE CONSENT OF DEPARTMENT WOULD NOT BE SUFFICIENT TO EXERCISE POWER U/S.12AA(3) WITHOUT GIVING A FINDING THAT THE APPELLANTS OBJECTS ARE NO LONGER CHARITABLE. 73.1 REFERRING TO THE DECISION OF HONBLE MADRAS HI GH COURT IN THE CASE OF DIT VS. VALLAL M.D. SESHADRI TRUST REPORTED IN 79 CCH 443 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT AS FAR AS THE AMENDMENT MADE TO THE TRUST DEED IS C ONCERNED IT IS NOT THE CONCERN OF THE ASSESSING AUTHORITY AND ONLY THE CIVIL COURT IS EMPOWERED TO DECIDE THE SAID ISSUE AND IN ANY EVENT THAT CANNOT BE THE REASON FOR DENYING THE CHARITABLE NATURE OF THE INS TITUTION, IF IT IS OTHERWISE CHARITABLE. 74. REFERRING TO THE DECISION OF MUMBAI BENCH OF TH E TRIBUNAL IN THE CASE OF GEM AND JEWELLERY EXPORT PROMOTION COUNCIL VS. ITO REPORTED IN 68 ITD 95 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT ASSESSEE HAVING APPLIED THE INCOME FOR CHARITA BLE PURPOSE IN INDIA, THE MERE FACT THAT THE EXPENDITURE HAD BEEN INCURRE D OUT OF INDIA DID NOT DISQUALIFY THE EXPENDITURE FROM EXEMPTION U/S.11(1) (A). 48 ITA NOS.915 TO 920/PUN/2012 75. SO FAR AS VIOLATION OF SECTION 13 AS PER GROUND S OF APPEAL NO.8 AND 11 ARE CONCERNED THE LD. COUNSEL FOR THE ASSESS EE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING CHART WHICH GIVES THE YEAR-WISE DETAILS SHOWING VARIOUS ADDITIONS MADE BY THE ASSES SING OFFICER AND ENHANCED BY LD.CIT(A) ON THE GROUND OF VIOLATION OF SECTION 13 : SR. NO. PARTICULARS ASSESSMENT YEAR 1999 - 00 2000 - 01 2001 - 02 2002 - 03 2003 - 04 2004 - 05 1. EXPENDITURE ON PROVIDING FACILITY TO B E AVHAD VEHICLE MAINTENANCE (A) ADDITION BY AO - - 21,850 - - - (B) ENHANCEMENT BY CIT(A) - - - 143,893 224,077 245,991 DEPRECIATION ON CAR ( A) ADDITION BY AO - - - - - - (B) ENHANCEMENT BY CIT(A) - - - 171,388 137,111 437,589 CREDIT CARD EXPENSES (A) ADDITION BY AO - - 180,004 - - - (B) ENHANCEMENT BY CIT(A) 133,891 142,529 - 242,566 279,298 178,264 OTHER EXPENSES - - - - - - HONORARIUM PAID - - - - - - SUB - TOTAL (1) 133,891 142,529 201,854 557,847 640,486 861,844 2 EXPENDITURE ON FOREIGN TOURS (A) ADDITION BY AO - - 152,930 - - - (B) ENHANCEMENT BY CIT(A) 671,273 - 130,492 24,700 266,154 357,442 SUB - TOTAL ( 2 ) 6 71,273 - 283,422 24,700 266,154 357,442 3 CONCESSIONAL EDUCATION (A) ADDITION BY AO - - 92,400 - - - (B) ENHANCEMENT BY CIT(A) 307,845 213,205 62,320 88,680 91,100 - SUB - TOTAL ( 3 ) 307,845 213,205 154,720 88,680 91,100 - 4 SCHOLARSHIP GIVEN TO RAHUL KARAD - - - - - - 5 NOTIONAL INTEREST ON ADVANCE TO RAHUL KARAD - - - - - - TOTAL (1+2+3+4+5) 1,113,009 355,734 639,996 671,227 997,740 1,219,286 76. SO FAR AS PURCHASE OF CAMRY CAR, COMPUTERS AND REIMBURSEMENT OF CREDIT CARD EXPENSES OF SHRI B.E. AVHAD IS CONCE RNED HE SUBMITTED THAT THE MAIN ALLEGATION OF THE ASSESSING OFFICER I S THAT SHRI B.E. AVHAD HAS NOT PROVIDED HIS SERVICES ON DAY TO DAY BASIS. ACCORDING TO THE ASSESSING OFFICER, IF MR. B.E. AVHAD WAS LOOKING AF TER THE LEGAL WORK AND NO FEES WAS CHARGED THEN WHY HUGE AMOUNT IS DEBITED TO INCOME AND EXPENDITURE ACCOUNT UNDER THE HEAD LEGAL EXPENSES B Y THE TRUST. 49 ITA NOS.915 TO 920/PUN/2012 FURTHER, THERE WAS NO NECESSITY OF GIVING ANY SALAR Y TO SHRI B.E. AVHAD FROM 01-01-2006 ONWARDS. 77. HE SUBMITTED THAT SHRI B.E. AVHAD IS THE FOUNDE R MEMBER AND IS ALSO AN EMINENT LAWYER BY PROFESSION HAVING KNOWLED GE IN VAST AREAS INCLUDING LEGAL AND REVENUE MATTERS. ALTHOUGH HE W AS NOT ENGAGED IN DAY TO DAY ACTIVITIES OF THE TRUST, HE WAS ASSOCIAT ED WITH ALL THE POLICY MATTERS, DEVELOPMENTAL ACTIVITIES, LEGAL MATTERS IN CLUDING DISPUTES IN THE COURTS ETC. BESIDES THIS ALL THE LAND MATTER CONCE RNING CONVEYANCE OF LAND, CONVERSION OF THE LAND, ANY ASSESSMENT OF THE LANDS OF THE INSTITUTION HAVE BEEN LOOKED AFTER BY SHRI B.E. AVH AD. HE SUBMITTED THAT SHRI B.E. AVHAD HAS USED THE FACILITIES PROVIDED ON LY FOR THE OFFICIAL PURPOSES OF THE TRUST. HE WAS HAVING HIS OWN CAR W HICH WAS USED FOR HIS PERSONAL WORK. THE ASSESSING OFFICER NOWHERE IN TH E ASSESSMENT ORDER HAS POINTED OUT ANY INSTANCE WHERE THE FACILITIES W ERE USED FOR PERSONAL PURPOSES. HE SUBMITTED THAT IT IS A REGULAR PRACTI CE TO PROVIDE CAR FACILITIES TO THE HIGHER LEVEL AUTHORITIES IN EVERY INSTITUTION INCLUDING GOVERNMENT OFFICES. THEREFORE THERE SHOULD NOT BE ANY OBJECTION FOR PROVIDING CAR FACILITIES TO THE PRESIDENT OF THE TR UST FOR OFFICIAL WORK OF THE TRUST. THEREFORE, THE ALLEGATION OF THE ASSESSING OFFICER IS BASELESS AND IT DOES NOT LEAD TO VIOLATION OF SECTION 13. 78. SO FAR AS LEGAL EXPENSES ARE CONCERNED HE SUBMI TTED THAT THE LEGAL EXPENSES ALSO INCLUDE COURT FEES, STAMP DUTY, FEES OF OTHER LAWYERS ON RECORD ETC. THERE WERE NUMEROUS LITIGATIONS ON DIFFERENT ISSUES LIKE LAND MATTERS, LABOUR MATTERS, CIVIL, CRIMINAL AND R EVENUE MATTERS ETC. FOR WHICH THE TRUST WAS BENEFITTED BECAUSE OF THE SERVI CES OF SHRI B.E. AVHAD. APART FROM SHRI B.E. AVHAD THE TRUST HAD AL SO ENGAGED SOME OTHER COUNSELS AND THEIR EXPENSES ARE DEBITED AS LE GAL EXPENSES IN THE BOOKS OF THE TRUST. THEREFORE, IT SHOULD NOT BE SA ID THAT SHRI B.E. AVHAD HAS NOT RENDERED ANY SERVICES TO THE TRUST. HE SUBM ITTED THAT MANY TIMES 50 ITA NOS.915 TO 920/PUN/2012 THE TRUSTEES AND THE PRESIDENT ARE SUPPOSED TO GIVE COURTESY GIFTS TO GUESTS AND OFFICIALS AS TOKEN OF APPRECIATION OR FO R PROMOTIONAL ACTIVITIES OF THE TRUST. THE PAYMENTS FOR SUCH GIFTS OCCASION ALLY WERE MADE BY ADVOCATE SHRI B.E. AVHAD THROUGH CREDIT CARD. THUS THE PAYMENTS FOR CLOTHING ETC. WERE INCURRED FOR THE PURPOSE OF THE ASSESSEE TRUST AND NOT FOR PERSONAL PURPOSE. HE SUBMITTED THAT SHRI B.E. AVHAD WAS HAVING HIS OWN CREDIT CARD WHICH WAS USED FOR INCURRING HIS PE RSONAL EXPENSES. 79. SO FAR AS HIRING OF TAXIES FOR TRIPS OF ADVOCAT E SHRI B.E. AVHAD TO MUMBAI IS CONCERNED HE SUBMITTED THAT THESE TRIPS W ERE NOT FOR PERSONAL PURPOSES BUT FOR OFFICIAL TRIPS TO ATTEND VARIOUS H IGH COURT MATTERS AND TO DISCUSS CASE MATTERS WITH LAWYERS ON RECORD. EVEN THE CREDIT CARD PAYMENTS WERE ALSO FOR THE HOTEL BILLS AT MUMBAI AN D DELHI TO WHICH PLACES SHRI B.E. AVHAD HAD TO GO FOR THE MATTERS CO NCERNING THE TRUST. HE SUBMITTED THAT THE FACILITIES DID NOT CONSTITUTE ANY PERSONAL BENEFIT TO ADVOCATE SHRI B.E. AVHAD AND THEREFORE THERE IS NO VIOLATION OF ANY OF THE PROVISIONS OF SECTION 13. 80. IN HIS ALTERNATE CONTENTION HE SUBMITTED THAT EVEN IF THE ABOVE FACILITIES WERE FOR THE PERSONAL BENEFIT OF SHRI B. E. AVHAD THERE IS NO REASON FOR DENIAL OF EXEMPTION U/S.11 AND 12 IN RES PECT OF THE ENTIRE INCOME OF THE ASSESSEE TRUST. AT THE BEST THE DISA LLOWANCE MAY BE RESTRICTED TO THE EXTENT OF THE SO CALLED VIOLATIO N. FOR THE ABOVE PROPOSITION THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD ITA NO.557/2008 ORDER DATED 17-06-2014 (KAR. HC) 2. SHETH MAFATLAL GAGALBHAI FOUNDATION TRUST REPORTED I N 249 ITR 533 (BOM.) 3. CIT VS. FR. MULLERS CHARITABLE INSTITUTIONS ITA NO.58 9/2007 ORDER DATED 10-02-2014 (KAR. HC) 4. CIT VS. FR. MULLERS CHARITABLE INSTITUTIONS REPORTED IN (2014) 227 TAXMANN 369 (SC) 5. AUDYOGIK SIKSHAN MANDAL VS. ITO REPORTED IN (2016) 15 6 ITD 1 (PUNE (TM) 51 ITA NOS.915 TO 920/PUN/2012 6. JAMSHETJI TATA TRUST VS. JCIT (EXEMPTION) REPORTED IN (2014) 148 ITD 388 (MUM) 81. SO FAR AS THE FOREIGN TOUR OF FAMILY MEMBERS OF SHRI B.E. AVHAD, PRESIDENT OF THE TRUST ARE CONCERNED, HE SUBMITTED THAT SHRI B.E. AVHAD HAS VISITED GENEVA FOR ATTENDING WORLD PHILOSOPHERS MEET IN THE YEAR 1999 AND ALL THE FAMILY MEMBERS HAD ACCOMPANIED HIM . THE ASSESSING OFFICER HAD CONSIDERED THE AMOUNT INCURRED ON AIRFA RE OF RS.1,60,000/- AND FOREIGN CURRENCY EXPENSES OF RS.4,40,000/- AS V IOLATION OF SECTION 13. HE SUBMITTED THAT THE REPRESENTATIVES OF THE A SSESSEE TRUST WERE ORGANIZERS AND PARTICIPANTS. THE PARTICIPATION WAS IN THE OFFICIAL CAPACITY AS TRUSTEES, STAFF OR AS THE STUDENTS. MR. B.E. AV HAD AND MRS. KAMAL AVHAD REPRESENTED THE ASSESSEE TRUST AS TRUSTEES. MRS. KAMAL AVHAD ATTENDED THE MEETING AS PART OF PROTOCOL. THE STUDE NTS PARTICIPANTS INCLUDED 3 CHILDREN OF MR. B.E. AVHAD. HE SUBMITTE D THAT ONLY THE EXPENDITURE INCURRED IN RELATION TO MEET WAS DEBITE D BY ASSESSEE TRUST. NO EXPENDITURE FOR THE PERSONAL BENEFIT WAS MADE FR OM THE FUNDS OF THE ASSESSEE TRUST. HE SUBMITTED THAT AMOUNTS INVOLVED ON THIS ISSUE ARE VERY SMALL AS COMPARED TO THE VOLUME OF GROSS RECEI PTS OF THE ASSESSEE TRUST. 82. IN HIS ALTERNATE SUBMISSION HE SUBMITTED THAT A T THE MOST THE AMOUNT INCURRED FOR RELATIVES MAY BE DISALLOWED. I N YET ANOTHER ALTERNATE ARGUMENT HE SUBMITTED THAT IF THE FOREIGN TOUR EXPENSES WERE NOT IN PURSUANCE OF THE OBJECTS OF THE TRUST, IN TH AT CASE, THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 AND THE DISALLOWANCE SHOULD BE RESTRICTED TO THE EXTENT OF SO CALLED VIO LATION. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISIONS CITED ABOVE . 52 ITA NOS.915 TO 920/PUN/2012 83. SO FAR AS FOREIGN TOUR OF THE TRUSTEES AND THEI R FAMILY MEMBERS ARE CONCERNED, HE MADE SIMILAR ARGUMENTS AS ARGUED WHIL E ARGUING FOR MR. B.E. AVHAD AND HIS FAMILY. 84. AS REGARDS THE VISIT TO KATMANDU BY SHRI RAHUL KARAD IS CONCERNED, HE SUBMITTED THAT THE INTERNATIONAL EDUC ATION CENTRE OF THE ASSESSEE TRUST IS ENTRUSTED WITH THE JOB OF PROMOTI NG THE EDUCATIONAL PROGRAMMES OF THE ASSESSEE TRUST. SUCH PROMOTIONAL ACTIVITIES NECESSITATE APPOINTMENT OF REPRESENTATIVES ABROAD I N DIFFERENT COUNTRIES AND UNDERTAKING OF THE FOREIGN TOURS BY THE CONCERN ED PERSONS FOR THE PROMOTIONAL ACTIVITIES. SHRI RAHUL KARAD IS THE EX ECUTIVE DIRECTOR OF THE MIT SCHOOL OF MANAGEMENT AND ALSO INCHARGE OF THE M IT GROUP OF MANAGEMENT INSTITUTIONS. FOR THE PURPOSE OF SUCH P ROMOTIONAL ACTIVITIES HE HAD VISITED KATMANDU IN JULY 2002 ALONG WITH PRO FESSOR SHRI P.D. CHIDGUPKAR, DIRECTOR INTERNATIONAL EDUCATION CENTRE OF THE ASSESSEE TRUST. HE SUBMITTED THAT THE ABOVE TRIP TO KATMAND U WAS FOR THE PURPOSE OF THE ASSESSEE TRUST AND NOT FOR ANY PLEASURE TRIP . IN ANY CASE EVEN IF THE SAME IS TREATED AS PERSONAL EXPENDITURE, EVEN T HEN THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION OF SECTION 11 AND ONL Y THE DISALLOWANCE IS TO BE RESTRICTED TO THE EXTENT OF SO CALLED VIOLATI ON. FOR THE ABOVE PROPOSITION HE RELIED ON THE DECISIONS ALREADY CITE D ABOVE. 85. SO FAR AS THE VISIT TO AUSTRALIA BY SHRI RAHUL V. KARAD AND PROF. V.D. KARAD DURING A.Y. 2003-04 IS CONCERNED HE SUBM ITTED THAT BOTH OF THEM VISITED AUSTRALIA TO ATTEND THE 13 TH TRIENNAL CONFERENCE OF UNIVERSITY PRESIDENTS WHICH WAS HELD BETWEEN 24 TH TO 27 TH JUNE 2002 AND BOTH THE ABOVE DELEGATES ATTENDED THE CONFERENCE DURING THE PERIOD. HE ALSO REFERRED TO THE INVITATION LETTERS PLACED AT PAGES 812 TO 821 OF THE PAPER BOOK. HE SUBMITTED THAT AS PER THE RULES 2000 US D OLLARS PER DELEGATE IS ALLOWABLE AS ALLOWANCE. HOWEVER, THE 2 DELEGATES P URCHASED ONLY 3000 DOLLARS, THUS AVOIDING EXCESS EXPENDITURE. THE AMO UNTS WERE USED FOR 53 ITA NOS.915 TO 920/PUN/2012 THE LOCAL CONVEYANCE, COOLIE CHARGES AND FOR THE ST AY/FOOD ETC. THERE WAS NO MISUSE OF FUNDS AS ALLEGED BY THE ASSESSING OFFICER. THERE WAS NO PERSONAL EXPENDITURE INCURRED BY THE ABOVE 2 DEL EGATES. THE SUN GLASSES, PERFUMES OR SHIRT ETC. WERE RECEIVED AS GI FTS FROM RELATIVES AND FRIENDS AND THERE WAS NO CONNECTION WITH THE AMOUNT SPENT OUT OF THE ABOVE-MENTIONED FOREIGN CURRENCY. IN HIS ALTERNATE SUBMISSION HE SUBMITTED THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 IN RESPECT OF THE ENTIRE INCOME OF THE ASSESSEE TRUST. THE DISALLOWANCE IS TO BE RESTRICTED TO THE EXTENT OF S O CALLED VIOLATION. 86. SO FAR AS FOREIGN TOUR OF MR. AND MRS. MANGESH KARAD (I.E., RELATED TO A.Y. 2001-02 RS.1,30,492/-) IS CONCERN ED HE SUBMITTED THAT MR. MANGESH KARAD, EXECUTIVE DIRECTOR, PLANNING & D EVELOPMENT OF THE TRUST VISITED EUROPE IN F.Y. 2000-01 TO ATTEND UNES CO CONFERENCE ON WORLD PEACE AND HUMAN SECURITY REPRESENTING THE ASS ESSEE TRUST. HIS WIFE SUNITA KARAD ACCOMPANIED HIM AS A PROTOCOL. H OWEVER, HER EXPENDITURE WAS NOT BORNE BY THE TRUST. ATTENDING SUCH HIGH LEVEL CONFERENCE BY MR. MANGESH KARAD WOULD DEFINITELY EN RICH THE KNOWLEDGE WHICH IN TURN CAN BE SHARED WITH STUDENTS AND COL LEAGUES IN INDIA. THUS, THE TRUST IS BOUND TO GAIN FROM SUCH ACTIVITI ES. THEREFORE, IT IS NOT A PERSONAL EXPENDITURE BUT AN EXPENDITURE FOR THE OBJ ECTS OF THE TRUST. 87. IN HIS ALTERNATE CONTENTION HE SUBMITTED THAT T HERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 IN RESP ECT OF THE ENTIRE INCOME OF THE ASSESSEE TRUST. THE DISALLOWANCE SHO ULD BE RESTRICTED TO THE EXTENT OF SO CALLED VIOLATION. 88. SO FAR AS LOCAL TOURS BY TRUSTEES AND THEIR FAM ILY MEMBERS TO VARIOUS PLACES WHERE THE TRUST DOES NOT HAVE ANY AC TIVITY IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS DOUBTED THE EXPENDITURE ON VARIOUS LOCAL TRAVEL S OF TRUSTEES AND THEIR 54 ITA NOS.915 TO 920/PUN/2012 RELATIVES AMOUNTING TO RS.25,650/- FOR A.Y. 1999-20 00 AND RS.47,697/- FOR A.Y. 2004-05. HE SUBMITTED THAT THESE EXPENSE ARE INCURRED ON THE OBJECTS OF THE TRUST. THE DETAILS OF THE EXPENDITU RE SHOW THAT THE TOURS ARE ONLY BY THE TRUSTEES AND IN PARTICULAR MAINLY B Y THE PRESIDENT AND THE MANAGING TRUSTEE. THESE LOCAL TOURS WERE UNDERTAKE N IN CONNECTION WITH SURVEY OF DIFFERENT TOWNS WITH A VIEW TO OPEN NEW S CHOOLS OR COLLEGES. FURTHER, CERTAIN EXPENSES ARE INCURRED FOR ATTENDIN G THE CONFERENCE OR FOR ADMINISTRATIVE MATTER. THUS, THERE IS NO VIOLA TION IN THIS RESPECT. SUCH EXPENDITURE HAS BEEN INCURRED ON THE OBJECTS O F THE TRUST. HE SUBMITTED THAT THE ASSESSING OFFICER HOWEVER HAS NO T MADE ANY ADDITION ON THIS ACCOUNT. 89. SO FAR AS INTEREST FREE LOAN OF RS.18 LAKHS TO SHRI RAHUL V. KARAD IS CONCERNED HE SUBMITTED THAT THE ASSESSING OFFICE R HAS DISCUSSED THE ISSUE AT PAGE 22 OF THE ASSESSMENT ORDER FOR A.Y. 1 999-2000. ACCORDING TO THE ASSESSING OFFICER HIGHER EDUCATION IN A FOREIGN UNIVERSITY HAS GIVEN PERSONAL GAIN TO SHRI RAHUL V. KARAD AND THE EXPENDITURE IS ONLY FOR THE ADVANCEMENT OF PERSONAL CAREER OF SHRI RAHUL V. KARAD AND THEREFORE IT CANNOT BE SAID TO BE FOR CHARITABLE PURPOSE. THUS, THERE IS VIOLATION OF PROVISIONS OF SECTION 1 3 OF THE I.T. ACT. HE SUBMITTED THAT THE EDUCATIONAL LOAN AND THE SUBSIDY GIVEN TO SHRI RAHUL V. KARAD WERE IN HIS CAPACITY AS AN EMPLOYEE IN ACC ORDANCE WITH THE RULES AND REGULATIONS OF THE ASSESSEE TRUST AND NOT AS A RELATIVE OF THE TRUSTEE. HE SUBMITTED THAT SHRI RAHUL V. KARAD WAS EMPLOYED AS EXECUTIVE DIRECTOR OF MIT SCHOOL OF MANAGEMENT W.E. F. 01-01-2001. HE WAS ALSO THE COORDINATOR FOR THE MIT SCHOOL OF GOVE RNMENT. HE SUBMITTED THAT OUT OF THE COURSE FEE OF RS.27 LAKHS FOR HIS POST GRADUATE COURSE AT HARWARD BUSINESS SCHOOL, MASS, USA, THE T RUST HAD SANCTIONED A LOAN OF RS.18 LAKHS AS PER THE LOAN AG REEMENT ENTERED INTO ON 05-01-2004. REFERRING TO THE SAID AGREEMENT, CO PY OF WHICH IS PLACED 55 ITA NOS.915 TO 920/PUN/2012 AT PAGES 888 AND 889 OF THE PAPER BOOK NO.4, HE SUB MITTED THAT THERE WAS AN UNDERTAKING BY SHRI RAHUL V. KARAD TO SERVE THE TRUST FOR A PERIOD OF 5 YEARS. THE LOAN WAS GIVEN TO SHRI RAHUL V. KA RAD ON HIS OWN MERIT AND THE COURSE UNDERGONE BY HIM HAS BEEN OF GREAT H ELP TO THE TRUST IN THE EXPANSION OF THE MANAGEMENT COURSES. HE SUBMIT TED THAT THE ENTIRE LOAN AMOUNT ALONG WITH COMPOUNDING INTEREST HAS BEE N RECOVERED FROM THE SALARY OF SHRI RAHUL V. KARAD. HE SUBMITTED TH AT AT THE REQUEST OF SHRI RAHUL V. KARAD FINANCIAL SUPPORT OF RS.5,44,79 7/- WAS SANCTIONED AND PAID IN TWO INSTALMENTS OF RS.2,72,102/- ON 12- 01-2006 AND RS.2,72,695/- ON 31-03-2006. HE USED THIS AMOUNT F OR REPAYMENT OF THE LOAN AND THE AMOUNTS WERE REPAID BY CHEQUE IMMEDIAT ELY THEREAFTER. REFERRING TO THE LOAN ACCOUNT OF SHRI RAHUL V. KARA D HE DREW THE ATTENTION OF THE BENCH TO THE RECOVERY OF THE SAME AND SUBMITTED THAT THE ENTIRE AMOUNT HAS BEEN RECOVERED AND THE CONTEN TION OF THE ASSESSING OFFICER THAT THE LOAN AND INTEREST HAVE N OT BEEN RECOVERED IS INCORRECT AND FALSE. HE SUBMITTED THAT SHRI RAHUL V. KARAD IS NOT THE ONLY BENEFICIARY OF THE EDUCATIONAL LOAN AND THE SU BSIDY. A NUMBER OF OTHER EMPLOYEES OF THE TRUST UNCONNECTED WITH THE M ANAGEMENT HAVE ALSO AVAILED SUCH BENEFIT. 90. SO FAR AS THE CLAIM OF THE ASSESSING OFFICER TH AT THE RECOVERY OF INTEREST IS AN AFTERTHOUGHT HE SUBMITTED THAT THIS CLAIM IS FACTUALLY INCORRECT. HE SUBMITTED THAT CHARGING OF INTEREST HAS BEEN SPECIFICALLY RECORDED IN THE LOAN AGREEMENT DATED 05-01-2004 ITS ELF. THEREFORE, ADVANCEMENT OF LOAN AND GRANTING OF SUBSIDY TO SHRI RAHUL V. KARAD IN HIS CAPACITY AS AN EMPLOYEE OF THE TRUST IS NOT IN VIOLATION OF PROVISIONS OF SECTION 13. IN HIS ALTERNATE CONTENTION HE SUBMITT ED THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 OF THE ENTIRE INCOME OF THE ASSESSEE TRUST FOR VIOLATION OF PROVISIONS OF SECTI ON 13. THE DISALLOWANCE 56 ITA NOS.915 TO 920/PUN/2012 HAS TO BE RESTRICTED TO THE EXTENT OF SO CALLED VIO LATION. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISIONS ALREADY CIT ED ABOVE. 91. SO FAR AS THE FREE ADMISSIONS AND FEE CONCESSIO NS TO RELATIVES OF THE TRUSTEES ARE CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CHILDREN OF ALL EMPLOYEES AND FOUNDER MEMBERS ARE GIVEN CONCESSION IN FEES AS A POLICY OF THE TRUST AND ALS O ON THE BASIS OF MERIT ONLY. HE SUBMITTED THAT THERE IS NO PROHIBITION FO R GIVING ANY FEE CONCESSION AND SUCH CONCESSION WOULD NOT AMOUNT TO USE OF TRUST FUNDS FOR NON EDUCATIONAL PURPOSES. REFERRING TO PROVISI ONS OF SECTION 13(6) HE SUBMITTED THAT THE SAID PROVISION SPECIFICALLY P ROVIDES THAT IN AN EDUCATIONAL INSTITUTION THERE WOULD BE NO PROHIBITI ON AS REGARDS FEE CONCESSION. FURTHER SUCH CONCESSION TO RELATIVES O F EMPLOYEES IS NOT COVERED IN SECTION 13 AND THEREFORE APPLICATION OF THE SAME TO THE ASSESSEE TRUST IS IMPROPER AND UNJUST. IN HIS ALTE RNATE CONTENTION HE SUBMITTED THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 OF THE ENTIRE INCOME OF THE ASSESSEE TRUST FOR V IOLATION OF PROVISIONS OF SECTION 13. THE DISALLOWANCE HAS TO BE RESTRICTED TO THE EXTENT OF SO CALLED VIOLATION. 92. SO FAR AS ADDITION ON ACCOUNT OF UNEXPLAINED CR EDITS AS PER GROUND OF APPEAL NO.9 IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE ARISES FOR A.Y. 1999-2000 FOR WHICH ADDITION OF RS.37,72,248/- HAS BEEN MADE AND FOR A.Y. 2003-04 I T IS RS.17,58,354/-. HE SUBMITTED THAT ON ACCOUNT OF CERTAIN MISSING CRE DITS IN F.Y. 1997-98 THE ASSESSEE PASSED A JOURNAL ENTRY OF RS.37,72,248 /- FOR A.Y. 1999- 2000 WHICH THE ASSESSING OFFICER TREATED AS INCOME FOR A.Y. 1999-2000. THE SPECIAL AUDITOR NOTED THAT AN AMOUNT OF RS.17,5 8,354/- WAS DIRECTLY TAKEN TO BALANCE SHEET AS ON 01-04-2002 FOR WHICH T HE ASSESSING OFFICER MADE THE ADDITION IN A.Y. 2003-04. HE RELIED ON TH E SUBMISSIONS MADE ON THIS BEHALF BEFORE THE ASSESSING OFFICER AND THE CIT(A). IN HIS 57 ITA NOS.915 TO 920/PUN/2012 ALTERNATE CONTENTION, HE SUBMITTED THAT EVEN IF THE AMOUNTS ARE ADDED AS INCOME FOR A.Y. 1999-2000 AND A.Y. 2003-04 THE APPL ICATION OF INCOME IN THESE TWO YEARS IS STILL HIGHER THAN THE RECEIPT S AND THEREFORE AFTER GRANTING EXEMPTION U/S.11 THERE IS NO TAXABLE INCOM E IN THE HANDS OF THE ASSESSEE. 93. SO FAR AS DISALLOWANCE U/S.43B, 40A(3) AND 40A( 7) AS PER GROUNDS OF APPEAL NO.10 IS CONCERNED THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPUTIN G THE INCOME OF THE ASSESSEE TRUST HAD ADDED VARIOUS DISALLOWANCES U/S. 40A(3), 43B AND 40A(7) ON THE GROUND THAT REGISTRATION U/S.12A HAS BEEN CANCELLED AND ASSESSEE DOES NOT HAVE ANY EXEMPTION U/S.10(23C)(VI ) OF THE I.T. ACT. HE SUBMITTED THAT SINCE THE TRIBUNAL HAS ALREADY RE STORED REGISTRATION U/S.12A TO THE ASSESSEE TRUST, THEREFORE, THE INCOM E OF THE ASSESSEE TRUST HAS TO BE COMPUTED U/S.11. REFERRING TO VARI OUS DECISIONS HE SUBMITTED THAT INCOME U/S.11 IS TO BE COMPUTED IN A COMMERCIAL MANNER AND NOT AS PER THE PROVISIONS OF I.T. ACT. THE VARI OUS HEADS OF INCOME U/S.14 ARE NOT RELEVANT IN THE CASE OF A CHARITABLE TRUST, THEREFORE, WHILE COMPUTING THE INCOME U/S.11 THE VARIOUS DISALLOWANC ES CANNOT BE MADE U/S.28 TO 43. FOR THE ABOVE PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. RAO BAHADUR CALAVALA CUNNAN REPORTED IN 135 ITR 485 (MAD.) 2. CIT VS. GANGA CHARITY TRUST FUND REPORTED IN (1986) 1 62 ITR 612 (GUJ.) HE ALSO RELIED ON THE CBDT CIRCULAR NO.5P(LXX-6) DA TED 19-06-1968. 94. SO FAR AS GROUND OF APPEAL NO.9 FOR A.Y. 2001-0 2 IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALT HOUGH THE SPECIAL AUDITOR IN HIS REPORT U/S.142(2A) OF THE ACT HAS OB SERVED THAT CERTAIN EXPENDITURE AMOUNTING TO RS.4,27,000/- WAS CAPITAL IN NATURE, HOWEVER, 58 ITA NOS.915 TO 920/PUN/2012 THE SAME WAS CLAIMED AS REVENUE EXPENDITURE IN THE INCOME AND EXPENDITURE ACCOUNT FOR A.Y. 2001-02. ACCORDINGLY, THIS AMOUNT WAS DISALLOWED IN THE RECASTED INCOME AND EXPENDITURE A CCOUNT FOR A.Y. 2001-02. HE SUBMITTED THAT THE ASSESSING OFFICER W HILE COMPUTING THE TAXABLE INCOME HAS AGAIN DISALLOWED THE SAME AMOUNT IN THE ASSESSMENT ORDER EVEN WHEN THE SURPLUS COMPUTED BY THE AUDITOR WAS CONSIDERED AS THE BASE. THIS ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE RESULTED INTO DOUBLE ADDITION. HE SUBMITT ED THAT THIS ISSUE WAS RAISED BEFORE THE CIT(A) VIDE GROUND OF APPEAL NO.1 4. HOWEVER, NO FURTHER DISCUSSION OR DECISION IS MADE ON THIS ISSU E IN THE ENTIRE ORDER. HE SUBMITTED THAT IN CASE THE ASSESSEE IS HELD TO B E ELIGIBLE FOR EXEMPTION U/S.11, THEN THE ISSUE WHETHER A PARTICUL AR EXPENDITURE IS REVENUE OR CAPITAL IN NATURE WILL NOT BE RELEVANT A T ALL. THE INCOME IN CASE OF A CHARITABLE TRUST IS TO BE COMPUTED IN COM MERCIAL MANNER AND ACCORDINGLY CAPITAL EXPENDITURE WILL ALSO BE CONSID ERED AS APPLICATION OF INCOME. WITHOUT PREJUDICE TO ABOVE, HE REFERRED TO PAGES 1006 TO 1008 OF PAPER BOOK NO.5 AND SUBMITTED THAT EVEN IF THE A BOVE AMOUNT IS DISALLOWED FOR A.Y. 2001-02, THE APPLICATION OF INC OME FOR THIS YEAR IS STILL HIGHER THAN THE INCOME RECEIPTS. 