NIMS UNIVERSITY RAJASTHAN vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS)

Order 29/05/2019 Charitable Trust:(2014)369ITR360(Raj.) and in the case of Chief Commissioner of Income Tax (The), Udaipur & Ors. Vs. Geetanjali University Trust: 2013 (3) RLW 2049 (Raj.); it is contended that an application instituted by the petitioner is pending consideration before the Commissioner of Income Tax (Exemptions), Jaipur. It is further pointed out that on a reference, the Commissioner of Income Tax (Exemptions), Jaipur, was required to adjudicate upon the pending application of the petitioner, within a period of six months. However, for reasons best known to the (2 of 3) [CW-9606/2019] authority, application of the petitioner has not been adjudicated upon in the backdrop of the contemplation under Section 12AA and 10 (23)(C) of the Income Tax Act, 1961, within the period of six months. Heard and considered. In the case of Commissioner of Income (supra), Division Bench of this Court observed thus:

“9. In our view, the Trust can move the application immediately at the time of formation then there is no prohibition under the Act seeking registration. In our view as observed earlier the only thing to be looked into at the time of granting of registration is that the object of the Trust for which it was formed have to be seen and examined, the CIT's satisfaction about genuineness of the activities of the Trust is not a criteria as the trust is yet to commence activities. Asking about charitable activities at the nascent stage would amount' to putting a cart before the horse.” In the case of Chief Commissioner of Income Tax (The), Udaipur & Ors. (supra), another Division Bench of this Court, at Principal Seat, Jodhpur, observed thus:

“10. A plain reading of the said provisions would reveal that what is required for the purpose of seeking approval thereunder is that the University or other educational institution should exist 'solely for educational purposes and not for purposes of profit'. It is nowhere the case and/or finding of the learned CCIT that on account of the said defect in the admission procedure, the Trust ceased to exist solely for educational purposes and/or it existed for the purposes of profit. Further, it is not the case of the appellants that the students who were admitted were not imparted education in the college in which they were admitted and/or the admissions granted were fake or non- existent or that the income generated by admitting the said students was not used for the purpose of the Trust. The emphasis on part of the learned CCIT that the purpose of education would not be served if the education is for students who have been illegally admitted and the (3 of 3) [CW-9606/2019] purpose of education as contemplated in the section would be served only if the students have been legally admitted and not otherwise, appears to be going beyond the requirements of the section. Of course, the requirement of an educational institution to provide admissions strictly in accordance with the prescribed rules, regulations and statute cannot be less emphasized, rather the same need to be adhered to in letter and spirit, but then, the said violation cannot lead to its loosing the character as an entity existing solely for the purpose of education.” In view of the opinions (supra) so also considering the nature of grievance raised and limited prayer addressed; the Commissioner of Income Tax (Exemptions), Jaipur, is directed to adjudicate upon the application of the petitioner in the backdrop of the law declared by this Court as taken note of hereinabove so also in view of contemplation under Section 12AA and 10(23) (C) of the Income Tax Act, 1961, irrespective of the fact that adjudication could not be made despite of a direction for adjudication within six months, which ended on 30th April, 2019. Needful be done, as expeditiously as possible; preferably, within two months from the date a certified copy of this order is presented. With the observations and directions as indicated above, the writ application stands disposed off. (VEERENDR SINGH SIRADHANA),J Pcg/165