VESTAL EDUCATIONAL SOCIETY,VIZIANAGARAM vs. THE CIT (EXAMPTIONS), HYDERABAD

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 16/VIZ/2016 Vestal Educational Society, vs. CIT (Exemptions), 382/2, Near Korukonda Sinik Hyderabad. School, Korukonda, Vizianagaram. PAN No. AAAAV 5760 D (Appellant) (Respondent)

Assessee by : Shri G.V.N. Hari – Advocate. Department By : Shri Deba K. Sonawal – CIT DR Date of hearing : 06/02/2018. Date of pronouncement : 23/02/2018. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Exemptions), Hyderabad, dated 28/09/2015. 2. Facts of the case, in brief, are that the assessee-society has filed an application on 31/03/2015 in Form No. 10A for registration under section 12AA of the Income Tax Act, 1961 (hereinafter referred to as 'Act') with the following objects:-

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(i) To impart and promote higher education, General Technical and Technological to boys and girls irrespective of caste or creed. (ii) To establish college or colleges and institutions for the said purpose. (iii) To run, develop or improve any school, college, Management, Institute, Technical Institute including vocational education or any other educational institution or Society or adopt assist or help any existing educational institution without profit motive for the benefit of the public in India in general and more particularly for the benefit of Scheduled Castes and Scheduled Tribes. (iv) To organize, start, run or assist any programme either by itself or by assisting or coordinating with other educational or other institutions for (v) coaching, guidance and counseling, vocational training or training for preparation for any entrance or competitive tests for recruitment for jobs including All India and State Service examination or for admission or professional or other educational institutions. (vi) To start, run or assist programmes for the Scheduled Castes and Scheduled Tribes, Backward Classes, women, Children, Bonded Labour and other sections of the Society for the promotion of Legal assistance, Legal awareness, training of Para Legal, Human Rights, Civil Rights and other matters concerned with overall development of these sections of Society. (vii) (vii) To run, workshop, programme, seminars etc for the educated unemployed and the rural youth in co- ordination with other organizations. (viii) To run computer training centres. (ix) To encourage and start research and study on modern education with scientific methods. (x) To promote and foster education among poor and deserving students whether of primary, secondary, graduate, post graduate or vocational courts by all means and make such education available to weaker sections of the community. (xi) To give donations to educational institutions which are running non-profit basis subject to such conditions consistent with objects of the Managing

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Committee. (xii) To constitute scholarships to poor and deserving students enabling them to continue their studies and to give grants for fees and other charges or reimbursement for costs of books instruments and other educational aids for their educational pursuits. (xiii) To help establishment of students hostel or to give other assistance for poor and deserving students to find inexpensive living accommodation to enable them to prosecute their studies (xiv) To constitute prizes for outstanding achievements of students in educational institutions either in the examinations, sports, general knowledge or such other proficiencies. (xv) To give loans at nit or subsidized low rate of interest to students to enable them to prosecute higher studies. (xvi) To undertake other incidental activities without profit motive which are consistent with the above objects and are not inconsistent with the object of the Managing Committee being promotion of education.”

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genuine, he has to grant registration under section 12AA of the Act. He relied on the decision of the Hon'ble Kerala High Court in the case of Sree Anjaneya Medical Trust vs. CIT [382 ITR 399 (Ker.).] 5. On the other hand, ld. Departmental Representative has submitted that assessee failed to explain the source of cash deposits in the bank account. 6. We have heard both the sides, perused the material available on record and order of the Ld. CIT(E). 7. The assessee-society is running an educational institution and as per the objects of the society, it is solely existed for the purpose of education. The Ld. CIT(E) has not doubted the activities carried on by the assessee-society. He denied the registration is only on the ground that source of cash deposits were not explained. We find that at the stage of granting registration, the Ld. CIT(E) has to see whether the objects of the assessee-society are charitable in nature or not. Once, objects are charitable in nature, genuineness of the society is not doubted, Ld. CIT(E) has no option but to grant registration under section 12AA of the Act. In the present case, no doubt, the objects are charitable objects, the genuineness is not doubted,

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therefore, in our opinion, the assessee is entitled for registration under section 12AA of the Act. 8. Under similar circumstances, the Hon'ble Kerala High Court in the case of Sree Anjaneya Medical Trust (supra) has observed that it is very clear from a plain reading of section 12A & 12AA of the Act that what is intended thereby is only a registration simpliciter of the entity of a trust. This has been made a condition precedent for the claiming of benefits under the other provisions of the Act regarding exemption of income, contribution etc. No examination of the modus of the application of the funds of the Trust or an examination of the ethical background of its settlers is called for while considering an application for registration. The stage for consideration of the relevance of the object of the Trust and the application of its funds arises at the time of the assessment. Where benefits are claimed by the assessees in terms of section 11 & 12 of the Act, the question as to the nature of such contribution and income can be looked into. At the time of registration of the Trust, going by the binding judgments of the Apex Court, what is to be looked into is whether the Trust is a genuine one and whether it is a sham institution floated only to avail the benefits of exemption under the Act.

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(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.