95. SO FAR AS DISALLOWANCE OF INCOME TAX AS PER GRO UND OF APPEAL NO.9 FOR A.Y. 2002-03 AND 2003-04 ARE CONCERNED HE SUBMITTED THAT ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS.4, 12,656/- AND RS.4,42,920/- RESPECTIVELY FOR A.Y. 2002-03 AND 200 3-04 ON ACCOUNT OF INCOME TAX DEBITED IN THE BOOKS. HE SUBMITTED THAT ACCORDING TO THE ASSESSING OFFICER THESE AMOUNTS WERE DEBITED TO INC OME AND EXPENDITURE ACCOUNT OF MIMER COLLEGE AND DBSR HOSPI TAL, TALEGAON WHICH IS ONE OF THE CONSTITUENT UNITS OF THE ASSESS EE. SINCE THESE AMOUNTS WERE DEBITED AS INCOME TAX THE ASSESSING OF FICER DISALLOWED THE SAME. HE SUBMITTED THAT THERE IS NO DISCUSSION IN THE ASSESSMENT 59 ITA NOS.915 TO 920/PUN/2012 ORDER AS WELL AS THE CIT(A)S ORDER ON THIS ISSUE. HE SUBMITTED THAT SINCE THE ASSESSEE IS A CHARITABLE TRUST CLAIMING E XEMPTION U/S.11, THEREFORE, THERE WAS NO QUESTION OF PAYMENT OF ANY INCOME TAX. THE AMOUNTS WERE NOT PAID TOWARDS INCOME TAX BUT TOWARD S TDS ARREARS OF EARLIER YEAR WHICH IS AN ALLOWABLE DEDUCTION. SECO NDLY, THE INCOME IN CASE OF A CHARITABLE TRUST IS TO BE COMPUTED IN COM MERCIAL MANNER AND ACCORDINGLY EVEN INCOME TAX EXPENDITURE WILL BE CON SIDERED AS APPLICATION OF INCOME. WITHOUT PREJUDICE TO THE AB OVE THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 1006 TO 1008 OF PAPER BOOK NO.5 AND SUBMITTED THAT EVEN IF THE ABOVE AMOUNTS ARE DISALL OWED FOR A.YRS. 2002- 03 AND 2003-04 THE APPLICATION OF INCOME FOR THESE YEARS ARE STILL HIGHER THAN THE INCOME RECEIPTS AND THEREFORE AFTER GRANTI NG EXEMPTION U/S.11 THERE IS NO TAXABLE INCOME IN THE HANDS OF THE ASSE SSEE. 96. SO FAR AS GROUNDS OF APPEAL NO.12 FOR A.Y. 2003 -04 IS CONCERNED WHICH RELATES TO DISALLOWANCE OF EXCESS PROVISION F OR REFUND OF FEES THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MIT SFS WAS ONE OF THE CONSTITUENT UNITS OF THE ASSESSEE TRUST WHICH WAS C LOSED DURING THE A.Y. 2003-04. THE ASSESSEE HAS MADE A PROVISION OF RS.5 0 LAKHS FOR REFUND OF FEES IN A.Y. 2002-03 OUT OF WHICH CERTAIN AMOUNT WAS REPAID AND RS.30,96,750/- WAS UNPAID DURING A.Y. 2003-04. THI S AMOUNT WAS UNPAID EVEN UPTO 31-03-2006 AND ACCORDINGLY THE ASS ESSING OFFICER HAD ADDED BACK THE EXCESS PROVISION IN THE YEAR OF CLOS URE OF UNIT, I.E. A.Y. 2003-04. THE ASSESSEE WHILE REITERATING THE SAME A RGUMENTS AS ADVANCED BEFORE THE ASSESSING OFFICER AND THE CIT(A ) REFERRED TO PAGES 1006 TO 1008 OF PAPER BOOK NO.5 AND SUBMITTED THAT EVEN IF THE AMOUNT HAS BEEN ADDED TO THE INCOME FOR A.Y. 2003-04 APPLI CATION OF INCOME FOR THIS YEAR IS STILL HIGHER THAN THE INCOME RECEIPTS AND THEREFORE AFTER GRANTING EXEMPTION U/S.11 THERE IS NO TAXABLE INCOM E IN THE HANDS OF THE ASSESSEE. 60 ITA NOS.915 TO 920/PUN/2012 97. SO FAR AS GROUND OF APPEAL NO.9 FOR A.Y. 2004-0 5 IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME RELATES TO INCORRECT ADDITION OF RS.4,62,41,042/-. REFERRING PAGE 29 OF THE ASSESSMENT ORDER HE SUBMITTED THAT THE ASSESSING OF FICER HAS STATED THAT THE AUDITOR HAS RECASTED THE INCOME AND EXPEND ITURE ACCOUNT OF THE ASSESSEE AND ARRIVED AT SURPLUS OF RS.7,23,46,742/- FOR THE YEAR. HOWEVER, THE SAME IS INCORRECT. THE AUDITOR HAS CO MPUTED SURPLUS OF RS.2,61,05,700/- IN HIS RECASTED INCOME AND EXPENDI TURE ACCOUNT FOR THE YEAR A.Y. 2004-05, COPY OF WHICH IS PLACED AT PAGE 85 OF THE PAPER BOOK FOR A.Y. 2004-05. THUS, THERE IS TYPOGRAPHICAL ERR OR ON THE PART OF THE ASSESSING OFFICER WHICH NEEDS TO BE CORRECTED. HE SUBMITTED THAT THE CORRECT SURPLUS BEING RS.2,61,05,700/- AND NOT RS.7 ,23,46,742/- RELIEF OF RS.4,62,41,042/- SHOULD BE GIVEN. 98. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT SEARCH TOOK PLACE ON THE TRUSTEES OF THE ASSESSEE ON 20-07-2005 AND T HE SURVEY ACTION WAS CONDUCTED ON THE ASSESSEE TRUST ON THE SAME DAY . THE 2 ND SURVEY ON THE ASSESSEE TRUST TOOK PLACE ON 26-08-2005 DURI NG WHICH CASH AMOUNTING TO RS.8 LAKHS AND VARIOUS INCRIMINATING D OCUMENTS WERE FOUND. THE NOTICE U/S.148 WAS ISSUED ON 20-03-2006 FOR THE A.Y. 1999- 2000 WHICH WAS RECEIVED BY THE ASSESSEE ON 01-04-20 06. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F ACIT VS. RAJESH JAVERI STOCK BROKERS PVT. LTD. REPORTED IN 291 ITR 508 HE SUBMITTED THAT 143(1) ORDER IS NOT AN ORDER OF ASSESSMENT AND THER EFORE THERE BEING NO ASSESSMENT U/S.143(3) THE QUESTION OF CHANGE OF OPI NION DOES NOT ARISE. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO REPORTED IN 236 ITR 34 HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAI D HAS HELD THAT REASSESSMENT PROCEEDINGS INITIATED ON THE BASIS OF INFORMATION OBTAINED 61 ITA NOS.915 TO 920/PUN/2012 IN ASSESSMENT PROCEEDINGS FOR A SUBSEQUENT YEAR IS VALID. HE SUBMITTED THAT IN THE INSTANT CASE THE LD.CIT(A) HAS ALREADY HELD THAT ALL THE CONDITIONS NECESSARY FOR REOPENING OF THE ASSESSMEN T UNDER THE PROVISIONS OF SECTION 147 AND FOR ISSUE OF NOTICE U /S.148 ARE SATISFIED. THEREFORE, THE ORDER OF THE CIT(A) ON THIS BE UPHEL D. 99. SO FAR AS GROUND RELATING TO VALIDITY OF THE AS SESSMENT BECAUSE OF LIMITATION IS CONCERNED HE SUBMITTED THAT THE LD.CI T(A) HAS DISCUSSED THE ISSUE FROM PAGE 58 ONWARDS AND HAS GIVEN JUSTIF IABLE REASONS FOR SPECIAL AUDIT U/S.142(2A) OF THE ACT BASED ON THE O BJECTIVE SATISFACTION OF THE ASSESSING OFFICER AND THE CIT CENTRAL THAT THER E WAS COMPLEXITY IN THE BOOKS OF ACCOUNT AND THE TRANSACTIONS RECORDED IN THE VOLUMINOUS SEIZED DOCUMENTS AND THEREFORE THE REFERENCE MADE B Y THE ASSESSING OFFICER FOR SPECIAL AUDIT IN THE INTEREST OF THE RE VENUE DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. SO FAR AS THE ARGUMENT O F THE LD. COUNSEL FOR THE ASSESSEE THAT NO OPPORTUNITY WAS GIVEN BY THE A SSESSING OFFICER AND THEREFORE PRINCIPLE OF NATURAL JUSTICE HAS BEEN VIO LATED HE SUBMITTED THAT THE CIT CENTRAL HAS ALREADY GIVEN ADEQUATE OPPORTUN ITY TO THE ASSESSEE TO JUSTIFY AS TO WHY DIRECTIONS FOR SPECIAL AUDIT U /S.142(2A) SHOULD NOT BE GIVEN. SINCE IN THE INSTANT CASE CIT CENTRAL HAS A LREADY GIVEN ADEQUATE OPPORTUNITY AND THE ASSESSEE HAS RESPONDED TO THE S AME, THEREFORE, THE ASSESSEE NOW CANNOT TAKE SHELTER OF LIMITATION. 100. SO FAR AS THE GROUND RELATING TO ENTITLEMENT O F EXEMPTION U/S.10(23C)(VI) IS CONCERNED THE LD. DEPARTMENTAL R EPRESENTATIVE SUPPORTING THE ORDER OF THE CIT(A) ON THIS ISSUE SU BMITTED THAT THE ASSESSEE TRUST DOES NOT ENJOY THE STATUS OF AN APPR OVED INSTITUTION U/S.10(23C)(VI). THEREFORE, IN ABSENCE OF ANY APPR OVAL FROM THE PRESCRIBED AUTHORITY FOR THE ASSESSMENT YEARS 1999- 2000 TO 2004-05 THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF EXEMPTIO N ON ITS INCOME U/S.10(23C)(VI). 62 ITA NOS.915 TO 920/PUN/2012 101. SO FAR AS DENIAL OF EXEMPTION U/S.11 TO THE AS SESSEE TRUST IS CONCERNED HE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN VALID REASONS FOR DENYING THE SAME SINCE THE ASSESSEE HAS VIOLATED TH E PROVISIONS OF SECTION 13(1)(C). THE ASSESSING OFFICER AND THE CI T(A) HAVE CATEGORICALLY FOUND THAT THE FUNDS OF THE TRUST HAV E BEEN DIVERTED FOR THE BENEFIT OF THE TRUSTEES AND THEIR RELATIVES. HE SU BMITTED THAT THE TRUSTEES AND THEIR RELATIVES HAVE VISITED FOREIGN COUNTRIES WHICH IS IN NO WAY CONNECTED WITH THE ACTIVITIES OF THE ASSESSEE TRUST . THE VEHICLES OF THE TRUST HAVE BEEN USED FOR THE PERSONAL USE OF THE TR USTEES. THEREFORE, IN VIEW OF THE VIOLATION OF PROVISIONS OF SECTION 13(1 )(C), THE CIT(A) WAS FULLY JUSTIFIED IN DENYING EXEMPTION U/S.11 TO THE ASSESS EE TRUST. HE SUBMITTED THAT THE ASSESSEE TRUST IN THE INSTANT CA SE HAS RECEIVED DONATIONS IN LIEU OF ADMISSION. SUCH DONATIONS WER E SPLIT INTO DONATIONS OF SMALLER DENOMINATIONS AND MULTIPLE RECEIPTS WERE ISSUED TO THE DONORS WHO ARE NOT TRACEABLE. THE ASSESSEE ALSO EX PRESSED ITS INABILITY TO PROVIDE THE ADDRESS OR WHEREABOUTS OF THE PERSON S WHOSE NAME APPEAR AS DONORS. THE VARIOUS INSTANCES BROUGHT ON RECORD BY THE ASSESSING OFFICER AND CIT(A) CLEARLY SUGGEST THAT T HE ASSESSEE TRUST IS RUNNING THE INSTITUTIONS ON COMMERCIAL LINES WHICH INDICATES THAT THE ACTIVITY OF THE ASSESSEE IS A COMMERCIAL ACTIVITY W ITH PROFIT MOTIVE AND IT DOES NOT EXISTS SOLELY FOR CHARITY. THEREFORE, THE CIT(A) WAS FULLY JUSTIFIED IN DENYING THE EXEMPTION U/S.10(23C)/SECT ION 11 OF THE I.T. ACT. 102. SO FAR AS THE CORPUS DONATION IS CONCERNED HE SUBMITTED THAT THE PROVISIONS OF SECTION 11(1)(D) ARE NOT APPLICABLE S INCE THE ASSESSEE COULD NOT GIVE THE DETAILS OF WHEREABOUTS OF THE DO NORS AND THE DIRECTION OF THE DONORS THAT THE CONTRIBUTION SHALL FORM PART OF CORPUS OF THE TRUST. 103. SO FAR AS THE RELIANCE ON THE ORDER OF THE TRI BUNAL RESTORING REGISTRATION U/S.12A IS CONCERNED HE SUBMITTED THAT THE SAID ORDER RESTORING REGISTRATION CANNOT BE RELIED UPON IN VIE W OF THE DETAILED 63 ITA NOS.915 TO 920/PUN/2012 FINDINGS GIVEN BY THE ASSESSING OFFICER AND THE CIT (A). HE SUBMITTED THAT THE LD.CIT(A) AT PARA 17.3 ONWARDS HAS CLEARLY MENTIONED THAT THE OBSERVATIONS OF THE ITAT ON APPLICATION OF INCOME I N THE SAID ORDER ARE ONLY OBITER-DICTA AND THEREFORE DO NOT HAVE A BINDI NG FORCE. HE ACCORDINGLY SUBMITTED THAT THE ARGUMENTS ADVANCED B Y THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUES INVOLVED IN THE PR ESENT APPEAL, I.E. APPLICATION OF INCOME BY THE ASSESSEE AND VIOLATION OF PROVISIONS OF SECTION 13 WERE SETTLED IN VIEW OF DECISION OF THE ITAT, PUNE IN ASSESSEES OWN CASE AND THEREFORE SHOULD NOT HAVE B EEN RAISED AGAIN AND EXAMINED BY THE ASSESSING OFFICER HAS GOT NO ME RIT. 104. AS REGARDS THE EXPENDITURE INCURRED ON WORLD P EACE CENTRE AS PER GROUND OF APPEAL NO.7 IS CONCERNED HE SUBMITTED THAT THE LD.CIT(A) WHILE DISCUSSING THE ISSUE HAS CATEGORICALLY HELD T HAT THE EXPENDITURE INCURRED ON ACCOUNT OF WORLD PEACE ACTIVITIES IS NO T TOWARDS THE APPROVED OBJECTS OF THE TRUST. FURTHER THE WORLD P EACE ACTIVITIES AND THE EXPENDITURE INCURRED ABROAD IN NO WAY FURTHER THE I NTEREST/OBJECTS OF THE TRUST IN INDIA NOR CAN IT BE SAID THAT THE EXPENDIT URE WAS INCURRED SOLELY FOR EDUCATIONAL PURPOSES. HE SUBMITTED THAT WHEN T HE ASSESSEE CHANGED ITS OBJECTS THE ASSESSEE HAS ALSO NOT INTIM ATED THE SAME TO THE DEPARTMENT. NO CBDT PERMISSION WAS OBTAINED FOR IN CURRING EXPENDITURE ABROAD. THEREFORE, THERE IS CLEAR VIOL ATION OF PROVISIONS OF SECTION 11(3) SINCE THE INCOME HAS BEEN APPLIED FOR PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS PURPOSES. 105. SO FAR AS GROUND OF APPEAL NO.8 IS CONCERNED H E SUBMITTED THAT SINCE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF S ECTION 13, THEREFORE, THE CIT(A) WAS FULLY JUSTIFIED IN DENYING EXEMPTION U/S.11 ON THE ENTIRE INCOME OF THE ASSESSEE TRUST. 64 ITA NOS.915 TO 920/PUN/2012 106. SO FAR AS GROUND OF APPEAL NO.9 RELATING TO AD DITION OF UNEXPLAINED ENTRIES OF RS.37,72,249/- IS CONCERNED HE SUBMITTED THAT THE CIT(A) WAS FULLY JUSTIFIED IN SUSTAINING THE ADDITI ON IN ABSENCE OF ANY PROPER RECONCILIATION BY THE ASSESSEE ON THIS ISSUE . 107. SO FAR AS GROUND RELATING TO ADDITIONS MADE BY THE ASSESSING OFFICER U/S.43B, 40A(7) AND 40A(3) ETC. AND CONFIR MED BY THE CIT(A) IS CONCERNED HE SUBMITTED THAT SINCE THE INCOME THE AS SESSEE TRUST HAS BEEN ASSESSED LIKE ANY OTHER COMMERCIAL ORGANIZATIO N SUCH ADDITIONS AS PER THE FINDINGS OF THE SPECIAL AUDITOR IS JUSTIFIE D. 108. SO FAR AS ENHANCEMENT OF INCOME BY THE CIT(A) AS PER GROUND OF APPEAL NO.11 IS CONCERNED THE LD. DEPARTMENTAL REPR ESENTATIVE HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO TH E DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF AGAPPA CHILD CENTR E VS. CIT REPORTED IN 226 ITR 211 HE SUBMITTED THAT THE HONBLE HIGH C OURT IN THE SAID DECISION HAS HELD THAT CONCESSION IS NOT AVAILABLE WHERE PROPERTY OF THE TRUST HAS BEEN MADE AVAILABLE FOR USE OF PROHIBITED PERSON. THE PROPERTY INCLUDES MOVABLE PROPERTY. SINCE IN THE I NSTANT CASE THE ASSESSEE HAS ALLOWED THE USE OF ITS MOTOR CAR TO ON E OF THE TRUSTEES AND THE TRUSTEES AND THEIR FAMILY MEMBERS HAVE UNDERTAK EN FOREIGN TRIPS FOR WHICH THE FUNDS OF THE ASSESSEE TRUST HAS BEEN USED AND THE CHILDREN OF THE TRUSTEES AND THE EMPLOYEES WERE GIVEN CONCESSIO N IN EDUCATION THE TRUST HAS VIOLATED PROVISIONS OF SECTION 13(1)(C). HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BEING IN CON SONANCE WITH LAW SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSE SSEE FOR VARIOUS YEARS SHOULD BE DISMISSED. 109. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS 65 ITA NOS.915 TO 920/PUN/2012 CITED BEFORE US. GROUND OF APPEAL NO.1 WHICH IS CO MMON FOR ALL THE APPEALS RELATES TO VALIDITY OF REASSESSMENT PROCEED INGS. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THIS ISSUE ONLY FOR A.Y. 1999-2000 AND DID NOT PRESS THIS ISSUE FOR OTHER YEARS. THER EFORE, OUR FINDINGS ON THIS ISSUE ARE CONFINED ONLY TO A.Y. 1999-2000. 110. FROM THE COPY OF THE REASONS SUPPLIED BY THE A SSESSING OFFICER FOR REOPENING OF ASSESSMENT FOR A.Y. 1999-2000, THE CONTENTS OF WHICH HAVE ALREADY BEEN REPRODUCED AT PARA 50 OF THIS ORD ER, WE FIND THE REASON FOR SUCH REOPENING WAS THAT THE ASSESSEE HAS SHOWN INCOME FROM OTHER SOURCES TO THE TUNE OF RS.17,97,33,097/- WHICH INCLUDES RENT INCOME OF RS.1,92,34,679/-. SINCE THE OBJECTS OF T HE ASSESSEE TRUST IS TO RUN EDUCATIONAL INSTITUTION AND NOT TO GIVE THE PROPERTIES ON RENT, THEREFORE, THE RENTAL INCOME SHOULD HAVE BEEN TAXED AS INCOME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES/BUSINESS INCOME. HOWEVER, A PERUSAL OF TH E ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER IN THE SAID ORDER HAS NOT BROUGHT TO TAX SUCH RENTAL INCOME AS INCOME FROM HOUSE PROPER TY. NO ADDITION ON THIS ACCOUNT HAS BEEN MADE. UNDER SUCH CIRCUMST ANCES WE HAVE TO DECIDE AS TO WHETHER THE ASSESSING OFFICER CAN MAK E VARIOUS OTHER ADDITIONS WHEN NO ADDITION HAS BEEN MADE ON THE ISS UE ON WHICH THE ASSESSMENT WAS REOPENED. 111. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF JET AIRWAYS INDIA LTD. (SUPRA) HAS HELD THAT IF THE ASS ESSING OFFICER AFTER ISSUING A NOTICE U/S.148 ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAS ESCAPED ASSESSMENT, AS A MATTER OF FACT NOT ESC APED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSES SOME O THER INCOME. THE POWER TO ASSESS SUCH OTHER INCOME VESTS ON HIM ONLY IF INCOME REFERRED 66 ITA NOS.915 TO 920/PUN/2012 TO IN NOTICE OF REASSESSMENT HAS BEEN ISSUED. THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT READ AS UNDE R : 16. EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTE D BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR REASSESSM ENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTIC E WAS ISSUED UNDER SECTION 148 SETTING OUT THE REASONS FOR THE BELIE F THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HELD T HAT WHEN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROU ND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE ASSESS ING OFFICER COULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON AN OTHER ISSUE WHICH CAME TO HIS NOTICE DURING THE PROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLANATION 3 BY THE FINANCE ACT (NO. 2) OF 2009. H OWEVER, EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSI TY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTI ON 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EX PLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RE NDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFEC T THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS O F THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HO WEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE C ONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER O F FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY T O ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTI CE UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 17. WE HAVE APPROACHED THE ISSUE OF INTERPRETATION TH AT HAS ARISEN FOR DECISION IN THESE APPEALS, BOTH AS A MATTER OF FI RST PRINCIPLE, BASED ON THE LANGUAGE USED IN SECTION 147(1) AND ON TH E BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WITH THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT SECTION 147(1 ) AS IT STANDS POSTULATES THAT UPON THE FORMATION OF A REASON TO BELI EVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUC H INCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE PROCEEDINGS AS HAV ING ESCAPED ASSESSMENT. THE WORDS 'AND ALSO' ARE USED IN A CUMULATIVE AND CONJUNCTIVE SENSE. TO READ THESE WORDS AS BEING IN THE ALTERNATIVE WOULD BE TO REWRITE THE LANGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPPORTED BY THE BACKGROUND WHICH LED TO THE IN SERTION OF EXPLANATION 3 TO SECTION 147. PARLIAMENT MUST BE REGA RDED AS BEING AWARE OF THE INTERPRETATION THAT WAS PLACED ON THE W ORDS 'AND ALSO' BY THE RAJASTHAN HIGH COURT IN SHRI RAM SINGHS CASE ( SUPRA). PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DECISIO N. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITUDE OF ITS LEGISLATIVE POWERS TO DO SO, THE PROVISIONS OF SECTION 147(1) AS THEY STOOD AFTER THE AMENDMENT OF 1-4-1989 CONTINUE TO HOLD THE FIEL D. 67 ITA NOS.915 TO 920/PUN/2012 18. IN THAT VIEW OF THE MATTER AND FOR THE REASONS TH AT WE HAVE INDICATED, WE DO NOT REGARD THE DECISION OF THE TRIB UNAL IN THE PRESENT CASE AS BEING IN ERROR. THE QUESTION OF LAW SHAL L, ACCORDINGLY, STAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF T HE ASSESSEE. THE APPEAL IS, ACCORDINGLY, DISMISSED. THERE SHALL BE N O ORDER AS TO COSTS. 112. WE FIND THE HONBLE DELHI HIGH COURT IN THE CA SE OF RANBAXY LABORATORIES LTD.(SUPRA) HAS OBSERVED AS UNDER : 17. NOW, COMING BACK TO THE INTERPRETATION WHICH W AS GIVEN BY THE BOMBAY HIGH COURT TO SECTIONS 147 AND 148 IN VIEW OF THE PRECEDENT ON THE SUBJECT. THE COURT HELD AS UNDER:- 11. INTERPRETING THE PROVISION AS IT STANDS AND WITH OUT ADDING OR DEDUCTING FROM THE WORDS USED BY PARLIAMENT, IT IS CLE AR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 1 47 AND FOLLOWING THE ISSUANCE OF A NOTICE UNDER SECTION 148, THE ASSESSING OFFICER HAS THE POWER TO ASSESS OR REASSESS THE INCOME WHIC H HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTH ER INCOME CHARGEABLE TO TAX. THE WORDS AND ALSO' CANNO T BE IGNORED. THE INTERPRETATION WHICH THE COURT PLACES ON THE PRO VISION SHOULD NOT RESULT IN DILUTING THE EFFECT OF THESE WORDS OR R ENDERING ANY PART OF THE LANGUAGE USED BY PARLIAMENT OTIOSE. PARLIAMENT HAVING USED THE WORDS 'ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT', T HE WORDS 'AND ALSO' CANNOT BE READ AS BEING IN THE ALTER NATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO RE GARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGN IFICANCE THAT PARLIAMENT HAS NOT USED THE WORD 'OR'. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING THE WORD 'AND'. THE WORDS 'AN D' AS WELL AS 'ALSO' HAVE BEEN USED TOGETHER AND IN CONJUNCTION. EVIDENTLY, THEREFORE, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS 'AND ALSO' IS THAT THE ASSESSING OFFICER, UPON THE FORMAT ION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE O F A NOTICE UNDER SECTION 148(2) MUST ASSESS OR REASSESS: (I). 'SUCH INC OME'; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHI CH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN TH E COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE WORDS 'SUCH INCOME' REFER TO THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND IN RESPECT OF WHICH THE ASSESSING OFFICER HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT. HENCE, THE LANGUAGE WHICH HAS BEEN USED BY PARLIAMENT IS INDI CATIVE OF THE POSITION THAT THE ASSESSMENT OR REASSESSMENT MUST BE IN RESPE CT OF THE INCOME IN RESPECT OF WHICH HE HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING T HE COURSE OF THE PROCEEDINGS AS HAVING ESCAPED ASSESSMENT. IF THE IN COME, THE ESCAPEMENT OF WHICH WAS THE BASIS OF THE FORMATION OF THE REASON TO BELIEVE IS NOT ASSESSED OR REASSESSED, IT WOULD NOT BE OPEN TO THE ASSESSING OFFICER TO INDEPENDENTLY ASSESS ONLY THAT INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PR OCEEDINGS 68 ITA NOS.915 TO 920/PUN/2012 UNDER THE SECTION AS HAVING ESCAPED ASSESSMENT. IF UPON T HE ISSUANCE OF A NOTICE UNDER SECTION 148(2), THE ASSESSING OFFICER ACCEPTS THE OBJECTIONS OF THE ASSESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HIM TO ASSESS INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. PARLIAMENT WHEN IT ENACTED THE PROVI SIONS OF SECTION 147 WITH EFFECT FROM 1ST APRIL 1989 CLEARLY STIPULATED THAT THE ASSESSING OFFICER HAS TO ASSESSEE OR REASSESS THE INCOME WHI CH HE HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH CAME TO HIS NOT ICE DURING THE PROCEEDINGS. IN THE ABSENCE OF THE ASSESSMENT OR REASSESSMEN T THE FORMER, HE CANNOT INDEPENDENTLY ASSESS THE LATTER. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HA S TO ASSESSEE OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSM ENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCA PED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, I T IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. I F HE INTENDS TO DO SO, A FRESH NOTICE UNDER SECTION 148 WOU LD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN TH E EVENT OF A CHALLENGE BY THE ASSESSEE. 18. WE ARE IN COMPLETE AGREEMENT WITH THE REASONING OF THE DIVISION BENCH OF BOMBAY HIGH COURT IN THE CASE OF JA GANMOHAN RAO (SUPRA). WE MAY ALSO NOTE THAT THE HEADING OF SEC TION 147 IS INCOME ESCAPING ASSESSMENT AND THAT OF SECTION 148 ISSU E OF NOTICE WHERE INCOME ESCAPED ASSESSMENT. SECTIONS 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO SECTION 147. SUB- SECTION (2) OF SECTION 148 MANDATES REASONS FOR ISSUANCE OF NOTICE B Y THE ASSESSING OFFICER AND SUB-SECTION (1) THEREOF MANDATES SER VICE OF NOTICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEE DS TO ASSESS, REASSESS OR RECOMPUTE ESCAPED INCOME. SECTION 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR RE ASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. AS PER EXPLANATION (3) IF DURING THE COURSE OF THESE PROCEEDINGS THE ASSESSING OFFICER COME S TO CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEE DINGS AND THE NOTICE, HE WOULD BE COMPETENT TO MAKE ASSESSMENT OF TH OSE ITEMS. HOWEVER, THE LEGISLATURE COULD NOT BE PRESUMED TO HAV E INTENDED TO GIVE BLANKET POWERS TO THE ASSESSING OFFICER THAT ON ASSUM ING JURISDICTION UNDER SECTION 147 REGARDING ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQUIRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INC OME NOT CONNECTED OR RELATED WITH THE REASONS TO BELIEVE, ON THE BASIS OF WHICH HE ASSUMED JURISDICTION. FOR EVERY NEW ISSUE COMI NG BEFORE ASSESSING OFFICER DURING THE COURSE OF PROCEEDINGS OF ASSESSM ENT OR REASSESSMENT OF ESCAPED INCOME, AND WHICH HE INTENDS TO T AKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER SECTION 148. 69 ITA NOS.915 TO 920/PUN/2012 19. IN THE PRESENT CASE, AS IS NOTED ABOVE, THE ASSESSING O FFICER WAS SATISFIED WITH THE JUSTIFICATIONS GIVEN BY THE ASSESSEE RE GARDING THE ITEMS VIZ., CLUB FEES, GIFTS AND PRESENTS AND PROVISION F OR LEAVE ENCASHMENT, BUT, HOWEVER, DURING THE ASSESSMENT PROCEEDI NGS, HE FOUND THE DEDUCTION UNDER SECTION 80 HH AND 80-I AS CLAIMED BY THE ASSESSEE TO BE NOT ADMISSIBLE. HE CONSEQUENTLY WHILE N OT MAKING ADDITIONS ON THOSE ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., PROCEEDED TO MAKE DEDUCTIONS UNDER SECTION 80HH AND 80-I AND ACCORDINGLY REDUCED THE CLAIM ON THESE ACCOUNTS. 