ADIT(OSD)(E), NEW DELHI vs. BIRD EDUCATION SOCIETY FOR TRAVEL & TOURISM, NEW DELHI

PER SMT. DIVA SINGH, JUDICIAL MEMBER

The present appeal has been filed by the revenue assailing the correctness of the

order dated 28.2.2012 of CIT (A) –XII New Delhi pertaining to 2008-09 assessment

year on the following grounds :-

registration u/s 12A vide letter No. DIT(Exemption)/2001-02/B-858/131 dated 29.5.2002

ITA No. 2131/Del/2012

returned a NIL income supported by audit report in Form No. 10B, balance sheet,

income and expenditure account with relevant schedules.

"3.1. To impart specialized training in the field travel & tourism to existing Travel & Tourism Industry personnel national & International levels. 3.2. To impart basic and advanced level training in the field of Travel & Tourism to young graduate and undergraduate aspirants to the Travel & Tourism Industry at the National & International Level. 3.3. To create potential new interpretation the Travel & Tourism Industry at the National & International level through extensive training covering specialized skills in the field of Marketing, Administration and Day to day operational Management.

3.4. To introduce training and update existing Travel & Tourism Industry professionals, New Entrants and Young Graduate as well as Undergraduate Aspirants on Computerized Operations of the Global travel I & tourism industry”.

3.1. In the scrutiny proceedings, the AO required the assessee to justify that the

activities were covered within the meaning of education as per the definition of

charitable purposes contained in Section 2(15) of the Income Tax Act 1961. The

triggering factor for this query was the fact on record that the assessee had provided

coaching / training for the period under consideration for which purposes a sum of Rs.

70,36,300/- had been received. The coaching/training was stated to be provided for

courses like computer reservation and automation, IATA Foundation, certificate course in

travel & tourism, 1 year diploma in aviation, IATA Cargo, IATA GDS Fares & Ticketing ,

tally, DGR etc. Accordingly the assessee was also required to required to address

whether the courses so conducted were “recognised”.

3.2. The following extracts from the assessment order captures the assessee’s

explanation:

“7. Submissions made by the assessee during the course of assessment proceedings have been duly considered. After going through all these submissions, it is seen that crux of assessee's submissions are contained in letter dt. 10.12.2010 and relevant portion of such submissions, pertaining to the issue under reference (para-5 above), are extracted below:- Page 2 of 16

ITA No. 2131/Del/2012

"As already explained in our earlier submissions the Society is broadly conducting eight courses / training programmes. All these courses educate the desirous students about the various aspects of the travel industry. These courses have an eligibility criteria, a definite curriculum, minimum number of classroom hours, practical hands on training, examination on completion of course and then the certification ..... Some of the courses consist of more than on module e.g. "Travel Agency & Tour Operation" course consists of two modules viz. 'lATA / UFTAA Foundation ' and lATA / GDS fares & Ticketing'. These courses are affiliated to lATA Training & Development Institute [ITDI] based in Canada. ITDI imparts diploma and certificate courses in travel/tourism / aviation / cargo disciplines as a part of distance learning programme through its Authorised Centres. Bird Education Society for Travel & Tourism {BESTT} is one of the authorized centres. Distance learning programme is a career oriented training programme for the aviation '1 learning sector providing students with industry wide knowledge and globally recognized qualifications. Every course being offered by BESTT is highly structured and has regular classes as per notified schedule. The courses are conducted through a regularly updated curriculum and there is a centralized examination system. These courses provide students with industry wide knowledge and globally recognized qualifications. This initiative of ITDI through its Authorised Centres in India has the support of Ministry of Civil Aviation. Copy of letter dated 21 st September 2010 from Ministry of Civil Aviation is attached herewith ..... "Certificate course in Travel & Tourism" is a course which is being conducted in conjunction with Miranda House, University of Delhi and has the approval of University Grant Commission .... "Computerized Reservation System" course is recognized by the New Delhi Young Men's Christian Association [YMCA] under its Human Potential development Programme. These courses are being offered to the YMCA sponsored students at a subsidized fee. "Tally" course is being offered by BESTT as an authorized Tally Academy ..... The Tally course educates the students about the computerized accounting which is widely being used in the travel agency business. From the above explanation it is evident that the courses conducted by the society require a minimum eligibility criteria for joining, follow a definite and scientific method of imparting knowledge which include mandatory attendance in classes that are being conducting by trained faculty in time bound schedule before taking up examination.

