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TMI Blog2018 (11) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... Government Notification for the allotment of land to the University was not in the ownership of the Indian Medical Trust or NIMS University. Solely on this ground, he has refused to grant registration. No where he has discussed the “objects” for which the said University is running; nor there is any whisper about the genuineness of the activities qua the objects. It is well settled position of law that at the time of granting registration u/s 12AA, CIT(E) is required to examine the 'objects' of the Trust or institution as to whether they are for the charitable purposes or not and also to see the genuineness of the activities qua the objects. If certain 'Khasra' numbers as notified by the Government has not been acquired or is not owned by the Indian Medical Trust or by the NIMS University and it is standing on some different land bearing different 'Khasra' numbers, but that does not mean that its activities are not genuine or is not carrying out charitable activities. Even if there is some technical breach or violation of the Notification pertaining to land that the said University is not standing on a particular 'Khasra' notified, then that would be a subject matter of issue of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/10/2016 when all the assets and liabilities of the Indian Medical Trust has been transferred to NIMS University by way of an agreement between the Indian Medical Trust and NIMS University. The genuineness of the agreement whereby entire assets and liabilities have been transferred from the Indian Medical Trust to NIMS University also can be examined whether it is in accordance with relevant provisions of law and there is actual transfer of assets and liability or it is mere paper entry or is just a façade. The issue of approval U/s 10(23C) is also remanded back to the file of the ld. CIT(E) to be examined denovo and afresh and in accordance with law after examining the objects and genuineness of the activities - Appeal of the assessee allowed for statistical purposes only. X X X X Extracts X X X X X X X X Extracts X X X X ..... lished from any documents during course of search or thereafter. (g) Treating unsigned and rough agreement between earlier shareholders of Omega TV Channel Ltd. on one part and Dr. B.S. Tomar and Juhi Tomar on other part for which payment was made by assessee Trust to Omega TV Channel Pvt. Ltd. as personal payment by party of other part and as made in contravention to the provisions of section 11(5) of IT Act, though the major shareholder in Omega TV channel is Nims University holding 15,19,999 shares out of 15,20,000 shares of ₹ 10 each. (h) Unsigned typed list of Doctors with proposed amount of their salaries as payment made to the Doctors in cash without finding any proof of actual payment or without examining the Recipients. (i) Not considering the benefits derived by the assessee Trust from Trustees in form of the rent-free city office accommodation, interest free loans and serving the assessee Trust without charging any salary or allowances by the Trustees. (3) That Id. Pr. CIT (A) had failed to appreciate and consider that each assessment year is an independent year and sufficient checks and balances are provided under the Income tax Act to bring to tax on viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tees themselves though the assessee Trust has applied total income in accordance with the provisions 11 and 12 of IT Act and no personal use of any fund or part thereof belonging to the assessee Trust was found or established as used by the Trustee from any evidence or documents during course of search or thereafter. (g) Treating unsigned and rough agreement between earlier shareholders of Omega TV Channel Ltd. on one part and Dr. B.S. Tomar and Juhi Tomar on other part for which payment was made by assessee Trust to Omega TV Channel Pvt. Ltd. as personal payment by party of other part and as made in contravention to the provisions of section 11(5) of IT Act, though the major shareholder in Omega TV channel is Nims University holding 15,19,999 shares out of 15,20,000 shares of ₹ 10 each. (h) Unsigned typed list of Doctors with proposed amount of their salaries as payment made to the Doctors in cash without finding any proof of actual payment or without examining the Recipients. (i) Not considering the benefits derived by the assessee Trust from Trustees themselves in form of the rent-free city office accommodation, interest free loans and serving the assessee Trust with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23/02/2000 with the 'objects' which were in the nature of "charitable purposes". The objects have been incorporated in the impugned order at page 2, wherein the main object related to carrying out educational activities in the field of medical education and other ancillary objects in field of education. Looking to its objects which were solely for educational purposes, the assessee was granted approval by the Ld. Chief Commissioner of Income Tax U/s 10(23C)(vi) & (via) of the Act, vide notification dated 20/03/2006 for the financial years 2003-04 to 2005-06, i.e., for the assessment years 2004-05 to 2006-07; and thereafter vide another notification dated 29/04/2008, the