20. THE VERY BASIS OF INITIATION OF PROCEEDINGS FOR WH ICH REASONS TO BELIEVE WERE RECORDED WERE INCOME ESCAPING ASSESSMENT IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., BUT TH E SAME HAVING NOT BEEN DONE, THE ASSESSING OFFICER PROCEEDED TO REDUC E THE CLAIM OF DEDUCTION UNDER SECTION 80 HH AND 80-I WHICH AS P ER OUR DISCUSSION WAS NOT PERMISSIBLE. HAD THE ASSESSING OFFICER PROCEEDED NOT TO MAKE DIS-ALLOWANCE IN RESPECT OF TH E ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., THEN IN VIEW OF OUR DI SCUSSION AS ABOVE, HE WOULD HAVE BEEN JUSTIFIED AS PER EXPLANATION 3 TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTION 80 HH AND 80-I AS W ELL. 21. IN VIEW OF OUR ABOVE DISCUSSIONS, THE TRIBUNAL WAS R IGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASSESS ISSUES OTHER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDIN GS ARE INITIATED BUT HE WAS NOT SO JUSTIFIED WHEN THE REASONS F OR THE INITIATION OF THOSE PROCEEDINGS CEASED TO SURVIVE. CONSE QUENTLY, WE ANSWER THE FIRST PART OF QUESTION IN AFFIRMATIVE IN FA VOUR OF REVENUE AND THE SECOND PART OF THE QUESTION AGAINST THE REVENU E. 22. THE PRESENT APPEAL IS ACCORDINGLY ALLOWED. 113. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SHRI VISHWAKALYAN JIVRAKSHA PRATISHTHAN (SUPRA) WHILE DE CIDING AN IDENTICAL ISSUE, FOLLOWING THE DECISION OF HONBLE BOMBAY HIG H COURT IN THE CASE OF JET AIRWAYS INDIA LTD. (SUPRA) HAS HELD THAT WHE N ADDITION HAS BEEN MADE FOR REASONS DIFFERENT FROM WHAT HAS BEEN COMMU NICATED TO THE ASSESSEE AND NO ADDITION HAS BEEN MADE ON THE GROUN D FOR WHICH THE ASSESSING OFFICER HAD REASON TO BELIEVE FOR REOPE NING OF ASSESSMENT, THE REASSESSMENT PROCEEDINGS ARE INVALID. THE VAR IOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE CASE OF THE ASSESSEE. THE VARIOUS DECISIONS RELIED ON BY T HE LD. DEPARTMENTAL REPRESENTATIVE ARE NOT APPLICABLE TO THE FACTS OF T HE PRESENT CASE AND ARE DISTINGUISHABLE, AS IN NONE OF THOSE CASES THE VALIDITY OF REASSESSMENT PROCEEDING WAS CHALLENGED ON THE GROUN D THAT ADDITIONS 70 ITA NOS.915 TO 920/PUN/2012 WERE MADE ON THE GROUNDS OTHER THAN THE GROUNDS ON WHICH THE ASSESSMENTS WERE REOPENED ON THE BASIS OF REASON TO BELIEVE BY THE ASSESSING OFFICER. SINCE IN THE INSTANT CASE THE A SSESSING OFFICER HAS NOT MADE ANY ADDITION ON THE ISSUE ON WHICH HE HAD REOPENED THE ASSESSMENT AND SOME OTHER ADDITIONS WERE MADE, THER EFORE, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF JET AIRWAYS INDIA LTD. (SUPRA) AND THE VARIOUS OTHER DECISIONS CITED (SUPRA) WE HOLD THAT THE REASSESSMENT PROCEEDINGS FOR THE A.Y. 1999 -2000 ARE BAD IN LAW. GROUND OF APPEAL NO.1 BY THE ASSESSEE IS ACCO RDINGLY ALLOWED. 114. SINCE THE ASSESSEE SUCCEEDS ON THE PRELIMINARY GROUND AS PER GROUND OF APPEAL NO.1 FOR A.Y. 1999-2000, THEREFORE , THE OTHER GROUNDS HAVE BECOME ACADEMIC IN NATURE AND THEREFOR E THESE ARE NOT BEING DISCUSSED. ITA NO.915/PUN/2012 BY THE ASSESS EE IS ACCORDINGLY ALLOWED. 115. GROUND OF APPEAL NO.2 WHICH IS COMMON FOR ALL THE YEARS RELATES TO VALIDITY OF THE REASSESSMENT PROCEEDINGS ON THE ISSUE OF LIMITATION IN VIEW OF THE ILLEGAL ORDER FOR SPECIAL AUDIT U/S.142 (2A). HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE RESTRICTED HIS ARGUMENTS F OR A.Y. 1999-2000 AND 2000-2001 ONLY AND DID NOT PRESS THIS GROUND FO R OTHER YEARS. ACCORDINGLY, THIS GROUND FOR OTHER YEARS ARE DISMIS SED. SINCE WE HAVE ALREADY HELD IN THE PRECEDING PARAGRAPHS THAT THE O RDER FOR A.Y. 1999- 2000 IS VOID, THEREFORE, WE CONFINE OUR DISCUSSION ON THIS ISSUE ONLY FOR A.Y. 2000-2001. 116. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT WHILE DIRECTING FOR SPECIAL AUDIT U/S.142(2A) OF TH E I.T. ACT FOR A.YRS. 1999-2000, 2000-01 AND 2005-06 THE ASSESSING OFFICE R HAD NOT GIVEN OPPORTUNITY OF BEING HEARD AS PER THE PROVISO TO SE CTION 142(2A) AND ONLY THE LD.CIT HAS GIVEN THE OPPORTUNITY. THEREFO RE, IN VIEW OF THE 71 ITA NOS.915 TO 920/PUN/2012 DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA JESH KUMAR (SUPRA) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN TH E CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) THE ORDER U/S. 142(2A) IS ILLEGAL AND INVALID AND THEREFORE, THE LIMITATION FOR ASSESSMEN T COULD NOT BE EXTENDED IN VIEW OF THE ILLEGAL ORDER U/S.142(2A). IT IS ALSO HIS SUBMISSION THAT THE ASSESSMENTS FOR A.YRS. 1999-200 0, 2000-01 AND 2005-06 WERE GETTING TIME BARRED IN VIEW OF SECOND PROVISO TO SECTION 153(2) ON 31-12-2007 WHEREAS THE ASSESSMENT ORDER I S DATED 08-08-2008. THEREFORE, SUCH ASSESSMENT ORDERS ARE TIME BARRED AND THEREFORE ARE VOID. 117. WE FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE ASSESSME NT ORDER FOR A.Y. 2000-01 IS DATED 08-08-2008. IT IS ALSO AN ADMITTE D FACT THAT THE ASSESSING OFFICER WHILE DIRECTING FOR SPECIAL AUDIT U/S.142(2A) HAS NOT GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSE E AND THE OPPORTUNITY OF BEING HEARD WAS GRANTED ONLY BY THE LD. CIT CENTRAL WHO HAS PASSED A DETAILED ORDER DATED 05-12-2007 GRANTI NG APPROVAL ON THE REFERENCE BY THE ASSESSING OFFICER FOR SPECIAL AUD IT U/S.142(2A). UNDER THESE CIRCUMSTANCES WE HAVE TO SEE WHERE THE ASSESS ING OFFICER BEFORE SENDING A PROPOSAL FOR CONDUCTING SPECIAL AUDIT U/S .142(2A) OF THE ACT HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN VIEW OF THE PROVISO TO SECTION 142(2A) OF THE ACT, WHETH ER THE SAID PROPOSAL MADE WITHOUT AFFORDING PREDECISIONAL HEARING TO THE ASSESSEE WAS VALID AND CAN THE PROCEEDINGS CONDUCTED THEREAFTER BE HEL D TO BE VITIATED. 118. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. VILSONS PAR TICLE BOARD INDUSTRIES LTD. AND VICE VERSA. WE FIND THE TRIBUNAL IN ITA N O.447/PN/2013, ITA NOS. 309 & 310/PN/2013 AND ITA NOS. 448 & 449/PN/20 13 VIDE ORDER 72 ITA NOS.915 TO 920/PUN/2012 DATED 21-12-2016 AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH KUMAR AND OTHERS (SUPRA ) AND VARIOUS OTHER DECISIONS HAS HELD THAT WHERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT U/S.142(2A) OF THE ACT AND SUCH OPPORTUNITY WAS GIV EN ONLY BY THE CIT BEFORE APPROVAL FOR SUCH SPECIAL AUDIT, SUCH ASSESS MENT IS VITIATED BECAUSE OF NON-COMPLIANCE OF PRINCIPLE OF NATURAL J USTICE. HENCE THE LIMITATION FOR CONCLUSION OF ASSESSMENT CANNOT BE E XTENDED FOR SUCH ILLEGAL ORDER U/S.142(2A). THE RELEVANT OBSERVATIO N OF THE TRIBUNAL FROM PARA 40 ONWARDS OF THE ORDER READ AS UNDER : 40. THE QUESTION WHICH ARISES FOR ADJUDICATION BEFO RE US IS THAT IN THE PRESENT SET OF FACTS, WHERE THE ASSESSING OFFICER BEFORE SENDING A PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT HAS NOT GIVEN AN OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND IN VIEW OF THE PROVISO TO SECTION 142(2A ) OF THE ACT, IS THE SAID PROPOSAL MADE WITHOUT AFFORDING PRE-DECISIO NAL HEARING TO THE ASSESSEE VALID AND CAN THE PROCEEDINGS CONDUCTED THEREAFTER BE HELD TO BE VITIATED IN LAW. THE HON'BLE SUPREME COURT IN THREE JUDGE DECISION IN SAHARA INDIA (FIRM) VS. CIT AND ANO THER (SUPRA) HAD DECIDED THE ISSUE OF SHOW CAUSE NOTICE TO BE GIVEN ON PRE- DECISIONAL STAGE AND POST-DECISIONAL STAGE OF STARTING TH E PROCEEDINGS UNDER SECTION 142(2A) OF THE ACT AND HAD ALSO REFERRED TO THE EARLIER DECISION OF APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA). THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT ARE THAT THE PRINCIPLE OF AUDI ALTERAM PARTEM CANNOT BE IGNORED EVEN AT THE STAGE OF PRE-DECISIONAL HEARING. IN OTHER WORDS, IN CASE THE ASSESSING OFFICER IS OF THE VIEW THAT HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND INTERESTS OF REVENUE, IT IS NECESSARY TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT , WITH PREVIOUS APPROVAL OF PRINCIPAL CHIEF COMMISSIONER, TH EN HE CAN DO SO. HOWEVER, THE PROVISO INSERTED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007 HAS VERY CATEGORICALLY PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNT S SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY OF BEING HEARD. IN OTHER WORDS, THE PRINCIPLES OF NATURAL JUSTICE THAT A PERSON COULD NOT BE CONDEMNED UNHEARD, HAVE BEEN INCORPORATED IN SECT ION ITSELF W.E.F. 01.06.2007. THE APEX COURT IN RAJESH KUMAR AN D OTHERS VS. DCIT (SUPRA) HAD DELIBERATED ON THE PROVISIONS OF THE ACT BEFORE INSERTION OF SAID PROVISO BUT HAD LAID DOWN THE PROPOSI TION THAT NOBODY COULD BE UNHEARD EVEN AT THE STAGE OF FORMING AN OPINION THAT IN VIEW OF THE NATURE AND COMPLEXITY OF ACCOUN TS AND INTEREST OF REVENUE, SPECIAL AUDIT IS TO BE CONDUCTED UNDER SECTIO N 142(2A) OF THE ACT. THE APEX COURT IN SAHARA INDIA (FIRM) VS. C IT AND ANOTHER (SUPRA) HAVE UPHELD THE SAID PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT AND HAS ALSO TAKEN NOTE OF THE AMENDMEN T W.E.F. 01.06.2007 AND HAVE HELD THAT THE PRINCIPLES OF NATU RAL JUSTICE HAVE TO BE FULFILLED EVEN AT THE PRE-DECISIONAL STAGE. IN CONCLUSION, THE 73 ITA NOS.915 TO 920/PUN/2012 APEX COURT DIRECTED THAT THE SAID PROPOSITION WOULD B E APPLICABLE PROSPECTIVELY. THE CASE OF THE ASSESSEE BEFORE US RELATE S TO THE PERIOD WHICH IS PROSPECTIVE TO THE DECISION OF THE APE X COURT AND IS ALSO AFTER INSERTION BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. REASONABLE OPPORTUNITY OF BEING HEARD ON PRE-DECISION AL STAGE TO BE ALLOWED BY THE ASSESSING OFFICER TO THE ASSESSEE WAS ON STAT UTE WHEN THE PROCEEDINGS WERE TAKEN UP AGAINST THE ASSESSEE. HOWEVER, AS THE FACTS REVEAL BEFORE SUBMITTING THE PROPOSAL DATE D 11.09.2008 FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT TO THE CIT(C), NO OPPORTUNITY OF HEARING WAS GIVEN TO THE A SSESSEE. THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFFICER HAS TO GIVE FINDING THAT THERE IS COMPLEXITY OF ACCOUNTS AND THE INTERESTS OF REVENUE WOULD BE AFFECTED, AND IN SUCH CIRCUMSTANCES, SHOW CAUSE NOTICE NEEDS TO BE GIVEN TO THE ASSESSEE TO EXPLAIN ITS C ASE. WHERE THE ASSESSEE WAS ABLE TO EXPLAIN THE NATURE OF ENTRIES AN D ALSO JUSTIFY THAT THE SAME ARE NOT COMPLEX, THEN THERE IS NO NEED TO PUT THE ASSESSEE TO SUCH HARDSHIP OF CONDUCTING SPECIAL AUDIT. THE ASSESSING OFFICER HAVING FAILED TO GIVE ANY OPPORTUNITY OF HE ARING TO THE ASSESSEE BEFORE MAKING THE PROPOSAL FOR CONDUCTING SPECIA L AUDIT UNDER SECTION 142(2A) OF THE ACT AT THE PRE-DECISIONA L STAGE, THEN SUCH PROPOSAL MADE BY THE ASSESSING OFFICER TO THE CIT(C) , PUNE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND SUFFERS FROM INFIRMITY. THE CASE OF REVENUE BEFORE US IS THAT THE CIT(C), PUNE BEFORE PASSING HIS ORDER OF GIVING PERMISSION TO THE ASSESSING OFF ICER TO ASK THE ASSESSEE TO GET THE SPECIAL AUDIT CONDUCTED HAD GIVE N FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ROLE OF CIT (C) IS THE ROLE OF APPROVING AUTHORITY. THE ROLE IS NOT THAT OF ADJU DICATING AUTHORITY WHICH HAD TO BE CARRIED OUT BY THE ASSESSING OFFICER. THE ADJUDICATING AUTHORITY IN THE PRESENT SET OF FACTS HAS FAILED TO GIVE ANY OPPORTUNITY TO THE ASSESSEE BEFORE MAKING PROPOSAL F OR SPECIAL AUDIT AND THE OPPORTUNITY ALLOWED BY THE APPROVING AUTHORITY, WHO IN ANY CASE IS ENSHRINED WITH THE DUTIES OF CHECKING WHETHER THERE IS NO ARBITRARINESS IN FUNCTIONING OF ADJUDICATING AUTHO RITY, HAS TO BE SATISFIED BEFORE GIVING APPROVAL. HENCE, THE OPPORTUN ITY ALLOWED BY THE CIT(C), PUNE AFTER PROPOSAL WAS MADE BY THE ADJUD ICATING AUTHORITY DOES NOT ABSOLVE THE NON-ALLOWANCE OF REASON ABLE OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER. 41. APPLYING THE PRINCIPLES LAID DOWN BY THE APEX C OURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA), WE H OLD THAT WHERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAK ING THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, IN THE PRESENT CASE AND THE CIT HAVING APPRO VED THE SAID PROPOSAL THOUGH AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE IS VITIATED BECAUSE OF NON-COMPLIANCE WITH THE PRINCI PLES OF NATURAL JUSTICE. ACCORDINGLY, THE ASSESSMENT ORDER PASSED IN THE F ACTS OF PRESENT CASE IS BEYOND THE PERIOD OF LIMITATION AND HE NCE, THE SAME IS INVALID AND BAD IN LAW. 42. ANOTHER POINT RAISED BY BOTH THE AUTHORITIES WAS IN RESPECT OF EXTENSION GRANTED. WE ARE NOT GOING INTO THE SAID FA CTUAL ASPECTS, IN VIEW OF OUR HOLDING THAT THE INITIAL ORDER AT THE P RE-DECISIONAL STAGE PASSED BY THE ASSESSING OFFICER WITHOUT SHOW CAUSING THE ASS ESSEE AS TO WHETHER ANY SPECIAL AUDIT SHOULD BE CONDUCTED IN HIS CASE UNDER SECTION 142(2A) OF THE ACT IS BAD IN LAW. HENCE , CONSEQUENTIAL ORDERS OF EXTENSION, IF ANY BECOME OF NO CONSEQUENCE. SINCE, WE HAVE DECIDED THE JURISDICTIONAL ISSUE ON MERITS, THE O THER GROUNDS OF APPEAL BECOMES ACADEMIC. 74 ITA NOS.915 TO 920/PUN/2012 119. SINCE IN THE INSTANT CASE THE ASSESSING OFFICE R HAS NOT GIVEN ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE D IRECTING HIM TO GET ITS ACCOUNTS AUDITED U/S.142(2A) AND SUCH OPPORTUNI TY WAS GRANTED ONLY BY THE CIT, THEREFORE, THE LIMITATION FOR COMPLETIO N OF ASSESSMENT CANNOT BE EXTENDED IN VIEW OF SAID ILLEGAL ORDER PASSED U/ S.142(2A). SINCE THE ASSESSMENT IN THE INSTANT CASE WAS GETTING TIME BAR RED UNDER SECOND PROVISO TO SECTION 153(2) ON 31-12-2007 AND SINCE T HE ASSESSING OFFICER HAS PASSED THE ORDER ON 08-08-2008, THEREFO RE, THE ASSESSMENT ORDER PASSED U/S.143(3)/147 FOR THE IMPUGNED A.Y. 2 000-2001 IS BARRED BY LIMITATION AND ACCORDINGLY THE SAME IS VOID AND ILLEGAL. GROUND OF APPEAL NO.2 FOR A.Y. 2000-2001 BY THE ASSESSEE IS A CCORDINGLY ALLOWED. 120. SINCE THE ASSESSEE SUCCEEDS ON THIS TECHNICAL GROUND, THE OTHER GROUNDS FOR A.Y. 2000-20001 HAVE BECOME ACADEMIC IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. THE APPEAL FILED BY THE ASSESSEE FOR A.Y. 2000-2001 IS ACCORDINGLY ALLOWED. 121. THE NEXT ISSUE THAT IS COMMON FOR ALL THE YEAR S IS GROUND OF APPEAL NO.3. THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS GROUND FOR ALL THE YEARS IS GENERAL IN NATURE. ACC ORDINGLY, THE SAME NEED NOT BE ADJUDICATED. 122. SO FAR AS GROUND OF APPEAL NO.4 IS CONCERNED WHICH IS COMMON FOR ALL THE YEARS, THE SAME RELATES TO DENIAL OF EX EMPTION U/S.10(23C)(VI) OF THE I.T. ACT. 123. AFTER HEARING BOTH THE SIDES, WE FIND FROM PAG E 88 OF THE PAPER BOOK NO.1 THAT THE CBDT VIDE ORDER DATED 09-03-2004 HAD GRANTED APPROVAL U/S.10(23C)(VI) FOR A.Y. 1999-2000 TO 2001 -02 SUBJECT TO CERTAIN CONDITIONS AS MENTIONED THEREIN. WE FIND SU BSEQUENTLY THE DGIT (INVESTIGATION), PUNE WITHDREW THIS EXEMPTION AND T HE ASSESSEE FILED A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT ON THE GROUND THAT 75 ITA NOS.915 TO 920/PUN/2012 THE EXEMPTION GRANTED BY THE CBDT CANNOT BE WITHDRA WN BY THE DGIT. WE FIND THE HONBLE BOMBAY HIGH COURT IN WRIT PETIT ION NO.7708/2008 VIDE ORDER DATED 28-07-2009, COPY OF WHICH IS PLACE D AT PAGES 89 TO 100 OF THE PAPER BOOK NO.1, ALLOWED THE WRIT PETITION F ILED BY THE ASSESSEE. SUBSEQUENTLY, THE REVENUE APPROACHED THE HONBLE SU PREME COURT AND THE HONBLE SUPREME COURT VIDE ORDER DATED 04-10-20 10 DISMISSED THE SLP FILED BY THE REVENUE. COPY OF ORDER OF HONBLE SUPREME COURT IS PLACED AT PAGE 102 OF THE PAPER BOOK NO.1. WE FIND SUBSEQUENTLY THE CBDT VIDE ORDER DATED 30-01-2012, COPY OF WHICH IS PLACED AT PAGES 103 TO 106 OF THE PAPER BOOK NO.1, WITHDREW THE EXE MPTION FOR A.YRS. 1999-2000 TO 2001-02. ALTHOUGH THE ASSESSEE HAS FI LED A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT, HOWEVER, THE SAME IS PENDING AS ON DATE. THEREFORE, IN ABSENCE OF ANY APPROVAL U/S.10(23C)(VI) AS ON THE DATE FOR THE A.YRS. 1999-2000 TO 2001-02 AND FO R SUBSEQUENT ASSESSMENT YEARS WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSEE TRUST IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(VI) OF THE I.T. ACT. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE FOR ALL THE YEARS IS DISMISS ED. 124. GROUND OF APPEAL NO.7 WHICH IS COMMON FOR ALL THE YEARS RELATES TO ALLOWABILITY OF EXPENDITURE ON WORLD PEACE CENTR E. 125. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSE SSEE HAS INCURRED VARIOUS EXPENSES ON TOUR AND TRAVEL OF THE TRUSTEES , OFFICIALS, FACULTIES OF THE TRUST FOR ATTENDING VARIOUS SEMINARS ON WORLD P EACE ACTIVITIES ABROAD. SOME OF THE SEMINARS ARE ARRANGED BY THE A SSESSEE TRUST ALSO. ACCORDING TO THE ASSESSING OFFICER THIS ACTIVITY DO ES NOT FALL IN THE CATEGORY OF EDUCATION FOR WHICH THE ASSESSEE TRUST WAS SET UP. IT IS ALSO HIS ALLEGATION THAT THE ACTIVITY OF WORLD PEACE CEN TRE IS NOT AN EDUCATIONAL ACTIVITY. FURTHER, THE ASSESSEE HAS AM ENDED THE TRUST DEED 76 ITA NOS.915 TO 920/PUN/2012 BUT HAS NOT INTIMATED SUCH AMENDMENT TO THE ASSESSI NG OFFICER. IT IS ALSO THE ALLEGATION OF THE ASSESSING OFFICER THAT E XPENDITURE INCURRED ABROAD FOR SUCH ACTIVITY IS NOT AN ALLOWABLE EXPEND ITURE. HE ACCORDINGLY DENIED THE EXEMPTION U/S.11 OF THE I.T. ACT TO THE TRUST. WE FIND IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER. 126. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT THE OBJECT OF WORLD PEACE CENTRE IS VERY MUCH A PART OF THE EDUCATIONAL OBJECT FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP . EVEN IF THE OBJECT WAS NOT INTRODUCED SEPARATELY STILL SUCH ACTIVITY C OULD BE A PART OF THE OBJECTS OF THE ASSESSEE. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE WAS NOT AWARE THAT AMENDMENT TO THE TRUST DEED WAS REQUIRED TO BE INTIMATED TO THE ASSESSING OFFICER, THE ASSESSEE DID NOT INTIMATE THE AMENDMENT TO ASSESSIN G OFFICER. HOWEVER, FAILURE TO INTIMATE SUCH AMENDMENT IN THE TRUST DEED DOES NOT CALL FOR CANCELLATION OF THE REGISTRATION OR DENIAL OF EXEMPTION. IT IS ALSO HIS SUBMISSION THAT EXPENDITURE ON ARRANGING THE CO NFERENCE IN GENEVA DOES NOT MEAN THAT THE EXPENDITURE IS INCURRED ABRO AD ON THE OBJECTS OF THE TRUST. 127. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSE SSEE IN THE PAPER BOOK WE FIND THE ASSESSEE HAS GIVEN THE DETAILS OF EVENTS WITH DATE AND VENUE, SPEAKERS, SUBJECTS AND THE PARTICIPANTS. WE FIND THE ASSESSEE IN HIS LETTER ADDRESSED TO THE CIT (A) VIDE LETTER DATED 28-01-2011 HAS GIVEN A NOTE ON THE ACTIVITIES OF WORLD PEACE CENTR E STATING THAT THE ACTIVITIES OF VISHWA SHANTI KENDRA AND WORLD PEACE CENTRE ARE EDUCATIONAL IN NATURE. THE RELEVANT PORTION OF THE SAID LETTER READS AS UNDER : 77 ITA NOS.915 TO 920/PUN/2012 IV. WORLD PEACE CENTRE (WPC) WORLD PEACE, CENTRE (WPC) OF MAEER IS AN UMBRELLA UN DER WHICH PROGRAMMES ARE CONDUCTED WHICH ARE COMMON, TO SCHOOLS AND COLLEGES OF' THE TRUST. THE BENEFIT OF THESE PROGRAMME S IS ALSO AVAILED BY THE OTHER EDUCATIONAL INSTITUTIONS. AS THE EDUCATION SHOULD INCLUDE INTELLECTUAL; MORAL AND SOCIAL INSTRUCT IONS', THE ACTIVITIES OF WPC ARE DESIGNED TO COVER THE REQUIREME NTS OF 'STANDARDS AND NORMS' SET BY AICTE/UNIVERSITY THE ACTIV ITIES OF WPC HAVE BEEN RECOGNISED AS EDUCATIONAL BY THE GOVERN MENT OF INDIA/UNESCO, WHICH HAVE SANCTIONED GRANTS FOR SUCH PROGRAMMES. THE OBJECT OF WPC IS TO PROMOTE THE CAUSE OF PROTECTION OF HUMAN RIGHTS, CULTURE OF PEACE AND DEM OCRATIC VALUES THROUGH VALUE BASED EDUCATION AND TRAINING TO THE STUDENTS COMMUNITY INCLUDING THE STUDENTS OF THE INSTITUTIONS R UN BY THE TRUST AND ALSO THE SOCIETY AT LARGE. V. WORLD PEACE UNIVERSITY IT IS WORTH NOTING THAT WORLD OVER THERE ARE A LARGE NUMBER OF INSTITUTIONS AND UNIVERSITIES CONDUCTING VARIOUS PROGRAM MES IN PEACE STUDIES AND PEACE RESEARCH, HUMAN RIGHTS EDUCATI ON IN ADDITION TO THE EDUCATION AND RESEARCH PROGRAMMES IN THE FIELDS OF ARTS, SCIENCE, COMMERCE, ENGINEERING, MEDICAL MANAGE MENT, SOCIAL STUDIES ETC. TO NAME A FEW PEACE UNIVERSITIES IN THE WORLD : (A) WORLD PEACE RESEARCH UNIVERSITY MEDICAL WORLD PEACE RESEARCH UNIVERSITY FACULTIES PHILOSOPHY, MEDICAL S CIENCES, MUSIC, MUSICOLOGY, ETC. (B) WORLD PEACE UNIVERSITY, COSTA RICA, USA UNDER THE U NESCO PROGRAMME (C) UNITED NATIONS PEACE UNIVERSITY, SRI LANKTA (D) UNIVERSITY OF WORLD PEACE, WASHINGTON (E) EUROPEAN INTERNATIONAL UNIVERSITY FOR WORLD PEACE (F) GLOBAL OPEN UNIVERSITY FOR WORLD PEACE, ITALY (G) BERKLEY CENTER FOR RELIGION, PEACE AND WORLD AFFAIR S (H) ROTARY WORLD PEACE FELLOWSHIP (I) INTERNATIONAL PEACE UNIVERSITY, SOUTH AFRICA THE TRUST HAS SUBMITTED A PROPOSAL TO UNIVERSITY GRANTS COMMISSION (UGC), NEW DELHI FOR THE ESTABLISHMENT OF MA EERS MIT WORLD PEACE UNIVERSITY ON THE SAME LINES. APPROVAL FROM THE UGC IS AWAITED. 78 ITA NOS.915 TO 920/PUN/2012 VI. ACTIVITIES OF WPC ARE PURELY EDUCATIONAL IN THIS CONTEXT, IT HAS TO BE EMPHATICALLY STATED TH AT THE REAL EDUCATION IS ONE WHICH MAKES A STUDENT SOCIALLY RELEVAN T. FOR THIS PURPOSE, HIS GREATER INTERFACE WITH THE SOCIETY IS REQU IRED AND BESIDES, THE EDUCATION SHOULD ALSO DEVELOP THE KNOWLEDG E, SKILL AND CHARACTER OF THE STUDENTS. IT MAY ALSO BE STATED I N THIS CONTEXT THAT THE EDUCATION IN ITS TRUE SENSE, MUST BE SO ORIENT ED, AS TO ENCOURAGE HUMAN VALUES, WHICH GO INTO MAKING A GOOD HUMAN BEING, A GOOD HUMAN SOCIETY AND A GOOD LIFE. OTHERWI SE OUR EDUCATIONAL INSTITUTIONS WOULD BE PRODUCING ONLY EDUC ATED ILLITERATES, WITHOUT ACQUIRING ANY MORAL, ETHICAL AN D SPIRITUAL VALUES. 128. FROM THE COPY OF THE SCHEME OF FINANCIAL ASSIS TANCE FOR STRENGTHENING EDUCATION IN HUMAN VALUES FORMULATED BY GOVERNMENT OF INDIA, MINISTRY OF HUMAN RESOURCES DEVELOPMENT, DEP ARTMENT OF SECONDARY AND HIGHER SECONDARY EDUCATION, COPY OF W HICH IS PLACED AT PAGES 624 TO 647 OF PAPER BOOK NO.3 THE CONDITION F OR GRANT IS GIVEN WHICH THE ASSESSEE TRUST HAS FULFILLED. SIMILARLY, THE 11 TH PLAN GUIDELINES FOR HUMAN RIGHTS EDUCATION ISSUED BY UGC, COPY OF W HICH IS PLACED AT PAGES 648 TO 658 OF PAPER BOOK NO.3, GIVES THE DETA ILS OF FINANCIAL SUPPORT FOR THE ACTIVITIES FOR PROMOTION OF HUMAN R IGHTS STANDARDS, SOCIAL CONCERNS AND HUMAN DEVELOPMENT FOR RESEARCH, TEACHING ETC. THE SYLLABUS AND SAMPLE QUESTIONS ON THE SUBJECT OF HUMAN RIGHTS AND DUTIES ISSUED BY THE UGC, COPY OF WHICH IS PLACED A T PAGES 659 TO 663 OF PAPER BOOK NO.3 AND THE AGREEMENT BETWEEN UNESCO AND THE ASSESSEE FOR ESTABLISHING UNESCO CHAIR AT WORLD PEA CE CENTRE, COPY OF WHICH IS PLACED AT PAGES 664 TO 668 OF PAPER BOO K NO.3 CLEARLY SHOW THAT THE OBJECTS OF WORLD PEACE CENTRE ARE EDUCATIO NAL IN NATURE. 129. WE FIND FORM THE DETAILS FURNISHED BY THE ASSE SSEE IN THE PAPER BOOK AT PAGES 1100 OF PAPER BOOK NO.5 AND FREE ENGL ISH TRANSLATION AT PAGE 1101 THAT IN THE MINUTES OF STATE CABINET MEET ING DATED 04-08- 2016 A DECISION WAS TAKEN TO GIVE PERMISSION TO THE BILL TO ESTABLISH THE SELF-FINANCED DR. VISHWANATH KARAD MIT WORLD PEACE UNIVERSITY, PUNE. SIMILARLY, HIGHER EDUCATION DEPARTMENT OF GOVERNMEN T OF ANDHRA 79 ITA NOS.915 TO 920/PUN/2012 PRADESH VIDE LETTER DATED 23-11-2016 COPY OF WHICH IS PLACED AT PAGE1 1002 OF PAPER BOOK NO.5 HAS ACCEPTED THE PROPOSAL G IVEN BY THE MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH TO ESTABLISH THE PROPOSED GREENFIELD PRIVATE UNIVERSIT Y AT VISAKHAPATNAM. ALTHOUGH THESE DOCUMENTS ARE ADDITIONAL EVIDENCES F ILED BY THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARI NG, HOWEVER, THESE EVIDENCES BEING GOVERNMENT DOCUMENTS OF THE RECENT PAST WHICH WERE NOT AVAILABLE AT THE TIME OF HEARING OF THE APPEAL PROCEEDINGS ARE ADMITTED FOR WHICH SEPARATE APPLICATION IS FILED. THESE DOCUMENTS CONCLUSIVELY SHOW THAT THE ACTIVITIES OF WORLD PEAC E CENTRE IS EDUCATION IN NATURE. FROM THE VARIOUS DETAILS FURNISHED BY T HE ASSESSEE IN THE PAPER BOOK WE FIND SOME OF THE SEMINARS WERE EVEN F INANCED BY THE UGC. WE, THEREFORE, FIND MERIT IN THE SUBMISSION O F THE LD. COUNSEL FOR THE ASSESSEE THAT THE WORLD PEACE STUDIES CONDUCTED BY THE ASSESSEE CONSTITUTE A PART OF EDUCATION SO FAR AS THE TRUST IS CONCERNED AND THE ACTIVITIES ARE CHARITABLE IN NATURE. THE ASSESSING OFFICER HAS NOT GIVEN A FINDING THAT THE SAME IS NON CHARITABLE IN NATURE . WE FIND MERIT IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE SINCE TH IS IS THE ONLY PROGRAMME ABROAD AND HAS TAKEN PLACE IN THE VERY FI RST YEAR THE TRUSTEES AND FACULTY MEMBERS WENT TO ATTEND THE SEM INAR AT GENEVA TO EDUCATE THEMSELVES. THEREFORE, WE DO NOT FIND ANY MERIT IN THE OBJECTION OF THE ASSESSING OFFICER FOR DENYING THE EXEMPTION ON THE GROUND THAT OBJECT OF WORLD PEACE CENTRE IS NOT EDU CATION IN NATURE. 