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TMI Blog2017 (8) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... rant registration to the assessee u/s 12AA of the Act. Consequently we also direct the ld. CIT(E) to grant approval u/s 80G of the Act to the assessee university. - ITA Nos.32 & 33/Kol/2017/Assessment Year : 2016-17 - - - Dated:- 23-8-2017 - J.Sudhakar Reddy Shri S.S.Viswanethra Ravi, For the Appellant: Shri S.K.Tulsiyan, Advocate For the Respondent:Shri G.Mallikarjuna, CIT(DR) 23-08-2017. ORDER PER J.SUDHAKAR REDDY, AM: These appeals are filed by the Assessee directed against the order of the Commissioner of Income Tax-(Exemptions), Kolkata dated 31.10.2016 rejecting the registration u/s 12AA of the Income Tax Act, 1961 (Act) to the assessee and consequently its application for approval u/s 80G of the Act. 2. The Assessee is an university which had come into existence by way of law enacted by West Bengal Assembly vide Neotia University Act, 2014 (West Bengal Act XXIII of 2014) and the Act was published in The Kolkata Gazette on 4th February, 2015. The Assessee university filed an application in Form 10A for registration u/s 12A of the Act and for its approval u/s 80G of the Income Tax Act, 1961 (Act) on 18.04.2016. The ld. CIT(Exemptions), K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 4. Alternatively without prejudice he submitted that the ld. CIT(Exemptions), Kolkata has totally misunderstood section 45 of the University Act for the reason that, it provides that it shall not be permitted to serve notice for winding up within a period of 10 years from the date of commencement. Even in the event of dissolution, an administrator is to be appointed by the State Government for the process of winding up and use of the endowment fund in such a manner as may be prescribed. He submitted that in the eventuality of dissolution, the Government of West Bengal will act in good faith and it cannot be concluded otherwise. He further submitted that consequent to the introduction of section 115TD(1)(a) of the Act, the interest of the revenue is protected as it is a charging provision which will be attracted when a trust or a society is converted to non charitable organisation or gets merged with a non charitable organisation or on transfer of assets of a charitable organisation on its dissolution to a non charitable organisation. 5. On the scope of the powers of the ld. CIT(Exemptions) for registration he relied on the following case laws : a) Allahabad High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not so satisfied, pass an order in writing refusing to register the trust or institution, And a copy of such order shall be sent to the applicant : The scope of this section has been examined by various court and it is held as follows :- The Hon ble Allahabad High Court in the case of Fifth Generation Education Society vs CIT (supra held as follows :- 2. A reading of the section shows that the registration under section 12A is a precondition for availing the benefit under sections 11 and 12 of the Act. 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 benefits of section 11 or section 12, as the case may be, he must obtain registration under section 12A. The application for registration under section 12A has to be made in Form No. 10A prescribed by rule 17 A before expiry of one year from the date of the creation of the trust or the establishment of the institution, whichever is later. It has to be made by the person in receipt of the income of the trust. 3. It is evident that at this stage, the Commissioner is not to examine the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income Tax (Exemption), (2006) 285 ITR 327 (Karn.) held as follows :- The registration of institution relates to the objects so that the activities be charitable, which should be considered as genuine trust. If the activities of the institution are taxable for any reason the matter to be considered at the time of assessment. The source of income cannot be questioned at the time of granting the registration under Section 12AA of the Act 10. The propositions of law laid down in the above case laws demonstrate that the ld. CIT(Exemptions) can refuse the registration of a trust of institution u/s 12AA of the Act only when (a) he should be satisfied that the objects of the trust or institution are not charitable in nature or he finds that the activities of the trust of institution are not genuine. In our view registration cannot be denied on the ground that there is no clause prescribing that as dissolution of the institution, the income and assets of the assessee shall be transferred to another similar institution which is registered under section 12AA of the Act. 11. The ld. Counsel for the assessee relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities. We therefore set aside the impugned order of the Id. DIT (Exemptions) and direct that the registration U/S 12A of the Act as applied by the assessee Trust be granted. 12. Similar is the decision in the case of Geeta Lalwani Foundation vs DIT (Exemptions), Kolkata in ITA No.3566/M/2013 order dated 02.01.2015 wherein it is held as follows :- Regarding the dissolution clause noting is brought on record even before us that the Bombay Public Trusts Act, 1950 mandates for incorporation of mandatory clause of dissolution of any irrevocable trust. Therefore, in our opinion, the decision of the DIT(E) rejecting the registration u/s 12A is required to be reversed. Accordingly, grounds raised by the assessee are allowed. No contrary decision was brought to our notice by the ld. DR. 13. Respectfully following the proposition of law laid down by the Coordinate Bench of the Tribunal in the cases referred to above we hold that the order of ld. CIT(Exemptions) was an error in rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is no spending of the income exclusively {or the purpose of charitable activities and profits of the assessee are not used {or charitable purpose under the terms of the object and there is no obligation on the part o(the assesse to spend on 'charitable purpose' only. Also as per clause 53 of the Jammu Kashmir Development Act, on dissolution of all properties and funds to vest in the Government and for the purpose of realizing properties, the function of the Authority shall be discharged by the Government. We concur with the views of the Ld. CIT on transfer of the properties, funds and dues and liabilities etc. will vest in the Govt. There is no restriction, how the same are to be utilized by the Government. There are other objects like sale and purchase, which makes the Authority a commercial organization. Therefore, in the facts and circumstances of the case, even on dissolution or winding up by not having any restriction on application of asset for charitable purpose, the objects pursued by the assessee cannot be said to be a charitable in nature. 7.7 As regards the reliance on the decisions of various courts of law by the Ld. CIT, most of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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