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TMI Blog2013 (5) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 25,00,000/- was paid to M/s. Zee Learn Ltd. in three installments from Feb. 2010 to March, 2011. This amount was paid after receiving unsecured loans from husband of one of the trustees. The assessee submitted that they have entered into an agreement with M/s. Zee Learn Ltd. to use their name and to start a school as a franchisee of the Society. The ld. CIT on perusal of the documents, copies of prospectus and brochure of the school found that school is being projected as an upper end educational experience where boarding and lodging facility would be available, once the construction is completed. It was also stated that M/s. Zee Learn Ltd. is a company, which is being run as Commercial Venture and was not having any registration u/s. 12A and exemption u/s. 10(23) of the Act. The ld. CIT also found that the prospectus of the school does not mention the possibility of special care/treatment of economic backwards or SC/ST candidates. Only for the reason that the society shall be running a school, it could not be said that the society is carrying charitable activities. The ld. CIT, accordingly, found that the assessee would run a commercial venture, therefore, it is not formed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Agra Bench in the case of Smt. Bimla Devi Gopal Prasad Press Wale Charitable Trust vs. CIT in ITA No. 288 & 289/Agra/2012 dated 23.11.2012. He has also relied upon unreported decision of Hon'ble Allahabad High Court in the case of ITA No. 107 of 2012 dated 15.03.2013 in the case of Hardayal Charitable and Educational Trust vs. CIT-II, Agra, in which it was held that at the stage of grant of registration, the genuineness of the objects has to be tested and not the activities which have not commenced. 5. On the other hand, the ld. DR relied upon the impugned order and submitted that the franchisee of assessee, being commercial venture, and has not been granted registration, therefore, on the same principle, the registration has been rightly rejected in the case of assessee. He has submitted that at the time of filing of application for registration, no activities have been started by the society towards its objects. He has submitted that the number of students and school fees charged by the assessee would show that the assessee is charging very high amount as fees. Therefore, the registration was rightly rejected in the matter. 6. We have considered the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides the definition of 'Charitable purpose' as under : 2(15) "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year; 6.2 On going through the definition of charitable purpose, it is clear that the education per se is charitable activity. The assessee has filed copies of aims and objects of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The Trust or society cannot claim exemption, unless it is registered under Section 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused." According to the above decision of Hon'ble High Court at the stage of grant of registration genuineness of the objects have to be tested and not the activities which have not commenced. In the case of assessee, genuineness of the objects, being educational in nature, have not been doubted by the ld. Commissioner and even if at the time of filing of application, educational activities were not started, but the assessee in F.Y. 2011-12 have commenced actual educational activities. Therefore, the decision of Hon'ble Allahabad High Court squarely apply in favour of the assessee. This is supported by the audited balance sheet ending 31.03.2012 in which the assessee has proved that from Junior K.G. to 6th classes, the assessee has 359 students and has received school fees and incurred expenses for educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and fulfill the conditions prescribed in sub-clause (i) to (v) of Section 80G(5) of the IT Act. None of these conditions have been stated to be violated by the assessee as per the impugned order. 5.1 Rule 11AA of the IT Rules provides requirements for approval of institution or fund u/s. 80G of the IT Act and same reads as under : Requirements for approval of an institution or fund under section 80G. 11AA. (1) The application for approval of any institution or fund under clause (vi) of sub-section (5) of section 80G shall be in Form No. 10G and shall be made in triplicate. (2) The application shall be accompanied by the following documents, namely :-- (i) Copy of registration granted under section 12A or copy of notification issued under section 10(23)or 10(23C) ; (ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less ; (iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less. (3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /institution. If one or more conditions of the above provisions are not satisfied, the Commissioner may reject the application for approval. However, no order of rejection of application shall be passed without giving the institution or fund an opportunity of being heard. Further, according to sub- rule (6) of Rule 11AA of the IT Rules, the Commissioner shall have to pass an order either granting approval or rejecting application within 6 months from the date on which such application was made. The proviso, however, provides that in computing the period of six months, any time taken by the assessee in not complying with the directions of the Commissioner under sub-rule (3), shall be excluded. 