130. SO FAR AS THE OBJECTION OF THE ASSESSING OFFIC ER THAT THE CHANGE IN THE OBJECTS IN THE TRUST DEED WAS NOT INTIMATED TO THE ASSESSING OFFICER, WE FIND THE SAME IS NOT FATAL FOR DENYING EXEMPTION U/S.11 OR ALLOWING THE EXPENDITURE FOR OBJECTS OF THE TRUST. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. BHANSALI TRUST REPORTED IN 155 ITD 736 HAS HELD THAT MERE NON INTIMATION OF AMENDMENTS IN TRUST DEED TO 80 ITA NOS.915 TO 920/PUN/2012 DEPARTMENT CANNOT IPSO FACTO LEAD TO CANCELLATION O F REGISTRATION BECAUSE STATUTORY REQUIREMENT OF CANCELLATION OF RE GISTRATION CONTAINED IN SECTION 12AA(3) OF THE ACT PRESCRIBE THAT CANCEL LATION OF REGISTRATION CANNOT BE EFFECTUATED UNLESS A CASE IS MADE OUT THA T NEW OBJECTS DO NOT FIT WITH EXISTING OBJECTS OR THAT ACTIVITIES A RE INGENUINE. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 7.4 OF THE ORDE R READS AS UNDER : 7.4 IN OUR CONSIDERED OPINION, A MERE NON-INTIMATIO N OF THE AMENDMENTS IN THE TRUST DEED TO THE DEPARTMENT CANNOT IPSO-FACTO LEAD TO CANCELLATION OF REGISTRATION BECAUSE THE STATU TORY REQUIREMENT OF CANCELLATION OF REGISTRATION CONTAINE D IN SECTION 12AA(3) OF THE ACT PRESCRIBE THAT THE CANCELLATION O F REGISTRATION CANNOT BE EFFECTUATED UNLESS A CASE IS MADE OUT THAT TH E NEW OBJECTS DO NOT FIT-IN WITH THE EXISTING OBJECTS (I.E. NEW OBJ ECTS ARE NON- CHARITABLE IN NATURE) OR THAT THE ACTIVITIES ARE IN -GENUINE. A PERTINENT QUESTION IS AS TO WHETHER, ON FACTS, CAN SUCH A FINDING BE REACHED IN THE PRESENT CASE. FOR THIS PURPOSE, WE HAVE PERUSED THE AMENDMENTS TO THE TRUST DEED MADE IN 1975 AND 1979, W HICH HAVE BEEN TABULATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND A COMPARATIVE CHART HAS ALSO BEEN PLACED IN THE PAPER BOOK FILED BEFORE US AT PAGES 52 TO 53. A PERUSAL OF THE SAME SHO WS THAT IN THE ORIGINAL TRUST DEED THE OBJECTS OF THE ASSESSEE ARE IN TH E SPHERE OF EDUCATION PURPOSE, MEDICAL PURPOSE AND RELIEF OF POVE RTY, ETC. IN THE CONTEXT OF THE OBJECTS OF MEDICAL PURPOSE AND RELIEF TO POVERTY, THE ACTIVITIES ENUMERATED INTER-ALIA, INCLUDED:- AID AND RELIEF IN KINDS SUCH AS GIVING CLOTHES, GRAINS AND FREE DISTRIBUTION OF MEDICINES OR PROVIDING FREE MEDICAL A ID. SUBSEQUENTLY, IN THE 1975 AMENDMENT, THE ACTIVITIES O F AID OR RELIEF IN KIND HAS BEEN SUPPLEMENTED BY ENABLING PROVIDING O F LOAN AND RELIEF IN CASH ALSO . 131. WE FIND THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF KRIPANIDHI EDUCATIONAL TRUST VS. DIT (EXEMPTION) RE PORTED IN 139 ITD 228 HAS HELD THAT MERE FINDING THAT THE OBJECTS OF EDUCATIONAL TRUST HAVE BEEN AMENDED WITHOUT THE CONSENT OF DEPARTMENT WOULD NOT BE SUFFICIENT TO EXERCISE POWER U/S.12AA(3) WITHOUT GI VING A FINDING THAT THE ASSESSEES OBJECTS ARE INITIALLY CHARITABLE. 132. THE HONBLE MADRAS HIGH COURT IN THE CASE OF D IT VS. VALLAL M.D. SESHADRI TRUST REPORTED IN 79 CCH 443 HAS HELD THAT AS FAR AS AMENDMENT MADE TO THE TRUST DEED IS CONCERNED, IT I S NOT THE CONCERN OF 81 ITA NOS.915 TO 920/PUN/2012 THE ASSESSING AUTHORITY AND ONLY THE CIVIL COURT IS EMPOWERED TO DECIDE THE SAID ISSUE AND IN ANY EVENT THAT CANNOT BE THE REASON FOR DENYING THE CHARITABLE NATURE OF THE INSTITUTION IF IT IS O THERWISE CHARITABLE. THEY HAVE FURTHER HELD THAT THE TERM CHARITABLE U/S.2( 15) INCLUDES EDUCATION WHICH CONNOTES THE PROCESS OF TRAINING AND DEVELOPI NG THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCH OOLING. 133. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE OBJECTION OF THE REVENUE THAT SINCE THE ASSESSEE HAS NOT INTIMATED T HE DEPARTMENT ABOUT THE AMENDMENT OF THE TRUST DEED, THEREFORE, T HE EXPENDITURE INCURRED IS NOT FOR THE OBJECT OF THE TRUST IS NOT CORRECT. 134. NOW COMING TO THE OBJECTION OF THE REVENUE THA T EXPENDITURE HAS BEEN INCURRED ABROAD AND THEREFORE, THE ASSESSEE IS NOT ENTITLED TO CLAIM SUCH EXPENDITURE IS CONCERNED, WE FIND THE SA ME IS ALSO NOT CORRECT AS PER LAW. 135. WE FIND THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CASE OF GEM AND JEWELLERY EXPORT PROMOTION COUNCIL VS. ITO 68 I TD 95 WHILE DECIDING SOMEWHAT SIMILAR ISSUE HAS OBSERVED AS UND ER : 32. IN OUR CONSIDERED VIEW, THE ASSESSEE DESERVES TO SUC CEED. IT MAY BE USEFUL TO REPRODUCE SECTION 11(1)(A). '11(1)(A) INCOME DERIVED FROM PROPERTY HELD UNDER T RUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO ACCU MULATED OR SET APART IS NOT IN EXCESS OF TWENTY-FIVE PER CENT OF THE INCOME FROM SUCH PROPERTY;' 33. A BARE READING OF THE SUB-SECTION 11(1)(A) DOES NOT LEAVE US IN DOUBT THAT THE REQUIREMENT UNDER SECTION 11 IS FOR APPLICATION OF INCOME FOR PURPOSES IN INDIA AND IT DOES NOT RESTRICT T HE APPLICATION OF INCOME WITHIN THE TERRITORY OF INDIA. THE CHARIT ABLE PURPOSE FOR WHICH THE INCOME SHOULD BE APPLIED FOR CLAIMING EXEM PTION UNDER SECTION 11(1)(A) SHOULD BE IN INDIA. IN THIS CAS E, IT IS NOT DISPUTED THAT THE TRADE DELEGATION HAD BEEN SENT ABRO AD FOR THE BENEFIT OF THE ENTIRE TRADE IN INDIA. THE EXPORTS AR E MADE FROM INDIA 82 ITA NOS.915 TO 920/PUN/2012 AND THE PURPOSE FOR SENDING THE DELEGATION WAS TO INC REASE THE POSSIBILITIES OF EXPORTS OUT OF INDIA. WE ACCORDINGLY H OLD THAT SINCE THE ASSESSEE HAS APPLIED THE INCOME FOR CHARITABLE PURPO SES IN INDIA, THE MERE FACT THAT THE EXPENDITURE HAS BEEN INCURRED OUT OF INDIA, DOES NOT DISQUALIFY THE EXPENDITURE FROM EXEMPTION UN DER SECTION 11(1)(A). 136. IN VIEW OF THE ABOVE DECISION, THE EXPENDITURE INCURRED ABROAD FOR WORLD PEACE CENTRE CANNOT BE HELD AS NOT FOR OB JECTS OF THE TRUST AND CONSEQUENTLY EXEMPTION U/S.11 CANNOT BE DENIED. 136.1 GROUND OF APPEAL NO.7 IS ACCORDINGLY ALLOWED. 137. THE NEXT ISSUE THAT IS COMMON FOR ALL THE YEAR S IS REGARDING GROUNDS OF APPEAL NO.5, 6, 8 AND 11 WHEREIN THE ASS ESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN DENYING EXEMP TION U/S.11 FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND FUR THER HOLDING THAT THE ACTIVITY OF THE ASSESSEE IS A COMMERCIAL ACTIVITY W ITH A PROFIT MOTIVE AND IT DOES NOT EXIST SOLELY FOR CHARITY AND THEREFORE NOT ELIGIBLE FOR EXEMPTION U/S.10(23C)/11. 138. AFTER HEARING BOTH THE SIDES WE FIND THE CIT C ENTRAL VIDE ORDER DATED 31-10-2007 PASSED U/S.12AA(3) CANCELLED THE R EGISTRATION GRANTED EARLIER TO THE ASSESSEE TRUST ON THE BASIS OF THE I ST SURVEY CONDUCTED U/S.133A ON 20-07-2005 AND THE SECOND SURVEY ON 26- 08-2005 DURING WHICH IT WAS FOUND THAT THE ASSESSEE TRUST WAS ACCE PTING DONATION AND CAPITATION FEE FOR ADMISSION THOUGH PROHIBITED UNDE R MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1987. WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA N O.1669/PN/2007 ORDER DATED 09-09-2009 RESTORED THE REGISTRATION BY OBSERVING AS UNDER : 11.12 BASED UPON THE FACTS OF THIS CASE, WE NOW SUM UP ABOVE DISCUSSION; THE SINE QUA NON FOR CANCELLATION OF REGIST RATION ARE TWO CONDITIONS PRESCRIBED IN S. 12AA(3) NEEDS TO BE SATISFIED ARE : (A) THAT ACTIVITIES OF THE TRUST/INSTITUTION ARE NOT GENUINE. 83 ITA NOS.915 TO 920/PUN/2012 (B) THAT ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/INSTITUTION. THUS THE FINDINGS OF THE LEARNED CIT HAS NOT TO BE ON LY CONCEPTUAL OR CONTEXTUAL BUT SHOULD BE WITHIN THE FOUR CORNERS O F LAW SO THAT NOT SURPASSING THE POWER, AS LISTED ABOVE, GRANTED IN SUB -S. (3) OF S. 12AA. BUT UNFORTUNATELY THE FALLACY IS WRIT LARGE AS GATHERED ON PERUSING THE IMPUGNED ORDER. WE CAN HOLD THAT THE CI TS APPROACH FOR DECIDING THE ELIGIBILITY OF REGISTRATION OF A TR UST SHOULD BE DIFFERENT FROM THE ANGLE BY WHICH AN ASSESSMENT OF AN I NCOME IS MADE BY THE AO. WE ARE AFRAID ABOUT THE RAMIFICATIO N IF WE APPROVE THE ACTION OF LEARNED CIT BECAUSE IN THAT CASE IT MAY ADVERSELY AFFECT THE IMPARTING OF EDUCATION ESPECIALLY WHEN TH E REVENUE HAS NOT MADE OUT A CASE THAT THE VERY PURPOSE FOR CREATIO N OF THE TRUST WAS DEFEATED. RATHER WE WONDER THAT WHAT PURPOSE DOES IT SERVE TO REVENUE BY CANCELLING A REGISTRATION IF THE ACTIVITI ES ARE IN PUBLIC INTEREST BECAUSE IN CASE OF ANY BREACH OF THE LAWS THE SAME IS SUBJECT TO TAX UNDER SS. 11 AND 12 OF IT ACT. THESE TW O PROVISIONS AND FEW OTHER PROVISIONS ARE COMPETENT ENOUGH TO TACK LE FIRMLY A DEFAULTER OF PHILANTHROPIC APPLICATION OF INCOME OR FUNDS OF THE TRUST. THE OTHER ADVERSE SIDE OF CANCELLATION IS THAT O N REFUSAL OF REGISTRATION THE ENTIRE RECEIPTS SHALL BE SUBJECT TO A SSESSMENT WITHOUT GRANTING BENEFIT OF S. 11 AND S. 12 OF IT ACT TO ASSESS INCOME WHICH DO NOT FORM PART OF TOTAL INCOME THOUGH THE F ACTUAL POSITION COULD BE THAT MAJOR PART MIGHT HAVE BEEN DEVOTED TO WARDS ACHIEVING THE OBJECTS I.E., IMPARTING EDUCATION, AS I N THIS CASE, BUT THE AO SHALL BE AUTOMATICALLY FORBIDDEN TO GRANT ADV ANTAGE OF EXEMPTION CONSEQUENT UPON THE CANCELLATION AS IS MANDA TORY IN STATUTE; RELEVANT SECTION ALREADY REPRODUCED ANTE. TH E OUTCOME OF THE DELIBERATION MADE IN DETAIL HEREINABOVE IS THAT PERCURIAN OPINION IS TO DEBAR THE CIT TO ENTER INTO THE AREA O F INVESTIGATION OF SOURCE OF INCOME AND ALSO APPLICATION OF INCOME, SO TH AT THE AMOUNT OF CORRECT EXEMPT INCOME BE NOT PREJUDGED. 11.13 THE ASPECT OF MORALITY AS TOUCHED BY THE LEARNE D CIT IS APPRECIABLE. EVERY VIGILANT AND LAW ABIDING CITIZEN HAS TO BE FAIR IN HIS CONDUCT AND SHOULD REFRAIN FROM IMMORAL ACTIVITIE S. BUT EXISTING BLUE LAWS ARE DERIVED FROM THE NUMEROUS EXTREMELY RIG OROUS LAWS DESIGNED TO REGULATE MORALS AND CONDUCT. THESE LAWS ARE ENACTED IN SUCH A FASHION THAT IF IMPLEMENTED CORRECTLY AND EFFI CIENTLY THEN THERE IS NO SCAPEGOAT FOR AN OFFENDER. WE ARE TEMPTED TO WRITE AN IDIOMATIC LANGUAGE DUE TO THE SENSITIVITY OF THE ISSUE, THAT A CIT CANNOT BE ALLOWED TO HOLD A BATON OF MORALITY IN HI S HAND TO HIT AN IMMORAL; BUT THE STATUTE HAS GIVEN HIM A FLEXIBLE STIC K FOR INFLICTING TAX ON DEFAULTER; THAT INCLUDES A TRUST OR EDUCATIONA L INSTITUTION. THE GIST IS THAT IF THE CIT HAD AN INFORMATION OF SOME WRO NGFUL MEANS OF EARNING FEES IN THE FORM OF A DONATION OR THE INFORM ATION TELLS ABOUT EXCESSIVE CHARGING OF FEES; THEN THE CIT IN HIS RIGHTS CAN PASS ON THE INFORMATION TO THE CONCERNED OFFICE BEARERS WORKING UNDER THE MAHARASHTRA CAPITATION FEES (PROHIBITION) ACT. THESE A UTHORITIES HAVE ENOUGH POWER TO DEAL WITH SUCH NATURE OF DEFAUL T, SIDE BY SIDE THE CIT IS TO LIMIT HIS JURISDICTION WITHIN THE AMBITS OF PROVISIONS OF THE ACT AND EXPECTED TO GIVE A FINDING ON FACTS THAT EITHER THE OBJECTS ARE NOT FOR GENERAL PUBLIC UTILITY OR NOT AC HIEVED AS PRESCRIBED UNDER LAW. HOWEVER PRESENTLY THE SITUATION IS THAT THE REVENUE HAS NOT SAID ABOUT ANY IMMORAL ACTIVITY OF TH E APPELLANT OR THE COLLECTION OF FEES WAS BY WRONGFUL MEANS; HENCE DE REGISTRATION 84 ITA NOS.915 TO 920/PUN/2012 SANS OUR APPROVAL. NEVERTHELESS THE LIST OF FIFTEEN CASES , AS HIGHLIGHTED BY LEARNED CIT, LACK DESIRED POSITIVE FIN DING AS IT WAS LEFT BLANK ON THE EXCUSE THAT EVEN THE OTHER AUTHORI TIES COULD NOT LAY THEIR HANDS ON ALLEGED DEFAULTS SO IT WAS ALSO DIFFICULT FOR THE REVENUE AUTHORITIES TO TRACE THE CORRECT POSITION. W HILE DEALING WITH THE FACTS ANTE, IT WAS FOUND THAT AFTER EXHAUSTIV E ENQUIRY FEW INSTANCES; FIFTEEN IN NUMBERS; WERE NOTICED BY THE REV ENUE AUTHORITIES WHEREIN IT WAS ALLEGED TO BE THE INFRINGE MENT OF CAPITATION FEE ACT. BUT THE IRONY IS THAT IN THE SAM E BREATH THE LEARNED CIT HAS ACCEPTED THE STAND OF THE ASSESSEE THAT IT CAN CHARGE FIVE TIMES THE NORMAL FEES IN CASE OF ADMISSION IN THE D EFINED MANAGEMENT QUOTA. THEREUPON THERE WAS A CIRCUMVENT IN THE APPROACH OF THE LEARNED CIT THAT THE AMOUNT OF DONA TION BE CONSIDERED TOGETHER WITH THE FEES TO FIND OUT THE VIO LATION OF PROHIBITION OF CAPITATION FEE ACT. BUT ON FACTS THAT TOO DID NOT STAND THE TEST OF THOSE PROVISIONS SINCE ADMITTEDLY DID NOT EX CEED THE PRESCRIBED LIMIT. 11.14 FACTS OF THIS APPEAL ARE PECULIAR, AS ALREADY DI SCUSSED IN ABOVE PARAS IN DETAIL AND THEREUPON CAN COMMENT THAT PRIMA FACIE NO CASE WAS MADE OUT BY THE LEARNED CIT SO AS TO EVEN V AGUELY DEMONSTRATE THAT THE ACTIVITIES OF THE APPELLANT WERE NOT GENUINE OR ACTIVITY OF IMPARTING OF EDUCATION, FOR WHICH THE T RUST WAS CREATED, WERE NOT CARRIED OUT. EVEN THE LEARNED CIT HAS FAILE D TO ESTABLISH THAT ANY PART OF THE INCOME/RECEIPT OF THE TRUST WA S IN ANY MANNER MISUTILIZED BY THE TRUSTEES FOR THEIR PERSONAL BENEFIT I.E., NOT IN FULFILLMENT OF THE OBJECT OF THE TRUST. OTHERWISE ALSO THERE ARE THREE WAYS TO LOOK AT THIS PROBLEM. ONE IS, THAT THE DONATIO NS ARE RAISED BUT NOT UTILIZED FOR ACHIEVING THE OBJECTS I.E., TOW ARDS IMPARTING EDUCATION; THEN SUCH AN INSTITUTION MUST BEAR THE CONSE QUENCE OF CANCELLATION OF REGISTRATION SINCE IPSO FACTO INFRINGE D S. 12AA(3) CONDITION. SECOND ASPECT IS, THAT THOUGH THE DONATION S RECEIVED ARE MEANT TO FULFILL THE OBJECTS BUT TOGETHER WITH FEES H AVE INFRINGED ANTI CAPITATION PROHIBITION ACT; THEN COMES WITHIN T HE CLUTCHES OF THAT ACT BUT DEFINITELY NOT UNDER S. 12AA(3) PROVISIO NS. THE THIRD ASPECT IS, THAT THE DONATION PLUS FEES DO NOT EXCEED TH E PRESCRIBED LIMIT OF ANTI CAPITATION FEE ACT I.E., FIVE TIMES TH E NORMAL FEES; FURTHER THAT NO EVIDENCE OF MISUTILIZATION OTHER THA N THE PRESCRIBED ACTIVITY THEN NO ACTION CAN BE SUGGESTED UNDER S. 12AA (3). THE ASSESSEES CASE FALLS UNDER THE THIRD CATEGORY. WITH THE RESULT, TOTALITY OF THE CIRCUMSTANCES THUS WARRANTS, IN THE LIG HT OF THE FOREGOING DISCUSSION, NOT TO ENDORSE THE VIEW OF THE LE ARNED CIT; CONSEQUENCE THERE UPON REVERSE THOSE FINDINGS. THE ORDE R OF CANCELLATION OF REGISTRATION IS HEREBY REVOKED. GROUN DS ALLOWED. 139. SINCE THE REGISTRATION CANCELLED EARLIER HAS B EEN RESTORED BY THE TRIBUNAL, THEREFORE, THE ASSESSEE IS ENTITLED TO TH E EXEMPTION U/S.11 SUBJECT TO FULFILMENT OF OTHER CONDITIONS 140. SO FAR AS THE DENIAL OF EXEMPTION U/S.11 ON TH E GROUND THAT THE ACTIVITY OF THE ASSESSEE IS A COMMERCIAL ACTIVITY W ITH PROFIT MOTIVE AND IT 85 ITA NOS.915 TO 920/PUN/2012 DOES NOT EXISTS SOLELY FOR CHARITY FOR WHICH IT IS NOT ELIGIBLE FOR EXEMPTION U/S.10(23C)/11 IS CONCERNED WE HAVE ALREADY HELD TH AT IN ABSENCE OF APPROVAL U/S.10(23C)(VI) THE ASSESSEE IS NOT ENTITL ED TO EXEMPTION UNDER SECTION 10(23C). HOWEVER, WE HAVE TO SEE WHETHER T HE ASSESSEE TRUST IS ELIGIBLE FOR EXEMPTION OR NOT U/S.11 FOR ACCEPTI NG DONATION AND WHETHER THE ACTIVITIES OF THE ASSESSEE TRUST ARE CO MMERCIAL ACTIVITY WITH PROFIT MOTIVE AND WHETHER IT EXISTS SOLELY FOR CHAR ITY OR NOT. 141. WE FIND THE ASSESSEE TRUST HAS RECEIVED CERTA IN DONATIONS TOWARDS BUILDING FUND ETC. WHICH IT CLAIMED AS EXEM PT U/S.11(1)(D) AS CORPUS DONATION. ACCORDING TO THE ASSESSING OFFICE R THESE DONATIONS ARE NOTHING BUT THE CAPITATION FEES COLLECTED BY TH E TRUST FROM STUDENTS FOR GRANTING ADMISSIONS IN VARIOUS INSTITUTES OF TH E TRUST. WHILE HOLDING SO, THE ASSESSING OFFICER RELIED UPON THE STATEMENT S OF PARENTS OF FEW STUDENTS WHO HAVE ADMITTED TO HAVE GIVEN THE DONATI ONS FOR SECURING ADMISSIONS IN VARIOUS INSTITUTES OF THE ASSESSEE TR UST. THE ASSESSING OFFICER TREATED THESE DONATIONS AS REVENUE RECEIPTS . THE ASSESSING OFFICER FURTHER HELD THAT SINCE THE ASSESSEE IS COL LECTING DONATIONS FOR ADMISSIONS IT HAS VIOLATED THE MAHARASHTRA EDUCATIO NAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1987. SINCE TH E ASSESSEE IS COLLECTING HUGE DONATIONS IN LIEU OF ADMISSIONS THE ASSESSING OFFICER HELD THAT THE ASSESSEE TRUST EXISTS FOR PROFIT MAKI NG ACTIVITY AND NOT FOR CHARITY AND THEREFORE EXEMPTION IS NOT ALLOWABLE. 142. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT ALL THESE DONATIONS ARE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. SO FAR AS DONATION OF RS.4 LAKHS IN A.Y. 2004-05 AND RS.1 LAKH IN A.Y. 2005-06 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON REC ORDING OF THE DONATIONS IN THE BOOKS OF ACCOUNT ARE CONCERNED IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THESE DONATIO NS BEING CORPUS 86 ITA NOS.915 TO 920/PUN/2012 DONATIONS ARE CREDITED TO VARIOUS FUNDS IN THE BALA NCE SHEET AND ARE NOT ROUTED THROUGH THE INCOME AND EXPENDITURE ACCOUNT. IT IS ALSO HIS SUBMISSION THAT ASSESSEE HAS ACCEPTED DONATIONS WHI CH ARE DULY INCORPORATED IN THE BOOKS OF ACCOUNT AND IT IS NOT A CASE THAT THE DONATIONS ARE NOT ACCOUNTED FOR. WHEREVER THE DONO RS HAVE GIVEN THE DONATIONS FOR SPECIFIC PURPOSES LIKE CONSTRUCTION O F BUILDINGS, PURCHASE OF EQUIPMENT ETC. SUCH DONATIONS ARE CAPITAL RECEIP T AND EXEMPT U/S.11(1)(D). 143. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL F OR THE ASSESSEE THAT NONE OF THE DONORS OR ANY STUDENT OR PARENT OR THE ASSESSING OFFICER HAS COMPLAINED TO APPROPRIATE AUTHORITY AGAINST THE ASSESSEE FOR VIOLATION OF MAHARASHTRA EDUCATIONAL INSTITUTIONS ( PROHIBITION OF CAPITATION FEE) ACT, 1987. IT IS ALSO THE SUBMISSI ON OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF TOTAL EXPENDITURE INCLUDIN G CAPITAL EXPENDITURE IS CONSIDERED AS A WHOLE THERE IS DEFICIT EVERY YEAR. HOWEVER, THE ASSESSEE DOES NOT HAVE ANY SURPLUS SO AS TO TREAT T HE ASSESSEE TRUST AS RUNNING ON COMMERCIAL ACTIVITY WITH PROFIT MOTIVE. 144. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A CHARITABLE TRUST RUNNING VARIOUS EDUCATIONAL INSTIT UTIONS. IT IS THE ALLEGATION OF THE REVENUE THAT THE TRUST IS COLLECT ING CAPITATION FEE IN THE GARB OF DONATION AND WAS THEREFORE RUNNING WITH A P ROFIT MOTIVE. HOWEVER, WE FIND NEITHER THE ASSESSING OFFICER NOR ANY OF THE PERSONS WHO HAVE STATED BEFORE THE DEPARTMENT THAT THEY HAV E GIVEN DONATION FOR GETTING ADMISSION HAS COMPLAINED TO THE GOVERNM ENT OR APPROPRIATE AUTHORITY FOR ANY SUCH VIOLATION UNDER THE MAHARASH TRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1 987. NOTHING HAS BEEN BROUGHT ON RECORD THAT ANY STUDENT HAS BEEN DENIED ADMISSION FOR NOT 87 ITA NOS.915 TO 920/PUN/2012 GIVING DONATION. THEREFORE, MERELY BECAUSE SOME OF THE DONORS HAVE STATED THAT THEY HAVE GIVEN DONATION FOR ADMISSION, WHICH HAVE BEEN RETRACTED LATER ON, THE SAME IN OUR OPINION WILL N OT DIS-ENTITLE THE ASSESSEE TRUST FROM GETTING EXEMPTION WHICH IS EXIS TING SOLELY FOR EDUCATIONAL PURPOSES. 145. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS. INSTITUTE OF BANKING REPORTED IN 264 ITR 110 HAS UPHELD THE D ECISION OF THE TRIBUNAL IN DIRECTING THE ASSESSING OFFICER TO ALLO W DEPRECIATION ON THE ASSETS THE COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICATION OF INCOME U/S.11 IN THE PAST YEARS. GOING BY THE RATIO OF DE CISION OF HONBLE BOMBAY HIGH COURT CITED (SUPRA) WE FIND FROM THE VA RIOUS DETAILS FURNISHED BY THE ASSESSEE THAT IF THE CAPITAL EXPEN DITURE AND DEPRECIATION THEREON IS CONSIDERED AS AN APPLICATIO N, THEN THE ASSESSEE HAS GOT DEFICIT IN EACH YEAR UNDER APPEAL AND THERE FORE IT CANNOT BE SAID THAT THE TRUST IS EXISTING SOLELY FOR PROFIT. 146. EVEN IF THE ASSESSEE HAS TAKEN DONATION FOR AD MISSION THE SAME ARE UNDER THE MANAGEMENT QUOTA. AS PER THE GOVERNM ENT CIRCULAR DATED 17-10-1994, COPY OF WHICH IS PLACED AT PAGE 1 011 (FREE ENGLISH TRANSLATION COPY AT PAGE 1012 OF PAPER BOOK NO.5) W E FIND THE ASSESSEE IS AUTHORISED TO ACCEPT FEE FROM THE STUDENTS ADMIT TED UNDER THE MANAGEMENT QUOTA TO THE EXTENT OF 5 TIMES OF ANNUAL FEE. FROM THE CHART FILED BY THE ASSESSEE GIVING THE NAMES OF STU DENTS WHO HAVE TAKEN ADMISSION BY GIVING DONATION, COPY OF WHICH I S PLACED AT PAGE 1037 OF PAPER BOOK NO.5 IN CASE OF 9 STUDENTS DURIN G THE PERIOD FROM 1999 TO 2004 WE FIND THE DONATION NOWHERE EXCEEDS 5 TIMES OF THE ANNUAL FEES. THEREFORE, WE CONCUR WITH THE ARGUMEN T OF THE LD. COUNSEL FOR THE ASSESSEE THAT SIMPLY BECAUSE THE AS SESSEE TRUST HAS ACCEPTED DONATIONS FROM FEW STUDENTS IT DOES NOT ME AN THAT THE 88 ITA NOS.915 TO 920/PUN/2012 ASSESSEE TRUST EXISTS FOR PROFIT MAKING ACTIVITY AN D NOT FOR PURPOSES OF EDUCATION. SINCE THERE ARE ABOUT 27000 STUDENTS IN VARIOUS INSTITUTES OF THE ASSESSEE AND AICTE, PUNE UNIVERSITY, MEDICAL CO UNCIL OF INDIA, DIRECTOR OF TECHNICAL EDUCATION ETC. HAVE A CONTROL ON THE ACTIVITIES OF THE ASSESSEE TRUST, THEREFORE, IT CANNOT BE HELD TH AT ASSESSEE HAS VIOLATED ANY LAW OR IT EXISTS AS A PROFIT MAKING BO DY. IT IS ALSO A FACT THAT THE DONATIONS HAVE BEEN ENTERED IN THE BOOKS OF ACC OUNT AND IT IS NOT THE CASE OF THE REVENUE THAT SUCH DONATIONS HAVE BE EN SIPHONED OFF BY THE TRUSTEES OR THE RELATIVES. 147. WE FIND SOMEWHAT SIMILAR ISSUE HAD COME UP BEF ORE THE TRIBUNAL IN THE CASE OF DECCAN EDUCATION SOCIETY. WE FIND T HE TRIBUNAL VIDE ITA NO.1480/PN/2014 ORDER DATED 13-07-2015 FROM PARA 66 ONWARDS HAS OBSERVED AS UNDER : 66. THE SECOND QUESTION THAT ARISES FOR OUR CONSIDERA TION AS TO WHETHER THE TRUST IS FOR PROFIT MOTIVE. IT IS THE AL LEGATION OF THE REVENUE THAT THE ASSESSEE TRUST WAS COLLECTING THE CAPITA TION FEE IN THE GARB OF DONATION AND WAS THEREFORE RUNNING WITH A PROFIT MOTIVE. WE FIND THE ASSESSING OFFICER HAS NOT REPORTED THE VIOL ATION, IF ANY, BY THE ASSESSEE TRUST TO THE GOVERNMENT OF MAHARASHTRA FO R TAKING ANY ACTION FOR VIOLATION OF THE MAHARASHTRA EDUCATIO NAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 1987. NONE OF THE PERSONS WHO HAVE DEPOSED AGAINST THE ASSESSEE BY STATING THAT THEY HAD GIVEN DONATION FOR THE PURPOSE OF GETTING ADMISSION HAS COMP LAINED TO THE GOVERNMENT FOR ANY SUCH VIOLATION BY THE SOCIETY. I T IS ALSO TO BE NOTED THAT THOSE PERSONS HAVE FILLED UP THE REQUISITE P ROFORMA STATING THAT THEY HAVE GIVEN DONATION TO THE ASSESSEE V OLUNTARILY AND NOT FOR SEEKING ADMISSION. EVEN SOME OF THEM CLAIMED DEDUCTION U/S.80G, A FACT STATED BY LD. COUNSEL FOR THE ASSESSEE AN D NOT CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. THEREFORE, CHANGING THE STANDS AFTER THEIR WARDS COMPLETED THEIR EDUCATION FROM THE INSTITUTIONS RUN BY THE ASSESSEE TRUST ARE CONTRA DICTORY. FURTHER, IT IS ALSO A FACT THAT ALL DONATIONS RECEIVED BY THE ASSESSEE TRUST ARE RECORDED IN THE BOOKS OF ACCOUNT. THERE IS NO ALLEGATION BY THE REVENUE THAT ANY PART OF SUCH DONATION HAS BEEN SI PHONED OFF FOR THE BENEFIT OF ANY OF THE TRUSTEES OR RELATED PER SONS. NOTHING HAS BEEN BROUGHT ON RECORD THAT ANY STUDENT HAS BEEN DENI ED ADMISSION FOR NOT GIVING DONATION. MERELY BECAUSE SOME OF THE DONORS STATED THAT THEY HAVE GIVEN THE DONATION FOR ADMISSION THE SAME IN OUR OPINION WILL NOT DISENTITLE THE SOCIETY FROM GETTING EXEMPTION WHICH IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND WHICH IS OTHERWISE ENTITLED TO THE EXEMPTION. 