approval was granted by the ld. Chief Commissioner of Income Tax, Jaipur for the assessment years 2007-08 and onwards. Apart from that, the assessee was also earlier granted registration U/s 12AA of the Act vide certificate dated 24/3/2000. Thus, in view of approval granted U/s 10(23C) and registration U/s 12AA of the Act, the assessee Trust was enjoying the exemption U/s 10 and also alternatively the benefit of Section 11 to 13 of the Act. Search and seizure action U/s 132(1) of the Act was carried out on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious incriminating material found during the search so as to reach to a conclusion that the Trust's activities were not being carried out in accordance with the objects and also its activities were not genuine. The first and foremost issue which has been raised in the impugned order is of unaccounted 'capitation fees' collected by the assessee Trust for admission of various courses mainly relating to medical and dental courses. He has noted that certain diaries/registers, loose papers and computer printouts were found and seized from the chamber of Smt. Shobha Tomar (one of the trustees and wife of Dr. B.S. Tomar) and Shri Kailash Chandra Jat, who was the Registrar of the NIMS University and also from their residences. In all, there were 638 entries of 'capitation fees' paid over the period of time from the financial year 2006-07 to 2014-15 which has been received by the assessee Trust from various students. The details of these entries spreading into various years have been elaborated in Annexure-A to the impugned order. Ld. PCIT observed that detailed analysis and investigations were carried by the department from various persons based on the details found du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting lands and thus, any such undisclosed amount on account of donation stands fully utilized for the educational purposes. However, the Ld. Pr.CIT after making various remarks held that, if capitation fees/voluntary donations received in cash has not been recorded in the books of account and stated to be expanded in construction of buildings, then such assertions of the assessee is without any evidence or any basis. The assessee has neither able to substantiate this contention and nor any such document or material was found during the course of search that the assessee had spent unaccounted capitation fees for the construction of the hospital building or utilized for its objects. He has also rejected the assessee's contention that these voluntary donations have been received only by NRI or management quota students for admission in MBBS and PG courses after recording the finding of fact from the seized material that in the F.Y. 2008-09, capitation fees were collected from 82 students who were from general quota and similar other number of students who were from general quota in other years. Thus, the contention of the assessee was found to be misleading. In so far as the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Fee Committee in which the trustees themselves were the decision makers. It was only in the wake of various Hon'ble Supreme Courts judgments strictly prohibiting collection of capitation fees from the students, the assessee Trust indulged in receiving capitation fees outside the books in cash and in this way, it has not only violated the objectives of the Trust and also its activities cannot be said to be genuine. He has also noted various instances from the seized material about the breakup of the fees and how the fee package was charged, like there is mention about separate capitation fees in figures and also regular fees and hostel fees. Based on the materials on record and rebutting all the contention raised by the assessee, he held that the activities of the Trust cannot be held to be charitable, albeit it was for profiteering by taking unaccounted capitation fees from students and parents in the garb of fee and same cannot be held to be genuine. Accordingly, he invoked the clause (ii)(a) of the 14th proviso to Section 10(23C) (vi)&(via) of the Act. 7. Further, the ld. Pr.CIT has given detailed observations and finding as to how the activities of the Trust were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been utilized in contravention of the objectives of the Trust. In so far as the assessee's contention at the objectives of the news channel was for its own educational purpose and programme and courses run by the NIMS University, the ld Pr.CIT has given a detailed reasoning as incorporated from pages 21 and 22 of the impugned order and based on the reasoning given therein, he came to the conclusion that setting up and running of a commercial news channel by utilizing the funds of the Trust is in violation of the objectives of the Trust. One most vital finding given by him was that the conditions laid down in sub-section (5) of Section 11; and clause (b) of 3rd proviso to Section 10(23C)(vi)&(via) of the Act have been violated as the trust cannot invest in shares of Private Limited Company. He has further discussed as to how such payment made by the Trust on behalf of the trustees for acquiring the shares and rights is in violation of provisions of the Act and therefore, such an activity is neither in accordance with the objectives nor can be reckoned as genuine. 