Partap Education & Research Society, Kangra v. Commssioner of Income Tax (Exemptions), Chandigarh

ITA 428/CHANDI/2016 | misc
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 42821514 RSA 2016
Assessee PAN AABAP9103F
Bench Chandigarh
Appeal Number ITA 428/CHANDI/2016
Duration Of Justice 5 month(s) 26 day(s)
Appellant Partap Education & Research Society, Kangra
Respondent Commssioner of Income Tax (Exemptions), Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 21-10-2016
Date Of Final Hearing 28-09-2016
Next Hearing Date 28-09-2016
Assessment Year misc
Appeal Filed On 25-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO.428/CHD/2016 (UNDER SECTION 12AA OF THE ACT) PARTAP EDUCATION & VS. THE C.I.T.(E) RESEARCH SOCIETY CHANDIGARH. VILLAGE CHANOUR TEHSIL INDORA DISTRICT KANGRA. (HP). PAN: AABAP9103F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S. BHASIN RESPONDENT BY : SHRI SUSHIL KUMAR DR DATE OF HEARING : 17.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 O R D E R PER ANNAPURNA GUPTA A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) CHANDIGARH DATED 29.2.2016 REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATI ON UNDER SECTION 12A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 2. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE TRUST WAS CREATED ON 13.12.2011 WITH THE FOLLOWING OBJECTS: AIMS & OBJECTS :- (A) MAIN OBJECTS; THE SOCIETY HAS BEEN CREATED FOR THE PUBLIC PURPOSES AND ITS OBJECTS SHALL INCLUDE IQ PROMOTE THE WORKS OF EDUCATION AMONG THE STUDENTS AT LARGE IRRESPECTIVE OF THEIR C ASTE CREED RELIGION REGION OR SOCIAL STATUS AND SPECIE! EMPHASIS WILL B E GIVEN ON THE MORAL AND CHARACTER BUILDING OF THE STUDENTS. THE OBJECTS OF THE SOCIETY WOULD FURTHER INCLUDE THE FOLLOWINGS :- I) TO SET UP ESTABLISH MANAGE AND RUN EDUCATION AL INSTITUTIONS II) TO PROVIDE MORAL PHYSICAL ACADEMIC CULTURAL RELIGIOUS AND TECHNICAL EDUCATION AMONG THE STUDENTS AND GENERAL MASSES. III) TO DEVELOP AND PROMOTE LITERACY AMONG CHILDREN ESPECIALLY AMONG GIRLS BACKWARD CLASSES AND ECONOMICALLY WEAKER SEC TION OF SOCIETY IV) TO PROVIDE MONETARY ASSISTANCE TO THE INTELLIG ENT DESERVING POOR AND NEEDY STUDENTS AMONG THE WEAKERASTER SECTIONS OF TH E SOCIETY. V) TO IMPART COMPUTER EDUCATION TO THE STUDENTS AND PROMOTE INFORMATION & TECHNOLOGY AMONG MASSES. VI) TO PREACH AND PRACTICE HINDI SCRIPT TO PROMOTE HINDI AS NATIONAL LANGUAGE. TO ENDEAVOR SINCERELY TO INCULCATE PATRIO TISM & SOCIALISM ETC. IN. THE RAW MINDS OF KIDS / YOUNG GENERATION VII) TO SET UP EDUCATIONAL INSTITUTIONS FOR ACHIEVE MENT OF THE OBJECTIVES MENTIONED HEREIN THE RELEVANT CLAUSES OF MEMORANDUM OF ASSOCIATION AND THE FIRST INSTITUTE WILL BE OPENED UNDER THE NA ME OF PARTAP WORLD SCHOOL AT VILLAGE CHANOUR TEHSIL INDORA DISTRICT KANGRA (HIMACHAL PRADESH). VIII ) TO TAKE UP SUCH STEPS AS ARE NECESSARY AND CONDUC IVE FOR ACTIVATING THE ABOVE OBJECTIVES I.E. TO RAISE FUNDS THROUGH SUBSCRIPTIONS DONATIONS FEES GRANTS-IN-AID LOAN FROM APPROVED FINANCING INSTIT UTION TO OPEN ACCOUNT OR ACCOUNTS IN BANK OR BANKS TO EXECUTE DOCUMENTS AND TO ARRANGE FOR AND OFFER SURETIES/SECURITIES AS MAY BE REQUIRED FROM T