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TMI Blog2017 (12) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of activities could not be verified. According to him, as per the provisions of section 12AA(1)(b), two factors namely the object of charitable purpose and genuineness of activities have to be proved before granting the registration. Since the assessee failed to prove the same, he held that the assessee society has not made out the case for granting the registration u/s 12AA(1)(b) of the I.T. Act. He referred to the decision of the Hon'ble Delhi High Court in the case of Kirti Chandra Tarawati Charitable Society vs. DIT (Exemption) reported in 232 ITR 11 wherein it has been held that there is no obligation on the CIT to grant registration to a society merely by looking at the instrument creating the society and shutting his eyes to the actual activities carried out by it. He also referred to the decision of the Hon'ble Kerala High Court in the case of Self Employers Service Society vs. CIT reported in 247 ITR 18 wherein it has been held that if a society proposed to carry out charitable activities in future, registration even u/s 12AA would not be available to it. He also referred to the decision of the Hon'ble Uttarakhand High Court in the case of CIT vs. National ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No.5970/Del/2012. (d) Amby International School Academy vs. DIT, ITA No.6214/Mum/2009 dated 25.01.2012. (d) Indo-American Society vs. ACIT, 278 ITR (AT) 49. 5. Ld. counsel for the assessee submitted that at the stage of grant of registration u/s 12A, ld. CIT is supposed to examine only the objects of the society/trust and it is not appropriate on the part of the CIT to examine the aspect of application of income at the stage of granting registration u/s 12AA, which is to be examined by the Assessing Officer on a year to year basis at the time of claiming exemptions u/s 11 of the I.T. Act. 6. Referring to the decision of the Delhi Bench of the Tribunal in the case of Bhartiya Kisan Sangh vs. CIT reported in (2017) 59 ITR (Trib) 228 (ITAT [Del]), he submitted that the Tribunal granted registration to the assessee trust wherein under identical circumstances the ld. CIT (Exemptions) had rejected the grant of registration u/s 12A(1) of the I.T. Act. The Tribunal at para 6.9 of the order held that at the stage of granting registration u/s 12A, the ld. CIT (Exemptions) is required to see the objects of the society and not required to examine on the application of income which wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine that trust was not utilizing its income for charitable purposes. 8. Referring to the decision of the Co-ordinate Bench of the Tribunal in the case of Shree Balaji Educational Trust vs. CIT reported in (2016) 47 ITR 595, he submitted that the Tribunal has also held the same view by following various decisions. He submitted that since the assessee trust has filed the relevant details along with the application in Form No.10A and since it is imparting education by running various schools and colleges which is charitable in nature, therefore, the ld. CIT should have granted registration u/s 12A of the I.T. Act. 9. Ld. DR on the other hand strongly supported the order of the ld. CIT. He submitted that the ld. CIT has got ample power u/s 12AA to examine the books of account of the assessee. By not allowing him to examine the books of account and thereby restricting his powers is contrary to the provisions of the Act. He submitted that ld. CIT has thoroughly discussed the issue by relying on various decisions which are applicable to the facts of the present case. He also relied on the decision of the Hon'ble Bombay High Court in the case of Blue Star Ltd. vs. CIT reported in 217 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be verified. Relying on various decisions, the ld. CIT rejected the claim of registration sought by the society u/s 12A(1) of the I.T. Act. It is the submission of the ld. counsel for the assessee that at the time of granting of registration the ld. CIT is required only to examine the objects of the trust and is not required to examine the books of account of the trust and it is only during the claim of exemption u/s 11 the Assessing Officer will examine the same and allow or disallow the same as the case may be. It is also his submission that since the assessee trust is imparting education by running various schools and colleges, therefore, it is doing charitable activities as according to him "education" per se is charitable activity. 13. We find merit in the above submission of the ld. counsel for the assessee. So far as whether education per se is charitable or not, we find the Delhi Bench of the Tribunal in the case of Shavak Shiksha Samiti (supra) at para 3 has observed as under :- "3. We have considered the facts of the case and rival submissions. Section 2(15) defines the term 'charitable purpose' in an inclusive manner and includes within its ambit relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held by the Apex Court in American Hotel & Lodging Association Educational Institute (supra) the character of the recipient of the income must have the character of educational institution is to be determined irrespective of the profits. In view of the above we reverse the order of the CIT and direct it to grant registration u/s 12A of the Act." 15. The various other decisions relied on by the ld. counsel for the assessee in the Paper Book also supports the view that education per se is a charitable activity. 16. Now, coming to the powers of the Commissioner as to whether while granting registration u/s 12A he is required to examine the books of account etc. or he is only to satisfy himself regarding the objects of the trust and genuineness of the activities of the trust, we find various courts have held that while granting registration u/s 12A the ld. CIT is required to see only the objects of the assessee trust/society and not to examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration. He is only required to examine the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The order impugned does not say that the objects of the society are not charitable in nature ; it merely says that they are general in nature. Just because they are general, they do not cease to be charitable. The Commissioner has also observed that no activity has been carried on by the society. It is also not the requirement of Section 12A of the Act. Nor has Section 80Gany relevance at this stage. The impugned order cannot, therefore, be sustained and it is quashed." 18. We find the Hon'ble Karnataka High Court in the case of A.S. Kupparaji Brothers Charitable Foundation Trust (supra) has observed as under :- "The certificate of registration is only an enabling provision to claim exemption. By merely granting a certificate income is not exempted. That is only a first stage to claim exemption. The Commissioner of Appeals should not have confused these two aspects and seems to think as the trustees and his family members are treating the property as their own and misutilising the property it is not a genuine trust. When once it is admitted that in pursuance of the trust deed and in terms of the objects set out therein, schools and colleges are being run and educational insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the CIT is not required to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of s. 12A r/w r. 17A and whether Form No.10A has been properly filled up. He has also to see whether the objects of the trust are charitable or not. Our view funds support from the Division Bench decision of the Allahabad High Court rendered in the case of Red Rose School (supra) and the decisions in the case of New Life in Christ Evangelistic Association (supra), Fifth Generation Education Society (supra) and Shantagauri Ramniklal Trust (supra). 9. In the backdrop of aforesaid legal position facts of the case may be seen. Admittedly the application submitted by the respondent was in consonance with the procedural requirement prescribed in this regard. From the trust deed which was filed before the CIT the objects of the trust could be ascertained. From perusal of cl. (3) of the trust deed we find that the objects of the trust are charitable in nature and are in tune with s. 2(15) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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