89 ITA NOS.915 TO 920/PUN/2012 67. WE FIND A SOMEWHAT SIMILAR ISSUE HAD COME UP BEFOR E THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHIEF CIT AND ANOTHER VS. GEETANJALI UNIVERSITY TRUST REPORTED IN 352 ITR 43 3. IN THAT CASE THE ASSESSEE-TRUST, FOR THE ASSESSMENT YEAR 2008-09, FILED A N APPLICATION SEEKING EXEMPTION OF ITS INCOME UNDER SECT ION 10(23C)(VI) OF THE INCOME-TAX ACT, 1961. AFTER EXCH ANGE OF SEVERAL LETTERS BETWEEN THE ASSESSEE AND THE AUTHORITIES WHEREBY SEVERAL QUERIES WERE RAISED AND ANSWERED, THE APPLICATION OF T HE ASSESSEE TRUST WAS REJECTED ON THE GROUND THAT THE ASSESSEE TRUST D ID NOT SATISFY THE ESSENTIAL CONDITIONS FOR EXEMPTION UNDER SECT ION 10(23C). FOR THE ASSESSMENT YEAR 2010-11 AND ONWARDS, THE ASSESSEE WAS GRANTED APPROVAL UNDER SECTION 10(23C)(VI). ON A WRIT PETITION THE SINGLE JUDGE ALLOWED THE WRIT PETITION BY SETTING ASIDE THE ORDER PASSED BY THE CHIEF COMMISSIONER UNDER SECTION 10(23C) AND DIRECTED THE AUTHORITY TO DECIDE AFRESH THE PROC EEDINGS FOR THE ASSESSMENT YEAR 2008-09 AND ONWARDS TILL THE ASSESSMENT YEAR 2010-11 BY PASSING AFRESH SPEAKING ORDER AFTER AFFORDIN G OPPORTUNITY OF HEARING TO THE ASSESSEE. ON APPEAL THE H ONBLE HIGH COURT HELD AS UNDER (HEAD NOTES): HELD, DISMISSING THE APPEAL, THAT UNDER SECTION 10(23C )(VI) AND (VIA), WHAT IS REQUIRED FOR THE PURPOSE OF SEEKING APP ROVAL IS THAT THE UNIVERSITY OR MOTHER EDUCATIONAL INSTITUTION SHOUL D EXIST ''SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFI T'. IT WAS NOWHERE THE CASE OR THE FINDING OF THE CHIEF COMMISSIO NER THAT ON ACCOUNT OF THE DEFECT IN THE ADMISSION PROCEDURE, ASSESS EE CEASED TO EXIST SOLELY FOR EDUCATIONAL PURPOSES OR IT EXISTED FOR THE PURPOSES OF PROFIT. FURTHER, IT WAS NOT THE CASE OF THE REVENUE T HAT THE STUDENTS WHO WERE ADMITTED WERE NOT IMPARTED EDUCATION IN TH E COLLEGE IN WHICH THEY WERE ADMITTED OR THE ADMISSIONS GRANTED WER E FAKE OR NON-EXISTENT OR THAT THE INCOME GENERATED BY ADMITTI NG THE STUDENTS WAS NOT USED FOR THE PURPOSE OF THE ASSESSEE. THE EMPHASIS ON THE PART OF THE CHIEF COMMISSIONER THAT THE PURPOSE OF ED UCATION WOULD NOT BE SERVED IF THE EDUCATION IS FOR STUDENTS WHO HAVE BEEN ILLEGALLY ADMITTED AND THE PURPOSE OF EDUCATION AS CONTEMPLATED IN THE SECTION WOULD BE SERVED ONLY IF THE STUDENTS HAVE BEEN LEGALLY ADMITTED AND NOT OTHERWISE, WENT BEYOND THE REQUIREM ENTS OF THE SECTION. OF COURSE, THE REQUIREMENT OF AN EDUCATIONAL INSTITUTION TO PROVIDE ADMISSIONS STRICTLY IN ACCORDANCE WITH THE PRESC RIBED RULES, REGULATIONS AND STATUTE NEEDS TO BE ADHERED TO IN LETT ER AND SPIRIT, BUT VIOLATION COULD NOT LEAD TO ITS LOSING THE CHARAC TER AS AN ENTITY EXISTING SOLELY FOR THE PURPOSE OF EDUCATION. THEREFOR E, THERE, WAS NO INTERFERENCE WITH THE ORDER OF THE SINGLE JUDGE. 68. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SHIKSHANA PRASARAKA MANDALI VS. CIT CENTRAL PUNE VIDE ITA NOS.1348 AND 1349/PN/2010 ORDER DATED 27-03-2014 (WH ERE ONE OF US ACCOUNTANT MEMBER IS A PARTY) WHILE DEALING W ITH DENIAL OF REGISTRATION U/S.12A FOR VIOLATION OF THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 198 7 BY ACCEPTING DONATIONS HAS OBSERVED AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDER OF THE LD.CIT AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARI OUS DECISIONS CITED BEFORE US. WE FIND THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE TRUST IS MORE THAN 100 YEARS OLD AND IT RUNS M ORE THAN 60 EDUCATIONAL INSTITUTIONS IMPARTING EDUCATION TO MO RE THAN 70000 90 ITA NOS.915 TO 920/PUN/2012 STUDENTS IN VARIOUS FIELDS. THE TRUST WAS GRANTED REGIST RATION EARLIER U/S.12A. HOWEVER, THE LD.CIT CANCELLED THE REGISTRAT ION GRANTED EARLIER ON THE GROUND THAT THE OBJECTS OF THE ASSESSEE T RUST ARE NOT GENUINE SINCE THE ASSESSEE TRUST IS COLLECTING HUGE DONATI ON FROM STUDENTS FOR ADMISSION TO THE VARIOUS INSTITUTES RUN BY IT IN VIOLATION OF THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITI ON OF CAPITATION FE) ACT, 1987. THE COLLECTION OF SUCH DO NATIONS ACCORDING TO HIM IS ILLEGAL AND THEREFORE THE ACTIVITIES OF TH E SAID SOCIETY ARE NOT GENUINE. HE FURTHER OBSERVED THAT THE INSTITUTE S ARE BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE. HE ALSO HELD THAT THE ASSESSEE TRUST HAS VIOLATED PROVISIONS OF SECTION 11(5) R.W. S. 13(1)(D) BY INVESTING IN SHARES OF COOPERATIVE BANKS. 8.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 NOW COMING TO THE FIRST ISSUE ON WHICH THE LD.CIT HAS CANCELLED THE REGISTRATION U/S.12A, I.E. THE ASSESSEE SOCI ETY IS COLLECTING HUGE DONATION FROM STUDENTS FOR ADMISSION T O VARIOUS INSTITUTES WHICH IS IN CLEAR VIOLATION OF THE MAHARASHT RA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE) ACT, 198 7, WE FIND THERE IS NO SUCH COMPLAIN BEFORE THE GOVERNMENT OF MAHARASHT RA OR AICTE OR ANY OTHER GOVERNMENT DEPARTMENT EITHER BY THE INCOME TAX DEPARTMENT OR BY ANY OF THE STUDENT/PARENTS STATIN G THAT THE ASSESSEE SOCIETY HAS CHARGED CAPITATION FEE FOR GIVING AD MISSION WHICH IS IN VIOLATION OF THE MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE ACT) 1987. EVEN THE CIT WHO IS ALLEGING THAT THE ASSESSEE TRUST HAS COLLECTED HUGE DONAT ION FOR ADMISSION OF STUDENTS TO VARIOUS INSTITUTES RUN BY IT HAS NOT INFORMED THE GOVERNMENT OF MAHARASHTRA IF HE WAS SERIO US ABOUT ANY SUCH VIOLATION DONE BY THE SOCIETY. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT AS AGAINST 70 MANAGEMENT QUO TA SEATS IT HAS COLLECTED DONATION FROM 9 STUDENTS AND SUCH DONA TION IS WITHIN THE PERMISSIBLE LIMIT PRESCRIBED BY THE GOVERNM ENT OF MAHARASHTRA AND THAT ALL SUCH RECEIPTS ARE REFLECTED I N THE ACCOUNTS COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL R EPRESENTATIVE. 8.4. . . . . . . . . . . . . 8.5 . . . . . . . . . . . . 8.6 . . . . . . . . . . . . 8.7 WE FIND THE HONBLE DELHI HIGH COURT IN THE CASE OF SHANTI DEVI PROGRESSIVE EDUCATION SOCIETY (SUPRA) HAS OBSERVE D AS UNDER : '26. WE HAVE CONSIDERED ALL THESE OPINIONS AS WELL AS T HE SUBMISSIONS MADE BY LEARNED COUNSEL FOR THE PARTIES. WE M UST AT THE INCEPTION ITSELF NOTE THAT THE THREE COMPONENTS SC RUTINIZED BY THE ASSESSING OFFICER ARE THE ADMISSION FEE, CORPUS FUND A ND THE LOANS TAKEN FROM PARENTS. THUS IT REALLY CAN'T BE DISPU TED THAT EVEN THE SOURCE OF FUNDS IS RELATABLE TO THE ACTIVITY OF ED UCATION. IT MAY BE NOTICED THAT THERE ARE FACTUAL FINDINGS ON THE LOAN S HAVING BEEN AVAILED OF BY THE ASSESSEE FROM A NATIONALIZED BANK FO R THE PURPOSE OF CREATING ADDITIONAL INFRASTRUCTURE/SCHOOLS AND THE THREE SETS OF AMOUNTS HAVE BEEN ADDRESSED ONLY TOWARDS THE OBJECT O F CREATING ADDITIONAL INFRASTRUCTURE AND EASING THE LIABILITY OF THE ASSESSEE 91 ITA NOS.915 TO 920/PUN/2012 TOWARDS THE INTEREST BURDEN OF LOAN REPAYMENT. WHAT I S PERTINENT TO BE TAKEN NOTE OF IS THAT THERE IS NO FINDING OR ALLEG ATION OF ANY DIVERSION OF THESE FUNDS FOR THE PURPOSE OTHER THAN CAR RYING ON EDUCATIONAL ACTIVITY. THERE IS NO DIVERSION OF FUNDS T O THE INDIVIDUAL MEMBERS OR TAKING AWAY OF PROFITS FOR SOME OTHER ACTIV ITY. IT DOES APPEAR TO US THAT THE ASSESSING AUTHORITY APPEARS TO HAVE BEEN WEIGHED DOWN BY THE FACTUM OF SOME QUESTIONS BEING RAI SED IN THE PARLIAMENT ABOUT THE MANNER OF COLLECTION OF FUNDS B Y THE INSTITUTIONS. THAT ALONE, WOULD NOT SUFFICE TO DENY T HE EXEMPTION UNDER SECTION 10(22) OF THE IT ACT. THERE IS IN FACT NO MATERIAL TO SHOW OR A COMPLAINT THAT THERE HAS EVEN BEEN ANY COER CIVE PROCESS TO RECOVER THESE AMOUNTS. 27. IT CANNOT BE LOST SIGHT OF THAT IF AN INSTITUTION HAS TO EXPAND, ADDITIONAL INFRASTRUCTURE HAS TO BE CREATED, QUALITY EDUCATION HAS TO BE IMPARTED, ALL THESE ACTIVITIES REQUIRE FUNDS. THER E MAY BE AN ORIGINAL CORPUS OF THE SOCIETY BUT THEREAFTER THE CO RPUS FOR SUCH ACTIVITY CAN BE CREATED ONLY THROUGH VOLUNTARY DONA TIONS EITHER FROM ANY PHILANTHROPIST OR THROUGH COLLECTION OF FUNDS IN THE PROCESS OF ADMISSION. WE ARE NOT CONCERNED WITH THE MORALITY OF THE ISSUE WHILE DECIDING WHETHER EXEMPTION HAS TO BE GRANTED. PERSONAL PREJUDICES SEEM TO HAVE STEPPED IN WHEN ALLEGATIONS WER E MADE WITHOUT ANY MATERIAL AGAINST CERTAIN MEMBERS (WHICH H AVE RIGHTLY BEEN STRUCK OFF BY THE MAJORITY OPINION OF TRIBUNAL) ALLEGING THAT THESE MEMBERS WERE WELL KNOWN FOR MAKING PROFIT THROU GH EDUCATIONAL INSTITUTIONS. WE ALSO FAIL TO APPRECIATE THE DOUBTS CAST OR THE POSSIBILITIES EXPRESSED ABOUT THERE BEING SOMETHING MORE TO IT IN VIEW OF THE FUNDS BEING DEPOSITED IN PRIVATE BANKS. TH E OPINION IS COMPLETELY BASED ON SURMISES AND CONJECTURES AS IT SEEMS TO SUGGEST THAT MERELY BECAUSE FUNDS WERE IN A PRIVATE BANK, THE RE MAY HAVE BEEN DIVERGENCE OF FUNDS TO THE MEMBERS OF THE SOCIET Y. SIMILARLY, THE FACTUM OF CONSTRUCTION BEING CARRIED OUT BY AHLU WALIA CONSTRUCTION CO. (P) LTD., STATED TO BE A FAMILY CON CERN OF THE PRESIDENT, WAS NOT MATERIAL AS THERE WAS NO ALLEGATION OF ANY INFLATED COST OF CONSTRUCTION OR UNREASONABLE PROFITS B EING DERIVED FROM THE SAME BY THIRD PARTIES AS A MODE OF DIVERGENCE OF FUNDS.' 8.8 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF DR. D.Y. PATIL EDUCATION SOCIETY (SUPRA) HAS OBSERVED AS UNDER : 13. THOUGH THE ASSESSEE HAS DENIED RECEIPT OF CAPITATIO N FEE/DONATIONS AND RUNNING ON COMMERCIAL LINES, HOWEVE R, WITHOUT GOING INTO THE MERITS OF SUCH PLEA, THE PERTINENT QUE STION IS THE CONSEQUENCES OF ACCEPTANCE OF CAPITATION FEE/DONATION S BY THE ASSESSEE AT THE STAGE OF EXAMINING ASSESSEE'S APPLICATION F OR REGISTRATION UNDER SECTION 12AA OF THE ACT. SOMEWHAT SIMILAR SITUATION AROSE 10 BEFORE THE MUMBAI BENCH OF THE TRI BUNAL IN THE CASE OF RAMARAO ADIK EDUCATION SOCIETY (SUPRA) WHEREI N THE COMMISSIONER OF INCOME-TAX WAS CONSIDERING CANCELLATION OF REGISTRATION ON THE BASIS OF THE PLEA THAT THE ASSESSEE W AS ACCEPTING CAPITATION FEE/DONATIONS. FOLLOWING DISCUSSION BY OUR C O-ORDINATE BENCH IS RELEVANT: '48. NOW THE QUESTION IS THE LEGAL CONSEQUENCE OF THE ASSESSEE ACCEPTING CAPITATION FEES / DONATIONS FROM STUDENTS SEEK ING ADMISSION TO VARIOUS COURSES OFFERED BY THE INSTITUTIONS RUN BY THE 92 ITA NOS.915 TO 920/PUN/2012 ASSESSEE-TRUST. EVEN IN THE MATTER OF CAPITATION FEES / D ONATIONS, THE COMMISSIONER OF INCOME TAX HAS NO CASE THAT THE FUN DS COLLECTED BY THE ASSESSEE- TRUST THROUGH CAPITATION FEE S / DONATIONS HAVE BEEN USED FOR THE PURPOSES OTHER THAN RUNNING THE INSTITUTIONS MANAGED BY THE ASSESSEE TRUST. IT IS TO BE SEEN THAT ALL T HE INSTITUTIONS RUN AND MANAGED BY THE ASSESSEE TRUST ARE CA RRYING ON THE ACTIVITIES ENVISAGED IN THE MEMORANDUM OF ASSOCI ATION THE ASSESSEE-TRUST. IT IS STATED BY THE COMMISSIONER IN HIS ORDER ITSELF THAT THE MONEYS COLLECTED BY THE ASSESSEE-TRUST BY WAY OF CAPITATION FEES / DONATIONS ARE USED FOR THE PURPOSE OF NOT ONLY BY THE ASSESSEE-TRUST BUT ALSO FOR OTHER INSTITUTIONS OF SIMILA R NATURE IT IS TO BE SEEN THAT APPLICATION OF FUNDS FOR THE CHA RITABLE ACTIVITIES OF ANOTHER ELIGIBLE INSTITUTION AMOUNTS TO APPLICATI ON OF FUNDS FOR CHARITABLE PURPOSES. THE LAW HAS MADE IT VERY CLEAR TH AT THE CHARITABLE ACTIVITIES MAY BE CARRIED OUT DIRECTLY BY AN ELIGIBLE INSTITUTION OR THROUGH ANOTHER ELIGIBLE INSTITUTION F OR THAT MATTER. THEREFORE, THOSE OBSERVATIONS OF THE COMMISSIONER STATED TO BE ADVERSE TO THE ASSESSEE-TRUST ARE NOT IN FACT PREJUDICIAL TO THE CASE OF THE ASSESSEE-TRUST. 49. THE KARNATAKA HIGH COURT IN THE CASE OF SANJEEV AMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR OF INC OME TAX (EXEMPTION) [285 ITR 327] HAS CONSIDERED THAT IN MATT ERS OF REGISTRATION AND EXEMPTION OF CHARITABLE INSTITUTIONS, THE SATISFACTION OF THE COMMISSIONER SHOULD BE REGARDING THE APPLICATION OF THE INCOME OF THE TRUST FOR THE SPECIF IED PURPOSES, WHICH ONLY ENTITLES THE ASSESSEE TO CLAIM EXEMPTION. THE COURT OBSERVED THAT FOR ARRIVING AT SUCH SATISFACTION PRIMARI LY HE HAS TO LOOK AT THE OBJECT OF THE TRUST, WHEN THE SAME IS RED UCED INTO WRITING IN THE FORM OF TRUST DEED. IF ON THE DATE OF THE APP LICATION THE TRUST HAS RECEIVED INCOME FROM ITS PROPERTY, THEN FIND OUT HOW THE SAID INCOME HAS BEEN EXPENDED, AND WHETHER IT CAN BE SAID THAT THE INCOME IS UTILIZED TOWARDS CHARITABLE AND RELIGIOUS PU RPOSES. THEREFORE, FOR THE PURPOSES OF REGISTRATION U/S. 12AA O F THE ACT, WHAT THE AUTHORITIES HAVE TO SATISFY IS THE GENUINENESS O F THE ACTIVITIES OF THE TRUST OR INSTITUTION AND HOW THE INC OME DERIVED FROM THE TRUST PROPERTY IS APPLIED TO CHARITABLE OR R ELIGIOUS PURPOSES AND NOT THE NATURE OF THE ACTIVITY BY WHICH THE INCOME WAS DERIVED TO THE TRUST. 50. THE ABOVE JUDGMENT PROPOSES THAT WHAT IS TO BE LO OKED INTO IS THE CHARACTER OF APPLICATION OF FUNDS AND THE CHARAC TER OF THE ACTIVITIES CARRIED OUT BY AN ASSESSEE AND NOT THE COLOU R AND NATURE OF THE SOURCES OUT OF WHICH NECESSARY FUNDS WERE COLLECTED BY THE ASSESSEE. IN OTHER WORDS, THE SOURCE OF FUNDS IS NOT AN IM PORTANT INGREDIENT IN ASSESSING THE CHARACTER OF THE ACTIVITIES CARRIED ON BY A CHARITABLE INSTITUTION. THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL [163 TAXMANN 19] HAS HELD THAT EDU CATIONAL ACTIVITIES CARRIED ON BY A SOCIETY ARE FOR CHARITABL E PURPOSES AND NOT AGAINST THE PUBLIC POLICY. THEREFORE, THE ACTIVITIES CARRIED ON BY THE ASSESSEE-SOCIETY IN THE PRESENT CASE CANNOT IN ANY WAY HE LD AS OPPOSED TO PUBLIC POLICY. THE OBJECTION EXPRESSED BY T HE COMMISSIONER COULD AT A MAXIMUM BE ATTRIBUTED TO THE QUESTION OF ACCEPTING CAPITATION FEES / DONATIONS. IN THIS CONTEXT , THE COMMISSIONER-DR HAS RAISED A CONTENTION THAT THE DON ATIONS RECEIVED BY THE ASSESSEE-TRUST ARE NOT VOLUNTAR Y AND THAT FACT ALSO SHOULD BE CONTRIBUTED TO JUSTIFY THE CANCELLATION OF THE 93 ITA NOS.915 TO 920/PUN/2012 REGISTRATION.' ON THE BASIS OF THE AFORESAID DECISION OF THE TRIBUNAL, WHICH HAS BEEN RENDERED AFTER CONSIDERING THE JUDGMEN TS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE 11 OF SANJE VAMMA HANUMANTHE GOWDA CHARITABLE TRUST (SUPRA) AND THAT OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V RED ROSE SC HOOL 163 TAXMANN 19 (AIL), IT IS QUITE CLEAR THAT THE OBJECT ION RAISED BY THE COMMISSIONER WITH REGARD TO THE RECEIPT OF CAPITATION FEE/DONATIONS ARE FACTORS TO BE CONSIDERED AT THE TIME OF ASSESSMENTS WH ILE EXAMINING THE ELIGIBILITY OF THE ASSESSEE TRUST FOR THE BENEFIT OF SECTION 11 & 12 AND THE SAME DO NOT COME INTO PLAY IN THE COURSE OF THE EXAMINATION BY THE COMMISSIONER FOR THE PURPOSES OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. 14. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR CONSIDER ED OPINION, THE COMMISSIONER HAS EXAMINED THE APPLICATION OF THE A SSESSEE ON IRRELEVANT CONSIDERATIONS WHICH WERE BEYOND THE SCOPE OF ENQUIRY ENVISAGED UNDER SECTION 12AA OF THE ACT. WE, THEREFOR E, DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER OF THE COMMISSIONER AND RESTORE THE MATTER BACK TO HIS FILE TO BE EXAMINED AFRESH STR ICTLY IN TERMS OF THE SCOPE OF THE ENQUIRY ENVISAGED UNDER SECTION 12AA( 1) OF THE ACT. 8.9 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RES EARCH (MAEER) VS. CIT REPORTED IN (2010) 133 TTJ (PUNE) 70 6 WHILE ADJUDICATING CANCELLATION OF REGISTRATION U/S.12AA FO R TAKING DONATION AND CAPITATION FEE HAS OBSERVED AS UNDER : (VI) CONCLUSION : 11. IN THE RECENT PAST THE QUESTION OF INTERPRETATION OF NEWLY INSERTED S. 12AA (W.E.F. 1ST APRIL, 1997) HAS ALWAYS BEE N PERENNIAL TEASER NOT ONLY TO THE TRUST OR INSTITUTIONS BUT ALSO TO THE REVENUE DEPARTMENT AS ALSO FACED BY THE JUDICIARY. TO GET THE ANSWER WE HAVE HEARD BOTH THE SIDES AT LENGTH, CAREFULLY PERUSED THE IMPUGNED ORDER AND ALSO SEVERAL CORRESPONDENCES FILED IN THE COM PILATION IN THE LIGHT OF THE CASE LAWS CITED. 11.1 THE LAW NOW INTRODUCED IS TO STREAMLINE THE 'PROCEDUR E FOR REGISTRATION' AND BY SAYING SO WE DO NOT WANT TO ENTE R INTO THE CONTROVERSY WHETHER THE APPLICABILITY OF S. 12AA(3) W AS RETROSPECTIVE OR PROSPECTIVE IN NATURE. RATHER WE CAN MAKE AN OBSERVATION THAT THIS ISSUE STOOD ANSWERED BY CO-ORDINAT E BENCHES. WE WANT TO EXPRESS THAT EARLIER TO THIS SECTION THERE W AS NO GUIDELINES IN THE STATUTE FOR REFUSAL OF REGISTRATION, THEREFORE IT WAS CONSIDERED EMINENT TO INTRODUCE IN THE STATUTE THE SAI D PROCEDURE. WHAT BOTHERED THE TRIBUNALS AND HIGH COURTS IN THE R ECENT PAST IS THE SCOPE AND THE PURPOSE OF INTRODUCTION OF S. 12AA I N THE STATUTE. ALL THOSE JUDGMENTS AS LISTED ABOVE, IN AGREEMENT HAVE SAID THAT THE ACTIVITIES OUGHT TO BE IN FULFILMENT OF THE OBJECTS F OR WHICH A TRUST IS CREATED. SENTIMENTS SHOULD BE IN LINE WITH THE PURPOSE FOR WHICH THE TRUST IS CREATED. THE PURPOSE SHOULD BE PHILANTHRO PIC, CHARITABLE, OR FOR PUBLIC GENERAL UTILITY. SERVICE WITHOUT PROFIT HAS TO BE THE MOTIVE. AS IN THE PRESENT CASE THE OBJECTS ARE TO UNDERTAKE, TO RUN AND TO IMPROVE THE EDUCATIONAL INSTITUTION FOR I MPARTING EDUCATION IN DIVERGENT FIELDS; DELIBERATED UPON ANTE . 94 ITA NOS.915 TO 920/PUN/2012 11.2 IN ANY CASE WE HAVE TO EXAMINE THE PURPOSE OF ENACTME NT OF SS. 12A, 12AA AND 12AA(3), VIZ-A-VIZ SS. 11 AND 12. WHILE READING SEVERAL CASE LAWS AS CITED SUPRA AN IMPORT ANT POINT OF VIEW OF THE HON'BLE COURTS HAVE COME TO OUR NOTICE T HAT MERE REGISTRATION UNDER S. 12AA WOULD NOT BY ITSELF BE A GR OUND FOR EXCLUSION OF SUCH AN INCOME FROM THE TOTAL INCOME OF A TRUST. TO OUR UNDERSTANDING, ALSO ACKNOWLEDGED IN THE PRECEDENTS; TH E PROVISIONS OF S. 12AA PRESCRIBES CONDITIONS FOR REGISTRATION OF A T RUST AND THEREFORE IN THE ABSENCE OF REGISTRATION DISENTITLES AN Y TRUST FROM CLAIMING ANY BENEFIT OF THE PROVISIONS OF S. 11 AND S. 12 OF THE ACT IN RELATION TO ITS INCOME. THEREFORE THE CONCLUSION IS T HAT S. 12AA PRESCRIBES CERTAIN CONDITIONS FOR THE REGISTRATION OF A TRUST AND THEREUPON OBLIGATES A TRUST OR AN INSTITUTION TO SEEK, RATHER OBTAIN, A REGISTRATION UNDER S. 12AA IF SUCH TRUST INTENDS TO HAV E THE BENEFITS OF THE EXEMPTION AS PRESCRIBED UNDER SS. 11 AND 12 OF T HE ACT. IT IS NOT THE OTHER WAY ROUND THAT THE BENEFIT OF SS. 11 A ND 12 SHALL BE AUTOMATIC ONCE THE REGISTRATION IS GRANTED. THUS THE O UTCOME IS THAT THESE PROVISIONS MAKE IT CLEAR THAT IF THE TRUST IS NOT REGISTERED UNDER S. 12AA IT WOULD NOT BE ABLE TO CLAIM ANY EXE MPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF TH E PREVIOUS YEAR, EVEN IF SUCH INCOME IS OTHERWISE LIABLE FOR E XCLUSION UNDER ANY OF THE CLAUSES OF S. 11 AND S. 12 OF THE ACT. 11.3 ON DUE CONSIDERATION OF THE RIVAL ARGUMENTS WE C AN SUMMARISE THE SECTION OF THE ACT GOVERNING THE ISSUE IN HAND. TH E PURPOSE OF FRAMING THE 'CONDITIONS FOR APPLICABILITY OF SS. 11 AN D 12' I.E., S. 12A AND FRAMING THE RULES OF 'PROCEDURE FOR REGISTRATION' I.E., S. 12AA IS BASICALLY MEANT TO OPEN THE DOOR TO A TRUST TO ENTER INTO THE FRAMEWORK OF THE PROVISIONS OF THE STATUTE, IN A WAY; AN ENTITLEMENT TO ENTER INTO A ROOM WHERE THE ELIGIBILITY OF EXEMP TIONS IS KEPT FOR ADJUDICATION. THUS IN A CASE OF REFUSAL OF REGISTRATION , THE TRUST WOULD EVEN NOT BE ALLOWED TO ENTER THE ROOM TO SEEK A CLAIM OF SUCH EXCLUSION OF A RECEIPT FROM THE TOTAL INCOME. IN SIMP LE WORDS; IN CASE OF NO REGISTRATION A TRUST IS DEBARRED BY LAW TO CLAIM EXEMPTION. THIS IS THE FIRST STEP TO CLIMB TO THE LEVEL WHERE THE EXEMPTIONS ARE PLACED. AT THIS FIRST STEP THE CIT IS CONFERRED WITH T HE POWERS TO CALL FOR SUCH DOCUMENTS AND INFORMATION IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES AND ALSO TO EN QUIRE THAT THOSE GENUINE ACTIVITIES ARE AS PER THE OBJECTS OF THE TRUST FOR WHICH IT IS SEEKING REGISTRATION. THE OBJECTS AND ACTIVITIES SH OULD BE PHILANTHROPIC AND NOT AGAINST THE PUBLIC INTEREST MUST BE FOR THE BENEFIT AT LARGE INSTEAD FOR THE BENEFIT OF PARTICUL AR INDIVIDUAL OR GROUP OF INDIVIDUALS. 11.4 IN THE RECENT PAST SUB-S. (3) WAS INSERTED IN S. 12A A W.E.F. 1ST OCT., 2004 WHICH GIVES POWER OF CANCELLATION OF REG ISTRATION TO THE CIT, IF HE FINDS THAT THE ACTIVITIES ARE NOT GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TR UST. THE NEED FOR THE ENACTMENT HAD ARISEN DUE TO BELIEF OF SOME QUART ER THAT IN THE ABSENCE OF EXPLICIT LAW THE CIT CANNOT EXERCISE THE P OWER OF CANCELLATION OF REGISTRATION. TO OVERCOME THIS HURDLE THIS SUB- SECTION IS INCORPORATED AND NOW IN OPERATION. NATURAL LY THESE POWERS ARE CONFERRED WITH A VIEW TO ENSURE THAT IF O NCE A REGISTRATION HAS BEEN GRANTED UNDER S. 12AA, A TRUST OR INSTITUTION MAY NOT TAKE ANY SUCH LIBERTY OF MISUSE OF THE REGISTRA TION OR THE PROVISIONS BY GOING HAYWIRE RATHER FURTHERING THE OBJ ECTS OF THE 95 ITA NOS.915 TO 920/PUN/2012 TRUST OR GENUINELY NOT PURSUING THE ACTIVITIES FOR WHI CH IT WAS ESTABLISHED. 11.5 CONSIDERING THE ARGUMENTS AND THE FACTS OF THIS CA SE WE HAVE NOTED THAT THE MOST IMPORTANT FEATURE OF S. 12AA IS, A S ALSO REFERRED TO US IN THIS APPEAL FOR OUR ADJUDICATION, THAT THIS SE CTION HAS ONLY LAID DOWN THE PROCEDURE OF REGISTRATION AND THIS SECTI ON NOWHERE SPEAKS THAT WHILE CONSIDERING THE APPLICATION OF REGIST RATION, THE CIT SHALL ALSO LOOK INTO THE PROCEDURE OF EARNING OF INCO ME AND SOURCES FROM WHERE RECEIPTS ARE DERIVED. THE ARGUMENT WAS, IT ALSO DOES NOT SPEAK ANYWHERE THAT WHILE CONSIDERING THE REGISTRATION THE CIT SHALL ALSO SEE THE MANNER IN WHICH THE RECEIPTS OR THE INCOM E IS BEING SPENT BY THE TRUST. TO OUR HUMBLE UNDERSTANDING OF VAR IOUS RELATED PROVISIONS, THE POWER OF ENQUIRY, IN RESPECT OF SOURCES OF RECEIPTS AND THE UTILIZATION OF INCOME IS ENTRUSTED IN SEPARATE SECTIONS AS ALREADY DISCUSSED ANTE. THE LANGUAGE THUS USED IN THIS SEC TION ONLY CONFINES TO ENQUIRE ABOUT THE ACTIVITIES OF THE TRUST AND ITS GENUINENESS, WHICH MEANS, IN CONSONANCE WITH THE OBJECT S FOR WHICH CREATED AND THOSE OBJECTS AS ALSO ACTIVITIES SHOULD NOT B E A CAMOUFLAGE BUT PURE, SINCERE, CHARITABLE AND FOR PUB LIC UTILITY AT LARGE. WHAT IS IMPLICIT IS THAT THE CIT HAS TO SINCER ELY EXAMINE THAT THE OBJECTS AS ALSO THE ACTIVITIES SHOULD NOT BE PRIMA F ACIE AGAINST THE BASIC STRUCTURE FOR WHICH BENEFICIAL LAW IS MADE A ND ALSO BE NOT IN CONFLICT WITH THE GENERAL PUBLIC UTILITY. NATURA LLY AN INSTITUTION IF ESTABLISHED TO CARRY OUT AN ILLEGAL ACTIVITY OR ACTIV ITIES ARE CAUSING ANY TYPE OF NUISANCE NOT IN THE INTEREST OF THE PUBLI C AT LARGE SHOULD DEFINITELY LEAD TO CANCELLATION OF REGISTRATION. THE REFORE, THIS IS THE FIRST REQUISITE OF THE STATUTE TO MANDATE FOR THE REGI STRATION AND IN THE ABSENCE OF SUCH REGISTRATION DISENTITLEMENT OF EXEM PTION. SO WHAT IS EXPLICIT IS THAT THOUGH AN INSTITUTION MAY BE DOING CHARITABLE ACTIVITIES AS PRESCRIBED BUT IN THE ABSENCE OF REGISTRAT ION CANNOT BE ENTITLED FOR THE EXEMPTIONS OR BENEFITS OF SS. 11 AND 1 2 OF THE ACT. IT IS ALSO EXPLICIT THAT REGISTRATION IPSO FACTO DOES NOT N ECESSARILY ENTITLE AN INSTITUTION TO GET THE RECEIPTS EXCLUDED FROM THE INCOME OR EXEMPTION BE GRANTED AUTOMATICALLY BY JUST SHOWING TH E REGISTRATION CERTIFICATE TO THE REVENUE AUTHORITIES. IN NO WAY TH E REGISTRATION CERTIFICATE IS A LICENSE TO DO ANY TYPE OF ACTIVITY A ND TO GET AWAY FROM THE AMBITS OF THE TAX. AN INSTITUTION HAS TO FOLLOW TH E NORMS AS LAID DOWN IN OTHER RELATED SECTIONS FOR AVAILING PRESCRIBE D BENEFITS. 