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TMI Blog2021 (8) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... an expression on the merits of the case or facts. The ld. CIT(E) shall decide the matter afresh that without being influence of the observation made by us while remanding the matter back to his file/desk. Assessee appeal is treated allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... rting education arts, management science and technology, to hold and manage education endowment, to erect, equip and manage school and college laboratories, libraries, hostel and to make regulations relating to residence and institutions mentioned and managed by the Trust, to patronize, enema-and grant stipends to poor and deserving students for higher education and specialized study in science or technical subjects and management, to propagate and keep in mind, while working for the attainment of the aims and objectives, the Gospel of truth Disipline in conduct as preached by the Sikh Gurus, to do all such acts as are incidental conductive to the attainment of above noted objectives, to do all such acts as are found beneficial by the trust. The applicant assessee was seeking registration u/s 12AA of the Act after a lapse of twenty years since creation of the trust and that it has receipts exceeding ₹ 1.0 Crore and it has been claiming exemptions without having any approval u/s 10(23C)(vi) or registration u/s 12AA of the I.T. Act , althpugh it has been disputed as per its reply dated 15.03.2018, submitted before the CIT(E) that the assessee has not claimed exemption u/s 10(23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a direct bearing on the genuineness of activities. 8. It is further clear that the reply of the applicant is vague and not based on the facts of the case as the application for grant of approval u/s 10(23C)(vi) of the Act was rejected vide order dated 31.03.2016 which has been remanded back by the ITAT, Amritsar vide order dated 30.12.2017 for statistical purpose. The claims of the assessee without a valid 10(23C)(vi) approval in the past shall be examined by the A.O. separately. The applicant instead of pursuing its earlier application u/s 10(23C)(vi) of the Act, has now chosen to seek registration u/s 12AA of the Act which in sync with the meaning of the term 'registration' should have been pursued in the initial year or incipient stage and not after a gap of twenty years. The trust has created a huge asset worth ₹ 1,89,44,685/- as on 31.03.2017 after its inception. There are no grounds for seeking registration under a different code even when the applicant has claimed for exemption u/s 10(23C)(vi) and the earlier applicant is still pending for adjudication. Moreover, in light of the fact that permissible reasonableness has clearly been defined in the order of the Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income received by the school during F.Y. 2014-15 F.Y. 2015-16 & F.Y. 2016-17 are ₹ 1,18,14,851/-, ₹ 1,39,70,278/-, and ₹ 1,60,19,787/- respectively. Further, perusal of the Income & Expenditure account trust reveals that the net surplus obtained from the school is reflected as the income of the trust, showing the total income of the applicant trust at ₹ 24,51,278/-, ₹ 39,83,709/- and ₹ 44,82,863/- during F.Y. 2014-15, F.Y. 2015-16 and F.Y. 2016-17 respectively. Clearly, the financial statements of the applicant trust do not show true affairs of its total income. The trust is required to reveal consolidated receipts and income in its account in order to enable examination of income that has been utilized for charitable purposes. 11. In view of the above the activities of the applicant trust cannot be termed to fall under the category of "charitable purposes" but purely on commercial principles having profit motives [ net surplus of the applicant trust is at 43.9%, 69.3% and 73.7% during the F.Y. 2014- 15,2015-16 and F.Y. 2016-17respectively]. The applicant has been claiming exemptions under section 10(23C)(vi) and section 11 of the Act wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act can't be filed by the applicant and in para 10 of its order that the financial statements do not show the true affairs of its total income as he has drawn wrong conclusions; that the CIT(E) has not taken into consideration the investment made in fixed assets by the applicant trust. The investment in fixed assets of the applicant trust are to the extent of ₹ 2569004/-,₹ 3066891/- arid ₹ 3348027/- for financial year 2014- 15, 2015-16 and 2016-17 respectively and sale of fixed assets is of ₹ 5 lac and 1.50 lac for the financial year 2014-15 and 2015-16 respectively. The net surplus after investment / sale of fixed assets is Rs.(-991451), Rs.(-152825) and Rs.(- 42955) respectively. He requested that suitable direction be issued to the CIT(E) to grant 12AA to the applicant Trust. In support, the ld. Counsel for the assessee has submitted PB containing pages 1 to 22 and CLPB of 116 pg. tabulated as under: Sr. No Description Page No. 1. Memorandum of Aims and Objects of the Trust 1-12 2. Consolidated Balance Sheet and Income and Expenditure account of the Trust for the financial year 2014-15 13-14 3. Income and Expenditure account of Guru T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. The main issue involved in the present appeal is grant of registration under section 12AA of the Act. The learned A.R. contended that all the details required by the learned CIT, has been furnished before him but same was not taken on record. 6. The Ld. CIT(E)'s observation regarding the activities of the applicant trust not to fall under the category of "charitable purposes" but purely on commercial principles being run on profit motives [net surplus of the applicant trust is at 43.9%, 69.3% and 73.7% during the F.Y. 2014-15,2015-16 and F.Y. 2016- 17respectively] cannot be approved as this is required to be substantiated with the cogent documentary evidences and in the light of the statement of account furnished by the assessee trust reflecting gross receipt, expenditure and purpose of utilization of surplus receipt if any. Further, the CIT was factually wrong in observing that the applicant has been claiming exemptions under section 10(23C)(vi) and section 11 of the Act, even without having approval of the prescribed authorities for claiming such exemptions under these sections and genuineness of activities claimed by the applicant. Moreover, 7. It is se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case to be remand back to the ld. CIT(E) who is empowered under the Act to examine the documents (already on record) mentioned hereinabove and other new facts brought before us with supporting documents in order to justify that whether the assessee was involved in its own capacity of doing the charitable activity? To arrive at his satisfaction, the CIT(E) would be examining the activities of the appellant Trust afresh and see that the assessee was involved in carried out of any charitable activities. In view of principles of natural justice, the ld. CIT(E) shall grant a reasonable opportunity of being heard to the assessee and an opportunity to file any other documents which are necessary in support of its claim. We note that the observation made herein above said paragraph shall not be treated as an expression on the merits of the case or facts. The ld. CIT(E) shall decide the matter afresh that without being influence of the observation made by us while remanding the matter back to his file/desk. Accordingly, the case is restored to the CIT, for afresh consideration and examination of the application of assessee under section 12AA, with the following observation: I. Consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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