The course may not be presently approved by a government regulatory authority in the field of education as the same is still to form a part of regular college curriculum as the infrastructure required to conduct these courses is not there but as the demand for professionals in the field of travel and tourism grows this field I will get the due recognition". 3.3. Since the courses admittedly were not accredited by UGC/Secondary Board, etc.

in India, the AO concluded that the courses conducted did not have any recognition

Page 3 of 16

ITA No. 2131/Del/2012

from the Govt. He was also of the view that there were no restrictions on the number of

students and on the charging of fees also there was apparently discretion; the

monitoring if any by IATA, Canada was only for doing business by executing

agreements with number of persons for opening, “Authorised Training Centres” under its

brand name. Further considering the IATA’s agreement made with the assessee on

14.8.2007, it was concluded that IATA gave authorization on year to year basis and it

was basically a business venture for spreading IATA’s Authorized Training Centres.

3.4. In the circumstances, it was hold that equipping the persons with the rules and

regulations for ticketing, air ticketing, air travel, cargo etc. could not be considered

educating them. Reliance was placed upon in the case of Sole Trustee Lok Shikshan

Trust vs. CIT 101 ITR 234 (SC) and Saurashtra Education Foundation vs. CIT

(2005) 273 ITR 139 (Guj.). It was concluded that the assessee was only carrying on

coaching classes for various courses on commercial lines with a profit motive. As a

result thereof, it was held that the activities carried on by the assessee fell outside the

purview of “charitable purpose” as per its definition contained in Section 2 (15) of the

Act. Consequently the assessee was held to be not entitled for exemption of income u/s

11 & 12 of the Income Tax Act, 1961. Accordingly as a result of denial of exemption u/s

11 & 12 the corpos donations in terms of the provisions of section 2(24)(iia) were held

to attract taxability leading to the assessment being concluded at an income of

Rs.2,30,71,122/-.

assessee in the year under consideration carried on the same activities as carried on in

the earlier years namely the activities of providing vocational training in the field of

travel and tourism by offering short term courses. Some of these short term courses it

was submitted had been approved by International Air Transport Association (IATA) . Page 4 of 16

ITA No. 2131/Del/2012

These activities had been held to be charitable and hence eligible for exemption u/s 11

and 12 in the earlier assessment years. It was submitted that the vision of the assessee

was to create a pool of young talent for travel and tourism industries by providing

training to the students. Accordingly in furtherance of its aims it conducted customized

Diploma programmes of one year duration and Certificate programmes of shorter

duration aimed at providing not only techno managerial knowledge and skills,

development of personality but also cross cultural orientation. As an IATA authorized

training centre it was submitted it not only was approved by IATA but also Director

General of Civil Aviation (DGCA) and it had been imparting training at a very highly

subsidized fee, to young men and women in the field of travel and tourism in association

with the following:-

facts and details explained before him and he has wrongly relied upon the decisions

cited. Those decisions on facts, it was submitted were distinguishable and instead the

issue was supported by Oxford Academy for careers Development vs. Chief CIT

reported in 315 ITR 382(All). It was further submitted that the AO has incorrectly

interpreted the provision of section 2(15) of the Act and the amendment carried out by

the Finance Act 2008 w.e.f 1.4.2009 and the relevant legislative intentions which infact had been explained by the CBDT Instruction No. 1 dated 27th March, 2009

reported in 310 ITR 42(St) relevant at page 52 to 53. Reliance was placed upon

the case of Delhi Music Society reported in 204 Taxman 231 (Del).

Page 5 of 16

ITA No. 2131/Del/2012

present appeal by the Revenue.

may be set aside. Ld. AR on the other hand relied upon the impugned order.