9. Lastly, the ld. Pr.CIT has also raised an issue of unaccounted cash payments of salary to Doctors and staffs. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested or deposited its funds in accordance with the provisions of clause (b) of 3rd proviso to section 10(23C)(vi) and s. 10(23C)(via), the activities of the assessee trust are not genuine and are not being carried out in accordance with the conditions subject to which it was notified. Therefore, the approval granted to the trust u/s 10(23C)(vi) and s.10(23C)(via) is hereby withdrawn by invoking the 14th Proviso to s. 10(23C)(vi) and s.10(23C)(via) of the I.T. Act, 1961 with effect from 01/04/2006." 11. In the appeal relating to cancellation of registration U/2 12AA of the Act, exactly similar facts are permeating and exactly same reasoning has been given by the ld. Pr. CIT based on the same facts and material on record. The ld. Pr.CIT has analysed the same material and has applied the same reasoning for holding that there is clear cut violation of conditions laid down from Sections 11 to 13 of the Act and again vide para 7 of the impugned order, he has cancelled the registration w.e.f. 01/4/2006, which reads as under: "7. In view of the facts stated above especially forcing students/parents to give unaccounted donations in lieu of admission, enriching the trustees from such un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of their relatives. The assessee is carrying out various philanthropic and charitable activities, which is evident from the fact that it has undertaken free medical camps at villages wherein major operations were conducted for a nominal fee and even various medical investigation procedures like MRI, Scanning, X-ray etc. were done for free for the poor citizens. In support, he also showed us certain pamphlets and news cuttings. Apart from that, he submitted that the assessee Trust had utilized the entire funds of the Trust in expansion of infrastructure facilities, medical equipment, modernization and construction of educational buildings, etc. There is no evidence found from the search which could indicate that the funds of the Trust have been misused by the trustees. In fact, he pointed out that the trustees have not charged any remuneration for their services rendered to the activities of the Trust and in fact they have given huge interest free funds to the Trust. None of its activities has been found to be carried out beyond the objects. Once the activities of the assessee Trust are charitable in nature as defined in Section 2(15) of the Act, then without any material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the field of running the TV channel and not for relay of educational programmes on it. In pursuance of objects for providing education on production of TV contents, Feature Films, Journalism etc. to the students, advance of ₹ 3 crores were given to earlier shareholders. Since the Omega TV Channel had no liquid sources, therefore, in order to secure the amount of advance so given, shares were transferred in name of NIMS. Omega TV is separately assessed to tax and no personal benefit from running of TV channel was gained by the Trustees as alleged by Ld. Pr. CIT. Had any benefit was gained by any of the Trustees, then additions would have been made in the hands of the trustees in their assessment orders. Even the allegation of the Ld. PCIT that running of TV channel was for publicity of Dr. B.S. Tomar is without any basis and proof. By running of TV channel, the assessee is providing degrees to the student and training, because it is running various courses relating to running of TV channels, production of TV contents, journalism, mass communication, advertisement etc. and once it is part of curriculum, which is relating to the objects, then running of TV channel cannot be a ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have neither been recorded in the books of account nor have been shown or reflected in the audited statement of income and expenditure. Such a capitation fee has been quantified by the ITSC at more than ₹ 21.00 crores. Apart from that, he submitted that the assessee was running a News TV channel on commercial lines, which was beyond the objects of the Trust. There were other incriminating materials found during search and investigation pointing that the trustees were misusing the funds for their personal benefits. This aspect too has been dealt in detail in the order of the Settlement Commission. It is in the light of these backgrounds and incriminating documents and evidences found, the ld. Pr. CIT (Central), Rajasthan, Jaipur has initiated the cancellation of the approval granted U/s 10(23C), as well as registration U/s 12AA of the Act. In support of his contentions, he strongly referred and relied upon to the various observations made in the impugned order, which we have already discussed above. He further submitted that the cancellation of registration has been provided U/s 12AA (3) and also in the 14th proviso to Section 10(23C) (vi) & (via) of the Act, wherein it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the concept of voluntary donation has a different connotation and meaning and in support thereof, he has referred to various dictionary meaning of the term 'voluntary', which are as under: "As per Collins dictionary a voluntary donation means: "performed, undertaken, or