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TMI Blog2015 (5) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... hority as to how and why the amounts made over to Ram Krishan & Sons Charitable Trust from its earnings through its charitable activities were either not a device, or were permissible under its trust. Given the significance of the amounts involved i.e. ₹ 2.74 crore and ₹ 60 lakhs in AY 2004-05 and ₹ 4,43,37,505/- crores in AY 2003-04, the assessee was certainly expected to give an explanation better than the one it argued that the AO’s reasoning was not supported by law as he was not the authority to doubt such expenditure. The obligation required of a charitable trust enjoying the benefit of tax exemption under Section 12A is clearly categorical in that it has applied for registration under Section 80G(5) towards its char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer could have rendered findings questioning the exemption under Section 12-A enjoyed by the assessee, on the basis of the donation which was made to the Ram Krishna and Sons Charitable Trust. 2. The question of law which arises in ITA 16/2013 is: Whether in the circumstances of the case ITAT was justified in setting aside the order of the Director of Income Tax (Exemption), which had cancelled the assessee s registration under Section 12A. 3. Brief facts are that the assessee was registered as trust on 01.02.2001. Its application for registration as a charitable trust was granted on 27.12.2001. On 30.06.2002 the assessee received the IILM Undergraduate Business School,from the Ram Krishna and Sons Charitable Trust (RKSCT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5. The second question which arises for consideration in ITA No.16/2013 is as to the legality of the revocation of the certificate under Section 12-A ordered by the DIT (Exemption). The order took note of the decision of the AO for AY 2003-04 and 2004-05 and thereafter the concerned authorities appears to have issued show cause notice to the assessee on 03.12.2009. The assessee appears to have responded on 26.05.2010, and relied almost unsuccessfully upon the Appellate s order, for the AY 2003-04 and 2004-05. It also relied upon the orders of the ITAT. The DIT (Exemption) after discussing the replies and submissions of the assessee held as follows: The submissions made in the above letter and verbal discussion held with the AR of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution is nothing but a colorable device to subvert the provision of the law and to gain benefits among specified person u/s 13 of the Income Tax Act, 1961. The activity of the Trust does not fall within the meaning of Charitable activity, as the transfer of running Business School from Ram Krishan and Sons Charitable Trust to Ram Krishan Kulwant Rai Charitable Trust (the assessee trust) is purely a business transaction for the benefit of common trustees and not in favour of general public. 6. In view of the above fact and considering the reply of the assessee, it is established beyond reasonable doubt that the society has violated the provisions of Section 2(15), activity by the society, it does not quality for registration u/s 12A. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e activities of the trust. This is not the only institution run by the trust, the RKSCT is running various other institutions and its activities have not been doubted. The show cause notice is based on the observations of the AO in asstt. Year 2003-04. However, those observations were not upheld by the Ld. First Appellate Authority as well as by ITAT. Copy of the Tribunal orders have been placed in the paper book on pages No.185 to 211. These are the orders for asstt. Year 2003-04 to 2006-07. On due consideration of the facts and circumstances, we do not find any ground or cancellation of registration. Therefore, we allow the appeal of assessee and quash the order of Ld. DIT, the registration already granted to the assessee is restored back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aritable activities. In these circumstances the DIT (Exemption) was certainly within her rights to insist on a proper explanation which in the circumstances of the case, the assessee failed to provide perhaps more as a result of its mistake on his mis-apprehension that the entire basis for the revocation proceedings or the AO s opinion for AY 2003-04 and 2004-05. Once the notice under Section 12A proposing revocation was issued in the independent nature of the proceedings had to be satisfied. The assessee was under an obligation to provide such material to satisfy that the donation fulfilled the objective and were of charitable nature and as such rendered any proposed action for revocation unwarranted. 8. For the above reason, this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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