On a consideration thereof, we find for reasons to be brought out in detail hereinafter

that in the peculiar facts and circumstances of the case, nothing has been placed before

us to upset the detailed finding of fact arrived at by the CIT(A). We find that the claim

of the assessee made before the CIT(A) that the arguments advanced before the AO are

being re-iterated has not been upset. We find that in the facts of the present appeal,

the distinction on facts drawn from the decision relied upon by the AO were confronted

to the AO in the remand proceedings by the CIT(A) and we have seen that the AO has

filed a Remand Report which has been extracted in para 8 of the impugned order. A

perusal of the same shows that apart from relying upon the decisions cited in the

assessment order reliance was further placed upon the decision of the Supreme Court in

the case of Distributors Baroda (P) Ltd. vs. Union of India & Others (1985)

155 ITR 120 (SC). The reference thereto is relevant in view of the facts that the

assessee before the CIT(A) relying upon the assessment order itself has submitted that

the registration granted to the assessee till date has not been withdrawn. The assessee

it is seen is a society registered under the Societies Registration Act XXI of 1860 vide Registration No. S-33130 of 1998 dated 15th June 1998. It is also a fact that the

assessee was granted registration u/s 12A of the Act vide order No. DIT(E)/2001-02/B- 858/131 dated 29th May, 2002 effective from 1st April, 2002. The ld.CIT(A) takes note of

the fact that the 12A exemption has not been withdrawn by the DIT(E) till date a fact

not upset by the Revenue before us. This fact is also acknowledged by the AO in his Page 6 of 16

ITA No. 2131/Del/2012

order at page 1 para 2. It is not the case of the Revenue that the activities of the society

are found to be contrary to the main objects of the society and in fact we find are as per

its memorandum extracted in the assessment order (which has been reproduced in the

earlier part of this order). The assessee has consistently put up a claim that it is a

charitable society – trust and relying upon the judicial precedent as considered by the

aforesaid decisions of the Hon’ble Allahabad High Court namely Oxford Academy for

careers Development and the decision of the Delhi High Court in the case of Delhi

Music Society has submitted that there is a pre-defined training program which is

strictly adhered to. The requisite information and details have specifically been called

for by the First Appellate Authority and have been filed an elaborate mention to these

facts at page 14 in the detailed finding on fact arrived at in page 12 to 21 of the

impugned order has been taken into consideration. On consideration, we further find

that the decisions relied upon by the AO infact support the case of the assessee.

Accordingly on facts and law, we do not find much merit in the department’s appeal.

The conclusion has been drawn on the following reasoning on facts, circumstances and

judicial precedent as found discussed hereinafter.

a very narrow scope of the term “Education” as appearing in section 2(15) of the

Income Tax Act. The facts qua the issue which have already been addressed are not

being repeated and on the nature of activities conducted by the assessee there is no

dispute the dispute is solely on the ground that the “education” is not recognised by

UGC/Board etc. under the aegis of the Government. We find that the narrow meaning

with which the “education” could be considered has resulted on account of mistakenly

relying upon the following observations of the Hon’ble Apex Court in the case of Sole

Shikshan Trust vs. CIT (cited supra):- Page 7 of 16

ITA No. 2131/Del/2012

“The sense in which the word “education” has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word “education” has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and having dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word “education” is used in cl.(15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling.” 9. The import and the context of the above observations of the Hon’ble Apex Court

came to be considered by the Hon’ble Gujarat High Court in the case of Gujarat State

Co-operative Union vs. CIT reported in 195 ITR 279 (Guj.) and we shall be

referring to these observations in greater detail subsequently for the present, we need

to refer to some material facts with which the Hon’ble Gujarat High Court was seized of.

In the facts of the case the activities conducted by the Gujarat State Co-operative Union

consisted of Higher diploma in co-operation (condensed), Diploma in land development

banking; Certificate course in Co-operative credit and banking’ Certificate course in Co-

operative credit and banking etc. consisting of 18 weeks, 12 weeks, 10 weeks and 24

weeks duration respectively. The activities of conducting of seminars and running four

cooperative training centres; conducting special courses for employee of urban co-

operative banks, district co-operative banks and market class, and also seminars. The

assessee therein also conducted co-operative education program, consumer education

programme, women co-operative education programme etc. amongst its list of activities

in the context of these aforesaid activities.

