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TMI Blog2015 (6) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... sociation or Article of Association though the same is constituted and governed by the provisions of Gujarat Private Universities Act and is a body corporate in accordance with the same. 3. The learned Director of Income Tax (Exemption), Ahmedabad has erred in not following the decision of the Supreme Court in the case of CIT vs. Gujarat Maritime Board - 295 ITR 561 granting exemption u/s.12A though the same was not constituted under separate Trust Deed or Memorandum of Association or Article of Association but the same was formed under Gujarat Maritime Board Act. 4. The learned Director of Income Tax (Exemption), Ahmedabad has erred in holding that there was no clause in the first statute that the university will not be dissolved and if at all it has to be dissolved, its assets will go to another trust carrying on similar activities of university education though the provisions of winding up of the University have been duly incorporated in section 41 of Chapter IX of Gujarat Private Universities Act. 5. The learned Director of Income Tax (Exemption), Ahmedabad has erred in holding that the asset of the Appellant on dissolution shall go to sponsoring body, which cannot be per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written submissions. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The assessee has filed written submissions dated 08.05.2014 and 12.05.2014, which read as under:- "WRITTEN SUBMISSIONS FACTS OF THE CASE: 1. Rai Foundation had submitted a proposal for setting up a university in the name of Rai university in the State of Gujarat. The said proposal to set up this university was submitted by Rai Foundation to the Hon. Chief Minister of Gujarat, Shri Narendra Modi and the sponsoring body had showed their willingness to invest around 50 crores in 3 years for the same (Paper Book Page No 129 to 371). The Govt of Gujarat had thereafter executed an MOU on 13-01-2009 and the Principal Secretary , Education Department, Govt of Gujarat had vide letter dated 19-09-2011 allotted land to the Appellant (Paper Book Page No 372 & 373). Thereafter the Education Department vide letter dated 22-02-2012 gave a letter of intent for setting up of the university under the Gujarat Private University Act Rules and Regulations (Paper Book Page No 375 to 377). On completion of the formalities relating to setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case to Hon. DIT(E) with instructions " to consider the documents as filed by the assessee i.e. deed of Trust and decide this issue in light of various case laws cited by the assessee." 8. Since there was no trust deed by which the Appellant was set up and the said fact was mentioned during the hearing to the Hon. Bench, the Appellant filed a Miscellaneous Application against the said Order of the Hon. Tribunal. The Said MA has been heard on 17-04-2015 and the Order is awaited. 9. Meantime, in response to the letter filed by The Department Representative to the DIT(E) for expediating the set aside matter, the Appellant filed submissions dated 21-03-2014, 25-03-2014, and 01-04- 2014 (Paper Book Page No 391 to 423) to the Hon. DIT in response to the queries raised by him. However, the Hon.DIT passed Order dated 03-04- 2014 and once again rejected the application of the Appellant on various other grounds. ARGUMENTS: 1. It is submitted that in light of above mentioned facts, the Appellant is a university established under the Gujarat Private University Act and Rai Foundation is its sponsoring body. The sponsoring body is a Trust created on 31-07-1996 and has been granted r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, wherein it was held that where the Trust is not created under instrument, it is impossible to produce constitutional document, and hence, the Rule requires the production of evidentiary documents i.e. the documents evidencing the creation of Trust. In the present case, Gujarat Private Universities Act, 2009 contains provisions regarding running of institution by which Rule 17A is complied with. In view of the above, we request the Hon'ble Members of the Bench to kindly consider the above and grant registration u/s.12AA of the IT. Act, 1961 to the Appellant. Date: 08.05.2014 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust or institution in the prescribed form and in the prescribed manner to the [principal commissioner or] commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA]:" 2. Further as per the aforesaid provisions, Rule 17A of the Income Tax Rules 1962, shall be applicable and the application for registration u/s.12A should be submitted in Form No.10A along with copy of instrument creating the Trust. However, it also states that if it is established otherwise than under the instrument, the document evidencing the creation of Trust or establishment of the Institution should be submitted. In the present case, the Institution viz. Rai University is established by the provisions of Gujarat Private Universities Act, 2009 and therefore, there cannot be any separate instrument for the creation of Rai University but none the less the same complies with the provisions of Rule 17A. 3.Thus as per the above, any Trust/Institution who wants to avail exemption u/s 11 & 12 has to approach the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity with the Government of Gujarat as per the terms of setting up of the University. Apart from that it is also funding the University expenses in the initial years of operation. 6. Our contention is further supported by the following judgements (copy enclosed): (1) Director of Income Tax Vs Garden City Educational Trust (330 ITR 480)(Karn)(HC): Wherein it has been held that manner of application of funds and as to whether assesses can claim benefit of exemption in terms of section 11 and 12 are questions which have to be examined by Assessing Officer at stage when it is urged and not by Commissioner while considering application for registration u/s 12A. (2) Hardayal Charitable & Educational Trust Vs CIT (355 ITR 534 (AII)(HC): Wherein it is held that enquiry of Commissioner at such preliminary stage should be restricted to genuineness of objects and not activities, unless such activities have commenced. (3) Swargiya Jagannath Jatteshwar Shikshan Sanstha Vs CIT : (31 taxmann.com 321)(Nag)(Trib): Wherein it is held while granting registration to a charitable Trust, Commissioner has to examine genuineness of objects and activities of the Trust and application of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; APPELLANT" 6. The Revenue has also filed written submissions which reproduced as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12AA 2. The Supreme Court noted the dissolution clause in the case of Surat Art Silk Cloth Manufacturers Association 121ITR 1 in para 2 as "The amended objects, so far as material, were as follows: (a).To promote commerce and trade in art silk yarn, raw silk, cotton yarn, art silk cloth, silk cloth and cotton cloth. (b).To carry on all and any of the business of art silk yarn, raw silk, cotton yarn as well as art silk cloth, silk cloth and cotton cloth belonging to and on behalf of the members. (c).To obtain import licences for import of art silk yarn, raw silk, cotton yarn and other raw materials as well as accessories required by the members for the manufacture of art silk, silk and cotton fabrics. (d).To obtain export licences and export cloth manufactured by the members. (e).To buy and sell and deal in all kinds of cloth and other goods and fabrics belonging to and on behalf of the members. (f) * * (g) * * (h) * * (i) * * (j) * * (k) * * (l) * * (m) * * (n). To do all other lawful things as arc incidental or conducive to the attainment of the above objects. Clause 5 of the memorandum provided in sub-clause (2) that the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, requested that the plea of appellant may be turn down to grant 12AA under the IT Act 1961. Yours Sincerely Sd/- & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments as well as funds. In view of the above, the application u/s 12A is rejected as the activities and objects of the trust cannot be said to be genuinely charitable." 8. From the above finding of Ld. DIT(E), it is evident that the ld. DIT(E) is concerned about the assets of the University in the event of dissolution and what would be the fate of the assets created in the event of dissolution of University. Under the identical facts, the Hon'ble High Court of Punjab & Haryana in the case of CIT vs. O.P. Jindal Global University (supra), was pleased to decide the issue in favour of the assessee. 9. In the instant case, in case of dissolution of University, property would go to sponsoring body that itself is registered under section 12AA of the Act, subjected to the relevant provisions of the Act. Undisputedly, the education is included into the definition of charitable purpose as per Section 2(15) of the Act. It is settled position of law that at the time of registration u/s 12AA of the Act, the DIT(E) has to satisfy with regard to the genuineness of activities of the Trust. In our considered view, the DIT(E) ought to have given specific finding with regard to genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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