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TMI Blog2015 (5) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant Sri Y V Raviraj, Adv. For the Respondent : By Sri S Parthasarathy, Sri P Dinesh, Sri H R Kambiyavar and Sri Gangadhar J M, Advs. JUDGMENT Dr. K. Bhakthavatsala J.- This is an appeal filed by the Revenue under section 260A of the Income-tax Act, 1961, challenging the order dated August 11, 2011, made in I. T. A. No. 149/PNJ/2011 on the file of the Income-tax Appellate Tribunal allowing the appeal filed by the assessee- KLE Society challenging the order dated July 8, 2011, passed under section 12AA(3) of the Income-tax Act, 1961, and cancelling the registration of trust granted under section 12A of the Income-tax Act, on the file of the Commissioner of Income-tax, at Belgaum. 2. For the purpose of convenience and better understanding, the respondent-KLE Society is hereinafter referred to as the society . 3. Brief facts of the case leading to the filing of the appeal by the Revenue may be stated as under : The society was registered under the Societies Registration Act, 1860, and also under the Bombay Public Trusts Act, 1950. It was also registered as a trust . under section 12A of the Income-tax Act (in short, the IT Act ). It is a charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have been admitted to the colleges in accordance with the rules and regulations approved by the Government of India through UGC ; (iv) that the society is running a large number of educational institutions since 1916, in urban as well as rural areas in various faculties ; (v) that the KLE University is an independent body running various colleges for undergraduate, post-graduate in medicine, dentistry, pharmacy, ayurveda and nursing ; (vi) that the society needs huge amount of funds for creating infrastructure and also for providing better facilities for the students in each of the area undertaken by the society and receive voluntary donations from various persons, societies and similar trusts and all such receipts are applied for attainment of the main object of charitable purpose of imparting education ; (vii) that the voluntary donations received from the various donors are not for the purpose of seeking admission in the society's colleges/institutions or any other institutions run by the society ; (viii) that the allegations that the donations received by the society are towards admission of students to the KLE University is baseless and contrary to facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Nursing College, for imparting practical education in the Hospital ; (xvi) that maintaining of hostels in the college premises is for the purpose of facilitating students studying in the college and the same is incidental to the object of education and running of the hostels cannot be said as a commercial activity ; (xvii) that since 2006, the society is having hostels, in JNMC campus, for the students of the college and when the KLE University came into existence and arrangements had to be made by the KLE University for separate hostels, the society allowed the KLE University to use the hostels on temporary basis ; (xviii) that the income of the hostels is used for further development of the educational activities only ; (xix) that the observation of the Revenue that the income of the soci ety deriving from the hospitals and hostels run by it is a commercial activity and, therefore, not carrying on its object is incorrect interpretation ; (xx) that the hospitals and hostels run by the society are linked with the main object of education. 6. The Revenue considered the above grounds but by order dated July 8, 2011, the Commissioner of Income-tax rejected the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons received by the society is for seeking admission in the KLE University and the donation is nothing but capitation fee ; (vi) that the hostels run by the society is not charitable and, therefore, it would not qualify the society as charitable by virtue of the proviso to section 2(15) of the Income-tax Act ; (vii) that the Tribunal failed to consider the genuineness of the activity of the society in the right perspective ; (viii) that the Tribunal ought to have held that the assessee indulged in sale of education by collecting donation and carrying on its activity with profit motive and, therefore, its activities are not charitable in nature and that charitable object cannot depend upon utilisation of profits and the activities carried on by the society are outside the purview of charitable purpose within the meaning of section 2(15) of the Income-tax Act ; (ix) that the Tribunal erred in not noticing that there is direct nexus to the donation collected by the society and admissions given to the students of KLE University. He has cited the following decisions : (i) CIT v. Surya Educational and Charitable Trust [2013] 355 ITR 280 (P H) ; (ii) CIT v. Savior Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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