APJ ABDUL KALAM EDUCATION AND WELFARE TRUST,JAIPUR vs. CIT EXEMPTION, JAIPUR, JAIPUR

5. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.

A). Not registered under the Rajasthan Public Trust Act, 1959 (RPT); B). Violation of Foreign Contribution Regulation Act, 2010 (FCRA) and C). Genuineness of Activities.

In addition to the above, provisional registration granted earlier u/s. 12A (1) (ac) (vi) of the Act vide dated: 03.08.2022 is also cancelled. The assessee being aggrieved with the same preferred the present appeal before us. We have gone through the order of the Ld. CIT (E), Jaipur alongwith the submissions of the assessee and paper book submitted before us.

Procedure for fresh registration. 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall, — (a) Where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) Where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) [or item (B) of sub-clause (vi)] of the said clause, — (i) Call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy him about— (A) The genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i), — (A) Pass an order in writing registering the trust or institution for a period of five years; or (B) If he is not so satisfied, pass an order in writing, — (I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub- section (1) of section 12A rejecting such application and also cancelling its registration; (II) In a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard.

“10. The scope and amplitude of section 10(23C) (vi) of the Income-tax Act, the provisos there under and the rules and forms applicable thereto, which were the subject-matter of examination in New Noble Educational Society vs. Chief CIT [2011] 334 ITR 303/201 Taxman 33/ 12 taxmann.com 267(AP) and in R. R. M. Educational Society vs. Chief CIT [2011] 339 ITR 323 (AP) can, conveniently, be summarized as under:

1. As section 20A of the A. P. Education Act prohibits individuals from establishing educational institutions, it is only societies/associations/ trusts which can establish educational institutions in the State of Andhra Pradesh.”

19. On a conjoint reading of sub-sections (3) and (4) of section 8 of the A. P. Societies Registration Act, 2001, it is only when the amendment to the objects of a society (educational agency) is intimated and the Registrar, on being satisfied that the amendment is not contrary to the provisions of the Act, registers and certifies such an alteration, would it be a valid alteration under the Act. It is only from the date the Registrar certifies the alteration that the amendment, to the objects of the society, comes into force.

5. Above discussed, judicial pronouncement is specifically applicable to the educational institutions, where a specific law is there to regulate such type of institutions and are in harmony with the provisions of section 12AB (1) (b) (ii) (B) of the Act, i.e. the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. In the matter under consideration, the Ld. CIT (E), Jaipur is duty bound to establish that how the compliance with RPT Act, 1959 is material for the purpose of achieving its objects. In our

opinion, both the statutes, i.e. The Income Tax Act, 1961 and RPT Act, 1959. All the authorities relied upon by the assessee are w.r.t. educational institutions, where context is different, i.e. students at large and issues like capitation fee, allocation of seats, pay scale of teachers and curriculum of the syllabus etc. are in focus. For public benefit and reasonability, such regulations are there, specifically the states where big institutions are indulged in imparting education in the field of Medical, Engineering and Managements etc.

[2022] 143 taxmann.com 276 (SC) New Noble Educational Society vs. CCIT, relevant paras are reproduced as under: “It is held that wherever registration of trust or charities is obligatory under state or local laws, the concerned trust, society, other institution etc. seeking approval under section 10(23C) should also comply with provisions of such state laws. This would enable the Commissioner or concerned authority to ascertain the genuineness of the trust, society etc. This reasoning is reinforced by the recent insertion of another proviso of section 10(23C) with effect from 1-4- 2021. [Para 76]”

7. Again referring our considered opinion as discussed (supra) vide para 5, this citation relied upon by the Ld. CIT (E), Jaipur is again w.r.t. an educational institution and our findings (supra) again confirmed. It is also observed that in both the citations discussed (supra) also discussed and relied upon the judicial precedents applicable to educational institutions only. None of the precedents discussed in the case of Aurora Educational Society vs. CCIT and New Noble Educational Society vs. CCIT matches with character of the assessee under consideration, which is being further fortified with the language of the Income Tax Act, 1961 itself as mentioned (supra). Plain reading of section 12AB (1) (b) (ii) (B) of the Act speaks in a way that compliance of requirement of any other law is required if compliance under the Act is material for achieving its objects.

8. There is no law which is required to be complied with for achieving the objects of the assessee trust. Section 17 of the RPT Act, 1959 requires that trustees of the trust has to apply for registration of a public trust, however, there is no section in the RPT Act, 1959 which prohibits a trust to carry out its objects if it is not registered under the RPT Act, 1959. In our considered opinion, both the statutes have their own provisions and implications and none of them have overriding effect. Even if, the assessee trust is not registered with the RPT Act, 1959 and the concerned officials under the RPT Act, 1959 deems it necessary to get the entity registered under section 17 of the RPT Act, 1959, appropriate action can be taken and against the trustees of the trust. But this issue can’t be a hurdle in getting registration before the Income Tax Department u/s. 12AB of the Act.

(a) In CIT v. Kids-R-Kids International Education & Social Welfare Trust [2018] 99 taxmann.com 384 (Punjab & Haryana), the Punjab and Haryana High Court held that the only requirement for granting registration under section 10(23C) (vi) is the satisfaction of the prescribed authority with regard to the genuineness of the activities of the assessee. Since the Principal CIT had not doubted the genuineness of the activities of the society, the Tribunal rightly directed the Principal CCIT to grant registration under section 10(23C) irrespective of non-compliance of the Right to Education Act, 2009.