Page 8 of 16

ITA No. 2131/Del/2012

Court considering the judgment of the Apex court of Sole Trustee, Loka Sikshana

Trust has elucidated and elaborated the said decision in the following manner :

"The Supreme Court, in the above observations, by referring to the systematic \ instruction, schooling or training given to the young has only cited an instance in order to indicate as to what the word "education" appearing in s. 2(15) of the Act \ which defines "charitable purposes" is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word "education", persons other than "young". The expression "schooling" also means "that schools, instructs or educates" (The Oxford English dictionary, Vo!. IX, p. 217). The Supreme Court has observed that the word "education" also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word "education ". By giving further illustrations of a traveller gaining knowledge, victims o-f swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge the hidden mysteries of life, the Supreme Court has indicated that the word "education" is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate the proper confines of the word "education" in the context of the provisions of section 2(15) of the Act. It will not be proper to construe these observations in a manner in which they are construed by the Tribunal when it infers from these observations, in para 17 of its judgment, that the word "education" is limited to schools, colleges and similar institutions and does not extend to any other media for such acquisition of knowledge. The observations of the Supreme Court do not confine the 1V0rd "education" only to scholastic instructions but other forms of education also are included in the word "education". As noticed above, the word "schooling" also means instructing or educating. It, therefore, cannot be said that the word "education" has been given an unduly restricted meaning by the Supreme Court in the said decision." 11. Reverting to the facts of the present case, the AO is found to have referred to the

activities in the assessment order. However, he has not cared to factually examine the

same. Satisfied by enumerating the activities, he has failed to examine the supporting

facts and requirements qua the specific courses; duration of the course; the course fee

and the assessee’s explanation and instead of examining and considering the same

which evidently was filed and made available he has instead jumped to the conclusion

based on decisions whose facts also he failed to consider. The specific courses

conducted by the assessee admittedly pertaining to travel and tourism industry were

having the approval of Director General, Civil Aviation Department of the Government of

Page 9 of 16

ITA No. 2131/Del/2012

India and meeting specific requirements and following a course program as approved

and recognized by the following:- � Dangerous Goods Regulations - Course approved by DGCA � Diploma in Aviation & Travel Industry with lATA Certification � Certificate Course in Travel and Tourism � Certificate Course in Travel & Tourism in collaboration with Miranda House � Computerized Reservation Systems in collaboration with YMCA � lATA/UFTAA Foundation � lATA/GDS Fares Ticketing � Tally Financial Accounting Programme � Soft Skills

the various courses conducted by the assessee alongwith rules and regulations adhered

to by it depicting its operating procedures were all considered and examined in extenso

and neither these findings have been upset in the present proceedings nor anything

upsetting these has been referred to by the Revenue in the Remand Report filed by the

AO before the CIT(A). Accordingly on perusal of the same and on considering the

submissions of the Sr. DR we find that the following conclusions drawn on facts have not

been rebutted by the Revenue:-

“....................... During the course of appellate proceedings the appellant was directed to file details of the various courses conducted by it along with rules and regulations articulated by it depicting its operating procedures, These details were furnished by the appellant and I have examined the same. It was observed that for each and every course conducted by the appellant there is a pre-defined training program which is strictly adhered to, The training program clearly sets the rules and regulations as regards eligibility criteria for course, registration and fee procedure, course schedule, maintenance of attendance record, examination enrolment procedure, examination/re- examination procedure, processing of results and award of certificates, etc. Further the applicant has also deployed an adequate pool of in-house and visiting professional faculty which imparts education to the students who have enrolled for courses. As an example it would be relevant here to highlight course programme and schedules of few of courses being carried on by the appellant. As regards Dangerous Goods Regulations Course the course content/set is prepared by Director General of Civil Aviation (DGCA), education and training i provided by the appellant, examination paper is approved by DGCA, examination is conducted by appellant. and the Diploma Certificate approved by DGCA is awarded by appellant to the successful candidates/students. As regards Certificate Course in Travel & Tourism in collaboration with Miranda House the course content is set Miranda House, education and training is provided by the appellant, examination paper is set by appellant, examination is conducted by appellant and the Diploma Certificate