11.6 PROCEDURE OF REGISTRATION IS A FIRST STEP AND A P RELIMINARY STAGE WHERE THE CIT SHALL RESTRICT THE ENQUIRIES AS TO WHETH ER THE TRUST IS ACTUALLY AND WHOLE HEARTEDLY PERFORMING ALL THE DUT IES AND ACTIVITIES FOR WHICH IT WAS CREATED. ON CAREFUL READING OF THIS SECTION IT WAS GATHERED THAT AT THIS INITIAL STAGE THERE IS NO SCOPE O F ANY APPREHENSION OF MISUTILIZATION OF FUNDS OR TO JUDGE TH E TAXABILITY INCOME. THE SCHEME OF THE ACT OTHERWISE DOES NOT SUBSCRI BE AND ALLOW A TRUST TO TAKE THE BENEFIT OF THE PROVISIONS OF SS. 11 AND 12 UNLESS IT ESTABLISHES THE PRESCRIBED UTILIZATION OF THE I NCOME, EVEN IF, AT ALL THE TRUST HOLDS THE REGISTRATION IN ITS HANDS. TH EREFORE AT THE STAGE OF GRANTING REGISTRATION THE CIT IS NOT EXPECTED TO BOTHER HIMSELF ABOUT THE OTHER PROVISIONS OF THE ACT AND SUPPO SED TO CONFINE HIMSELF TO THE PROCEDURE OF REGISTRATION AS LA ID DOWN THEREIN. FOR THIS VIEW, WE DRAW SUPPORT FROM THE ORDE R OF THE RESPECTED CO-ORDINATE BENCH TRIBUNAL, NEW DELHI PRON OUNCED IN THE CASE OF AGGARWAL MITRA MANDAL TRUST VS. DIRECTOR OF IT (EXEMPTION) (SUPRA), A PORTION REPRODUCED BELOW (P. 186 OF PAPER BOOK) : 96 ITA NOS.915 TO 920/PUN/2012 '............IN THIS SITUATION, IF THE REGISTRATION AP PLIED FOR UNDER S. 12A IS NOT GRANTED TO IT FOR VIOLATION OF THE PROVISIONS OF S. 13(L)(B) AND IT IS ULTIMATELY FOUND THAT THE ASSESSEE-TRUST ACTUALLY ACCOMP LISHED THE OBJECTS AS INDICATED IN CLAUSE NO. 3(4) ONLY FOR THE BENEFIT OF PUBLIC AT LARGE WITHOUT THERE BEING ANY ACTIVITY UNDERTAKE N AS PER OBJECT CLAUSE NOS. 3(1) AND 3(2), IT WOULD BE DEPRIVED OF AN Y BENEFITS WHICH OTHERWISE WERE AVAILABLE TO IT UNDER S. 11 OR S. 12. THIS CERTAINLY IS NOT THE LEGISLATIVE INTENTION AS REFLECTE D IN THE SCHEME LAID DOWN IN SS. 11, 12, 12A, 12AA AND 13. ON THE CON TRARY, THE PHRASEOLOGY OF S. 13, AS ALREADY DISCUSSED, MAKES IT EXPLI CITLY CLEAR THAT THE SAID PROVISIONS BECOME OPERATIVE OR RELEVANT ONLY AT THE STAGE OF ASSESSMENT WHEN THE AO IS REQUIRED TO EXAMINE TH E CLAIM OF THE ASSESSEE FOR BENEFITS UNDER S. 11 OR S. 12 WHILE COMPU TING THE TOTAL INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YE AR. THE APPLICATION OF S. 13 THUS FALLS WITHIN THE EXCLUSIVE DO MAIN OF THE AO AND THE PROVISIONS CONTAINED THEREIN CAN BE INVOKED B Y HIM WHILE FRAMING THE ASSESSMENT AND NOT BY THE CIT WHILE CONSIDER ING THE APPLICATION FOR REGISTRATION UNDER S. 12AA.' 11.7 AN ANOTHER FEATURE OF THE IMPUGNED ORDER OF TH E LEARNED CIT IS IN FACT BOTHERING US THAT NOWHERE HE HAS TAKEN ANY OB JECTION TO THE CHARITABLE AND EDUCATIONAL NATURE OF THE INSTITUTIO N. IN FACT, THE OBJECTS OF THE INSTITUTION AS DECLARED IN THE TRUST DEE D, WHICH ARE EXTRACTED EARLIER, DOES REFLECT THAT ALL ARE PHILANT HROPIC OR BENEVOLENT IN NATURE, PRECISELY FOR THE PURPOSE OF IM PARTING EDUCATION. STRANGE ENOUGH THERE IS NO FINDING RECORD ED BY THE LEARNED CIT CONTRARY TO THIS FACT. BE THAT AS IT MAY, THE REAL AND THE ONLY SUBSTANTIAL OBJECTION FOR REFUSAL OF REGISTRATION WAS THAT THE INSTITUTION HAS COLLECTED DONATIONS THUS ADOPTED SOME W RONG MEANS OF COLLECTION OF FEES. BUT WHETHER AT THIS PRELIMINAR Y STAGE HE HAD THE RIGHT TO DRAW AN ADVERSE INFERENCE SO AS TO REFUSE REGI STRATION OR ALTERNATIVELY CONFINE HIMSELF TO THE ENQUIRY ABOUT T HE OBJECTS AND THE ACTIVITIES OF THE TRUST AS PER THE LIMITS OF THE JU RISDICTION OF S. 12AA OF THE ACT. RATHER THIS IS ALSO NOT THE CASE OF TH E LEARNED CIT THAT THE INSTITUTION IS DOING SOME OTHER ACTIVITY OF EARNING PROFIT OTHER THAN THE ACTIVITY OF RUNNING EDUCATIONAL INSTI TUTIONS. THE ESTABLISHED FACTUAL POSITION IS THAT THE INSTITUTION IS N OT DOING IN ANY OTHER ACTIVITY EXCEPT RUNNING EDUCATIONAL INSTITUTIO NS. IN SUCH CIRCUMSTANCES, CAN WE UPHOLD THE ACTION OF CANCELLATI ON OF REGISTRATION ? ANSWER IS OBVIOUS NO. 11.8 WHILE READING THE PRECEDENTS CITED FROM THE SIDE OF THE APPELLANT WE COME ACROSS A DECISION OF A RESPECTED CO-O RDINATE BENCH TRIBUNAL, KOLKATA PRONOUNCED IN THE CASE OF KA LINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY (SUPRA) AND HAVE FOUND THAT ALMOST ON IDENTICAL SITUATION, AS IN THE PRESENT APPEAL, IT WAS HELD THAT CONSEQUENCE UPON A SEARCH WHILE THE ASSESSMENT PROCEEDING S ARE PENDING A CANCELLATION OF REGISTRATION BY INVOKING S. 12AA(3) IS A PREMATURE ACTION ON THE PART OF CIT, BECAUSE IT IS EX PECTED FROM HIM TO TAKE PRECAUTION TO LET THE ASSESSMENT GET COMPLETED , IF POSSIBLE EXPEDITIOUSLY, INSTEAD OF RUSHING TO CANCEL THE REGISTR ATION WHICH SHALL EFFECT AND INTERRUPT THE OTHER PROCEEDINGS UNDE R THE ACT AND SO PREMATURELY PUNISH A PERSON WITHOUT JUDICIOUS HEARING AS PRESCRIBED BY THE STATUTE. HELD PORTION IS WORTH REPRO DUCTION AS DID IN PARA (XII) P. 35 ANTE. 97 ITA NOS.915 TO 920/PUN/2012 11.9 WE HAVE ALSO GONE THROUGH A DECISION REFERRED FR OM THE SIDE OF THE REVENUE NAMELY THE JAMMU & KASHMIR BANK PRIORITY SECTOR ASSET RISK FUND VS. CIT (ITA NO. 61/ASR/2006 ORDER DT. 1 ST SEPT., 2006) (SUPRA); CITED IN SUPPORT OF THE ARGUMENT THAT FIRSTLY THE CIT HAS BEEN VESTED WITH THE POWERS VIDE S. 12AA(3), INSERTE D W.E.F. 1ST OCT., 2004, TO ENQUIRE ABOUT THE GENUINENESS OF THE ACTIVITIES OF A TRUST AND TO SATISFY HIMSELF THAT SUCH ACTIVITIES ARE BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. SECONDLY IN CASE OF DISSATISFACTION HE IS EMPOWERED TO CANCEL THE ALREADY G RANTED REGISTRATION. THIRDLY IN CASE IT IS FOUND THAT THE ACT IVITIES ARE NOT IN CONFORMITY WITH THE OBJECT THAT TOO IS THE GOOD REASO N FOR CANCELLATION OF REGISTRATION. FOURTHLY THE SWEEP OF T HE SECTION IS WIDE ENOUGH TO EMPOWER THE CIT TO EXAMINE THE NATUR E OF THE OBJECT WHETHER FOR GENERAL PUBLIC UTILITY AND PHILA NTHROPIC IN NATURE. IN OUR CONSCIENTIOUS VIEW THERE IS NO DISAGREEMENT ABOU T THE ABOVE- MENTIONED FOUR LEGAL PROPOSITION AS ERUDITELY LAID DO WN BY THE RESPECTED AMRITSAR BENCH. UNDISPUTEDLY WE HAVE ALSO TO DECIDE THIS APPEAL MORE OR LESS WITHIN THESE PARAMETERS. BUT THE B ASIC QUESTION IS THAT BEFORE STEPPING TOWARDS THE CANCELLATION OF RE GISTRATION THE HEAVY BURDEN IS ON THE LEARNED CIT TO CONCLUSIVELY DE MONSTRATE THAT ALL HAD GONE HAYWIRE I.E., OBJECTS ARE MEANT FOR PER SONAL BENEFITS; THAT ENGAGED IN IMMORAL ACTIVITIES OR THAT THERE IS N O ELEMENT OF PUBLIC BENEFIT. IN THE PRESENT APPEAL NONE OF THE AB OVE CRITERIA FOR REJECTION OF REGISTRATION WAS IN EXISTENCE, HOWEVER MA INLY CONFINED TO THE FINDING THAT BY CHARGING DONATION THE TRUST H AS INFRINGED THE RULES OF PROHIBITION OF CAPITATION FEE ACT. 11.10 BEFORE WE PART WITH IT IS WORTH TO CITE AN ANOTHER L ATEST DECISION PRONOUNCED BY RESPECTED CO-ORDINATE BENCH OF CHANDIGARH IN THE CASE OF HIMACHAL PRADESH ENVIRONMENT PROTECTIO N AND POLLUTION CONTROL BOARD VS. CIT (ITA NO. 74/CHD/2009 ) [REPORTED AT (2009) 125 TTJ (CHD) 98 : (2009) 28 DTR (CHD)(TRIB) 289ED.] WHEREIN THE WORTH NOTING OBSERVATIONS WERE AS FOLLOWS : '17. ON A PERUSAL OF THESE OBJECTIVES, AS SANCTIONED BY THE STATUTE, IT IS OBVIOUS THAT THE ACTIVITIES PERFORMED BY THE ASSESSEE T RUST ARE REGULATORY FUNCTIONS FOR THE PUBLIC GOOD, AND ANY CO LLECTION FOR FEES OR CHARGES, IN THE COURSE OF DISCHARGING THESE REGULATO RY FUNCTIONS, CANNOT BE VIEWED AS A CONSIDERATION OF RENDERING THESE SERVICES OF POLLUTION CONTROL MEASURES. WE ARE UNABLE TO SEE ANY SU BSTANCE IN LEARNED CIT'S STAND THAT THE INCOME EARNED BY ASSESSEE AS LICENCE FEES, CONSENT FEES AND TESTING CHARGES ARE RECEIPTS IN CO NSIDERATION OF RENDERING THE SERVICES TO TRADE, COMMERCE OR BUSINE SS. WHAT IS TERMED AS CONSENT FEES IS IN FACT FEES ACCOMPANYING THE APPLICATION FOR OBTAINING CONSENT (I.E., PERMISSION) OF THE ASSESSEE B OARD TO SET UP A NEW UNIT. IT CANNOT BE ANYBODY'S CASE THAT THE P ROCESSING OF APPLICATIONS BY ITSELF HAS S COMMERCIAL MOTIVE, OR THAT FEES FOR PROCESSING OF APPLICATIONS IS A FEES COLLECTED FOR RENDE RING OF SERVICE OF POLLUTION CONTROL WHICH IS UNDISPUTED SOLE OBJECT O F THE ASSESSEE TRUST. SIMILARLY, FEES FOR TESTING CHARGES AND LICENCE FEES ARE NOT ALSO TOWARDS RENDERING OF ANY SERVICES OF POLLUTION CONTROL EITHER. THESE ARE NOT THE SERVICES WITH A PROFIT MOTIVE BUT ESSENTIAL LY ONLY TO RECOUP THE COST OF GETTING THE SAMPLES TESTED OR PROCE SSING OF LICENCES. IN ANY EVENT, THESE ACTIVITIES, IF THESE CAN BE AT ALL BE CONSTRUED AS RENDERING OF SERVICES, THESE ARE WHOLLY SUB SERVIENT TO THE PUBLIC UTILITY OBJECTIVE OF POLLUTION CONTROL, AND, IT CANNOT BE ANYONE'S CASE THAT EVEN THOUGH THE STATE POLLUTION BO ARDS LIKE THE ASSESSEE BEFORE US ARE SET UP UNDER AN ACT OF THE PARLIAM ENT, BUT, TO 98 ITA NOS.915 TO 920/PUN/2012 USE THE WORDS EMPLOYED IN THE CBDT CIRCULAR (SUPRA) 'T HE OBJECT OF' GENERAL PUBLIC UTILITY' WILL ONLY BE A MASK OR A DEV ICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE, COMMERCE, OR BUSINESS OR RENDER ING OF ANY SERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS'. 19. IN ANY EVENT, AS A PLAIN READING OF S. 12AA(3) WO ULD INDICATE THAT A REGISTRATION GRANTED UNDER S. 12AA CAN ONLY BE WITH DRAWN WHEN THE CIT IS SATISFIED THAT (A) THE ACTIVITIES OF THE TR UST OR THE INSTITUTION ARE NOT 'GENUINE'; OR (B) THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT S OF THE TRUST OR THE INSTITUTION. THERE CANNOT BE ANY OTHER LEGALLY SU STAINABLE REASON FOR CANCELLING OR WITHDRAWING THE REGISTRATION GRANT ED UNDER S. 12AA. BY NO STRETCH OF LOGIC, THE ACTIVITIES OF THE A SSESSEE CAN BE SAID TO BE NOT GENUINE AND THE ASSESSEE IS ADMITTEDLY PURSUING THE OBJECTS FOR WHICH IT WAS ESTABLISHED. WHEN THE ASSESSEE IS E NGAGED IN BONA FIDE ACTIVITIES, WITH THE FRAMEWORK OF LAW, TO PURSUE ITS OBJECTIVES, IT CANNOT BE SAID THAT THE ACTIVITIES OF T HE ASSESSEE ARE NOT GENUINE. LEARNED CIT HAS ALSO NOT BROUGHT ON RECORD A NY MATERIAL TO DEMONSTRATE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARR IED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTIT UTION. UNDER THESE CIRCUMSTANCES, THE WITHDRAWAL OF REGISTRATION GRA NTED UNDER S. 12AA CANNOT BE SUSTAINED IN LAW. LEARNED CIT HAS EXTEN SIVELY REFERRED TO AS TO WHY THE ASSESSEE IS NOT ELIGIBLE FOR EX EMPTION UNDER S. 11 AS THE ACTIVITIES OF THE ASSESSEE CANNOT BE SA ID TO BE FOR 'CHARITABLE PURPOSES' DEFINED UNDER S. 2(15), BUT THEN THIS ASPECT OF THE MATTER IS RELEVANT FOR THE ASSESSMENT PROCEEDINGS AN D NOT IN THE CONTEXT OF EXERCISE OF CIT'S POWERS UNDER S. 12AA(3). T HE IMPUGNED ORDER PASSED BY THE LEARNED CIT IS THUS VITIATED IN LAW ON THIS COUNT AS WELL. 20. FOR THE DETAILED REASONS SET OUT ABOVE, WE QUASH TH E ORDER OF THE LEARNED CIT AND HOLD THAT THE LEARNED CIT DID NOT H AVE ANY GOOD REASONS, SUSTAINABLE IN LAW, TO WITHDRAW THE REGISTRATIO N. THE IMPUGNED ORDER IS ACCORDINGLY SET ASIDE.' ON READING THE ABOVE VERDICT IT IS GATHERED THAT IF THE OBJECTS AS PERMISSIBLE IN THE EYES OF LAW ARE CARRIED OUT LEGALL Y AND THE OBJECT OF ADVANCEMENT OF EDUCATION AS ALSO THE OBJECT OF GEN ERAL PUBLIC UTILITY ARE CARRIED OUT WITH DUE SINCERITY THEN THE CLAIM OF REGISTRATION IS WITHIN THE AMBIGUITY OF S. 12A OF THE ACT. 11.11 AS FAR AS THE OBJECTIVE OF THE APPELLANT IS CONCERNED THIS IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS NOT IMPART ING EDUCATION. AS WE KNOW THE TERM EDUCATION MEANS TO TEA CH SUBJECTS TO STUDENTS FOR THE DEVELOPMENT OF HIS MIND AND ALSO TO EQUIP STUDENTS TO DEAL WITH REALITY. THE TRAINING PROCESS IS E ITHER THEORETICAL OR PRACTICAL BUT STUDENT HAS TO BE TAUGHT THE ESSENTIALS OF THE SELECTED SUBJECTS SO AS TO DEVELOP HIS SKILL AND KNOW LEDGE FOR THE SUBJECTS STUDIED BY HIM. THE APPELLANT INSTITUTE, ADMIT TEDLY, FULFILS THE REQUIREMENTS OF IMPARTING FORMAL EDUCATION BY A SYSTEMATIC TEACHING AND INSTRUCTIONS. SINCE THE QUESTION ABOUT TH E IMPARTING OF EDUCATION HAS NOT BEEN DOUBTED OR CHALLENGED BY THE REVENUE THEREFORE. IN OUR CONSIDERED OPINION THE IMPUGNED OR DER PASSED BY THE RESPONDENT IS UNSUSTAINABLE IN LAW. STRANGE ENOUGH THERE IS NOTHING ON RECORD TO PROVE SIGHTLESSLY THAT THE PURPOSE OF IMPARTING OF EDUCATION WAS NOT FULFILLED BY THIS INSTITUTE THUS T HE REVENUE 99 ITA NOS.915 TO 920/PUN/2012 DEPARTMENT HAS HOPELESSLY FAILED TO ESTABLISH THAT THERE WAS ANY ILLEGAL ACTIVITY OR INFRINGEMENT OF ANY LAW SO THAT TO DOUBT THE GENUINENESS OF THE ACTIVITIES. IF IT WAS SO THEN IT CAN BE HELD THAT THE ALLEGATIONS OF THE REVENUE AS DISCUSSED ABOVE, REMAINED UNSUPPORTED THUS DESERVES OUR DISMISSAL. 11.12 BASED UPON THE FACTS OF THIS CASE, WE NOW SUM UP ABOVE DISCUSSION; THE SINE QUA NON FOR CANCELLATION OF REGISTR ATION ARE TWO CONDITIONS PRESCRIBED IN S. 12AA(3) NEEDS TO BE SATISFIED ARE : (A) THAT ACTIVITIES OF THE TRUST/INSTITUTION ARE NOT G ENUINE. (B) THAT ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/INSTITUTION. THUS THE FINDINGS OF THE LEARNED CIT HAS NOT TO BE ONL Y CONCEPTUAL OR CONTEXTUAL BUT SHOULD BE WITHIN THE FOUR CORNERS OF L AW SO THAT NOT SURPASSING THE POWER, AS LISTED ABOVE, GRANTED IN SUB-S. ( 3) OF S. 12AA. BUT UNFORTUNATELY THE FALLACY IS WRIT LARGE AS GATHERED ON PERUSING THE IMPUGNED ORDER. WE CAN HOLD THAT THE CI T'S APPROACH FOR DECIDING THE ELIGIBILITY OF REGISTRATION OF A TR UST SHOULD BE DIFFERENT FROM THE ANGLE BY WHICH AN ASSESSMENT OF AN INCOME IS MADE BY THE AO. WE ARE AFRAID ABOUT THE RAMIFICATIO N IF WE APPROVE THE ACTION OF LEARNED CIT BECAUSE IN THAT CASE IT MAY ADVERSELY AFFECT THE IMPARTING OF EDUCATION ESPECIALLY WHEN THE REVEN UE HAS NOT MADE OUT A CASE THAT THE VERY PURPOSE FOR CREATION OF THE TRUST WAS DEFEATED. RATHER WE WONDER THAT WHAT PURPOSE DOES IT SERVE TO REVENUE BY CANCELLING A REGISTRATION IF THE ACTIVITI ES ARE IN PUBLIC INTEREST BECAUSE IN CASE OF ANY BREACH OF THE LAWS THE SAME IS SUBJECT TO TAX UNDER SS. 11 AND 12 OF IT ACT. THESE TWO PROVI SIONS AND FEW OTHER PROVISIONS ARE COMPETENT ENOUGH TO TACKLE FIRML Y A DEFAULTER OF PHILANTHROPIC APPLICATION OF INCOME OR FUNDS OF T HE TRUST. THE OTHER ADVERSE SIDE OF CANCELLATION IS THAT ON REFUSAL OF REGISTRATION THE ENTIRE RECEIPTS SHALL BE SUBJECT TO ASSESSMENT WITHOUT GRANTING BENEFIT OF S. 11 AND S. 12 OF IT ACT TO ASSESS INCOME WH ICH DO NOT FORM PART OF TOTAL INCOME THOUGH THE FACTUAL POSITIO N COULD BE THAT MAJOR PART MIGHT HAVE BEEN DEVOTED TOWARDS ACHIEVIN G THE OBJECTS I.E., IMPARTING EDUCATION, AS IN THIS CASE, BUT THE AO SHALL BE AUTOMATICALLY FORBIDDEN TO GRANT ADVANTAGE OF EXEMP TION CONSEQUENT UPON THE CANCELLATION AS IS MANDATORY IN ST ATUTE; RELEVANT SECTION ALREADY REPRODUCED ANTE. THE OUTCOM E OF THE DELIBERATION MADE IN DETAIL HEREINABOVE IS THAT PERC URIAN OPINION IS TO DEBAR THE CIT TO ENTER INTO THE AREA OF INVESTIGA TION OF SOURCE OF INCOME AND ALSO APPLICATION OF INCOME, SO THAT THE AM OUNT OF CORRECT EXEMPT INCOME BE NOT PREJUDGED. 11.13 THE ASPECT OF MORALITY AS TOUCHED BY THE LEARNED CIT IS APPRECIABLE. EVERY VIGILANT AND LAW ABIDING CITIZEN HAS TO BE FAIR IN HIS CONDUCT AND SHOULD REFRAIN FROM IMMORAL ACTIVITIE S. BUT EXISTING BLUE LAWS ARE DERIVED FROM THE NUMEROUS EXTREMELY RIG OROUS LAWS DESIGNED TO REGULATE MORALS AND CONDUCT. THESE LAWS ARE ENACTED IN SUCH A FASHION THAT IF IMPLEMENTED CORRECTLY AND EFFI CIENTLY THEN THERE IS NO SCAPEGOAT FOR AN OFFENDER. WE ARE TEMPTED TO WRITE AN IDIOMATIC LANGUAGE DUE TO THE SENSITIVITY OF THE ISSUE, THAT A CIT CANNOT BE ALLOWED TO HOLD A BATON OF MORALITY IN HI S HAND TO HIT AN IMMORAL; BUT THE STATUTE HAS GIVEN HIM A FLEXIBLE STIC K FOR INFLICTING TAX ON DEFAULTER; THAT INCLUDES A TRUST OR EDUCATIONA L INSTITUTION. THE GIST IS THAT IF THE CIT HAD AN INFORMATION OF SOME WRO NGFUL MEANS OF 100 ITA NOS.915 TO 920/PUN/2012 EARNING FEES IN THE FORM OF A DONATION OR THE INFORM ATION TELLS ABOUT EXCESSIVE CHARGING OF FEES; THEN THE CIT IN HIS RIGHTS C AN PASS ON THE INFORMATION TO THE CONCERNED OFFICE BEARERS WORKING UNDER THE MAHARASHTRA CAPITATION FEES (PROHIBITION) ACT. THESE A UTHORITIES HAVE ENOUGH POWER TO DEAL WITH SUCH NATURE OF DEFAUL T, SIDE BY SIDE THE CIT IS TO LIMIT HIS JURISDICTION WITHIN THE AMBITS OF PROVISIONS OF THE ACT AND EXPECTED TO GIVE A FINDING ON FACTS THAT EITHER THE OBJECTS ARE NOT FOR GENERAL PUBLIC UTILITY OR NOT ACHIEVED AS PRESCRIBED UNDER LAW. HOWEVER PRESENTLY THE SITUATION IS THAT THE REVE NUE HAS NOT SAID ABOUT ANY IMMORAL ACTIVITY OF THE APPELLANT OR THE COLLECTION OF FEES WAS BY WRONGFUL MEANS; HENCE DEREGISTRATION SANS OU R APPROVAL. NEVERTHELESS THE LIST OF FIFTEEN CASES, AS H IGHLIGHTED BY LEARNED CIT, LACK DESIRED POSITIVE FINDING AS IT WAS LE FT BLANK ON THE EXCUSE THAT EVEN THE OTHER AUTHORITIES COULD NOT LAY THEIR HANDS ON ALLEGED DEFAULTS SO IT WAS ALSO DIFFICULT FOR THE REVEN UE AUTHORITIES TO TRACE THE CORRECT POSITION. WHILE DEALING WITH THE F ACTS ANTE, IT WAS FOUND THAT AFTER EXHAUSTIVE ENQUIRY FEW INSTANCES; FIF TEEN IN NUMBERS; WERE NOTICED BY THE REVENUE AUTHORITIES WHER EIN IT WAS ALLEGED TO BE THE INFRINGEMENT OF CAPITATION FEE AC T. BUT THE IRONY IS THAT IN THE SAME BREATH THE LEARNED CIT HAS ACCEPTED THE STAND OF THE ASSESSEE THAT IT CAN CHARGE FIVE TIMES THE NORMAL FE ES IN CASE OF ADMISSION IN THE DEFINED MANAGEMENT QUOTA. THEREUPON THERE WAS A CIRCUMVENT IN THE APPROACH OF THE LEARNED CIT THA T THE AMOUNT OF DONATION BE CONSIDERED TOGETHER WITH THE FEES TO FIND OUT THE VIOLATION OF PROHIBITION OF CAPITATION FEE ACT. BUT ON FACTS THAT TOO DID NOT STAND THE TEST OF THOSE PROVISIONS SINCE ADMITTED LY DID NOT EXCEED THE PRESCRIBED LIMIT. 11.14 FACTS OF THIS APPEAL ARE PECULIAR, AS ALREADY DISCUSSED I N ABOVE PARAS IN DETAIL AND THEREUPON CAN COMMENT THAT PRIMA FACIE NO CASE WAS MADE OUT BY THE LEARNED CIT SO AS TO EVEN VAGUELY DEMONSTRATE THAT THE ACTIVITIES OF THE APPELLANT WERE NOT GENUIN E OR ACTIVITY OF IMPARTING OF EDUCATION, FOR WHICH THE TRUST WAS CREAT ED, WERE NOT CARRIED OUT. EVEN THE LEARNED CIT HAS FAILED TO ESTAB LISH THAT ANY PART OF THE INCOME/RECEIPT OF THE TRUST WAS IN ANY MANNER MISUTILIZED BY THE TRUSTEES FOR THEIR PERSONAL BENEFIT I.E., NOT IN F ULFILLMENT OF THE OBJECT OF THE TRUST. OTHERWISE ALSO THERE ARE THREE WA YS TO LOOK AT THIS PROBLEM. ONE IS, THAT THE DONATIONS ARE RAISED BU T NOT UTILIZED FOR ACHIEVING THE OBJECTS I.E., TOWARDS IMPARTING EDU CATION; THEN SUCH AN INSTITUTION MUST BEAR THE CONSEQUENCE OF CANCEL LATION OF REGISTRATION SINCE IPSO FACTO INFRINGED S. 12AA(3) COND ITION. SECOND ASPECT IS, THAT THOUGH THE DONATIONS RECEIVED ARE MEA NT TO FULFILL THE OBJECTS BUT TOGETHER WITH FEES HAVE INFRINGED ANTI CA PITATION PROHIBITION ACT; THEN COMES WITHIN THE CLUTCHES OF TH AT ACT BUT DEFINITELY NOT UNDER S. 12AA(3) PROVISIONS. THE THIRD ASPECT IS, THAT THE DONATION PLUS FEES DO NOT EXCEED THE PRESCRIBED LI MIT OF ANTI CAPITATION FEE ACT I.E., FIVE TIMES THE NORMAL FEES; FURTHER THAT NO EVIDENCE OF MISUTILIZATION OTHER THAN THE PRESCRIBED ACTIVITY THEN NO ACTION CAN BE SUGGESTED UNDER S. 12AA(3). THE ASSESSEE'S CA SE FALLS UNDER THE THIRD CATEGORY. WITH THE RESULT, TOTALITY OF THE CIRCUMSTANCES THUS WARRANTS, IN THE LIGHT OF THE FOREGO ING DISCUSSION, NOT TO ENDORSE THE VIEW OF THE LEARNED CIT; CONSEQUEN CE THERE UPON REVERSE THOSE FINDINGS. THE ORDER OF CANCELLATION OF R EGISTRATION IS HEREBY REVOKED. GROUNDS ALLOWED. 101 ITA NOS.915 TO 920/PUN/2012 8.10 IN VIEW OF THE ABOVE CITED DECISIONS, WE HOLD TH AT THE FINDING GIVEN BY THE LD.CIT THAT THE ASSESSEE WAS COLLECTING HUG E DONATION FOR ADMISSION OF STUDENTS TO VARIOUS INSTITUTES RUN BY IT IN VIOLATION OF PROVISIONS OF MAHARASHTRA EDUCATIONAL INSTITUTIONS (P ROHIBITION OF CAPITATION FEE) ACT, 1987 FOR WHICH THE ACTIVITI ES OF THE ASSESSEE TRUST ARE ILLEGAL AND THEREFORE THE ACTIVITIES ARE NO T GENUINE IS NOT CORRECT. FURTHER, THE CONCLUSION OF THE LD. CIT THA T THE INSTITUTES ARE BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE DUE TO THE SUBSTANTIAL SURPLUS CREATED YEAR AFTER YEAR IS ALSO NOT C ORRECT SINCE THE ASSESSEE HAS ACCUMULATED ITS SURPLUS WHICH IS WITHIN THE PERMISSIBLE LIMIT OF 15% U/S.11 AND 12. 8.11 SO FAR AS THE 2 DECISIONS RELIED ON BY LD.CIT ARE CONCERNED WE FIND THE LD. COUNSEL FOR THE ASSESSEE HAS DISTINGUISHED THE SAME. WE FULLY AGREE WITH HIS ARGUMENTS. IN ANY CASE SINCE 2 V IEWS ARE POSSIBLE ON THIS ISSUE, THE VIEW IN FAVOUR OF THE ASSESSEE H AS TO BE ADOPTED IN VIEW OF THE SETTLED PROPOSITION OF LAW. I N THIS VIEW OF THE MATTER, WE HOLD THAT THE LD. CIT IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION U/S.12A OF THE I.T. ACT, 1961. WE ACCOR DINGLY SET-ASIDE THE ORDER OF THE LD.CIT AND DIRECT HIM TO GRANT REG ISTRATION U/S.12A OF THE INCOME TAX ACT. WE HOLD AND DIRECT ACCORDIN GLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 69. ALTHOUGH THE ABOVE DECISION WAS RENDERED IN THE C ONTEXT OF DENIAL OF REGISTRATION U/S.12A OF THE I.T. ACT WE FIN D THE ISSUE THERE WAS ALSO DENIAL OF REGISTRATION U/S.12A ON THE GROUND T HAT THE INSTITUTIONS ARE ACCEPTING CAPITATION FEE IN GUISE OF VOLUNTARY DONATIONS AND ARE BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE. THEREFORE, THE RATIO THAT WHETHER THE INSTITUTIONS AR E BEING RUN ON COMMERCIAL LINES WITH PROFIT MOTIVE DUE TO ACCEPTANC E OF CAPITALISATION FEE IN GUISE OF DONATION WILL BE APPLI CABLE TO THE FACTS OF THE PRESENT CASE. 70. WE FIND THE BANGALORE C BENCH OF THE TRIBUNAL IN THE CASE OF SADVIDYA EDUCATIONAL INSTITUTION VS. ADD.CIT WHILE DE CIDING AN IDENTICAL ISSUE WHERE ASSESSEE TRUST WAS COLLECTING VOLUNT ARY CONTRIBUTIONS, DONATIONS AGAINST BUILDING FUND, DEVELO PMENT FUND AGAINST ADMISSIONS UNDER MANAGEMENT QUOTA FOR WHICH EXE MPTION U/S.11 WAS DENIED BY THE ASSESSING OFFICER HAS HELD AS UNDE R (HEAD NOTES) : CHARITABLE OR RELIGIOUS TRUSTEXEMPTION U/S 11ASSESSEE-T RUST WAS A REGISTERED SOCIETY AND RAN SEVERAL EDUCATIONAL I NSTITUTIONS IN CITY OF MYSORE STARTING FROM NURSERY TO PUCASSESSEE TRUST WAS ALSO REGISTERED U/S 12AA AND HAD ALSO OBTAINED EXEMPTIO N U/S 11 AND 12SOME OF THE EDUCATIONAL INSTITUTIONS RUN BY ASSE SSEE WERE AIDED INSTITUTIONS, AND AS PER NORMS FIXED BY STATE GOV ERNMENT, ASSESSEE WAS ENTITLED TO GIVE 50% OF ADMISSIONS UNDER MANA GEMENT QUOTA IN RESPECT OF PU COURSEASSESSEE FILED ITS RETURNS OF INCOME, ADMITTING 'NIL' INCOME FOR AYS 2006-07 & 2008-09 AND DECLARING A LOSS FOR AY 2007-08 AFTER CLAIMING EXEMPTION U/S 11(1) (A) AND 11(1)(D)IN MEANWHILE, SURVEY WAS CONDUCTED U/S 133A I N ASSESSEE'S PREMISES AND CERTAIN BOOKS AND DOCUMENTS CONTAI NING DETAILS OF STUDENT WISE DONATIONS COLLECTED BY WAY OF D DS AND DONATION RECEIPT BOOKS FOR ADMISSIONS GIVEN DURING FYS 2005-06 AND 2006-07 RELATING TO FEES AND ALLEGED DONATIONS CO LLECTED FROM STUDENTS WHO GOT ADMISSIONS INTO THE SCHOOLS/COLLEGE RUN B Y THE ASSESSEE WERE IMPOUNDED AND STATEMENT OF SECRETARY OF ASSE SSEE 102 ITA NOS.915 TO 920/PUN/2012 WAS ALSO RECORDEDAO OBSERVED THAT ASSESSEE WAS COLLECTING VOLUNTARY CONTRIBUTIONS/BUILDING FUND/DEVELOPMENT FU NDS AGAINST ADMISSIONS GIVEN UNDER MANAGEMENT QUOTA IN INSTITUTIONS RUN BY ASSESSEE AND WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.11(1 )(A) AND 11(1)(D) CIT(A) UPHELD FINDINGS OF AO HOLDING THAT THERE WAS A DIRECT NEXUS BETWEEN ADMISSIONS GRANTED UNDER THE MANAG EMENT QUOTA AND VOLUNTARY CONTRIBUTIONS COLLECTED BY ASSESSEE- HELD, IF EDUCATIONAL INSTITUTION HAS COLLECTED MONEY IN FORM O F VOLUNTARY CONTRIBUTIONS FROM PUBLIC AND MAY BE FROM PARENTS OF THE STUDENTS WHO ARE STUDYING IN INSTITUTION AND ISSUED RECEIPTS ACKN OWLEDGING SAID AMOUNT TOWARDS BUILDING FUND AND MADE REQUISITE E NTRIES IN THE BOOKS AND DEPOSITED SAME IN THE BANK, REQUIREMENT OF SECTION 11(L)(D) IS FULFILLED ASSESSEE WAS RUNNING SEVERAL SCHOOL S STARTING FROM NURSERY TO PUC AND SAID FACT HAS BEEN ENDORSED BY AONO QUESTION OF ASSESSEE COLLECTING 'CAPITATION FEES' IN GUISE OF 'BUILDING FUND OR DEVELOPMENT FEEFURTHER VOLUNTARY CONTRIBUT IONS RECEIVED WERE FOR THE SPECIFIC PURPOSE OF 'BUILDING FUND OR DE VELOPMENT FEE FURTHER VOLUNTARY CONTRIBUTIONS RECEIVED WERE FOR TH E SPECIFIC PURPOSE OF BUILDING AND ASSESSEE HAD APPLIED SUCH CONTR IBUTIONS TOWARDS OBJECT OF TRUST ASSESSEE HAD OBTAINED THE SIGNAT URES OF THE PARENTS OF SUCCESSFUL STUDENTS IN PRE-PRINTED LETTERS BEFORE OBTAINING DONATION AND SHOWN INSTATEMENT ASSESSEE WAS EN TITLED TO EXEMPTION U/S.11 IN RESPECT OF BUILDING FUND AS W ELL AS COLLEGE DEVELOPMENT FUND ASSESSEES APPEAL ALLOWED. HELD : IN THE PRESENT CASE, EVEN IF THE FEES COLLECTED WERE I N VIOLATION OF THE NORMS SUBSCRIBED BY THE STATE GOVERNMENT, THE APPLICAT ION OF THE FUNDS WERE TOWARDS THE OBJECTS OF THE ASSESSEE TRUST AND AS SUCH, THERE WAS NO VIOLATION OF S.13 OF THE ACT AS ASCRIBED B Y THE REVENUE, THE ASSESSEE HAD OBTAINED THE SIGNATURES OF THE PARENTS OF THE SUCCESSFUL STUDENTS IN PRE-PRINTED LETTERS WITHOUT GIVING THE DETAILS OF AMOUNTS' DONATED, DATE OF CONTRIBUTIONS ETC., BUT CONTAINED THE DONORS' NAMES AND THEIR ADDRESSES. HOWEVER, THE ASSESSING AUTHORITY HAD CHOSEN NOT TO CROSS-EXAMINE SUCH PARENTS WHO HAVE ADMITTED THEIR CHILDREN TO THE INSTITUTION OF THE ASSE SSEE TO VERIFY THE VERACITY OF THE ASSESSEE'S CLAIM. 