brought about by free choice, willingly, or without being asked" As per Merriam Webster dictionary: * "proceeding from the will or from one's own choice or consent * having power of free choice * acting or done of one's own free will without valuable consideration or legal obligation" As per Cambridge English Dictionary: * "done, made, or given willingly, without being forced or paid to do it: The word 'donation' has to be seen from the context that it has been given by free will. On the other hand, the word 'fee' indicates compulsion, i.e., there is some kind of force to charge fees. Therefore, fee and voluntary donation cannot be equated and treated at par. The word 'fee' does not bear the voluntary character albeit it is to be understood as fixed charge or sum paid or a charge for a service, i.e., it is some sort of consideration paid compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such object in the trust deed so as to authorize the trust for running a TV channel on commercial lines. Once such a channel is being run without there being any object, then it goes to show that the assessee's activities are not being carried out in accordance with its objects. Secondly, he pointed out that a Trust of Institution cannot make investment in shares of a Private Limited Company which has been specifically debarred in sub-section (5) of Section 11 read with Section 13(1)(d); and Section 10(23C) clause (b) of 3rd proviso to Section 10(23C) (vi)&(via) of the Act. Thus, making such investment in the shares of Private Limited Company by the assessee trust, itself acts as a deterrent and whence there is a violation of the statutory provision, then it can be held that its activities are not genuine and they are not being carried out as per the statutory provision. In the search proceedings, an MOU was found wherein the trustees namely, Dr. B.S. Tomar and Dr. Juhi Tomar were parties to such MOU and the entire funds for acquiring of shares have been routed through Trust. He also drew our attention to the share hold pattern wherein the NIMS University, Rajasthan was held 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order. We have already discussed the facts and background of the case and the contentions raised by the parties in detail. The assessee is an Indian Medical Trust, which was formed on 23/2/2000 and was registered as a Charitable Trust under the 'Rajasthan Public Trust Act'. It was not only granted approval U/s 10(23C) (vi) & (via) of the Act from time to time, but was also granted registration U/s 12AA of the Act w.e.f. 24/3/2000. The registration and approval under the relevant provisions of the Act was granted looking to the fact that the Trust was carrying out educational activities by setting up several colleges, schools and institutions for imparting education in various disciplines and courses. A medical college and hospital were also opened in the name of NIMS Medical College in the year 2004 and later on the Trust has been extending its courses in various fields of medical science and health services. The assessee has set up its own private university as NIMS University, Rajasthan, Jaipur which later on was enacted by the Legislature of Rajasthan through "NIMS University Rajasthan, Jaipur Act 2008". After the establishment of NIMS University, the assessee Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, for these three years, the capitation fee has been duly recorded in the books of account and also disclosed as a part of income and expenditure account wherein the details of receipts as well as utilization has been given. Apart from that, the income and expenditure account were subjected to scrutiny assessments u/s 143(3) of the Act and in the assessment made, no adverse inference has been drawn. Even before us, the department could not establish that the capitation fee from the period A.Y. 2006-07 to 2008-09 found from the seized document were not recorded in the regular books of account; and perhaps that is the reason why the ITSC also has also quantified the undisclosed capitation fee only from the A.Y. 2009-10 onwards. Regarding issue of capitation fee, the observations of the Settlement Commission in its order only for the sake of reference is reproduced herein below: - "(c) We have considered the issues raised and the evidence presented before us by the Department and the clarifications given by the applicant. On the basis of the evidence produced it is not possible to come to a definite conclusion about the voluntary nature of the donations or otherwise. The most dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion goes to show that some of the entries of cash received has been captioned as "capitation fees", however, the issue whether capitation fees is voluntary or not has been left open as they have held that this issue would assume relevance only at the time of cancellation/withdrawal of the registration U/s 12AA/10(23C) of the Act 23. From a careful analysis of the findings given in the impugned order as well as the seized documents shown before us, it is quite glaring that the assessee has been receiving huge money in cash over and above the regular course fees and hostel fees from the parents/guardians of the students in various years for the various courses run by the trust. The ld. Pr.CIT had given various instances