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TMI Blog2015 (5) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... existing solely for educational purposes and not for purposes of profit. If the existence of the assessee was not for the purposes of profit, but solely for educational purpose, then the receipts of the assessee, if the same did not exceed ₹ 1 crore per annum, will be outside the purview of total income as is the mandate contained in Section 10(23C)(iiiad) of the Act. That having not been held by the Assessing Officer was reversed by the Commissioner of Appeals and the same having been affirmed by the Tribunal, there is no scope of interference. Thus the basis adopted by the CIT to decline registration was not in accordance with law and in view thereof, CIT is directed to grant the registration to appellant trust u/s 12AA(1)(b) of the Act. - Decided in favour of assessee. - ITA No. 5481/Del/2013 - - - Dated:- 27-2-2015 - SHRI N.K.SAINI AND SHRI A.T. VARKEY, JJ. For The Appellant : Sh. Gautam Jain, Adv For The Respondent : Gujan Prasad, CIT DR ORDER PER A. T. VARKEY, JUDICIAL MEMBER This is an appeal arises from an order dated 26.07.2013 of CIT, Dehradun u/s 12AA(1)(b)(ii) of the Income tax Act, 1961 (herein after the Act ). 2. The factual matri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety reported in 315 ITR 428, and Rajah Sir Annamalai Chettair Vs. DIT 48 SOT 502 are not applicable to the fact of the appellant trust. He placed reliance on the following judgements:- (a.) CIT Vs. Red School reported in 212 CTR 394 (All), (b.) American Hotel and Lodging Association Education Vs. CBDT 301 ITR 86 (SC), (c.) ITA No. 142/2007 (Uttrakhand) dated 27.112012 CIT Vs. Highlander Educational Academy (Pages 94-95 of Paper Book), (d.) CIT Vs. Jyoti Prabha Society 310 ITR 162. 5. He also contended that amended provision section 2(15) of the Act clearly provide that education activities cannot be classified as commercial and therefore the denial of registration to the charitable trust was invalid. On the other hand the ld CIT DR supported and relied on the order of the ld CIT and does not want us to interfere in the impugned order. 6. We have considered the rival submission and perused the material on record. In instant case we find that the appellant was formed under a trust deed dated 11.06.2012 as a public charitable trust. The trust deed provides that trust has been formed for public educational and cultural purpose. It further stipulates in clause 27 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;] 8. Section 2(15) defines charitable purpose to include education. There is no restriction imposed in the manner and mode of education under this Act. Further the proviso to section 2(15) of the Act provides that the advancement of any other object of general public shall not be a charitable purpose if it involves the carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity. Thus the above proviso stipulates that the aspect of commerciality will be confined to the last limb of section 2(15) i.e. advancement of any other object of general public utility and not to any other limb namely relief of the poor, education or medical relief, preservation of environment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of activity. If the activity like running a printing press takes place it is not educational. But whether the income/profit has been applied for non-educational purpose has to be decided only at the end of the financial year. 10. Having regard to the above we hold that the conclusion of the ld CIT that appellant is not engaged in charitable activities under section 2(15) of the act is incorrect. 11. The application for registration cannot be rejected on presumptions and surmises that the income of the trust will not be utilized for charitable purpose. The conditions of the franchiser under the franchisor agreement cannot be a ground to assume that the income of the trust will not be applied for educational activity which is charitable activity u/s 2(15) of the Act or objects of the trust. We consider it appropriate to emphasize here that CIT at the stage of registration is not required to examine the application of under section 11 and 12 of the Act. The Allahabad High Court in the case of CIT Vs. Red Rose (supra) has held sufficient safeguards have been given in section 11, 12 and 13 for assessing the income which has not been applied for the purpose of the trust or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer could come to that conclusion. The prudence that he had used, however, is not acceptable in the prudent world as is known in law. A look at each of those cIauses will show that to fulfil any of them, the assessee will undertake only educational activity and accordingly, the conclusion would be that the whole purpose of establishment of the assessee was to engage it solely for educational purposes. It will further be seen from those objects that the assessee was not established for the purpose of profit. None of the said 12 objects would show that the activities contemplated therein suggested even a hidden intent of making profit. At the same time, those objects will also not show that while carrying out those Objects, the assessee will be discharging any religious or charitable activity. The conclusion, therefore, would be that the object of establishment of the assessee was solely for educational purposes and not for the purposes of profit. However, object of establishing the assessee was of no consequence in the instant case. What the Assessing Officer was required to see was, whether the assessee was existing solely for educational purpose, inasmuch as, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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