71. WE FIND THE CHENNAI BENCH OF THE TRIBUNAL IN TH E CASE OF PADANILAM WELFARE TRUST VS. DY.CIT REPORTED IN 10 ITR 479 HAS OBSERVED AS UNDER (HEAD NOTES) : CHARITABLE INSTITUTIONREGISTRATION UNDER S.12AACIT WITHDRAWING REGISTRATION ALLEGING THAT CAPITATION FE ES WAS COLLECTED BY THE TRUSTEES AND THERE WAS DIVERSION AND MISUSE OF FUN DS VIOLATION OF PROHIBITION OF CAPITATION FEES ACT CANN OT BE A GROUND TO TAKE AWAY THE REGISTRATION OF A CHARITABLE ORGANIZAT IONCAPITATION FEE PER SE IS NOT IN THE NATURE OF ILLEGAL INCOME-TH ERE IS NOTHING TO SHOW IN THE SEIZED MATERIALS THAT THE ASSESSEE HAD MADE AN Y PROFIT OUT OF THE ACTIVITIES CARRIED ON BY IT AND ANY PORTI ON OF THAT PROFIT HAS BEEN ENJOYED BY ANY OF THE TRUSTEES OR THE RELATIVES. SURPLUS FUNDS OF THE ASSESSEE-TRUST YEAR TO YEAR HAVE BEEN USED ONLY FO R THE PURPOSES OF FURTHERING THE OBJECTS OF THE ASSESSEE-TRUST THERE IS NO DISTRIBUTION OF PROFIT OR SUCH OTHER BENEFITS TO THE T RUSTEES OR RELATIVES OF THE ASSESSEE-TRUSTTHEREFORE ACTION OF THE CIT IN 103 ITA NOS.915 TO 920/PUN/2012 WITHDRAWING THE REGISTRATION GRANTED TO THE ASSESSEE UN DER S. 12AA IS NOT SUSTAINABLE IN LAW HELD : IT IS FOUND THAT THE FIRST GROUND POINTED OUT BY THE CIT TO CANCEL THE REGISTRATION GRANTED TO THE ASSESSEE UNDER S. 12A ON THE GROUND OF ACCEPTING CAPITATION FEES IS NOT SUSTAINABLE IN LAW. TH E CIT IS NOT TO CONDUCT INVESTIGATION INTO THE SOURCES OF 72. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF M/S. QUEENS EDUCATIONAL SOCIETY VS. CIT VIDE CIVIL APPEAL NO.5167/2008 ORDER DATED 16-03-2015 HAS APPROVED THE DECISION OF T HE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PINE GR OVE INTERNATIONAL CHARITABLE TRUST VS. UNION OF INDIA REP ORTED IN 327 ITR 73 HAS OBSERVED AS UNDER : 23. THE PUNJAB AND HARYANA HIGH COURT, BY THE IMPU GNED JUDGMENT DATED 29TH JANUARY, 2010 EXPRESSED ITS DISSATISF ACTION WITH THE VIEW TAKEN BY THE UTTARAKHAND HIGH COURT I N THE CASE OF QUEENS EDUCATIONAL SOCIETY AS FOLLOWS: 8.8 WE HAVE NOT BEEN ABLE TO PERSUADE OURSELVES TO AC CEPT THE VIEW EXPRESSED BY THE DIVISION BENCH OF THE UTTRAKHAND HIG H COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY (SUPRA). THERE ARE VARIETY OF REASONS TO SUPPORT OUR OPINION. FIRSTLY, THE SCOPE OF TH E THIRD PROVISO WAS NOT UNDER CONSIDERATION, INASMUCH AS, THE CA SE BEFORE THE UTTRAKHAND HIGH COURT PERTAINED TO SECTION 10(2 3C)(IIIAD) OF THE ACT. THE THIRD PROVISO TO SECTION 10(23C)(VI) IS NOT APPLICABLE TO THE CASES FALLING WITHIN THE PURVIEW OF SECTION 10(23C)(I IIAD). SECONDLY, THE JUDGMENT RENDERED BY THE UTTARKHAND HIGH COURT RUNS CONTRARY TO THE PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT I NCLUDING THE PROVISOS THEREUNDER. SECTION 10(23C)(VI) OF THE ACT I S EQUIVALENT TO THE PROVISIONS OF SECTION 10(22) EXISTING EARLIER, WHI CH WERE INTRODUCED WITH EFFECT FROM 1ST APRIL, 1999 AND IT I GNORES THE SPEECH OF THE FINANCE MINISTER MADE BEFORE THE INTRODUCTION OF THE SAID PROVISIONS, NAMELY. SECTION 10(23C) OF THE ACT [SEE O BSERVATIONS IN AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL IN STITUTE'S CASE (SUPRA)]. THIRDLY, THE UTTRAKHAND HIGH COURT HAS NOT APPRECIATED CORRECTLY THE RATIO OF THE JUDGMENT RENDERED BY HON 'BLE THE SUPREME COURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION(SUPRA) AND WHILE APPLYING THE SAID JUDGMEN T INCLUDING THE JUDGMENT WHICH HAD BEEN RENDERED BY HON'BLE THE SUPREME COURT IN THE CASE OF CHILDREN BOOK TRUST (SUPRA), IT L OST SIGHT OF THE AMENDMENT WHICH HAD BEEN CARRIED OUT WITH EFFECT FR OM 1ST APRIL, 1999 LEADING TO THE INTRODUCTION OF THE PROVISIONS OF SECTION 10(23C) OF THE ACT. LASTLY, THAT VIEW IS NOT CONSISTENT WITH THE LAW LAID DOWN BY HON'BLE THE SUPREME COURT IN AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTE (SURPA). IT THEN SUMMED UP ITS CONCLUSIONS AS FOLLOWS: 8.13 FROM THE AFORESAID DISCUSSION, THE FOLLOWING PRI NCIPLES OF LAW CAN BE SUMMED UP: 104 ITA NOS.915 TO 920/PUN/2012 (1) IT IS OBLIGATORY ON THE PART OF THE CHIEF COMMISSI ONER OF INCOME TAX OR THE DIRECTOR, WHICH ARE THE PRESCRIBED AUTHOR ITIES, TO COMPLY WITH PROVISO THIRTEEN (UN-NUMBERED). ACCORDINGLY, IT HAS TO BE ASCERTAINED WHETHER THE EDUCATIONAL INSTITUTION HAS BE EN APPLYING ITS PROFIT WHOLLY AND EXCLUSIVELY TO THE OBJECT FOR W HICH THE INSTITUTION IS ESTABLISHED. MERELY BECAUSE AN INSTITUTION HAS EARNED PROFIT WOULD NOT BE DECIDING FACTOR TO CONCLUDE THA T THE EDUCATIONAL INSTITUTION EXISTS FOR PROFIT. (2) THE PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT ARE ANALOGOUS TO THE ERSTWHILE SECTION 10(22) OF THE ACT, AS HAS BEEN L AID DOWN BY HON'BLE THE SUPREME COURT IN THE CASE OF AMERICAN HO TEL AND LODGING ASSOCIATION (SUPRA). TO DECIDE THE ENTITLEMENT OF AN INSTITUTION FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT, THE TEST OF PREDOMINANT OBJECT OF THE ACTIVITY HAS TO BE APPLIED BY POSING THE QUESTION WHETHER IT EXISTS SOLELY FOR EDUCATION AND NOT TO EARN PROFIT [SEE 5-JUDGES CONSTITUTION BENCH JUDGMENT IN T HE CASE OF SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (SUPRA)] . IT HAS TO BE BORNE IN MIND THAT MERELY BECAUSE PROFITS HAVE RESULTE D FROM THE ACTIVITY OF IMPARTING EDUCATION WOULD NOT RESULT IN CHANGE OF CHARACTER OF THE INSTITUTION THAT IT EXISTS SOLELY FOR EDUCATIONAL PURPOSE. A WORKABLE SOLUTION HAS BEEN PROVIDED BY HON 'BLE THE SUPREME COURT IN PARA 33 OF ITS JUDGMENT IN AMERICAN HOTEL AND LODGING ASSOCIATION'S CASE (SUPRA). THUS, ON AN APPLICATI ON MADE BY AN INSTITUTION, THE PRESCRIBED AUTHORITY CAN GRANT AP PROVAL SUBJECT TO SUCH TERMS AND CONDITIONS AS IT MAY DEEMS FIT PROVIDED T HAT THEY ARE NOT IN CONFLICT WITH THE PROVISIONS OF THE ACT. THE P ARAMETERS OF EARNING PROFIT BEYOND 15% AND ITS INVESTMENT WHOLLY F OR EDUCATIONAL PURPOSES MAY BE EXPRESSLY STIPULATED AS PER THE STATUTORY REQUIREMENT. THEREAFTER THE ASSESSING AUTHORIT Y MAY ENSURE COMPLIANCE OF THOSE CONDITIONS. THE CASES WHERE E XEMPTION HAS BEEN GRANTED EARLIER AND THE ASSESSMENTS ARE COMPLETE WITH THE FINDING THAT THERE IS NO CONTRAVENTION OF THE STATU TORY PROVISIONS, NEED NOT BE REOPENED. HOWEVER, ALTER GRANT OF APPRO VAL IF IT COMES TO THE NOTICE OF THE PRESCRIBED AUTHORITY THAT THE C ONDITIONS ON WHICH APPROVAL WAS GIVEN, HAVE BEEN VIOLATED OR THE CIRCUMSTANCES MENTIONED IN 13TH PROVISO EXISTS, THEN BY FOLLOWING TH E PROCEDURE ENVISAGED IN 13TH PROVISO, THE PRESCRIBED AUTHORITY CA N WITHDRAW THE APPROVAL. (3) THE CAPITAL EXPENDITURE WHOLLY AND EXCLUSIVELY T O THE OBJECTS OF EDUCATION IS ENTITLED TO EXEMPTION AND WOULD NOT CON STITUTE PART OF THE TOTAL INCOME. (4) THE EDUCATIONAL INSTITUTIONS, WHICH ARE REGISTERED AS A SOCIETY, WOULD CONTINUE TO RETAIN THEIR CHARACTER AS SUCH AND WOULD BE ELIGIBLE TO APPLY FOR EXEMPTION UNDER SECTION 10(23 C)(VI) OF THE ACT. [SEE PARA 8.7 OF THE JUDGMENT-ADITANAR EDUCATIONAL INSTITUTION CASE (SUPRA)] (5) WHERE MORE THAN 15% OF INCOME OF AN EDUCATIONAL INSTITUTION IS ACCUMULATED ON OR AFTER 1ST APRIL, 2002, THE PERIOD OF ACCUMULATION OF THE AMOUNT EXCEEDING 15% IS NOT PERMISSIBLE BEYOND FIVE YEARS, PROVIDED THE EXCESS INCOME HAS BEEN APPLIED OR ACCUMUL ATED FOR APPLICATION WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EDUCATION. 105 ITA NOS.915 TO 920/PUN/2012 (6) THE JUDGMENT OF UTTRAKHAND HIGH COURT RENDERED IN THE CASE OF QUEENS EDUCATIONAL SOCIETY (SUPRA) AND THE CONNECTED MATTERS, IS NOT APPLICABLE TO CASES FALL WITHIN THE PROVISION OF S ECTION 10(23C)(VI) OF THE ACT. THERE ARE VARIOUS REASONS, WHI CH HAVE BEEN DISCUSSED IN PARA 8.8 OF THE JUDGMENT, AND THE JUDGMEN T OF ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CITY MO NTESSORI SCHOOL (SUPRA) LAYS DOWN THE CORRECT LAW. AND FINALLY HELD: 8.15 AS A SEQUEL TO THE AFORESAID DISCUSSION, THESE PETIT IONS ARE ALLOWED AND THE IMPUGNED ORDERS PASSED BY THE CHIEF CO MMISSIONER OF INCOME TAX WITHDRAWING THE EXEMPTION GRANTED UND ER SECTION 10(23C)(IV) OF THE ACT ARE HEREBY QUASHED. HOWEVER, THE REVENUE IS AT LIBERTY TO PASS ANY FRESH ORDERS, IF SUCH A NECESSITY I S FELT AFTER TAKING INTO CONSIDERATION THE VARIOUS PROPOSITIONS OF L AW CULLED OUT BY US IN PARA 8.13 AND VARIOUS OTHER PARAS. 8.16 THE WRIT PETITIONS STAND DISPOSED OF IN THE ABOVE TERMS. 24. THE VIEW OF THE PUNJAB AND HARYANA HIGH COURT H AS BEEN FOLLOWED BY THE DELHI HIGH COURT IN ST. LAWRENCE ED UCATIONAL SOCIETY (REGD.) V. COMMISSIONER OF INCOME TAX & ANR., (2011) 53 DTR (DEL) 130. ALSO IN TOLANI EDUCATION SOCIETY V. DEPUTY DIRE CTOR OF INCOME TAX (EXEMPTION) & ORS., (2013) 351 ITR 184, THE BOMB AY HIGH COURT HAS EXPRESSED A VIEW IN LINE WITH THE PUNJAB AN D HARYANA HIGH COURT VIEW, FOLLOWING THE JUDGMENTS OF THIS COUR T IN THE SURAT ART SILK MANUFACTURERS ASSOCIATION CASE AND ADITANAR ED UCATIONAL INSTITUTION CASE AS FOLLOWS: ..THE FACT THAT THE PETITIONER HAS A SURPLUS OF INC OME OVER EXPENDITURE FOR THE THREE YEARS IN QUESTION, CANNOT B Y ANY STRETCH OF LOGICAL REASONING LEAD TO THE CONCLUSION THAT THE PET ITIONER DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES OR, AS THAT CHIEF COMMISSIONER HELD THAT THE PETITIONER EXISTS FOR PROFIT. THE TEST T O BE APPLIED IS AS TO WHETHER THE PREDOMINANT NATURE OF THE ACTIVITY I S EDUCATIONAL. IN THE PRESENT CASE, THE SOLE AND DOMINANT NATURE OF THE ACTIVITY IS EDUCATION AND THE PETITIONER EXISTS SOLELY FOR THE PUR POSES OF IMPARTING EDUCATION. AN INCIDENTAL SURPLUS WHICH IS GE NERATED, AND WHICH HAS RESULTED IN ADDITIONS TO THE FIXED ASSETS IS UTI LIZED AS THE BALANCE-SHEET WOULD INDICATE TOWARDS UPGRADING THE FA CILITIES OF THE COLLEGE INCLUDING FOR THE PURCHASE OF LIBRARY BOOKS A ND THE IMPROVEMENT OF INFRASTRUCTURE. WITH THE ADVANCEMENT OF TECHNOLOGY, NO COLLEGE OR INSTITUTION CAN AFFORD TO REMAIN STAGNANT. THE INCOME-TAX ACT 1961 DOES NOT CONDITION THE GRAN T OF AN EXEMPTION UNDER SECTION 10(23C) ON THE REQUIREMENT THAT A COLLEGE MUST MAINTAIN THE STATUS-QUO, AS IT WERE, IN REGARD TO ITS KNOWLEDGE BASED INFRASTRUCTURE. NOR FOR THAT MATTER IS AN EDUCAT IONAL INSTITUTION PROHIBITED FROM UPGRADING ITS INFRASTRUCTU RE ON EDUCATIONAL FACILITIES SAVE ON THE PAIN OF LOSING THE BENEFIT OF THE EXEMPTION UNDER SECTION 10(23C). IMPOSING SUCH A COND ITION WHICH IS NOT CONTAINED IN THE STATUTE WOULD LEAD TO A PERVE RSION OF THE BASIC PURPOSE FOR WHICH SUCH EXEMPTIONS HAVE BEEN GRANT ED TO EDUCATIONAL INSTITUTIONS. KNOWLEDGE IN CONTEMPORARY T IMES IS TECHNOLOGY DRIVEN. EDUCATIONAL INSTITUTIONS HAVE TO M ODERNISE, UPGRADE AND RESPOND TO THE CHANGING ETHOS OF EDUCATIO N. 106 ITA NOS.915 TO 920/PUN/2012 EDUCATION HAS TO BE RESPONSIVE TO A RAPIDLY EVOLVING SO CIETY. THE PROVISIONS OF SECTION 10(23C) CANNOT BE INTERPRETED R EGRESSIVELY TO DENY EXEMPTIONS. SO LONG AS THE INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PROFIT, THE TEST IS ME T. 25. WE APPROVE THE JUDGMENTS OF THE PUNJAB AND HARYA NA, DELHI AND BOMBAY HIGH COURTS. SINCE WE HAVE SET ASIDE THE JUDGME NT OF THE UTTARAKHAND HIGH COURT AND SINCE THE CHIEF CITS ORDE RS CANCELLING EXEMPTION WHICH WERE SET ASIDE BY THE PUNJAB AND HARY ANA HIGH COURT WERE PASSED ALMOST SOLELY UPON THE LAW DECLARED B Y THE UTTARAKHAND HIGH COURT, IT IS CLEAR THAT THESE ORDER S CANNOT STAND. CONSEQUENTLY, REVENUES APPEALS FROM THE PUNJAB AND HA RYANA HIGH COURTS JUDGMENT DATED 29.1.2010 AND THE JUDGMENTS FO LLOWING IT ARE DISMISSED. WE REITERATE THAT THE CORRECT TESTS WHICH HAVE BEEN CULLED OUT IN THE THREE SUPREME COURT JUDGMENTS STATE D ABOVE, NAMELY, SURAT ART SILK CLOTH, ADITANAR, AND AMERICA N HOTEL AND LODGING, WOULD ALL APPLY TO DETERMINE WHETHER AN ED UCATIONAL INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NO T FOR PURPOSES OF PROFIT. IN ADDITION, WE HASTEN TO ADD THAT THE 13TH PROVISO TO SECTION 10(23C) IS OF GREAT IMPORTANCE IN THAT ASSESSING AUTHORITIES MUST CONTINUOUSLY MONITOR FROM ASSESSMENT YEAR TO ASSESSMENT YEAR WHETHER SUCH INSTITUTIONS CONTINUE TO APPL Y THEIR INCOME AND INVEST OR DEPOSIT THEIR FUNDS IN ACCORDANCE WITH THE LAW LAID DOWN. FURTHER, IT IS OF GREAT IMPORTANCE THAT T HE ACTIVITIES OF SUCH INSTITUTIONS BE LOOKED AT CAREFULLY. IF THEY ARE NOT GENUINE, OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH APPROVAL HAS BEEN GIVEN, SU CH APPROVAL AND EXEMPTION MUST FORTHWITH BE WITHDRAWN. ALL THESE CASES ARE DISPOSED OF MAKING IT CLEAR THAT REVENUE IS AT LIBERTY TO PASS FRESH ORDERS IF SUCH NECESSITY IS FELT AFTER TAKING INTO CONSID ERATION THE VARIOUS PROVISIONS OF LAW CONTAINED IN SECTION 10(23C) READ WITH SECTION 11 OF THE INCOME TAX ACT. 73. FROM THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE WE FURTHER FIND THAT OUT OF MORE THAN 47000 STUDENTS THE ASSESSEE TRUST HAS COLLECTED DONATIONS FROM ONLY 1217 STUDENTS OUT OF WHICH ONLY 23 PERSONS HAD ADMITTED TO HAVE GIVEN DONATIONS FOR AD MISSION. WE FIND OUT OF THE ABOVE 23 PERSONS ONLY 6 WERE AVAILABL E FOR CROSS EXAMINATION. WE FIND THE RELATIVES OR PARENTS OF THE STUDENTS HAVE FILLED UP THE DECLARATION STATING THAT THEY HAVE GIV EN VOLUNTARY DONATIONS TO THE INSTITUTIONS, EVEN SOME OF THEM CLAIME D DEDUCTION U/S.80G ALSO. NOTHING HAS BEEN BROUGHT ON RECORD THAT ANY SUCH AMOUNT OF DONATION HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OR HAS BEEN UTILISED BY ANY OF THE TRUSTEES OR THEIR RELATIVES OR HAS NOT BEEN UTILISED FOR PURPOSES OTHER THAN EDUCAT ION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE TRUST WHOSE MAIN OBJECT IS IMPARTING EDUCATION, CANNOT BE D ENIED THE BENEFIT OF PROVISIONS OF SECTION 10(23C)(IIIAB) AND (I IIAC) MERELY ON THE BASIS OF CONTRADICTORY STATEMENTS OF A FEW DONORS. NEITHER ANY DONOR NOR THE ASSESSING OFFICER HAS LODGED ANY COMPLAIN BEFORE GOVERNMENT AUTHORITIES FOR VIOLATION OF THE ACT. ASSESSMENTS OF THE TRUST HAVE BEEN COMPLETED IN THE PAST ACCEPTING THE E XEMPTION U/S.10(23C) OF THE ACT. THEREFORE, WE FIND NO REASON TO DEVIATE IN ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD FOR DENYIN G THE EXEMPTION CLAIMED U/S.10(23C) FOR THE YEAR. SO FAR AS THE DECISION RELIED ON BY LD. DEPARTMENTAL REPRESENTATIVE IS CONCE RNED, THE SAME IN OUR OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE WHICH WAS IN CONTEXT OF SECTION 10(23C)(IIIAD). IN V IEW OF OUR 107 ITA NOS.915 TO 920/PUN/2012 REASONS GIVEN ABOVE WE HOLD THAT THE LD.CIT(A) IS NOT JUSTIFIED IN DENYING THE EXEMPTION U/S.10(23C) (IIIAB) OF THE I.T . ACT. WE ACCORDINGLY SET ASIDE THE SAME AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ALTHOUGH THE APPEAL WAS DECIDED ON THE ISSUE OF APP LICABILITY OF SECTION 10(23C)(VI), HOWEVER, IT WILL HAVE EQUAL FORCE WHIL E DECIDING THE ISSUE ON ELIGIBILITY FOR SECTION 11/12A. 148. SO FAR AS DENIAL OF EXEMPTION U/S.11 FOR VIOLA TION OF PROVISIONS U/S.13(1)(C) ARE CONCERNED, WE FIND THE ASSESSING O FFICER DENIED EXEMPTION U/S.11 FOR VIOLATION OF PROVISIONS OF SEC TION 13(1)(C) ON ACCOUNT OF USE OF TRUST FUNDS BY THE TRUSTEES AND T HEIR FAMILY MEMBERS. SOME OF THE ISSUES WHICH THE ASSESSING OFFICER HAS NARRATED IN THE BODY OF THE ASSESSMENT ORDER FOR VARIOUS YEARS RELA TE TO FACILITIES PROVIDED TO SHRI B.E. AVHAD, HONORARY PRESIDENT OF THE TRUST, FOREIGN TOUR OF FAMILY MEMBERS OF SHRI B.E. AVHAD, FOREIGN TOUR EXPENDITURE OF THE TRUSTEES AND THEIR FAMILY MEMBERS, VISIT TO KAT MANDU BY SHRI RAHUL V. KARAD, VISIT TO AUSTRALIA BY SHRI RAHUL V. KARAD AND PROF. V.D. KARAD, PLEASURE TRIP OF SHRI V.D. KARAD TO EUROPE, FOREIGN TOUR OF MR. AND MRS. MANGESH KARAD, LOCAL TOUR OF TRUSTEES AND THEIR FAM ILY MEMBERS TO PLACES WHERE TRUST DOES NOT HAVE ANY ACTIVITY. THE SE ARE ALREADY DISCUSSED IN THE PRECEDING PARAGRAPHS. APART FROM THE ABOVE, THE ASSESSING OFFICER HAS ALSO REFERRED TO THE INTEREST FREE LOAN OF RS.18 LAKHS TO SHRI RAHUL V. KARAD WHO IS THE SON OF THE MANAGING TRUSTEE, FREE ADMISSIONS AND FEE CONCESSIONS TO RELATIVES OF THE TRUSTEES, CHILDREN OF THE EMPLOYEES. THE DETAILS OF SUCH EXP ENDITURE INCURRED BY THE TRUST FOR THE BENEFIT OF THE TRUSTEES AND THEIR FAMILY MEMBERS WHICH ACCORDING TO THE ASSESSING OFFICER IS VIOLATION OF PROVISIONS OF SECTION 13(1)(C) ARE AS UNDER : 108 ITA NOS.915 TO 920/PUN/2012 MAHARASTRA ACADEMY OF ENGINEERING AND EDUCATINAL RE SEARCH YEARWISE CHART SHOWING DETAILS OF EXPENSES CONSIDER ED AS VIOLATION OF SECTION 13 SR. NO. PARTICULARS ASSESSMENT YEAR TOTAL 1999 - 00 2000 - 01 2001 - 02 2002 - 03 2003 - 04 2004 - 05 1. EXPENDITURE ON PROVIDING FACILITIES TO B E AVHAD - VEHICLE MAINTENANCE - - 21,850 143,893 224,077 245,991 635,811 - DEPRECIATION ON CAR - - - 171,388 137,111 437,589 746,088 - OTHER EXPENSES - LOCAL TRAVEL TO MUMBAI - - - - - - - - HONORARIUM PAID - - - - - - - 2 EXPENDITURE ON FOREI GN TOURS 71,273 - 94,227 24,700 266,154 - 456,354 3 CONCESSIONAL EDUCATION - RELATIVES OF EMPLOYEES 150,000 75,000 - - - - 225,000 4 SCHOLARSHIP GIVEN TO RAHUL KARAD - - - - - - - 5 NOTIONAL INTEREST ON ADVANCE TO RAHUL KARAD - - - - - - - SUB TOTAL(A ) 221,273 75,000 116,007 339,981 627,342 683,580 2,063,253 6 EXPENDITURE ON PROVIDING FACILITIES TO B E AVHAD - CREDIT CARD EXPENSES 133,891 142,529 180,004 242,566 279,298 178,264 1,156,552 7 EXPENDITURE ON FOREIGN TOURS - - - - - - - 8 CONCES SIONAL EDUCATION - RELATIVES OF TRUSTEE 157,845 138,205 154,720 88,680 91,100 - 630,550 SUB TOTAL(B) 291,736 280,734 334,724 331,246 370,398 178,264 1,787,102 9 EXPENDITURE ON FOREIGN TOURS WHICH BE TAKEN ON PRO-RATA BASIS - MR. & MRS B E AVHAD & 2 CHILDS- GENEVA 600,000 - - - - - 600,000 - MR. & MRS.MANGESH KARAD- EUROPE - - 130,492 - - - 130,492 - MR. & MRS.V D KARAD - AUSTRALIA - - 58,703 - - - 58,703 - MR. & MRS V.D KARAD - PARIS - - - - - 357,442 357,442 - MR. & MRS B E AVHAD - USA - - - - - - - - MR. & MRS V.D KARAD - UK - - - - - - - SUB TOTAL(C) 600,000 - 189,195 - - 357,442 1,146,637 TOTAL (A+B+C) 1,113,009 355,734 639,996 671,227 997,740 1,219,286 4,996,992 149. SO FAR AS FACILITIES GIVEN TO SHRI B.E. AVHAD IS CONCERNED, IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SHRI B.E. AVHAD IS A FOUNDER MEMBER. HE IS ALSO AN EMINENT LAWYER BY PROFESSION. ALTHOUGH HE IS NOT ENGAGED IN DAY TO DAY ACTIVITIES OF THE TRUST HE IS ASSOCIATED WITH ALL THE POLICY MATTERS, DEVELOPMENT AL ACTIVITY, LEGAL MATTERS INCLUDING THE DISPUTES IN THE COURTS ETC. IT IS ALSO HIS SUBMISSION THAT HE IS LOOKING AFTER ALL THE LAND MATTERS CONCE RNING CONVEYANCE OF THE LAND, CONVERSION OF LAND, ASSESSMENT OF LANDS O F THE TRUST ETC. 109 ITA NOS.915 TO 920/PUN/2012 FURTHER, THE FACILITIES PROVIDED BY THE TRUST TO SH RI B.E. AVHAD IS ONLY FOR OFFICIAL PURPOSE AND NOT FOR PERSONAL PURPOSES. SO FAR AS THE EXPENDITURE INCURRED OF RS.6 LAKHS ON ACCOUNT OF FO REIGN TOUR OF FAMILY MEMBERS OF SHRI B.E. AVHAD IS CONCERNED IT IS HIS S UBMISSION THAT THE SAME WAS INCURRED ON ACCOUNT OF AIRFARE RS.1,60,000 /- AND FOREIGN CURRENCY EXPENSES OF RS.4,40,000/- FOR ATTENDING TH E WORLD PHILOSOPHERS MEET IN THE YEAR 1998-99. SO FAR AS T HE VARIOUS OTHER FOREIGN TOUR EXPENDITURE IS CONCERNED IT IS HIS S UBMISSION THAT THE ENTIRE EXPENDITURE IS FOR THE OBJECTS OF THE TRUST AND NO PART OF THE EXPENDITURE RELATES TO OUTSIDE OF THE OBJECTS OF TR UST. IT IS ALSO HIS ALTERNATE CONTENTION THAT EVEN IF THERE IS ANY VIOL ATION OF THE PROVISIONS OF SECTION 13(1)(C) EVEN THEN THERE CANNOT BE WHOLE SALE DENIAL OF EXEMPTION AND THE DISALLOWANCE SHOULD BE RESTRICTE D TO THE EXTENT OF THE SO CALLED VIOLATION. 150. SO FAR AS FREE ADMISSIONS AND FEE CONCESSIONS TO THE CHILDREN OF THE EMPLOYEES AND RELATIVES OF THE TRUSTEES ARE CON CERNED IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CHILDREN OF THE EMPLOYEES AND FOUNDER MEMBERS ARE GIVEN CONCESSION IN FEES AS A POLICY OF THE TRUST AND ON THE BASIS OF MERIT ONLY. IT IS ALSO HIS SUBMISSION THAT PROVISIONS OF SECTION 13(6) SPECIFI CALLY PROVIDE THAT IN AN EDUCATIONAL INSTITUTION THERE WOULD BE NO PROHIBITI ON AS REGARDS FEE CONCESSION IS CONCERNED. IT IS HIS ALTERNATE CONTE NTION THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND 12 FOR VIOLATION OF PROVISIONS OF SECTION 13. THE DISALLOWANCE MAY BE RESTRICTED ONLY TO THE EXTENT OF SO CALLED VIOLATION. 151. WE FIND SOME MERIT IN THE ABOVE ARGUMENTS OF T HE LD. COUNSEL FOR THE ASSESSEE. SO FAR AS DENIAL OF EXEMPTION U/ S.11 AND 12 FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) ARE CON CERNED THE PUNE BENCH 110 ITA NOS.915 TO 920/PUN/2012 OF THE TRIBUNAL IN THE CASE OF SINHGAD TECHNICAL ED UCATION SOCIETY VS. ACIT VIDE ITA NO.320/PUN/2010 ORDER DATED 14-12-201 6 HAS HELD THAT WHENEVER THERE IS VIOLATION OF PROVISIONS OF SECTIO N 13(1)(C) OR 13(1)(D) OF THE ACT, EXEMPTION CANNOT BE WITHDRAWN FOR THE E NTIRE INCOME AND INCOME WHICH IS THE SUBJECT MATTER OF VIOLATION ONL Y CAN BE BROUGHT TO TAX. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 68 ONWARDS READ AS UNDER : 68. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY QUESTION TO BE DECIDED IN THIS ADDITIONAL GROUND IS AS TO WHETHER FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND 13(1)(D), EXEMPTION U/S.11 BE DE NIED TO THE WHOLE OF THE INCOME OR WILL BE CONFINED TO THE EXTE NT OF INCOME WHICH IS IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) AND 13(1)(D). 69. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF DIT (EXEMPTION) VS. SHETH MAFATLAL GAGALBHAI FOUNDATION TRUST. [2001] 249 ITR 533 (BOM) HAS OBSERVED AS UNDER : 7. . . . . . . . . . . . . . . HOWEVER, THE LEGISL ATURE INSERTED A PROVISO BY THE FINANCE ACT, 1984, WITH EFFECT FROM APRIL ,1 985. BY THE SAID PROVISO, IT IS, INTER ALIA, LAID DOWN THAT WHERE THE WHOLE OR PART OF THE RELEVANT INCOME IS NOT EXEMPT BY VIRT UE OF SECTION 13(1)(D), TAX SHALL BE CHARGED ON THE RELEVA NT INCOME OR PART OF THE RELEVANT INCOME AT THE MAXIMUM MARGI NAL RATE, THE PHRASE 'RELEVANT INCOME OR PART OF THE RELEVANT INCOME' IS REQUIRED TO BE READ IN CONTRADISTINCTION TO THE PH RASE 'WHOLE INCOME' UNDER SECTION 161 (1A). THIS IS ONLY B Y WAY OF COMPARISON. UNDER SECTION 161 ( A), WHICH BEGINS W ITH A NON OBSTANTE CLAUSE, IT IS PROVIDED THAT WHERE ANY INC OME IN RESPECT OF WHICH A PERSON IS LIABLE AS A REPRESENTATIVE ASSESSEE CONSISTS OF PROFITS OF BUSINESS, THEN TAX SHALL BE CHARGED ON THE WHOLE OF THE INCOME IN RESPECT OF WHI CH SUCH PERSON IS SO LIABLE AT THE MAXIMUM MARGINAL RATE. THER EFORE, READING THE ABOVE TWO PHRASES SHOW THAT THE LEGISLATURE HAS CLEARLY INDICATED ITS MIND IN THE PROVISO TO SECTION 164(2) WHEN IT CATEGORICALLY REFERS TO FORFEITURE OF EXEMPT ION FOR BREACH OF SECTION 13(1)(D), RESULTING IN LEVY OF MAX IMUM MARGINAL RATE OF TAX ONLY TO THAT PART OF THE INCOM E WHICH HAS FORFEITED EXEMPTION. IT DOES NOT REFER TO THE ENTIR E INCOME BEING SUBJECTED TO MAXIMUM MARGINAL RATE OF TAX. THI S INTERPRETATION OF OURS IS ALSO SUPPORTED BY CIRCULAR NO . 387, DATED JULY 6, 1984 (SEE [1985] 152 ITR (ST.) 1). VID E THE SAID CIRCULAR, IT HAS BEEN LAID DOWN IN PARA. 28.6 THAT, WHERE A TRUST' CONTRAVENES SECTION 13(1)(D) OF THE ACT, THE M AXIMUM MARGINAL RATE OF INCOME-TAX WILL APPLY ONLY TO THAT PART OF THE INCOME WHICH HAS FORFEITED EXEMPTION UNDER THE SAID PROVISION AND NOT TO THE ENTIRE INCOME. WE MAY ALSO A DD THAT IN LAW, THERE IS A VITAL DIFFERENCE BETWEEN ELIGIBIL ITY FOR 111 ITA NOS.915 TO 920/PUN/2012 EXEMPTION AND WITHDRAWAL OF EXEMPTION/FORFEITURE OF EXEMPTION FOR CONTRAVENTION OF THE PROVISIONS OF LAW. THESE TWO CONCEPTS ARE DIFFERENT. THEY HAVE DIFFERENT CONSEQUENCES. IT IS INTERESTING TO NOTE THAT ALTHOUGH T HE LEGISLATURE WITHDREW SECTION 164(2) BY THE DIRECT TA X LAWS (AMENDMENT) ACT, 1987, WHICH PROVISION WAS REINTRODUC ED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989, THE LEGISLATURE DID NOT TOUCH THE PROVISO TO SECTION 164 (2) WHICH HAS BEEN ON THE STATUTE BOOK RIGHT FROM APRIL 1, 1985 . THE SAID PROVISO WAS INSERTED BY THE FINANCE ACT, 1984, THE PROVISO SPECIFICALLY REFERS TO VIOLATION OF SECTION 13 (1)( D) AND ITS CONSEQUENCES. IN THE CIRCUMSTANCES, WE FIND MERI T IN THE CONTENTION OF THE ASSESSEE THAT IN THE PRESENT CASE, THE MAXIMUM MARGINAL RATE OF TAX WILL APPLY ONLY TO THE DIVIDEND INCOME FROM SHARES IN MAFATLAL INDUSTRIES LIMITED AND NOT TO THE ENTIRE INCOME. THEREFORE, INCOME OTHER THAN DIV IDEND INCOME SHALL BE TAXED AT THE NORMAL RATE OF TAXATION UNDER THE ACT. 70. WE FIND THE HONBLE KARNATAKA HIGH COURT HAS FOL LOWED THE ABOVE DECISION OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. FR. MULLERS CHARITABLE INSTITUTIONS REPORTED IN 363 IT R 230. SUBSEQUENTLY, THE HONBLE KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD HAS DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 2. THESE TWO APPEALS WERE ADMITTED ON 2004.2010 AND 16.7.2009 RESPECTIVELY. IN ITA NO.557/2008, THE FOLL OWING SUBSTANTIAL QUESTION OF LAW IS FRAMED FOR CONSIDERATION: 'WHETHER THE TRIBUNAL WAS CORRECT IN UPHOLDING THE F INDING OF THE APPELLATE COMMISSIONER THEREAFTER DIRECTING A RE-LOOK IN RESPECT OF THE RELIEF CLAIMED U/S.11 OF THE ACT AN D SECTION 13(1)(D) OF THE ACT WITHOUT CONSIDERING THE CONTROVE RSY BEFORE IT'?' 3. IN SHORT, THE QUESTION FOR CONSIDERATION IS WHEN THE RE IS VIOLATION U/S.11 (5) AND 13(1)(D) OF THE ACT, WHETHE R THE EXEMPTION IS TO BE WITHDRAWN FOR THE ENTIRE INCOME O R THE PORTION OF THE INCOME. THIS ISSUE IS COVERED BY THE JUD GMENT OF THE BOMBAY HIGH COURT IN THE CASE REPORTED IN (20 01) 249 ITR 533 (BORN). FOLLOWING THE AFORESAID JUDGMENT, TH IS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, MANGALORE V S. FR. MULLERS CHARITABLE INSTITUTIONS, KANKANADY, MANGALORE , IN ITA NOS.588 AND 589 OF 2007 DECIDED ON 10.2.2014 HAS HELD THE ENTIRE INCOME OF THE ASSESSEE CANNOT BE ASSESSED FOR T HE TAX, FOR VIOLATING UNDER SECTION 11(5) READ WITH SE C.31(1)(D) OF THE ACT AND WHAT WOULD BECOME THE SUBJECT MATTER OF ASSESSMENT IS ONLY THAT INCOME WHICH IS THE SUBJECT MATTER OF VIOLATION. IN THAT VIEW OF THE MATTER, AS THE SUBSTANTIAL QUESTION OF LAW HAS ALREADY ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE, WE ALSO ANSWER IT ACCORDINGLY AND DISMISS T HESE APPEALS. 112 ITA NOS.915 TO 920/PUN/2012 71. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KARNATAK INDUSTRIAL AREA DEVELOPMENT BOARD VIDE SLP (C) NO.19422/2015 ORDER DATED 11-11-2016 HAS DISMISSED THE SLP FILED BY THE REVENUE. 72. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED O PINION THAT WHENEVER THERE IS VIOLATION OF SECTION 11(5) AND 13( 1)(D) OF THE I.T. ACT, EXEMPTION CANNOT BE WITHDRAWN FOR THE ENTIRE I NCOME AND INCOME WHICH IS THE SUBJECT MATTER OF VIOLATION ONLY CAN BE BROUGHT TO TAX. ACCORDINGLY, ADDITIONAL GROUND NO.3 BY THE ASSESSEE IS ALLOWED. 152. FOLLOWING THE ABOVE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY (SU PRA) (TO WHICH BOTH OF US ARE PARTIES) WE HOLD THAT THERE CANNOT BE WHO LESALE DENIAL OF EXEMPTION U/S.11 FOR VIOLATIONS OF PROVISIONS OF SE CTION 13(1)(C) AND INCOME WHICH IS SUBJECT MATTER OF VIOLATION ONLY CA N BE BROUGHT TO TAX. 153. NOW HAVING HELD SO, WE HAVE TO SEE THE EXTENT OF VIOLATION YEAR- WISE. SO FAR AS THE ISSUE RELATING TO EXPENDITURE ON ACCOUNT OF VEHICLE MAINTENANCE IS CONCERNED WE FIND FROM THE DETAILS F URNISHED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS DISALLOWED EXPENDITURE OF RS.21,850/- FOR A.Y. 2001-02, RS.1,43,893/- FOR A.Y . 2002-03, RS.2,24,077/- FOR A.Y. 2003-04 AND RS.2,45,991/- FO R A.Y. 2004-05. IT IS AN UNDISPUTED FACT THAT SHRI B.E. AVHAD IS A LAWYER AND IS ALSO ATTENDING TO THE VARIOUS WORKS OF THE TRUST. APART FROM USIN G HIS OWN CAR HE HAS ALSO USED THE VEHICLE OF THE TRUST. THEREFORE, DIS ALLOWANCE OF THE ENTIRE EXPENDITURE ON ACCOUNT OF VEHICLE MAINTENANCE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT JUSTIFIED. CONSID ERING THE TOTALITY OF THE FACTS OF THE CASE, WE HOLD THAT 50% OF THE VEHICLE MAINTENANCE EXPENSES CAN BE HELD AS FOR THE OBJECTS OF THE TRUS T AND THE BALANCE 50% IS TO BE DISALLOWED AND BROUGHT TO TAX. 154. SO FAR AS THE DEPRECIATION ON MOTOR CAR IS CON CERNED AN AMOUNT OF RS.1,71,388/- FOR A.Y. 2002-03, RS.1,37,111/- FO R A.Y. 2003-04 AND RS.4,37,589/- FOR A.Y. 2004-05 HAVE BEEN DISALLOWE D. SINCE THE MOTOR 113 ITA NOS.915 TO 920/PUN/2012 CAR IS OWNED BY THE TRUST, THEREFORE, DISALLOWANCE OF DEPRECIATION IN OUR OPINION IS UNCALLED FOR. ACCORDINGLY, IT IS HELD T HAT SUCH DEPRECIATION IS FOR THE OBJECTS OF THE TRUST AND CANNOT BE DISALLOW ED AS A FACILITY GIVEN TO SHRI B.E. AVHAD. 155. AS REGARDS THE EXPENDITURE ON FOREIGN TOUR IS CONCERNED, THE VISIT TO KATMANDU BY SHRI RAHUL V. KARAD, IN ABSENCE OF F ULL DETAILS GIVEN BEFORE THE ASSESSING OFFICER AND IN ABSENCE OF FURN ISHING OF THE PASSPORT DESPITE BEING ASKED TO DO SO BY THE ASSESS ING OFFICER, THE EXPENDITURE IS HELD TO BE NOT FOR THE OBJECTS OF TH E TRUST. SO FAR AS VISIT TO AUSTRALIA BY SHRI RAHUL V. KARAD AND SHRI V.D. K ARAD DURING A.Y. 2001-02 IS CONCERNED THE ASSESSING OFFICER HAS MADE ADDITION OF RS.1,52,930/-. ALTHOUGH THE ASSESSEE HAS PRODUCED THE PLANE TICKETS, HOWEVER, THERE WERE PURCHASES OF PERSONAL ARTICLES LIKE, SUN GLASSES, PERFUMES, SHIRT ETC. THE ASSESSEE COULD NOT EXPLA IN THE SOURCE. IT IS ALSO A FACT THAT THE DAUGHTER OF SHRI V.D. KARAD WA S STAYING IN AUSTRALIA. THEREFORE, ALTHOUGH THE ASSESSEE HAS CLAIMED THAT S UCH EXPENDITURE IS ON ACCOUNT OF ATTENDING THE WORLD PEACE TOUR, HOWEV ER, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR TH E ASSRESSEE AND THE EXPENDITURE OF RS.1,52,930/- FOR A.Y. 2001-02 IS HE LD AS NOT FOR THE OBJECTS OF THE TRUST. SIMILARLY, THE FOREIGN TOUR EXPENSES OF RS.24,700/- FOR A.Y. 2002-03, RS.2,66,154/- FOR A.Y. 2003-04 AN D RS.3,75,442/- FOR A.Y. 2004-05 ARE HELD TO BE NOT FOR THE OBJECTS OF THE TRUST AND ACCORDINGLY THE SAME HAS TO BE BROUGHT TO TAX. 156. SO FAR AS THE CONCESSION IN EDUCATION GIVEN TO RELATIVES OF THE EMPLOYEES ARE CONCERNED, THE SAME IN OUR OPINION CA NNOT BE DISALLOWED FOR VIOLATION OF PROVISIONS OF 13(1)(C) AND CANNOT BE HELD AS NOT FOR OBJECTS OF THE TRUST. WE FIND THE PROVISIO NS OF SECTION 13(6) READ AS UNDER : 114 ITA NOS.915 TO 920/PUN/2012 13(6) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (1) OR SUB-SECTION (2), BUT WITHOUT PREJUDICE TO THE PROVISIO NS CONTAINED IN SUB-SECTION (2) OF SECTION 12, IN THE CASE OF A CHA RITABLE OR RELIGIOUS TRUST RUNNING AN EDUCATIONAL INSTITUTION OR A MEDICAL INSTITUTION OR A HOSPITAL, THE EXEMPTION UNDER SECTION 11 OR SECTION 12 SHALL NOT BE DENIED IN RELATION TO ANY INCOME, OT HER THAN THE INCOME REFERRED TO IN SUB-SECTION (2) OF SECTION 12, B Y REASON ONLY THAT SUCH TRUST HAS PROVIDED EDUCATIONAL OR MEDICAL FA CILITIES TO PERSONS REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAU SE (C) OR CLAUSE (CC) OR CLAUSE (D) OF SUB-SECTION (3). 157. FROM THE ABOVE IT IS CLEAR THAT THERE WOULD BE NO PROHIBITION AS REGARDS FEE CONCESSION U/S.13(6) IN CASE OF AN EDUC ATIONAL INSTITUTION. WE FURTHER FIND FROM THE DETAILS GIVEN BY THE ASSES SEE THAT IT IS THE POLICY OF THE TRUST TO GIVE CONCESSION IN FEE TO TH E CHILDREN OF THE EMPLOYEES. WE ALSO FIND MERIT IN THE ARGUMENT OF TH E LD. COUNSEL FOR THE ASSESSEE THAT PROVISIONS OF SECTION 13(1)(C) AR E NOT APPLICABLE TO ANY CONCESSION IN FEE GIVEN TO THE RELATIVES OF THE EMPLOYEES. HOWEVER, THE SAME IN OUR OPINION IS NOT APPLICABLE TO THE RELATIVES OF THE TRUSTEES AS DEFINED IN EXPLANATION 1 TO SECTION 13. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO BRING TO TAX THE CONCESSION IN FEES GIVEN TO THE RELATIVES OF THE TRUSTEES ONLY. SO FA R AS INTEREST FREE LOAN OF RS.18 LAKHS GIVEN MR. RAHUL KARAD IS CONCERNED, WE FIND SUCH INTEREST DOES NOT RELATE TO ANY OF THE YEARS UNDER APPEAL SI NCE NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE THAT ANY SUCH INTE REST RELATE TO ANY OF THE YEARS UNDER APPEAL. EVEN OTHERWISE ALSO, AS HE LD EARLIER THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11. 158. SO FAR AS THE EXPENDITURE INCURRED ON ACCOUNT OF CREDIT CARD EXPENSES OF SHRI B.E. AVHAD IS CONCERNED, WE FIND T HE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE CREDIT CARD WAS USED FOR MEETING EXPENSES OF HOTEL BILLS AT MUMBAI AND N EW DELHI AND AIR TICKETS TO MUMBAI AND DELHI ETC. IT IS ALSO HIS AL LEGATION THAT THE ASSESSEE BEING A SENIOR ADVOCATE IS REGULARLY APPEA RING BEFORE THE BOMBAY HIGH COURT AND SUPREME COURT AND THEREFORE H IS PERSONAL 115 ITA NOS.915 TO 920/PUN/2012 EXPENSES HAS BEEN MET THROUGH SUCH CREDIT CARD. IT IS AN UNDISPUTED FACT THAT THE MATTER OF THE ASSESSEE HAS ALSO GONE BEFORE THE HONBLE BOMBAY HIGH COURT AND HONBLE SUPREME COURT. THER EFORE, IT CANNOT BE SAID THAT SHRI B.E. AVHAD HAD TRAVELLED TO BOMBA Y OR DELHI ONLY FOR HIS CLIENTS AND NOT FOR THE TRUST. HOWEVER, IN ABS ENCE OF FULL PARTICULARS GIVEN BY THE TRUST ON ACCOUNT OF EACH AND EVERY EXP ENSES WE HOLD THAT 50% OF SUCH EXPENDITURE IS FOR THE OBJECTS OF THE T RUST AND THE BALANCE 50% IS TOWARDS HIS PERSONAL EXPENDITURE WHICH HAS T O BE DISALLOWED AND BROUGHT TO TAX. WE HOLD AND DIRECT ACCORDINGLY . 159. SO FAR AS LOCAL TOUR BY TRUSTEES AND THEIR FAM ILY MEMBERS TO PLACES WHERE TRUST DOES NOT HAVE ACTIVITY IS CONCER NED, WE FIND THE ASSESSEE HAS INCURRED AN AMOUNT OF RS.47,697/- FOR A.Y. 2004-05. WE FIND THE ASSESSEE HAS GIVEN DETAILS AT PAGE 884 OF THE PAPER BOOK NO.4. A PERUSAL OF THE SAME SHOWS THAT THE TOURS ARE ONLY BY THE TRUSTEES AND IN PARTICULAR MAINLY BY THE PRESIDENT AND THE MANAG ING TRUSTEE. WE FURTHER FIND FROM THE DETAILS FILED THAT THE VISITS ARE TO NAGAR PATHARDI NEAR SHIRDI WHERE TRUST HAS STARTED A SCHOOL DURING 1999-2000. THE VISIT TO GONDAVALE, COCHIN, MUMBAI, MADURAI AND TRIVENDRU M ARE FOR ADMINISTRATIVE MATTERS. THE VISIT TO UDAIPUR IS AL SO TO ATTEND THE CONFERENCE AT MOUNT ABU AND THE VISIT TO SOLAPUR AN D AKKALKOT WAS IN CONNECTION WITH PURCHASE OF LAND TO START EDUCATION AL COMPLEX AT SOLAPUR. THEREFORE, THE LOCAL TOURS BY THE TRUSTEE S IN OUR OPINION IS FOR THE OBJECTS OF THE TRUST AND CANNOT BE HELD AS NOT FOR THE OBJECTS OF THE TRUST. IN VIEW OF THE ABOVE DISCUSSION THE ASSESSI NG OFFICER IS DIRECTED TO COMPUTE THE AMOUNT OF DISALLOWANCE THAT HAS TO B E BROUGHT TO TAX AND THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION. THE GROUNDS OF APPEAL NO.5, 6, 8 AND 11 ARE DECIDED ACCORDINGLY. 116 ITA NOS.915 TO 920/PUN/2012 160. THE NEXT ISSUE WHICH IS COMMON FOR ALL THE YEA RS IS REGARDING DISALLOWANCE U/S.43B, 40A(3) AND 40A(7) ETC. 161. SINCE IN THE INSTANT CASE THE TRIBUNAL HAS RES TORED THE REGISTRATION U/S.12A TO THE ASSESSEE TRUST, THEREFO RE, THE INCOME IN OUR OPINION HAS TO BE COMPUTED U/S.11. IT HAS BEEN HEL D IN VARIOUS DECISIONS THAT THE INCOME U/S.11 HAS TO BE COMPUTED IN A COMMERCIAL MANNER AND NOT AS PER THE PROVISIONS OF I.T. ACT. THE VARIOUS HEADS OF INCOME U/S.11 ARE NOT RELEVANT IN CASE OF A CHARITA BLE TRUST AND THEREFORE WE FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL F OR THE ASSESSEE THAT WHILE COMPUTING THE INCOME U/S.11 THE VARIOUS DISAL LOWANCES/ADDITIONS U/S.40A(3), 40A(7) AND 43B ETC. CANNOT BE MADE U/S. 28 TO 43. 162. WE FIND THE HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES REPORT ED IN 135 ITR 0485 HAS HELD THAT INCOME FOR PURPOSES OF SECTION 1 1(1)(A) HAS TO BE COMPUTED ON NORMAL COMMERCIAL BASIS WITHOUT REFEREN CE TO PROVISIONS ATTRACTED BY SECTION 14. THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE FOR THE RESPECTIVE ASSESSMENT YEARS UNDER APP EAL ARE ACCORDINGLY ALLOWED. 163. THE NEXT ISSUE THAT REQUIRES ADJUDICATION IS G ROUND OF APPEAL NO.9 FOR A.Y. 2001-02 WHERE THE ASSESSEE HAS CHALLE NGED THE ADDITION OF RS.4,27,004/- ON ACCOUNT OF TREATING CERTAIN EX PENSES AS CAPITAL EXPENSES. 164. AFTER HEARING BOTH THE SIDES, WE FIND THE SPEC IAL AUDITOR IN HIS REPORT U/S.142(2A) HAS OBSERVED THAT EXPENDITURE AM OUNTING TO RS.4,27,004/- WAS CAPITAL IN NATURE BUT WAS CLAIMED AS REVENUE IN NATURE IN THE INCOME AND EXPENDITURE ACCOUNT. HE, THEREFORE, DISALLOWED THE SAME AMOUNT IN THE RECASTED INCOME A ND EXPENDITURE 117 ITA NOS.915 TO 920/PUN/2012 ACCOUNT. HOWEVER, WHILE COMPUTING TAXABLE INCOME F OR THE YEAR THE ASSESSING OFFICER AGAIN DISALLOWED THE SAME WHICH A CCORDING TO THE ASSESSEE HAS RESULTED IN DOUBLE DISALLOWANCE. ALTH OUGH THE ASSESSEE HAD RAISED THIS ISSUE BEFORE THE CIT(A) AS PER GROU NDS OF APPEAL NO.14, HOWEVER, HE HAS NOT MADE ANY FURTHER DISCUSSION OR DECISION ON THIS ISSUE. 165. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT SINCE THE CIT(A) HAS NOT DISCUSSED THE ISSUE THE MA TTER MAY BE RESTORED TO THE FILE OF THE CIT(A). IT IS ALSO HIS FIRST ALTERNATE CONTENTION THAT IF THE INCOME OF THE ASSESSEE IS HELD TO BE EL IGIBLE FOR EXEMPTION U/S.11 THEN THE ISSUE WHETHER A PARTICULAR EXPENDIT URE IS REVENUE OR CAPITAL IN NATURE WILL NOT BE RELEVANT AT ALL. ACC ORDING TO HIM, THE INCOME IN CASE OF A CHARITABLE TRUST IS TO BE COMPUTED IN COMMERCIAL MANNER AND ACCORDINGLY CAPITAL EXPENDITURE WILL ALSO BE CO NSIDERED AS APPLICATION OF INCOME. IT IS ALSO HIS SECOND ALTER NATE CONTENTION THAT EVEN IF THE AMOUNT IS DISALLOWED FOR A.Y. 2001-02 T HE APPLICATION OF INCOME FOR THIS YEAR BEING HIGHER THAN THE RECEIPTS , THEREFORE, AFTER GRANTING EXEMPTION U/S.11 THERE IS NO TAXABLE INCOM E IN THE HANDS OF THE ASSESSEE. 166. WE FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND ALTHOUGH THE ASSESSEE HAS RAISED THE GROUND BEFORE THE CIT(A) AS PER GROUND OF APPEAL NO.14, HOWEVER, HE HAS NOT GIVEN ANY DECISION ON THIS ISSUE. FURTHER, TREATING THE EXPENSES AS CAPITAL OR REVENUE WILL NOT BE MATERIAL SINCE THE INCOME IN TH E CASE OF A CHARITABLE TRUST HAS TO BE COMPUTED IN A COMMERCIAL MANNER AS HELD BY US IN THE PRECEDING PARAGRAPH. ACCORDINGLY, THE CAPITAL EXPE NDITURE WILL ALSO BE CONSIDERED AS APPLICATION OF INCOME. ACCORDINGLY, THIS GROUND BY THE ASSESSEE IS ALLOWED. HOWEVER, THE ASSESSING OFFICE R IS DIRECTED TO 118 ITA NOS.915 TO 920/PUN/2012 MAKE NECESSARY VERIFICATION AND IF THERE IS DOUBLE DISALLOWANCE, MAKE NECESSARY CORRECTION. THIS GROUND IS ACCORDINGLY AL LOWED FOR STATISTICAL PURPOSES. 167. THE NEXT ISSUE THAT REQUIRES ADJUDICATION IS G ROUND OF APPEAL NO.9 FOR A.Y. 2002-03 AND A.Y. 2003-04 ON ACCOUNT O F DISALLOWANCE OF RS.4,12,656/- FOR A.Y. 2002-03 AND RS.4,42,920/- FO R A.Y. 2003-04 ON ACCOUNT OF INCOME TAX DEBITED. 168. AFTER HEARING BOTH THE SIDES WE FIND THE ASSES SING OFFICER DISALLOWED THE ABOVE AMOUNTS ON ACCOUNT OF INCOME T AX DEBITED IN THE BOOKS OF MIMER COLLEGE AND DBSR HOSPITAL, TALEGAON WHICH IS ONE OF THE CONSTITUENT UNITS OF THE ASSESSEE TRUST. ACCOR DING TO THE LD. COUNSEL FOR THE ASSESSEE IT IS A CHARITABLE TRUST C LAIMING EXEMPTION U/S.11 AND THEREFORE THERE WAS NO QUESTION OF PAYME NT OF ANY INCOME TAX. THE AMOUNTS WERE NOT PAID TOWARDS INCOME TAX BUT TOWARDS TDS ARREARS OF EARLIER YEAR WHICH IS AN ALLOWABLE DEDUC TION. IT IS ALSO HIS FIRST ALTERNATE CONTENTION THAT THE INCOME IN CASE OF A C HARITABLE TRUST IS TO BE COMPUTED IN COMMERCIAL MANNER AND INCOME TAX EXPEND ITURE WILL ALSO BE CONSIDERED AS APPLICATION OF INCOME. IT IS HIS S ECOND ALTERNATE CONTENTION THAT EVEN IF THE AMOUNT IS DISALLOWED FO R A.Y. 2002-03 AND 2003-04 THE APPLICATION OF INCOME FOR THESE YEARS B EING HIGHER THAN THE RECEIPTS, THEREFORE, AFTER GRANTING EXEMPTION U/S.1 1 THERE IS NO TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. 169. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE. SINCE WE HAVE ALREADY HELD THAT THE ASSE SSEE TRUST IS ELIGIBLE FOR CLAIMING EXEMPTION U/S.11, THEREFORE, THE INCOME OF THE ASSESSEE TRUST HAS TO BE COMPUTED IN COMMERCIAL MAN NER AND SUCH EXPENDITURE WHICH IS ON ACCOUNT OF TDS ARREARS OF E ARLIER YEAR WILL BE CONSIDERED AS APPLICATION OF INCOME. EVEN OTHERWIS E ALSO ACCORDING TO 119 ITA NOS.915 TO 920/PUN/2012 LD. COUNSEL FOR THE ASSESSEE, AFTER DISALLOWANCE OF THE SAME, APPLICATION OF INCOME OF THE ASSESSEE TRUST FOR BOT H THE YEARS WILL BE HIGHER THAN THE INCOME/RECEIPTS AND THEREFORE AFTER GRANTING EXEMPTION U/S.11 THERE WILL BE NO TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. HOWEVER, THIS NEEDS VERIFICATION AT THE LEVEL OF TH E ASSESSING OFFICER. WE THEREFORE DIRECT THE ASSESSING OFFICER TO MAKE N ECESSARY VERIFICATION AND IF THE APPLICATION IS MORE THAN THE INCOME, THE RE WILL BE NO TAXABLE INCOME. ACCORDINGLY, GROUND OF APPEAL NO.9 FOR A.Y RS. 2002-03 AND 2003-04 ARE ALLOWED FOR STATISTICAL PURPOSES. 170. THE NEXT ISSUE THAT REQUIRES ADJUDICATION IS G ROUND OF APPEAL NO.12 FOR A.Y. 2003-04 REGARDING DISALLOWANCE OF EX CESS PROVISION FOR REFUND OF FEES. 171. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSE SSEE HAS MADE A PROVISION OF RS.50 LAKHS FOR REFUND OF FEES IN A.Y. 2002-03 IN RESPECT OF MIT SFS WHICH IS ONE OF ITS CONSTITUENT UNIT. THE UNIT WAS CLOSED DURING A.Y. 2003-04. CERTAIN AMOUNT WAS REPAID OUT OF THE PROVISION OF RS.50 LAKHS AND AN AMOUNT OF RS.30,96,750/- REMAINED OUT STANDING DURING A.Y. 2003-04 WHICH REMAINED UNPAID EVEN UPTO 31-03- 2006. THE ASSESSING OFFICER ACCORDINGLY ADDED BACK THE EXCESS PROVISION IN THE YEAR OF CLOSURE OF THE UNIT, I.E. A.Y. 2003-04. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT EVEN IF THE AMOUN T IS ADDED AS INCOME FOR A.Y. 2003-04 THE APPLICATION OF INCOME I N THIS YEAR IS STILL HIGHER THAN THE INCOME/RECEIPTS AND THEREFORE AFTER EXEMPTION U/S.11 THERE IS NO TAXABLE INCOME IN THE HANDS OF THE ASSE SSEE. 172. SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE I S ENTITLED TO EXEMPTION U/S.11, THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO FIND OUT AS TO WHETHER AFTER D ISALLOWANCE OF THE SAME THE APPLICATION OF INCOME IS MORE THAN THE REC EIPT AND IF THERE IS 120 ITA NOS.915 TO 920/PUN/2012 NO TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER WILL PASS APPROPRIATE ORDER. THE GROUND IS ACCORDI NGLY ALLOWED FOR STATISTICAL PURPOSE. 173. THE NEXT ISSUE THAT REQUIRES ADJUDICATION IS G ROUND OF APPEAL NO.9 FOR A.Y. 2004-05 WHICH RELATES TO INCORRECT AD DITION OF RS.4,62,41,042/- BY ADOPTING WRONG SURPLUS. 174. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSE SSING OFFICER ON PAGE 29 OF THE ASSESSMENT ORDER FOR A.Y. 2004-05 HA S STATED THAT THE AUDITOR HAS RECASTED THE INCOME AND EXPENDITURE ACC OUNT OF THE ASSESSEE AND ARRIVED AT SURPLUS OF RS.7,23,46,742/- FOR THE YEAR. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE THIS FIGURE IS INCORRECT SINCE THE AUDITOR HAS RECASTED THE SURPLUS OF RS.2, 61,02,700/- IN THE RECASTED INCOME AND EXPENDITURE ACCOUNT FOR A.Y. 20 04-05. ACCORDING TO HIM THIS TYPOGRAPHICAL ERROR NEEDS TO BE CORRECT ED. IN VIEW OF THE ABOVE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASS ESSING OFFICER WITH A DIRECTION TO VERIFY THE RECORDS AND IF THE CONTENTI ON OF THE ASSESSEE IS CORRECT THEN ADOPT THE CORRECT SURPLUS OF RS.2,61,0 5,700/- AND NOT RS.7,23,46,742/-. THIS GROUND BY THE ASSESSEE IS A CCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 175. IN THE RESULT, THE APPEALS FILED BY THE ASSESS EE FOR A.YRS. 1999- 2000 AND 2000-01 ARE ALLOWED, AND THE REMAINING APP EALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10-02-2017. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; DATED : 10 TH FEBRUARY, 2017. 121 ITA NOS.915 TO 920/PUN/2012 ( )'+ , / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // # % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A ) - I II , PUNE 4. 5. THE CIT(A)-11, PUNE # %%*, *, BENCH / DR, ITAT, A BENCH PUNE; 6. 2 / GUARD FILE.
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