where the capitation fee has been collected from various students who were not from NRI or management quota but were from general quota. For various medical courses, cash has been charged from the students/parents which have been clearly specified and not only that, fixed schedule of installments have been granted for payment of such cash. There is very systematic and organized manner in which such cash fees are being charged from the students for various courses an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even though, the assessments have been completed U/s 143(3) earlier, but the issue of capitation fees/cash donation only surfaced after the search and seizure wherein huge incriminating material and evidence were found, which could not have be subject matter of scrutiny, because assessments were made much prior to the date of search on the basis of entries made in the regular books of account and amount shown in the audited income and expenditure account. Thus, such a plea raised by the assessee lacks merits. 24. Now the moot question before us is that, whether in the wake of clinching evidences found during the course of search and corroborated by post search enquiry that the assessee has been receiving huge capitation fees which admittedly was unaccounted money, can it be held that the assessee's activities are genuine or not. First of all, such huge cash fees have been received over and above the regular fees claimed to in the nature of 'voluntary donation' by the assessee, cannot be treated as voluntary at all, because the concept of 'voluntary' alludes to the concept of free will and choice and there cannot be any element of force. The nature and patte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need of education in all walk of life, the State has encouraged private educational institutions to fulfill the Constitutional goal of providing education, therefore, State has always given a separate status to education and has treated it distinct with other economic activities. That is why there are various Regulations and Acts passed by the various State Governments and Central Government to regulate and control educational activities both for the private institutions as well as for State institutions. For this reason alone, the providing of education has been treated to be one of the paramount activities of charity and has been enshrined as one of the "charitable purposes" u/s 2(15) of the Act. Carrying out such charitable activity by any Trust or institution has been provided with certain benefits and exemptions under Chapter III of the Act, especially under Section 10(23C) and Sections 11 to 13 of the Act. If any Trust or institution transgresses such a noble activity of education on a commercial line which is tainted with commerciality and for profiteering, then same has to be adversely viewed and any such benefits enjoyed by the Trusts or institutions has to be withdrawn or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for which it was notified or approved, then such notification can be rescinded or can be withdrawn. There is no specific date prescribed under the said provision from which such approval can be withdrawn. From the plain reading of aforesaid provision, it can be interpreted that if from a particular year or date it is found that the activities are not genuine or such activities are not carried out in accordance with the objects then from that date/year, approval/notification can be withdrawn. 26. Similarly section 12AA(3) provides for cancellation/withdrawal of registration granted U/s 12A/12AA of the Act, which for the sake of ready reference is reproduced herein: "[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of P.A. Inamdar v. State of Maharashtra [2005] 6 SCC 537, wherein while referring the principle laid down by the Hon'ble Constitutional Bench of 11 Judges in T.M.A. Pai Foundation (supra) the Hon'ble Court had observed as under: "Capitation fees 140. Capitation fee cannot be permitted to be charged and no seat can be permitted to be appropriated by payment of capitation fee. "Profession" has to be distinguished from "business" or a mere "occupation". While in business, and to a certain extent in occupation, there is a profit motive, profession is primarily a service to society wherein earning is secondary or incidental. A student who gets a professional degree by payment of capitation fee, once qualified as a professional, is likely to aim more at earning rather than serving and that becomes a bane to society. The charging of capitation fee by unaided minority and non-minority institutions for professional courses is just not permissible. Similarly, profiteering is also not permissible. Despite the legal position, this Court cannot shut its eyes to the hard realities of commercialisation of education and evil practices being adopted by many institutions to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in accordance with objects of the trust or under the law. Before us, the ld AR of the assessee has harped upon the fact that one of the curriculums run by the NIMS University is that, it is providing course of Mass communication, journalism, TV production, feature film etc. and it is for this purpose, the University has desired to have its own TV channel for the benefit of its students. The ld. counsel has also shown