9911796707
TMI Blog2013 (10) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... fusing the registration sustained - Decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... g education and prepare itself to launch a new line in the educational arena from the beginning. The assessee's counsel stated that the Society had recently identified poor deserving students and distributed free stationery to them in order to help them in their studies. The assessee also furnished "Income and expenditure account" for the period ending 30.09.2012 in which no such expenditure like distribution of stationery to the poor students has been shown. The Commission of Income Tax was of the view that The creation of this new society without carrying out such an exercise can best be described as an attempt of the assessee to split up assets of an already existing society and conveniently pass it over to a new one with sole intention of evading tax liability. This if allowed unchecked would in all probability defeat the very purpose for which the exemption provisions have been contained in the I.T. Act. The Commission of Income Tax vide para 8 thus held as under: It is seen that the Society has been set up by registering with the Registrar of societies on 3.04.2012 but no activity has been started even upto the date of present proceedings. In the absence of any activities h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 ITR). 18 ( Ker ) ] and Hardayal Charitableand Educational Trust Vs . CIT - II[ 138 ITD 179 (Agra) ] 6. We have heard the rival contentions and perused the record. The assessee society came into existence w.e.f. 13.11.2012 and is registered as society under the Societies Registration Act. The certificate of registration of societies is enclosed at page 6 of the Paper Book. The assessee at pages 7 to 8 of the Paper Book has placed on record the Memorandum of Association of the assessee society. As per clause 4(i) and (ii), the aims and objects of the assessee society are as under: i) To provide advancement, Research and dissemination of education-literacy, scientific and scholastic and opening and to start, establish, run, takeover or manage and maintain schools with an object to provide sound pre-primary, primary, middle, secondary and higher education including running of engineering and medical colleges, polytechnic institutes and various vocational courses to children seeking recognition. The society shall provide education to the students for the various examinations conducted by different Indian/Foreign Universities, Boards and Institutions etc. ii) To affiliate, get re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the trust were charitable or not was to be seen and at the stage of grant of registration by the Commissioner of Income Tax, the application of the income is not to be looked in. The assessee placed on record another note of activities before the Commissioner of Income Tax alonwith letter dated 11.9.2012 which reads as under: NOTE ON ACTIVITY Suchinta Educational Society was registered as a society under Societies Registration Act 1860, on 13th April 2012 with basic objective of imparting education to alias mentioned in Memorandum and Articles of Association. Shishu Nike tan Model School, an existing society is already registered under section 12 A of the Income Tax Act since 1968. The existing society is running four schools, Two in Chandigarh ,one in Mohali and one in MDC Panchkula The existing Society is registered under Section 80 G and also registered under Section 10(23)C of the Income Tax Act The new society proposes to approach for taking on lease the management of existing school to be run on day to day basis Since the existing society is running four schools, and in order to ease the pressure and effectively manage the affairs in a better way the new society c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head 'corpus fund' it had shown Rs.5000/- and balance cash in hand after expenses was shown at Rs.3480/-. The assessee alongwith letter dated 23.10.2012 filed before the Commissioner of Income Tax placed at page 54 of the Paper Book, enclosed a request for providing the management contract of Shishu Niketan Public School, Sector 66, SAS Nagar, Mohali under which it is intimated that the request made by the assessee society was under consideration. The assessee furnished before the Commissioner of Income Tax the Balance Sheet as on 30.9.2012 alongwith income and expenditure account for the period ending 30th September, 2012, under which the corpus fund was reflected at Rs.10,000 with cash in hand at Rs.3420/- and the bank balance at Rs.5000/-. The expenditure incurred by the assessee was legal expenses of Rs.1100/- and miscellaneous expenses of Rs.480/- which was booked up to 31.3.2012. 10. The issue arising in the present appeal in the given facts and circumstances is that whether the assessee is entitled to the claim of registration under section 12AA of the Act. Under the provisions of section 12A of the Act it is provided that in order to avail the exemption under sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (c) [** ** **] [(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. 