(b) In Paramount Education Charitable Trust v. CIT [2015] 61 taxmann.com 283 (Chandigarh - Trib.), the assessee-trust filed an application for registration under section 12A. Commissioner rejected assessee's application on ground that assessee- trust was not registered under new Haryana Registration & Regulation of Societies Registration Act, 2012. The Tribunal held that aims and objects of assessee were of general public utility as well as to provide education and were covered by provisions of section 2(15). If the activities of assessee were charitable in nature, registration of assessee couldn't be denied merely on fact that it was not registered under Societies Act. In the light of above, objection of the Ld. CIT (E), Jaipur is dismissed and further directed that registration can’t be denied on this ground. In the result relevant ground raised by the assessee is allowed.

11. The assessee submitted before the Ld. CIT (E), Jaipur that it has not taken foreign donations till now and will be taken only after necessary prior approval if needed. The reply of the assessee was not accepted by the Ld. CIT (E), Jaipur on the ground that it is not specifically mentioned in the trust deed that foreign donations will be taken only after prior approval and the assessee has not amended its clause. For clarity on the issue we are reproducing herein below the relevant provisions as under:

Section 11 in The Foreign Contribution (Regulation) Act, 2010

A). Income and Expenditure Account for the F.Y. 2023-24;

B). Detailed note of activities undertaken by the applicant and C). The applicant is running hostel and it is not clear whether it is running free of cost or cost to cost basis. Whether it is used by specific caste and/or religion? Thus, the trust is working beyond charitable activities and not proves genuineness of activities.

[2020] 114 taxmann.com 693 (SC) Ananda Social & Educational Trust vs. CIT “Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. [Para 9] The purpose of section 12AA is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust is genuine and that its activities are in furtherance of the objects of the Trust that is equally genuine. [Para 11] Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, it is viewed that the term 'activities' in the provision includes 'proposed activities'. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a Trust under sub-section (3) of section 12AA. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust. [Para 12]” [2012] 25 taxmann.com 376 (Del.) DIT vs. Foundation of Ophthalmic & Optometry Research Education Centre Facially the provision of section 12AA would suggest that there are no restrictions of the kind which the revenue is reading into in the instant case. In other words, the statute does not prevent or enjoin the Commissioner from registering a trust based only on its objects, without any activity, in the case of a newly registered Trust. The statute does not prescribe a waiting period, for a trust to qualify itself for registration. [Para 10] If the revenue's contentions are correct then, necessarily, a condition would have to be read into the provision that the Commissioner should be satisfied that the Trust is in fact engaged in charitable activities which would in turn inject considerable deal of subjectivity. If such flexibility is introduced there is possibility that, it would be susceptible to varied interpretation by the different authorities; some would be satisfied with activity of few months, while others may wish to examine the activities of the organization for longer time. [Para 11] For the above reasons, the Tribunal is right in holding that while examining the application under section 12AA(1)(b), read with section 12A, the concerned Commissioner/Director is not required to examine question whether the trust has actually commenced and has, in fact carried on charitable activities. [Para 12]

4. The Tribunal has noticed that the assets of the assessee, i.e., its land and building etc. had been created out of the donations received for the setting up of the school of the society and the objection of the CIT(E) that the assessee had amassed capital funds to the tune of Rs. 5.59 crores and fixed assets to the extent of Rs. 5.85 crores neither impinged on the objects nor the genuineness of the activities of the assessee. The object of the society is 'To Promote the Quality and Scope of Education in Rural Area and manage the affairs of Sadhu Singh Rural Public School, Mukand Pur.' Therefore, the contention of the assessee that the corpus got created from such donations as received for the setting up of the school had not been rebutted by producing any material to the contrary on record. Regarding creation of assets, the Tribunal had recorded nothing had been brought on record to show that the assets of the assessee were meant for any purposes other than its aims and objects which included managing the affairs of the school and that as per the balance sheets, the entire expenditure incurred by it had been for the purposes of school only. Further, at the time of considering the grant of registration, only the objects and genuineness of the activities of the assessee were to be got verified. Accordingly, the Tribunal directed the CIT (E) to grant registration to the respondent. The relevant findings recorded by the Tribunal in paras 6 to 8 of the order read thus: — 6. While refusing registration to the assessee society, the Objection raised by the ld. CIT(E) is that the applicant has amassed capital funds to the tune of Rs. 5.59 crores and fixed assets to the extent of Rs. 5.85 crores. This observation, it is seen, impinges on neither the objects of the applicant, nor the genuineness of its activities. It has been submitted before us that the assets of the applicant, i.e., its land and building etc., have been created out of donations received for the setting up of the school of the society. As per Object (APB-1), as set out in the Memorandum of Association of the applicant society, the applicant is "To Promote the Quality and Scope of Education in Rural Area and Managed the Affairs of Sadhu Singh Rural Public School, Mukand Pur". In its reply (APB 23-29) (Dated 12.08.2016) to the Questionnaire (APB 21-22) (Dated 04.08.2016) the applicant stated that the details of donations received were being Annexed. The contention that the corpus got created from such donations received for the setting up of the school has not been rebutted based on anything to the contrary on record. And be that as it may, the fact remains that the observation in this regard in the impugned order fails to carry out the statutory mandate of satisfaction regarding the objects and genuineness of activities of the applicant. It is, therefore, superfluous and not detrimental to the applicant's claim for registration.

Order pronounced in the open court on 15thday of January 2025. Sd/- Sd/- (Dr. S. SEETHALAKSHMI) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 15/01/2025 Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. आयकर आयु� CIT 3. 4. िवभागीय �ितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड� फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Jaipur

Details Date Initials Designation 1 Draft dictated on PC on 15.01.2025 Sr.PS/PS 2 Draft Placed before author 15.01.2025 Sr.PS/PS 3 Draft proposed & placed before the Second JM/AM Member 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order