Page 10 of 16

ITA No. 2131/Del/2012

approved by Miranda House (College affiliated to Delhi University) is awarded by both Miranda House and the appellant to the successful candidates/student .The examination procedure being followed by the appellant is in fact more comparable to a normal schooling activity. Out of various candidates/students registered with the appellant for various courses conducted by it, it is seen there are some students who have been unsuccessful in the examinations. These students then re-appeared for re-examination with the appellant in the next term of the relevant course. A proper attendance record is being, maintained by the appellant for all the students as well as the teachers and visiting facilit : The appellant has also set operating standards for the various courses conducted by it. These operating standards clearly ear mark for each course the periodicity, examination schedule, duration, eligibility criteria, registration criteria, fee schedule, rules vis a vis attendance procedure, etc. These facts clearly distinguish activities of the appellant which are more analogous to schooling from the activities of a normal coaching institute...............” 13. The conclusion so drawn is further supported by the decision of the jurisdictional

High Court in the case of Delhi Music Society reported in 204 Taxman

231(Delhi) where their Lordships hold as under considering the facts of that case:

"11. Even if these tests are applied to the case of the petitioner, the petitioner fulfils them. As has already been noticed, the petitioner is teaching and promoting all form of music and dance, western, Indian or any other. In accordance with the object, it is running a music school in Delhi, collecting tuition fee and admission fee from the students. Teachers have been employed and they have been paid salaries. Expenditure is also incurred on the maintenance of musical instruments. All these are reflected in the income and expenditure account for the years ended 31st March, 2006 to 31stMarch, 2010. The petitioner has also filed audited account for these years. In annexure P-5 to the writ petition, the petitioner has annexed a write up of its activities. From this, it is seen that there are 549 students enrolled with the petitioner who are taught western instruments according to their choice such as Piano, Guitar, Electronic Key Board, Wind Instruments, Drums and Vocal. The school faculty comprises of 30 teachers with 25 of them being Grade 8 and above in western music. There is reference to scholarships that are open to the students including waiver of fees from 25% to 90%. It has been stated that several students of the school have gone on for higher musical studies to places like Moscow, London, New York, Prague and Rome. The schedule of fees effective from April, 2011 i also made part of the annexure. There are rules and regulations governing the running of the school which are also made part of the annexure. The main rules and regulations are that the school works for all seven days a week and remains closed only on national and public holidays; that the school year is divided into four terms of three months each; that students who are attending instrumental music classes would be taught individually by the teachers; that dance students would be taught in groups: that there would be workshops/lecture demonstrations arranged for the benefit of the students from time to time and that attendance in such workshops would be compulsory, that students who report late by more than 20 minutes may be marked absent and so on. There is also a rule that the students; who are irregular in attending the classes or absent them elves frequently for long periods without prior intimation, would be removed from the rolls and if any of the students are found lacking in application or discipline, they are liable to be terminated by the Principal.

Page 11 of 16

ITA No. 2131/Del/2012

assessee do not have recognition from the Govt. and further that there is no regulatory

Authority to exercise check on its fee structure is no longer a valid objection as not only

considering the aforesaid decision but also considering the approvals/recognition of

sector specific competent Authority like DGCA at the national level and IATA at the

global level who are presumed to have given their giving approvals as per industry

standard requirements by way of their Agreements/approvals etc on a year to year

basis after due care and diligence, considering the adherence of standards and

requirements to be met in the industry specific skill/qualification requirements.

Court in the aforesaid case of Delhi Music Society (supra) has been placed on the

decision of the decision of the Hon’ble Calcutta High Court in the case of CT vs. Doon

Foundation (1985) 154 ITR 208/22. The relevant extract supporting the view taken

from the said decision is reproduced hereunder for ready reference.

