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TMI Blog2019 (7) TMI 1868X X X X Extracts X X X X X X X X Extracts X X X X ..... each of the principles of natural justice. WITHOUT PREJUDICE TO THE ABOVE 2.1 The Ld. CIT (E) erred in cancelling the registration of the Appellant trust by invoking the provisions of section 12AA (3) of the Income - tax Act, 1961. 2.2 While doing so, the Ld. CIT (E) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. 3.1 Without prejudice to the above, assuming - but not admitting - that the registration of the Appellant trust was liable to be cancelled u/s. 12AA (3) of the Act, the Ld. CIT(E) erred in cancelling the same with effect from 1986-1987. 4. The Appellant craves leave to add to, alter, delete or modify all or any of the above grounds at the time of hearing." 2. The brief facts of the case are that the assessee is an educational institution established as a public charitable trust in the year 1985 with main objects of imparting education. The assessee is running a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trust. In this regard, it has relied upon various judicial precedents including the decision of ITAT, Mumbai in the case of South Indian Educational Society vs. CIT-Central in ITA No.3288/M/2013. 3. The Ld. CIT(E) after considering relevant submissions of the assessee and also by relied upon the decision cited by the assessee in the case of South Indian Educational Society vs. CIT (supra) held that the assessee has accepted donations from students, thereby, violated Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 and hence, the activities of the trust cannot be considered as in accordance with its objects. The Ld. CIT(E) further observed that it has accepted donations from students for admission, but reiterated its arguments that donations taken from students do not come within the provisions of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 without explaining how such donations are not hit by provisions of said Act. The Ld. CIT(E) has also distinguished the case laws relied upon by the assessee, more particularly, in the case of South Indian Educational Society vs. CIT (supra) to argue that although the Tribunal has held that when ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'building fund' from parents of students. The assessee never disputed the fact that it has collected donations but, such donations are within the prescribed limit fixed by the competent authority and also donations have been utilised for the purpose of objects of the trust. The Ld. A.R. referring to provisions of the Maharashtra Educational Institution, Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 and rules, submitted that there is no bar in the IT Act, for receiving voluntary contributions for the purpose of development at trust, but if the institution/trust collects capitation fee in pursuance of admission of a student in school/colleges, then it violates the Prohibition of Capitation Fee Act (Government of Maharashtra), 1987. In this case, the assessee has demonstrated with evidences that it has collected small amount of building fund ranging from Rs. 1000 to Rs. 15000 for the purpose of development of infrastructure being buildings and such donations are voluntarily given by parents without any compulsion for admission to courses conducted by the trust. If you go through the list of donations which is available in paper books, in many cases the donations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. Once an institution/trust came within the phrase "existence slowly for education purpose and not for profit" no other conditions like application of income were required to be complied with. If you go through the order of the Ld. CIT(E), it is very clear that the sole reason given by Ld. CIT(E) for cancellation of registration is collection of donations in violations of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987. Whether collection of donations from the parents/students amounts to violation of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 or not has to be examined in light of quantum of donations collected by the assessee and also applications of such donations for the objects of the trust. In this case, on perusal of details filed by the assessee, we find that the assessee has collected donations from parents/students ranging from Rs. 1000 to Rs. 15000 and in total the sum of such donations collected for the year under consideration is at Rs. 70,60,700/-. In most of the cases, the donations collected from parents/students are ranging from Rs. 1000 to Rs. 2000/-. The assessee filed necessary evidences to prove that the donations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration granted under section 12A of the IT Act, 1961 cannot be cancelled. We further noted that ITAT, Pune Bench in the case of Maharashtra Academy of Engineering and Educational Research vs. CIT (2010) 133 TTJ 706 held that if the CIT had an information of some wrongful means of earning fees in the form of a donation or the information tells about excessive charging of fees; then the CIT in his rights can pass on the information to the concerned authority, but when there is no misutilisation of funds and it continue to carry on, its activities, then the CIT has no jurisdiction to cancel registration under section 12AA(3) of the IT Act, 1961. The Hon'ble Karnataka High Court, in the case of CIT vs. Islamic Academy of Higher Education (2013) 229 taxmann.com held that where assessee trust was fulfilling its main object of imparting education, registration of trust should not be cancelled on the basis of trustees misappropriating trust funds. The Hon'ble Karnataka High Court in the case of CIT vs. Garden City Education Trust 28 DTR 139 (Kar.) held that where there is no dispute in respect of the objects of the trust, that of imparting of education and also when there is no dispute re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... too when such donations are within the limit at prescribed fees fixed by the competent authority, registration granted under section 12A cannot be cancelled by invoking his powers under section 12AA(3) of the IT Act,1961. Hence, we set aside the order of the Ld. DIT(E) and restored registration granted under section 12A of the IT Act, 1961. ITA No.2612/M/2016 10. The issue involved in this appeal is consequential and follow up action of the AO, consequent to cancellation of registration granted under section 12A of the IT Act, by the Ld. CIT(E) under section 12AA(3) of the Act. The AO assessed surplus for the year under the head income from business or profession for the reason that exemption granted under section12A has been withdrawn for the impugned assessment order for the reason stated in the order of the Ld. CIT(E) as per which the assessee has violated provisions of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 by collecting building fund from parents/students in connection with admission in schools/colleges run by the trust. Except this, no other reasons have been brought on record to deny the benefit of exemption claimed under section 11 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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