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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 ..... s 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 of the trust. See Bhartiya Kisan Sangh vs. CIT [2017 (8) TMI 1065 - ITAT DELHI] wherein 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 will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files return of income claiming exemption under section 11 - Decided in favour of assessee. - ITA No.309/Del/2016 - - - Dated:- 14-12-2017 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Piyush Kaushik, Adv. For The Department : Shri Vijay Verma, CIT-DR ORDER PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT, the assessee is in appeal before the Tribunal by raising the following grounds :- 1. That on the facts and circumstances of the case and in the Law, the CIT (Exemptions) has grossly erred in denying registration to the assessee society u/s 12(A)(a) of the Income Tax Act, 1961 ( the Act ) as claimed. 2. That on the facts and circumstances of the case and in the Law, the CIT (Exemptions) has grossly erred in denying registration to the assessee society u/s 12A(a) of the Income Tax Act, 1961 ( the Act ) as claimed in gross violation to the principle of natural justice fairness. That the appellant craves leave to Add to and / or Amend, modify or withdraw the grounds outlined above before or at the time of hearing of the appeal. 4. Ld. counsel for the assessee referred to page 1 of the Paper Book and drew the attention of the Bench to the copy of the Form 10A wherein the assessee had enclosed the documents such as Certified Copy of Trust Deed, Last three years income tax returns, acknowledgements, Audited Balance Sheets of the assessee for last three years, copy of Minutes of the last Board Meeting, PAN of the Trust and the declaration u/s 13(1)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation u/s 12A, ld. CIT is not required to examine the application income or carrying on of any activity by assessee trust or institution. Referring to the decision of the Hon ble Karnataka High Court in the case of CIT vs. A.S. Kupparaju Brothers Charitable Foundation Trust reported in (2012) 69 DTR 315, he submitted that the Hon ble High Court in the said decision has held that 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 institution are being run, nothing more requires to be established to show that the trust in question is a genuine trust. Referring to the decision of the Hon ble Madhya Pradesh High Court in the case of CIT vs. D.P.R. Charitable Trust reported in (2011) 61 DTR 410, he submitted that the Hon'ble High Court in the said decision has held that while considering the application u/s 12A, the ld. CIT 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. Since the assessee trust was established for educational purposes it was held that the trust is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all applicable to the facts of the present case. 11. We have considered the rival arguments made by both the sides, perused the order of the ld. CIT and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is a society running certain schools and colleges. It applied for registration u/s 12A of the I.T. Act in Form No.10A. A perusal of the objectives of the society as per Memorandum of Association, copy of which is placed at page 30 of the Paper Book shows the following objects of the society :- ( i) To impart education of Indian Culture, Languages, Art, Science and Technology and in other areas irrespective of caste and creed. ( ii) To develop and encourage and indigenous system of education based on latest scientific researches. ( iii) To create and provide facilities for all round development of the child. ( iv) To organize cultural activities for promotion of various aspects of India Culture. ( v) to provide facilities for social and economic development for the poor and needy who deserve. ( vi) To establish libraries with books on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or distribution of profits or net assets in case of dissolution to members. The precondition for grant of registration under Section 12AA is that objects are charitable in nature and activities are genuine. We have seen that objects are charitable. The society is trying to set up a school in pursuance of its main object, which is a genuine activity. The learned CIT has also not referred to any material to show that the activities are not genuine. It is no doubt true that income of the society can also be exempted under Section 10(23C), but when two recourses are available to a person under the law, it is for him to choose one, the other or both the recourses. The assessee applied for its registration, to which it was entitled. We are of the view that under the circumstances, it has to be registered. The learned CIT is directed to grant registration to the society. 14. The Co-ordinate Bench of the Tribunal in the case of Shanti Education and Welfare Society vs. CIT in ITA No.5970/Del/2017 order dated 16.01.2015 has also held similar view by observing as under :- 8. Applying the foregoing ratio, it is evident that the relevant determinative factor for conferring registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -compliance of assessee society, the genuineness of the activities could not be verified. The ld. CIT, therefore, relying on various decisions including the decisions which have been relied on by the ld. CIT in the present case, rejected the claim of registration u/s 12A(1) of the I.T. Act. When the matter travelled to the Tribunal, the Tribunal allowed the claim of registration by holding that at this stage on granting registration u/s 12A the ld. CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption u/s 11 of the I.T. Act. 17. We find the Hon ble Allahabad High Court in the case of Fifth Generation Education Society (supra) has observed as under :- 2. A reading of the section shows that the registration under Section 12A is a pre-condition for availing of the benefit under Sections 11 and 12. Section 11 provides for exemption of income which is applied for charitable purposes. Section 12 is in the nature of an explanation to Section 11. Before a person can claim the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular sections 11 and 12 is not automatic. It is only when the assessee satisfies the requirement of section 13, he would be eligible for exemption. That is a matter to be gone into by the Assessing Authority in respect of the returns filed every year and if according to them there is misappropriation of funds and it is hit by section 13 of the Act, certainly, they can deny the benefit of exemption. But that is not a ground to deny the registration in the instant case under Section 12AA, when admittedly the trust has been established to run schools and colleges for imparting education, which is a charitable purpose. In that view of the matter, we do not see any merit in this appeal. The substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed. 19. We find the Hon ble Madhya Pradesh High Court in the case of D.P.R. Charitable Trust (supra) has observed as under :- 8. Sec. 12A of the Act prescribes conditions for registration of the trust whereas s. 12AA of the Act prescribes the procedure for registration. A careful reading of the relevant provisions would reveal that appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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