"10. We may refer to the judgment of the Calcutta High Court in CIT v. Doon Foundation [1985] 154 ITR 208/22 Taxman 9. Interpreting the provisions of Section 10(22) of the Act, the High Court observed as under:-

Page 12 of 16

ITA No. 2131/Del/2012

"We are also unable to accept the contention of Mr. Maitra that an educational institution to be eligible for exemption under Section 10(22) should be affiliated to any university or any board. Section 10(22) does not impose such a condition. So long as the income is derived from an educational institution existing solely for educational purposes and not for purposes of profit such income is entitled to exemption under Section 10(22), whether or not-such educational institution is affiliated to any university or college or board If the contention of the Revenue is accepted. then many of the societies running institutions solely for imparting education would not get the benefit of Section 10(22). Education as envisaged in Section 10(22) may be imparted in a school or college or institution which may or may not be affiliated to, or recognized by, a university or board. " This judgment takes care of the objection of the prescribed authority that the petitioner is not affiliated to, or recognized by any university or board in India and that it merely awards certificates or grades which are issued by the Trinity College and Royal School of Music, London. Since Section 10 (23C)(vi) also uses the same language as Section 10(22), the same principle should govern the interpretation of that provision also. " 16. We further find that the AO in his Remand Report in the face of the claims of the

assessee before the CIT(A) has again placed reliance upon the decision of the Hon’ble

Gujrat High Court in the case of Saurashtra Education Foundation vs. CIT (supra). On

considering the facts of the said decision, we find that the claim of the assessee that the

facts are distinguishable are found to be correct. We find that in the facts of that case,

the activities of the assessee were like a coaching institute in as much as it was

conducting various classes for students of class X, XI and XII for CA Entrance

Examination. Apart from that it was also holding refresher courses for teachers teaching

in various schools. Further the issue under consideration in the facts of that case was

exemption claimed u/s 10(22) of the Act. We find that in the circumstances, reliance on

the said decision was misplaced. In fact the Hon’ble Gujrat High Court itself has held

that there is a difference in the concept of “education” as envisaged u/s 2(15) with

respect to section 11 of the Act vis a vis section 10(22) of the Act. The following extract

from the said judgment brings out this fact:-

"It is significant to note that while a trust holding property for a charitable purpose of education as defined by section 2(15) may also be an educational institution existing solely for the purpose of education, the two institutions cannot be treated as belonging to the same class. An institution may be carrying on Page 13 of 16

ITA No. 2131/Del/2012

educational activities as are being carried on by the assessee herein without imparting formal education and without being affiliated to or accountable to any authority. Such a trust can certainly be considered as qualifying for exemption under section 11 (1)(a) read with section 2(15), hut the term 'the educational institution' contemplated by section I0 (22) is a narrower concept. Though 'educational institution' and the educational activities are closely interconnected; in section 11 (1)(a), read with section 2(15) it is the activities which are in focus, whereas in section 10(22) both the institution and the activities are in focus A n educational institution under section 10(22) is, therefore, more than a body carrying on charitable activities in the field of education as contemplated by section 2(15) .” 17. We further find that the fact that exemption u/s 12A has not been withdrawn by

DI (Exemption) as noted in the earlier part of this order is a fact which has not been

upset as the assessee continues to enjoy exemption u/s 12A, a finding which has not

been assailed by the Revenue. Accordingly, considering the decision of the ITAT in the

case of Surat City Gymkhana vs. ACIT reported in 76 ITD 127 (Ahd.) which has

been upheld by the Hon’ble Gujarat High Court and stands affirmed by the Hon’ble Apex

