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TMI Blog2013 (12) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... in collection of charges from them and making a profit, then certainly it is a profitable organization, no matter that no dividend is declared by virtue of registration granted under section 25 of the Companies Act – The lower authorities have not examined the sources and application of funds - The matter set aside for fresh decision. - ITA No.92/Coch/2011,ITA No.93/Coch/2011 - - - Dated:- 31-1-2013 - Shri N. R. S. Ganesan (JM) And Shri B. R. Baskaran (AM),JJ. For the Appellants : Shri M. S. Venkitachalam For the Respondent : Shri M. Anil Kumar, C.I.T. Smt. S. Vijayaprabha ORDER Per N.R.S. Ganesan (JM) These two appeals of the two independent taxpayers are directed against the independent orders of the Administra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Therefore, according to the ld.representative, the taxpayer is not eligible for registration u/s 12AA of the Act. Referring to the paper book filed by the taxpayer, the ld.DR submitted that both the taxpayers have received huge donations immediately after its creation. The source of receipts of donation and the expenditure was not examined by the Administrative Commissioner. According to the ld.DR, no charitable activity was carried on except an expenditure of Rs.20,000 for medical aid and Rs.12,500 for social aid in the case of Restoration Trust. Therefore, according to the ld.DR, the taxpayer is not eligible for registration u/s 12AA of the Act. 4. We have considered the rival submissions on either side and also perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears that the taxpayer trusts have received huge amounts as donation from foreign sources. Therefore, this Tribunal is of the opinion that the source of the donations received by the taxpayer trust needs to be examined. We find that the Kerala High Court had an occasion to examine an identical issue in the case of Norka Roots (2010) 320 ITR 733 (Ker). The Kerala High Court after considering the provisions of section 12AA found that the Commissioner should verify the sources of funds and the utilization of the same for the purpose of grant of registration. In fact, the Kerala High Court observed as follows on pages 735 736 of the ITR: "............. However, we find that before deciding the entitlement for registration as charitable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the Tribunal and that of the Commissioner and by restoring the matter to the Commissioner for fresh decision, but the Commissioner is directed to consider the original application after calling for particulars, particularly statement of accounts, as stated above." 5. In view of the above observation of the Kerala High Court it is also necessary to find out sources of funds and its application. Since these aspects were not examined by the lower authority, the orders of the lower authority are set aside and the issue of registration is remitted back to the file of the Commissioner of Income-tax. The Commissioner of Income-tax shall examine the matter of registration in light of the judgment of the Kerala High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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