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Facts
Madhav University filed appeals against the order of the CIT(Exemption) denying registration under section 12AB and 80G of the Income-tax Act, 1961. The grounds for denial included non-registration under the Rajasthan Public Trust Act, profitability, benefit to specified persons, and violation of other laws.
Held
The Tribunal held that Madhav University, being a statutory body established by state legislation, is not required to be registered under the Rajasthan Public Trust Act. It was also observed that the university's activities are primarily for advancing education, and any surplus generated was ploughed back into educational activities, aligning with the principles laid down in various Supreme Court judgments. The Tribunal found the grounds for denial by the CIT(E) unsustainable.
Key Issues
Whether Madhav University, as a statutory body, is required to be registered under the Rajasthan Public Trust Act and whether denial of registration under sections 12AB and 80G based on profitability and alleged violations is justified.
Sections Cited
12AB, 80G, 2(15), 13(3), 12AB(1)(i)(B)
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA, HONBLE & SHRI ANIKESH BANERJEE, HONBLE
Per Bench: The instant appeals of the assessee filed against the order of the Learned Commissioner of Income-tax (Exemption), Jaipur (for brevity, 'Ld.CIT(E)'] order passed under section 12AB of the Income-tax Act, 1961 (in short, 'the Act') and order passed under section 80G(5) of the Act, date of orders 30/09/2024. 2. Act Both the appeals related to registration under section 12AB& 80G of the 3. The assessee has taken following grounds:- "1. a. The order passed by Id. CIT(Exemption) u/s 12A In Form 10AD rejecting the application made for registration u/s 11/12 of the Act is bad in law and bad on facts. b. The order passed is also contrary to the principles of law and is also contrary to the principles of natural justice and inadequate opportunity of hearing. c. The appellant being separately granted status of University under the Act of State Government was a charitable institution and registration denied was bad in law and bad on facts, d. The Id. CIT(E) has failed to appreciate that the appellant was granted status of University by the Act of the State Government and separate registration under Rajasthan Public Trust Act was not required. e. The Id. CIT(E) has erred in observing that profit before depreciation indicates profits, and therefore in view of high margins, benefit of registration cannot be granted. f. The Id. CIT(E) has erred in observing that the appellant has given benefits to specified persons by purchasing luxury items.
The Id. CIT(E) had erred in observing that change in fee structure was made
therefore it is violation of fee committee. h. The Id. CIT(E) has erred in observing that the appellant had made payments to rent and salary to specified persons therefore it is not eligible to registration. i. The Id. CIT(E) has erred in observing that there Is violation of other law. J. The various observations made in rejecting the application are bad in law and bad on facts and are simply on the basis of suspicion and surmises of the Id. CIT(E)." The Ld. AR, in support of the grounds raised, argued the matter at length and filed a paper book running into pages 1 to 159. The Ld. AR also placed on record a factsheet and advanced his submissions ground-wise. The same have been duly considered and are reproduced in brief as under: "Re: Gr. No.
Refusal to grant registration u/s 12A and 80G of the Act: Facts of the Case:
Madhav University, Pindwara (Sirohi), was established by The Madhav University, Pindwara (Sirohi) Act 2014 (Act No. 7 of 2014).
The University was incorporated on 25th September 2013 and received the assent of the Governor of Rajasthan on 3rd March 2014. (page 10)
The sponsoring body of the university is Manav Bharti Foundation (formerly known as Manav Bharti Charitable Trust).
The appellant is registered with University Grant Commission vide their letter dated 16.11.2016 (page 15).
Registered with National Council for Teacher Education vide letter dated 19.8.2016 (page 21) for various courses.
Approval for affiliation of Department of Law granted by Bar Council of India (page 50).
Approval by Pharmacy Council of India vide letter dated 9.6.2015 (page 67)
The appellant submitted application for exemption under Section 12AA and Section 80(G) of the Income Tax Act 1961 before the PCIT, Exemption, Jaipur which was not granted, and the present appeal are against such order.
As per Section 3(2) of The Madhav University, Pindwara (Sirohi) Act 2014, the movable and immovable properties specified in Schedule-I were to be vested in the University.
However, due to unavoidable reasons, the sponsoring body continued to get assessed under the Income Tax Act along with Madhav University till AY 2023-24.
From 1st April 2023, the sponsoring body and the management mutually agreed to get Madhav University assessed separately under its PAN (AASAM7855L) and complied with the requirements of Section 3(2) of The Madhav University, Pindwara (Sirohi) Act 2014.
The appellant applied for exemption under Section 12AA and Section 80(G) of the Income Tax Act 1961 but the same was not granted by the Id. PCIT Exemption, and the appellant had therefore filed appears before your honours.
The main reasons for such denial of exemption by the Id. PCIT Exemption had been as under: i. Non-registration under Rajasthan Public Trust Act, 1959- claiming violation of Sec. 12AB(1)(b)(i) (B) read with New Noble Education Society. ii. Past exemptions under Sections 10/11/12-contradiction with current application under 12AB. alleging iii. Surplus generation- Asserting profit motive. iv. Hostel fee receipts-Treating them as commercial activityrequiring separate books., v. Transactions with persons u/s 13(3)- alleging personal benefit/diversion. vi. Linkage with Enforcement Directorate proceedings- against the sponsoring body imputing lack of genuineness.
In relation to the various issues raised by the Id. PCIT, our submissions are as under, and it is submitted that there was no proper appreciation of facts, which resulted into denial of approvals under the above sections.
Establishing Statutory Status & Non-applicability of Rajasthan Public Trust Act
Madhav University, Pindwara (Sirohi), was established by a specific act of the Rajasthan State Legislature-The Madhav University, Pindwara (Sirohi) Act 2014 (Act No.7 of 2014). As such, it is a statutory body created by law, and its governance, structure, and operations are defined by this legislative framework.
Being statutory nature, the appellant does not fall within the purview of the Rajasthan Public Trust Act, 1959, which primarily applies to voluntary charitable organizations and public trusts.
Madhav University is not created through a trust deed or society registration, but by a state legislative enactment. It holds an independent legal identity governed by its own statute, and not the Indian Trust Act or RPT Act.
The appellant University's Governance is entirely distinct and regulated by its own enabling statute, which provides it with legal recognition and authority. Thus, registration under the Rajasthan Public Trust Act is not required for statutory bodies like ours.
The Madhav University, Pindwara (Sirohi) Act 2014 lays down: Powers and duties of officers (VC,