us the various courses and curriculum wherein the students were required to participate in the activities of the TV channel. However, one of the most noticeable fact is that Omega TV Media Pvt. Ltd. which owns and has the rights to run a news channel is an independent assessee separately assessed to tax, however, the entire investment in the said private limited company has been made by the Trust. Such an investment made in the shares of the private limited company is clearly prohibited u/s 11(5) of the Act and also under 3rd proviso to Section 10(23C) (vi) & (via) of the Act wherein it has been provided that a Trust or institution cannot invest in the shares of private limited company. This has been specifically provided in Sub-section (5) of Section (11) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) two amendment have been brought, one which has been brought w.e.f. 01/10/2004 by which sub-section (3) was introduced wherein the CIT was given power to cancel the registration which was granted under clause (b) of sub-section (1) of Section 12AA of the Act. Such granting of registration as discussed above U/s 12AA was brought in the statute w.e.f. 01/4/1997. Thus, any registration granted after 01/4/1997, was U/s 12AA and prior to this date, the registrations were granted U/s 12A of the Act. If the registration was granted under the earlier provision of Section 12A, then if such a registration is cancelled by invoking the provisions of Section 12AA (3) then in that case the courts have held that the CIT cannot cancel such registration from the retrospective date, because these provisions were meant only to cancel the registration granted U/s 12AA of the Act and not for the earlier registration granted u/s 12A with retrospective date. In order to examine the conditions for cancellation of registration granted u/s 12A, the Parliament brought an amendment by the Finance Act, 2010 w.e.f. 01/6/2010, wherein it has been provided that the registration granted at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed capitation fee from A.Y. 2009-10 onwards and not for the earlier years. If the revenue seeks to cancel registration w.e.f. A.Y. 2006-07, then the onus was upon the Revenue to show that the capitation fee received by the assessee is outside the books of account. Accordingly, we hold that the cancellation of registration u/s 12AA (3) or withdrawal of approval u/s 10(23C) should be only from the A.Y. 2009-10 onwards and not from the A.Y. 2006-07. 33. In so far as the judgments relied upon by the ld. counsel for the assessee that the cancellation should not be made from retrospective effect, especially the judgment of the Hon'ble Allahabad High Court in the case of Agra Development Authority (supra), on perusal of the said judgment, it is seen that it was a case of registration of a Development Authority, which was granted registration U/s 12AA of the Act w.e.f. 01/4/2003. The registration was cancelled by the ld. CIT U/s 12AA (3) vide order dated 04/4/2012 from the date of registration. The reason for cancellation of registration was that a proviso was inserted in Section 2(15) w.e.f. 01/4/2009 and therefore, the activities of the authority was violating the conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng body (M/s Indian Medical Trust- though the sponsoring body was already granted registration U/s 12AA by ld. CCIT, Jaipur and was carrying out educational activities from the year 2000) (2) The ld. CIT(Exemptions) was not justified in ignoring the charitable objects of the assessee University for the purpose of granting registration U/s 12AA of IT Act (392 ITR 285 Raj), to assessee University who came into existence by an Act passed by Rajasthan Legislative Assembly and accordingly started its educational activities after transfer of all the assets and liabilities of the sponsoring body-Indian Medical Trust. Grounds of ITA No. 545/JP/2018 1. Ld. CIT(Exemption) was not justified in denying approval under section 10(230) (vi) and (via) Income tax Act to the assessee University solely that certain Khasaras of land mentioned in enactment passed by Rajasthan Legislative Assembly were not in ownership of the sponsoring body (M/s. Indian Medical Trust) though the assessee University is running its charitable and hospital activities on about 90 bighas of land which is sufficient to run such type of charitable activities. 2. That Id. CIT (Exemption) was not justified in refusing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties/assets held by the Trust has been transferred by registered documents by way Registry or by paying the stamp duty. Similarly, the liabilities have also not been assigned specifically to the assessee by way of registered agreement. The sponsoring body continued to be the Indian Medical Trust by same trustees. All the recognition and approval by the State and Central Government for running the educational and other courses and medical hospital run by the Indian Medical Trust was to be treated and considered as taken by the NIMS University. The 'objects' of the NIMS University continued to be the same. 37. An application was filed U/s 12AA (1) (aa) of the Act on 16/2/2017 before the ld. CIT(E). However, such an application for granting registration U/s 12AA has been denied by the ld. CIT(E) mainly on the ground that certain 'Khasra' Nos. of