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TMI Blog2011 (3) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... der that the trustees did not have the wherewithal to contribute the sums mentioned and even if we treat such donations as coming from anonymous sources, it would not be reason to deny registration under section 12AA of the Act. Trust was charging exorbitant amounts as school fees and was spending only a small part towards the salary of the teachers and other related expenses - Held that:- There is no finding by CIT(A) that any excess or surplus was used or diverted, for any purpose other than for educational needs. On the other hand, there is a clear finding that the funds were used for construction of the building of the school. Where education is itself is charitable under section 2(15) of the Act, construction of the building to carry on such education, or in other words spending money for raising necessary infrastructure would also be very much charitable. Trust was running hostel and transportation services not part of its educational activity - Held that:- A school has to have a hostel and a mode of transporting the students. Surplus if any generated, as long as it was used for educational objects would not make the institution non-charitable. In favour of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authority or the Appellate Tribunal in connection with any proceeding under this Act otherwise than when required under section 131 to attend personally for examination on oath or affirmation, may, subject to the other provisions of this section, attend by an authorised representative. (2) For the purposes of this section, 'authorised representative' means a person authorised by the assessee in writing to appear on his behalf, being- (i) a person related to the assessee in any manner, or a person regularly employed by the assessee ; or (ii) any officer of a scheduled bank with which the assessee maintains a current account or has other regular dealings ; or (iii) any legal practitioner who is entitled to practice in any civil court in India ; or (iv) an accountant ; or (v) any person who has passed any accountancy examination recognised in this behalf by the Board ; or (vi) any person who has acquired such educational qualifications as the Board may prescribe for this purpose ; or (via) any person who, before the coming into force of this Act in the Union territory of Dadra and Nagar Haveli, Goa, Daman and Diu, or Pondicherry, attended before an income-tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue audit examination for Section Officers conducted by the office of the Comptroller and Auditor General of India". 6. By virtue of sub-rule (4) of rule 50, Departmental examinations conducted by or on behalf of the Central Board of Direct Taxes are recognised for the purpose of clause (v) of sub-section (2) to section 288 of the Act. There is no dispute raised by the learned Departmental representative on the claim of Shri Subbarayan that he had passed such Departmental examination while in service. Now coming to the contention of the learned Departmental representative that every authorised representative, for appearing before this Tribunal had to apply to the Chief Commissioner within whose area of jurisdiction he was practicing, in accordance with rule 54 of the Rules and obtain a certificate of registration as per rule 55, we are unable to accept. Rule 54 of the Rules is reproduced as under : "54. (1) Any person who wishes to have his name entered as an authorised income-tax practitioner in the register shall apply to the Chief Commissioner or Commissioner within whose area of jurisdiction he has been practicing. The application shall be made in Form No. 39 and shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised, we now proceed with the merits of the appeal. Reasons why the learned Commissioner of Income-tax denied registration under section 12AA appears at paragraph 7 of his order which is reproduced hereunder : "7. I have carefully considered the submission of the authorised representative and the absence of the original trust deed, the amended deed cannot be accepted as the original deed more so, when the original name and address of the trust has been changed by the trust on its own without seeking clearance from the Income-tax Department. Secondly, 25 persons have initially invested in land by contributing entire money in cash and similarly they have brought in a sum of Rs.12 lakhs in the trust by bringing in Rs. 50,000 in cash for construction of the school. Many of the trustees do not have taxable income and investment made by them is questionable in their respective hands. Thirdly, the trust is charging exorbitant fees as school fees and is spending only a small part towards the salary of the teachers and other related expenses. The school is generating substantial surpluses year to year which are being utilised for the construction of the building of the school. It is appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts as school fees and was spending only a small part towards the salary of the teachers and other related expenses. This reasoning, in our opinion, could be relevant only if running of the school was incidental to the running of the main objects of the trust. When education itself was the main object, running a school could never be considered as incidental. There is no finding by the learned Commissioner of Income-tax that any excess or surplus was used or diverted, for any purpose other than for educational needs. On the other hand, there is a clear finding that the funds were used for construction of the building of the school. Where education is itself is charitable under section 2(15) of the Act, construction of the building to carry on such education, or in other words spending money for raising necessary infrastructure would also be very much charitable. The final finding of the learned Commissioner of Income-tax is that the trust was running hostel and transportation services, and such activities were not part of its educational activity and that the trust was making profit on these activities. This view is also incorrect in our opinion. A school has to have a hostel a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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