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TMI Blog2022 (3) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents furnished, the ITAT, Chennai, merely referring to the objects of the respondent trust, opined that the purpose of the respondent trust was nothing but education; construction of infrastructure for pursuing educational activity is also by its very nature a necessary expenditure for effectively pursuing the educational objects; and the Act itself contemplates exemption to income of institution imparting education. Ultimately, it was concluded by the Tribunal that the respondent trust was eligible for registration under section 12AA. This court is of the view that such reasoning of the Tribunal without proper verification of the requisite materials, cannot be countenanced and on that score alone, the order impugned herein deserves to be set aside. We set aside the order of the Tribunal and remand the matter to it for fresh consideration. The respondent trust is at liberty to submit all the requisite documentary evidence available to them to substantiate its claim for registration under Section 12AA of the Act, to the Tribunal, within a period of two weeks from the date of receipt of a copy of this judgment. - T.C.A.No.16 of 2012 - - - Dated:- 22-3-2022 - Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan creditors? 4.The main contention of the learned senior standing counsel appearing for the appellant/Revenue is that the respondent/assessee failed to produce the requisite documents for consideration of its application seeking registration under section 12AA of the Act. According to the learned counsel, the respondent did not comply with the basic requirement for grant of registration to a public charitable trust; and they are carrying on the educational activity with receipt of fees of substantial amount, which is purely on commercial basis and they failed to produce the relevant details to the CIT for verification. However, the ITAT, merely placing reliance on the objects of the respondent trust, allowed the appeal filed by the respondent and directed the appellant to grant registration to them under section 12AA of the Act, by the order impugned herein, which is arbitrary and illegal and hence, is liable to be set aside. 5.On the other hand, the learned counsel for the respondent / assessee submitted that the objects of the respondent trust itself would speak for the activities carrying on by them and they have utilized its surplus funds only for educational purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite for grant of registration to a public charitable trust i.e. carrying genuine charitable activities is absent in this case according to the statement of accounts filed along with the application. Besides, the claim of exemption of its income u/s.11(1)(a) of the I.T.Act will also be adversely affected in absence of utilization of at least 85% of such income in India towards genuine charitable purposes i.e. helping the public in general those who are needy, poor and destitute without expecting or receiving anything in return. It was therefore, told to the Ld.A/R that the trust has made itself ineligible for grant of registration in terms of the provisions of section 12AA (1)(b)(ii) r.w. 12A(2) of the Income Tax Act, 1961. 8.However, it could be seen from the order impugned herein that without properly examining the activities carrying on by the respondent trust and utilisation of the surplus funds received by them, in the light of the documents furnished, the ITAT, Chennai, merely referring to the objects of the respondent trust, opined that the purpose of the respondent trust was nothing but education; construction of infrastructure for pursuing educational activity is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th case, Aditanar case and the American Hotel and Lodging case. It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit. In fact, in S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income Tax, (1998) 2 SCC 584, this Court in the context of benefit claimed under Section 11 of the Act held: 9. In the present case, the assessee is not claiming any benefit under Section 11(2) as it cannot; because in respect of this assessment year, the assessee has not complied with the conditions laid down in Section 11(2). The assessee, however, is entitled to claim the benefit of Section 11(1)(a). In the present case, the assessee has applied ₹ 8 lakhs for charitable purposes in India by purchasing a building which is to be utilised as a hospital. This income, therefore, is entitled to an exemption under Section 11(1). In addition, under Section 11(1)(a), the assessee can accumulate 25% of its total income pertaining to the relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in governme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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