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TMI Blog2022 (3) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... test of predominant object of the activity is to be seen whether it exists solely for education and not to earn profit . Thus, in the case of the appellant, the activity is running education which is a charitable activity as defined u/s 2(15) of the Act. The Surplus is in the range of 10-15% .The ld.Commissioner has not alleged that the surplus has been used for non charitable activities. It means surplus has been used for the objects mentioned in the trust deed. After analysing all these facts, we are of the opinion that the appellant trust is eligible for registration u/s 12AA of the Act. Accordingly, the ld.Commissioner of Income Tax (exemption) is directed to grant registration u/s 12AA of the Act, to the applicant. Appeal of assessee allowed. - ITA No.201/PUN/2021 - - - Dated:- 15-3-2022 - Shri S.S.Viswanethra Ravi, Judicial Member And Shri Dr. Dipak P. Ripote, Accountant Member For the Assessee : Shri Kishor Phadke AR For the Revenue : Shri Naveen Gupta - DR ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the assessee against the order u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961 ( the Act ) passed by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 4.1.1 The ld.Commissioner of Income Tax (Exemption) mainly rejected the application u/s 12AA on the following grounds: -(A) appellant has shown other income of ₹ 7,08,500/-for FY 2018-19 . The said income was generated from Rent from conference hall, Rent received from stalls placed in the school premises during festivals like Diwali, Christmas etc. The ld.Commissioner of Income Tax (Exemption) conclude that these are business activities. These activities are not incidental to the educational activities. _ (B) Appellant have received donations in cash and appellant failed to provide details of the donors to prove identity of the donors. The para graph 4 of the Order of The ld.Commissioner of Income Tax (Exemption) is reproduced here as under : 4. It is also noticed that the applicant has shown donation receipts of ₹ 6,09,400/- during F.Y. 2017-18. As per the list of donors submitted by the applicant, the entire receipts are in cash. The applicant has not furnished the PAN / complete postal address of the donors. Thus, the applicant has failed to furnish any details so as to prove the identity of the donors. Therefore, the exact nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold the same type of income as exempt. 5.3 In view of the above, it is seen that although education is a charitable purpose as per section 2(15) of the Act, the applicant found to be also engaged in business activities along with the educational activity. A substantial component of fees structure fixed by the applicant include charges other than tuition fees. The fees structure itself is planned in such a way that there would be a sizable profit. The profit of the applicant is increasing year-to-year and is in the range of 12% to 15% of receipts. Thus, it is not a case that after meeting expenditure, a surplus is generated incidentally from the activity carried on by the institution but the same is planed in such a way that there would be a huge profit. Therefore, considering the overall facts of the case, the activity of the applicant cannot be termed as a charitable activity but a pure business model. 6. Considering the above facts, I am not satisfied about the genuineness of the activities of the trust / institution and hence, the request for grant of registration u/s 12AA of the Income-tax Act, 1961 cannot be accepted. 5. The learned AR of the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose circumstances, it is a little unrealistic to think of two situations. First, on creation of the trust the trustees apply for registration under section 12AA. In that case, they would have to demonstrate the genuineness of the objects of the trust, only, before the Commissioner. Secondly, the other situation where the trustees carry on activities for sometime and then apply for registration. In that case, the genuineness of the objects as well as the genuineness of its activities have to be proved to the Commissioner. In the second situation, practically speaking, any activity of the trust carried out without registration and without any tax benefit would likely to be insignificant. 7. We have heard both the parties at length, perused the order u/s 12AA and written submissions, case laws relied upon. We find that it is a fact that the appellant is running a CBSC school in Aurangabad Maharashtra. This fact has not been disputed by the DR or the Commissioner of Income Tax (Exemption). There was a survey u/s 133A of the act in the case of the appellant on 10.07.2019. The ld.Commissioner of Income Tax (Exemption) has not observed any activity which is in violation of the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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