5.3. ITAT Amritsar Bench in the case of S. Lakha Singh Bahra Charitable Trust vs. CIT (supra) held - "CIT has to pass an order either granting the approval or rejecting application within six months from the date on which such application for exemption is made; rejection of application beyond six months makes the assessee legitimately entitled for approval." 5.4 ITAT, Delhi Bench in the case of Maharishi Dayanand Education Society vs. CIT(supra), following its earlier decision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order sheet of 18.02.2010, in which the CIT, Aligarh directed enquiry to be conducted by the Addl. CIT, which is also referred in the impugned order, but it was not explained as to which of the CIT has signed this order sheet. The ld. counsel for the assessee in the paper book filed the profiles of Shri A.K. Jain, Shri Virendra Singh, CITs, in which it is made clear that Shri A.K. Jain, CIT, Aligarh remained posted at Aligarh from 22.06.06 to 28.01.2010 and Shri Virendra Singh, CIT remained posted as CIT, Aligarh from 22.07.2010 till date. In between Shri Surendrajit Singh, was holding the charge of CIT, Aligarh during the period 10.07.2010 to 18.07.2010 and no such information was maintained by the department whether he was physically present at the office of CIT, Aligarh. In view of the above facts, the ld. DR was directed to produce the jurisdictional order of the CIT, Aligarh. Despite giving sufficient time, no jurisdictional order of CIT, Aligarh dealing with the above matter was produced. The ld. DR filed copies of several letters which were written by him to the department for doing the needful and jurisdiction order of CIT, Aligarh between 19.01.2010 to 27.07.2010, but noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every issue during the course of arguments to show that there is no sudden jump in the donation and that none of the provisions of section 11 have been violated which are also subject mater of regular assessment. Since the observation in the impugned order are verbatim of the order sheet of ITO (Tech.) as per order sheet dated 08.07.2010, therefore, the finding of ITO (Tech.) have no value under the eyes of law because no enquiry or proceedings have been conducted by CIT, Aligarh. 6. Considering the above discussion, the impugned order dated 27.07.2010 cannot be sustained in law and accordingly, we hold - (i). That the CIT, Aligarh has not conducted any enquiry into the matter in order to satisfy himself about the genuineness of the activities of the assessee institution or fund; (ii). That the impugned order is passed by the ld. CIT without giving opportunity of being heard to the assessee and in most mechanical manner, merely relying upon the order sheet dated 08.07.2010 recorded by ITO (Tech.); (iii). That the impugned order is passed beyond the period of 6 months from the date of filing of application and, therefore, provisions of Rule 11AA(6) of the IT Rules have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d merely acted on the report of ITO (Tech.) against the report of Addl. CIT. The impugned order is entirely verbatim of the order sheet dated 27.09.2010 prepared by ITO (Tech.). These facts would clearly show that the ITO (Tech.) acted against the provisions of law without any authority of law and the ld. CIT did not do anything in the matter and merely approved the draft order of the ITO (Tech.). The order is also passed beyond the period of limitation. Therefore, in our view, the facts would justify grant of approval in favour of the assessee. The issue is squarely covered by our order in the case of Shiksha Sankalp Society (supra). We, accordingly, following our order in the case of Shiksha Sankalp Society (supra), set aside the order of the ld. CIT, Aligarh and direct him to grant approval u/s. 80G(5)(vi) of the IT Act as prayed for by the assessee. 6. In the result, the appeal of the assessee is allowed." 6.3 In this case, the Tribunal has followed its earlier decision delivered in the case of Shiksha Sankalp Society, 53 SOT (Agra) URO 26. Same view is taken by the Tribunal in its later decision in the case of Smt. Bimla Devi Gopal Prasad Press Wale (supra). Consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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