Court in the case of ACIT vs. Surat City Gymkhana (SC), we find that it is also worth

referring to at this juncture. Thus, reference to the following discussions from the order

of ITAT in the facts of that case would be appropriate in the facts of the present case at

this stage in order to further fortify the view taken:-

"25 ..............It is further to be noted that the CIT, Surat has registered the assessee trust on 4-1-1984 under section 12A. Section 12A provides that for claiming exemption under section 11 it is mandatory that an application for registration of the trust in prescribed Form No. 10A is filed before the CIT along with the instrument under which the institution is established accompanied with the accounts of the institution relating to such prior year or years for which such accounts have been made up. The grant of registration by the CIT under section 12A does not constitute an empty formality which is to be completed in a routine and mechanical fashion by the CIT without any scrutiny regarding the charitable nature of the trust or institution required to be registered under the 1. T. Act. If goes without saying that registration under section 12A is to be granted only if the CIT is satisfied that the trust or the institution is a charitable institution and its objects are covered as charitable as per the definition of "charitable purposes" contained under section 2(15) of the Act. Once the institution has been registered under section 12A, it is for the Assessing Officer to find out whether the income of the institution has been applied for the objects of the institution and the statutory conditions as contained under sections 11 to 13 are fulfilled by the assessee. In our opinion it is beyond the powers of the Assessing Officer to reject the claim of exemption under section 11 by looking into the objects of the association and holding the same as non-charitable in Page 14 of 16

ITA No. 2131/Del/2012

nature. In support of the view being taken by us here, reliance is placed on the judgment of Calcutta High Court in Ananda Marga Pracharaka Sangh v. CIT [1996J 218 ITR 254.At page 270 of the report their Lordships observed as follows: "It may be mentioned here that the registration of the charitable society as a charitable society under section 12A is not an idle or empty formality. This is apparent from the tenor of the provisions of section 12A. It requires that not only an application should be filed in (he prescribed form setting out the details of the origin of the trust but also the names and addresses of the trustees and/or managers. The form further requires a certified copy of the instrument of its creation as well as two copies of the latest accounts of the applicant-trust or institution for as far as back as three years to accompany each application. The requirement of obtaining the details as also the copies of the past accounts cannot be said to be a ceremonial one. The purpose is to examine the objects of creation a' well as an empirical study of the past activities of the applicant for three years where the application is made belatedly so that the Commissioner could come to a conclusion on examination of all the factors that the applicant is really a charitable trust or institution eligible for registration. " Similar view has been taken by the Special Bench of the Tribunal in the case of Mrs. Dwarika Prasad Trust (supra) relied upon by the Id. counsel. The decisions of the Allahabad High Court in Fifth Generation Education Society's case (supra) and Calcutta High Court in CIT v. Ganapatra.Sagarmal [J990} 182 ITR 89 have taken similar view in the matter. In view of the aforesaid discussion, we feel that after allowing registration under section 12A it is not for the Assessing Officer to deny exemption under section 11 on the ground that the assessee Association is not charitable in nature. 26. Regarding the two decisions cited by the Id D.R. viz.Fifth Generation Education Society's case (supra) and Shantagauri Ramniklal Trust's case (supra), we find that both these decisions rather support the view being taken by us here and the reliance placed by the learned DR is entirely mis-conceived. In Shantagauri Ramniklal Trust's case (supra) the Hon' ble Gujarat High Court held that whenever application is made for registration under section 12A, it is for the CIT to make an inquiry and reach conclusion regarding the charitable nature of the assessee trust. Obviously once the conclusion has been reached by the CIT that the objects of the trust are charitable and the CIT proceeds to register the trust, the Assessing Officer is precluded from carrying out the same exercise again and deny the claim of exemption under section 11. " 18. Considering the peculiar facts and circumstances of the case and the position of the

law which is further found supported by the decision of the Hon’ble Bombay High Court

in the case of DIT vs. Women’s India Trust 379 ITR 506 (Bombay) the challenge

posed by the revenue that exemption u/s 11 & 12 of the Act was not warranted is

found to be not sustainable.

Page 15 of 16

ITA No. 2131/Del/2012

18.1. Accordingly on account of the above reasoning, facts, circumstances and position

of law, we find that the departmental grounds having no merit have to be dismissed.

Ordered accordingly.

Sd/- Sd/- (PRASHANT MAHARISHI) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

‘veena/Amit Kumar’

Copy of the Order forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File By order Assistant Registrar

Page 16 of 16