land allotted as per the notification of the Government was not in the ownership of the sponsoring body, i.e., Indian Medical Trust. In the impugned order, the ld CIT(E) in the show cause notice to the assessee has made following observations: "In this connection, spot visit & verification report of inspector of this office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice, the assessee submitted that the 'Khasra' Nos. as been mentioned in the notice was never in the ownership of the Indian Medial Trust nor was transferred to NIMS University. Further the NIMS University had not yet become the owner of the land bearing said 'Khasra' numbers. However, the Ld. CIT (E) noted that, as per the notification issued by the government, Schedule-1 provided that the University will have 60.67 acres of land comprising of various 'Khasra' numbers, but some of the Khasra numbers were not found to be in the ownership of the University. Thus, he concluded that there is a clear-cut contradiction from the Govt Gazette Notification and the reply filed by the assessee that the ownership of the land intended to be vested in the university is not established. Accordingly, he has refused to grant registration after observing as under: - "11. Once it is found that the ownership of land intended to be vested in university is not with the sponsoring body, the next question comes whether such issue can be examined while granting registration u/s 12AA of the IT Act, 1964 in present case where university came into existence in 2008, almost 9 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a news channel namely "NEWS INDIA" at NIMS University, Shobha Nagar, Jaipur, whose city office is at Sahakar Marg, Jaipur. It is clear that the trust has utilized its funds in contravention of its objectives as running a commercial news channel is not as per the stated objectives of the trust. Hence, it has violated the 3rd proviso to section 10(23C) of the Act. 7.4 The trust has also made unaccounted cash payment of salaries to doctors/staff, over and above the salaries given to these doctors/staff by way of cheque. In view of the above facts, the approval granted u/s 10(23C)(vi) & (via) to the Indian Medical Trust has been withdrawn w.e.f. 01.04.2006. Thus, it can be concluded, when activities of the sponsoring Body taken over by NIMS University are not genuine, the activities of the sponsored body i.e. NIMS University cannot be independently considered as genuine. Thus, the activities of the applicant are held as non-genuine. 8. It is also important to note that the applicant University applied for approval under both the Sec./clauses 10(23C)(vi) & 10(23C)(via) by filing common form. On giving show cause regarding correct section under which approval is sought the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng certain 'Khasra' numbers is irrelevant consideration for refusing the registration U/s 12AA of the Act. 40. On the other hand, the Ld. CIT-DR submitted that, if once it is found that the assessee has not found to be running its hospital and educational activities on the land which has been notified by the government, then it cannot be said that its activities are genuine. He, thus strictly relied upon the order of the ld. CIT (E). 41. After considering the rival submissions and on perusal of the material facts placed on record, we find that the NIMS University, Rajasthan, Jaipur has been notified by an enactment passed by the Legislature of Rajasthan. The said university was enacted to provide higher education in various fields. The sponsoring body of the University was Indian Medical Trust. Thereafter in the Gazette Notification, Schedule-1 provided that the University will have 60.67 acres of land comprising of various khasras numbers in village Jugalpura, Teshil- Amber, district-Jaipur. The said schedule also enlists various buildings, academic facilities and various kinds of degrees run by the said University. In an enquiry conducted by the ld. CIT (E), it was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or statistical purposes only. 42. Lastly, coming to the additional reason given by the ld. CIT(E) while refusing the approval U/s 10(23C) of the Act that, firstly, during the course of search and seizure operation U/s 132(1) of the Act, it was found that the Indian Medical Trust was profiteering by taking unaccounted capitation fee and such fee was not accounted by the assessee in view of the 10th proviso to Section 10(23C)(vi) & (via); and secondly, the Trust was operating News Channel, namely, News India at NIMS University which is not genuine. While coming to this conclusion he has referred to the decision and finding given by Pr. CIT in his order for withdrawal of approval u/s 10(23C) in the case of Indian Medical Trust and on that basis, he has refused to grant approval to NIMS University also. In so far as the issue of material found during the course of search in the case of Indian Medical Trust that it was receiving unaccounted capitation fee, the same was applicable till the date of search and that to be in the case of Indian Medical Trust for which we have already given our finding while deciding the case of the Indian Medical Trust. However, the same charge or allegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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