CHIMMAVEER TRUST,NEW DELHI vs. CIT (EXEMPTIONS), CHANDIGARH

Briefly stated, the facts are that the assessee came into existence on 31/10/2014 by way of donation of Rs.21,000/- as corpus of the trust by the settler Sh. Mahabir Prasad. In the trust deed dated 31/10/2014, the main objective of trust was stated as establishing, open, and run the educational Institute. In furtherance of the main object, the assessee started the process of opening the school under the trade name “Mount Litera Zee School” which was used under the academic alliance agreement entered between the “Zee Litera Ltd” (ZLL) and the assessee trust. The assessee purchased land and began constructing the school building. The first academic session was claimed to be started with effect from 01/04/2016, however admissions of the students were started in the month of February 2016.

The assessee applied for a grant of registration under section 12AA of the Act and for approval under section 80G (5)(vi) of the Act on 31/03/2016 before the Ld. CIT(E). The Ld. CIT(E) after examination of the object of the trust and after carrying out necessary inquiries as to the activity of the assessee trust, rejected the application of the assessee for registration under section 12AA of the trust as well as approval under section 80G of the Act. The observations of the ld. CIT(E) are summarized as under :

In view of the above observations, the Ld CIT(E) concluded that the trust activity till date had not been projected transparently and the charitable intent had not been brought out, accordingly, he rejected the application of registration under section 12AA of the Act. As the registration was rejected, he also rejected the approval required under section 80G of the Act.

Before us, the Ld. counsel of the assessee filed a paper book containing pages 1 to 47 and submitted that the assessee trust has been established with the main object of providing education, which is a charitable activity in terms of section 2(15) of the Act. He submitted that the Ld CIT(E) has not disputed this requirement of granting registration under section 12AA of the Act . Regarding the second requirement of genuineness of the activities of the assessee trust, he submitted that all the activities are genuine and the view of the CIT(E) that those activities not projected transparently, cannot hold the activities as non-genuine . He referred to the genuineness certificate issued by the Deputy Commissioner of the District, which was filed on page 8 of the paper book. He further filed an additional evidence in the form of affiliation granted by the Central Board of Secondary Education for running classes of Senior Secondary level. He submitted that the permission was received subsequent to the rejection of the registration by the Ld. CIT(E). He submitted that though activities of the assessee are genuine, if required so the matter may be restored back for deciding the issue of registration under section 12AA of the Act and subsequent approval under section 80G of the Act afresh in the light of the additional evidences submitted evidencing the genuineness

The LD DR on the other hand relied on the order of the Ld. CIT(E ) and objected for restoring the matter back to him.

We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record including the impugned orders and the paperbook filed by the assessee. As far as granting of registration under section 12AA of the Act is concerned, the Ld. CIT(E) is required to grant or reject the registration after satisfying himself -

As far as object of the society is concerned, the LD CIT(E) has not disputed the object of providing education. Regarding the genuineness of the activity of the assessee also, he has concluded that till date those activities had not been projected transparently. In our opinion, the observation made by the ld CIT(E), which we have summarised above, do not indicate that activities of the trust are not genuine. All the activities of change of land use (CLU), construction of the building, getting franchisee of established organisation, obtaining secured and unsecured loan etc. are in furtherance of the object of providing education by way of running the schools. The information regarding PAN, details of unsecured loan provider etc can be obtained, and same cannot be ground for holding that the activity is not transparent. Similarly the activities cannot be held as non-transparent due to giving personal guarantee by the trustees for getting secured loan. Similarly, projection of quality of education not clear or method of recruitment of teachers or their qualifications etc not clear , can not be basis for holding the activities as non genuine. Nowhere the Ld. CIT(E), has brought on record any non-genuine activity carried by the assessee. If any further information was required in the case, he could have carried further enquiries but rejection of registration on presumption is not justified. In our opinion, the Ld. CIT(E) has not examined the activities of the assessee in the right perspective. As the assessee has filed additional evidence before us including the affiliation granted by the central board of education, we feel it appropriate to set aside the order of the Ld. CIT(E) and restore the matter back for deciding the application of registration under section 12AA of the Act as well as the application for approval under section 80G of the Act afresh, in accordance with law. The assessee shall be afforded adequate opportunity of being heard.