12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A, shall-- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he-- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary in order to satisfy himself about the genuineness of the activities of the trust or the institution. The Commissioner of Income Tax may also make such enquiry as he deem necessary in this behalf. The Commissioner of Income Tax on being satisfied about the objects of the trust and genuineness of its activities is to pass an order in writing registering the trust or institution or refusing to register the trust or institution, copy of which is to be served upon the assessee. It is further provided under the section that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. The time limit for passing the order granting or refusing the registration under sub-section (1) shall be before the expiry of six months from the end of month in which the application was received by the Commissioner of Income Tax, as per sub-section (2) of section 12AA of the Act. Under section 12AA(3) of the Act, the Commissioner of Income Tax is empowered to withdraw the registration already granted to a trust or institution in case he is satisfied that the activities of such trust or institution are not genuine or are not being ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 12 of the Act are provided under section 12A of the Act and one of the conditions is that the person in receipt of the income which he claims to be for charitable purposes is to make an application for registration of the trust or the institution in the prescribed form and in the prescribed manner to the Commissioner within the stipulated period of creation of the trust or the establishment of the institution. On receipt of the application in the requisite form No.10A alongwith Instrument of creation of the trust or the institution, the procedure for registration of the trust or the institution by the Commissioner is provided under section 12AA of the Act. Admittedly, at the time of grant of registration the Commissioner is not empowered to examine the application of income but he has to examine whether the application is made in accordance with the requirements of section 12A of the Act and whether form No.10A has been properly filled in. The Commissioner is further to examine whether the objects of the trust are charitable or not and also to satisfy himself about the genuineness of the activities of the trust or the institution. The Commissioner is not to examine the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Boards and other Authorities and to observe the Rules and Regulations prescribed by them or contained in the Education Code, etc. and to receive grants-in-aid. 17. The perusal of the above said objects of the assessee society reflect that the assessee has a wide range of objects, which it may consider as its activity of running the trust. The objects of the assessee are in different directions and different fields and are general in nature. If we have look at clauses 4(i) and 4(ii) of aims and objects, the objects, of the trust are to provide: (a) Advancement, Research and dissemination of education-literacy, scientific and scholastic; (b) Opening and to start, establish, run, takeover or manage and maintain schools; (c) Running of engineering and medical colleges, polytechnic institutes and various vocational courses to children seeking recognition; (d) Education to the students for the various examinations conducted by different Indian/Foreign Universities, Boards and Institutions etc; (e) Affiliate, get recognition of the schools and colleges maintained by the society to the Universities, Education Boards and other Authorities; (f) To observe the Rules and Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis Since the existing society is running four schools, and in order to ease the pressure and effectively manage the affairs in a better way the new society can play a supportive role.. The existing School at Sector 43 Chandigarh is already having around 1400 Students with complete infrastructure i.e. Land & Building, Furniture & Fixture and Other Facilities to run the school. The school is located on a plot measuring more than one acre allotted by Punjab Urban Development Authority The school building has provision for 60 classrooms, Reception area , Staff rooms , Sports room etc. and a large basement for use for various indoor activities. The school has complete infrastructure as per requirements laid down by CBSE for Computer and Science Laboratories, Library, Drinking water, Fire fighting, Play area etc. The school is Affiliated with Central Board of Secondary Education up to Senior Secondary classes and its students are appearing for the exams under the CBSE curriculum. The school is providing education to all class of students and providing Fee concessions to deserving students under category of Fatherless, Poor means, Merit students and EWS etc, to around 99 students, Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner. The Hon'ble Madras High Court in CIT v. Ootacamund Gymkhana Club [1977] 110 ITR 392 had held that on an application being filed under section 12A of a trust of institution is registered as charitable or religious one and the registration itself would be sufficient proof of the fact that the trust or institution concerned was created or established for charitable or religious purpose. 21. The Hon'ble Supreme Court in CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 had held that "If there were two distinct objects, one of which was charitable and the other not charitable and if the fund of the association could be applied for either of these purposes at the discretion of those in authority, then it cannot be held that there was any property held under trust wholly for charitable purpose". 22. The objects of the assessee society have to be charitable or religious, as the case may be, in order to avail the benefits under sections 11 and 12 of the Act. The case of the assessee was that some of the trustees were already running schools and it proposes to take over one of such schools for better administration. The second plea was that it had provided free books t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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