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TMI Blog2014 (8) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... trust. The assessee trust administer and manage the so-called medical college in a commercial manner with profit motive. The assessee trust gone to the extent of entering into agreement for offering employment and admission for medical education and collects money. It is to be remembered that admission in any educational institution including medical college has to be made only on merit basis. Therefore, entering into agreement for admission in medical college after collecting money is not only inhuman but also against the scheme of the Constitution as held by the Apex Court in Mohini Jain's case [1992 (7) TMI 330 - SUPREME COURT]. This Tribunal is of the considered opinion that there is no genuineness in the activity of the assessee tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the medical college and therefore he found that there was a financial irregularity. Accordingly, the registration was rejected. Referring to the statement said to be recorded from the Managing Director, Shri Anil Kumar, the ld.senior counsel submitted that the assessee admittedly collected around Rs. 4 crores from the prospective employees. The assessee has also collected money from four parties and an agreement was entered into to provide admission under NRI quota for medical education. In case the medical seat could not be provided the amount received by the assessee would be returned with 12% interest per annum. According to the ld.senior counsel, the assessee has to mobilize funds for construction of massive building for medical colleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny proper records. Since the institution collected money in a commercial manner for admission of the students and for providing employment opportunity to the prospective employees, according to the ld.DR, the institution was established only for the purpose with a profit motive in a commercial manner. Therefore, the assessee is not entitled for registration u/s 12AA of the Act. The ld.DR placed her reliance on the unreported judgment of the jurisdictional High Court in Dawn Education Trust vs CIT I.T.A. No.300 of 2013 judgment dated 12-02-2014, copy of which is filed by the ld.DR. 4. We have considered the rival submissions on either side and perused the material available on record including the trust deed. The trust was established by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri V Anil Kumar, the managing director of the assessee trust has clarified that "no proper books of account has been maintained by him for his consultancy business and Malabar Medical College, although he admitted to have maintained books of account for his business concern NIET. The revenue authorities further examined Mr. V Anil Kumar, showing certain list of doctors said to be working under him, where he clarified as follows: "The list shown to me contains names of doctors working in this hospital and payments made to them by cheque are accounted. It can be roughly that said payments to the tune of 50% (cash payment) are not accounted. I state that no tax has been deducted from this payment." 7. From the above admission of Shri V A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r providing employment and admission in medical college. The object of the assessee even though stated to be establishing a medical college, the purpose is to run the medical college in a commercial manner with a private motive. 8. The object of granting registration u/s 12AA of the Act and exemption u/ss 11 and 12 is to encourage the non governmental organization to establish educational institution and to run the same in a charitable manner after collecting the fees prescribed by the government or the committee appointed by the state government. In this case, even before starting the college and even before obtaining recognition from the MCI and affiliation from the concerned university, the assessee mobilized funds on the assurance of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho grant registration. Similarly, while considering claim of exemption, authorities under the Act would look into the actual activity of the institution, especially main activity of the institution. In the absence of facts indicating that the activities carried on attracts definition of charitable purpose, one cannot find fault with rejection of registration. When the school is running on commercial lines under the clad of charitable purpose, the parties were justified making enquiries and rejecting the application." 10. In view of the above factual situation, this Tribunal is of the considered opinion that the activities of the trust was not carried out in accordance with the object of the trust. The assessee trust administer and manage t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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