IME TO TIME. IX) TO ADOPT AND FOLLOW THE SYLLABUS FOR TEACHING I N ITS INSTITUTION AS MAY BE PRESCRIBED BY THE DEPARTMENT OF EDUCATION HIMACHAL PRADESH THE CENTRAL BOARD OF SECONDARY EDUCATION NEW DELHI AND OTHER EDUCATIONAL BOARDS & UNIVERSITIES ETC. AS THE CASE MAY BE FROM TIME TO TIME. TWENTY FOUR HOURS UNTIL & UNLESS PROVIDED OTHERWISE IN THESE BY-LAWS WHICH WILL BE APPLICABLE IN CASE OF ANY CONTRADICTI ON. 3. THE ASSESSEE FILED AN APPLICATION IN FORM NO.10A FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT ON 31.8.2015. DURING THE COURSE OF PROCEEDIN GS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX NECE SSARY INFORMATION WAS CALLED FOR FROM THE ASSESSEE WHIC H WAS DULY SUPPLIED. AFTER GOING THROUGH THE SAME THE L EARNED 3 COMMISSIONER OF INCOME TAX FOUND THAT THE FOLLOWIN G ISSUES EMERGED: I) THE SOCIETY WAS A CLOSELY HELD FAMILY CONCERN FINANCED MOSTLY BY THE LOANS FROM FAMILY AND RELATIVES OF THE MEMBERS OF THE SOCIETY. II) NO DONATIONS HAD BEEN RECEIVED BY THE SOCIETY. THUS IT WAS NOT AMENABLE TO PUBLIC CHARITY. III) THE LAND OWNED BY THE SOCIETY ALSO BELONGED T O THE FAMILIES OF THE MEMBERS OF THE SOCIETY AND AS A RESULT THE POSSIBILITY OF STRANGLE HOLD REMAINED OVER THE LEASEHOLD GIVEN. IV) THERE WERE FEES WHICH REMAINED OUTSTANDING FOR RECOVERY IN THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR 2013-14 THE LACK OF EXPLANATION OF WHICH HAD BEEN THE REASON FOR REJECTION OF APPLICATION FOR REGISTRATION IN THE PRECEDING YEAR. V) THE FEES RECEIVED BY THE SCHOOL IN THE SECOND YEAR WAS THE SAME AS THAT IN THE FIRST YEAR WHICH MEANT THAT THE SCHOOL HAD NOT BEEN ABLE TO IMPROVE. VI) THERE WERE HOST OF CASH TRANSACTIONS IN THE BA NK ACCOUNT OF THE ASSESSEE SOCIETY WHICH SHOWED 4 THAT THE SYSTEM OF THE SCHOOL BEING RUN BY THE SOCIETY WAS NOT TRANSPARENT. 4. ON THE BASIS OF THE ABOVE LD.CIT HELD THAT THE SOCIETY AND ITS SCHOOL WAS INTENDED AND DESIGNED PU RELY FOR IMPARTING EDUCATION ON COMMERCIAL PRINCIPLES AN D THAT THERE WAS NO ALTRUISTIC INTENT BUILT INTO THE SCHEM E OF ACTIVITIES. HE THEREFORE DENIED REGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF THE ACT. 5. THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX AT PARAS 8 AND 9 OF HIS ORDER REJECTING THE APPLICATION FOR REGISTRATION ARE AS F OLLOWS : 8. NOTWITHSTANDING THE ABOVE THE FOLLOWING ISSUES ALSO EMERGED ON EXAMINATION OF THE PAPERS FILED ALONG WI TH APPLICATION/ SUBSEQUENT SUBMISSIONS: A) THE SOCIETY'S MEMBERSHIP AND THE CONTRIBUT IONS MADE IN THE SHAPE OF UNSECURED LOANS MAKE FOR A CL OSELY HELD FAMILY CONCERN. THE FINANCES FOR CONSTRUCTIO N OF THE SCHOOL BUILDING ETC ARE MOSTLY FINANCED BY LOANS FR OM FAMILY & RELATIVES. THE SAME ARE RETURNABLE TO THE MEMBERS O F THE SOCIETY SINCE THE SAME ARE LIABILITIES IN THE BALANCE SHEET . THIS ASPECT DOES NOT REFLECT ANY ALTRUISTIC INTENT ON THE PART OF THE MEMBERS OF THE SOCIETY. ACTUAL ALTRUISM WOULD HAVE BEEN REFLEC TED IF THE SAME LOANS HAD BEEN MADE PART OF THE CORPUS FUND OF THE SOCIETY. (B) THE MATTER IS FURTHER EXACERBATED BY THE LACK O F ANY OTHER DONATIONS ETC THAT MAY HAVE BEEN RECEIVED BY THE SO CIETY. THIS DOESN'T IMPART THE INSTITUTION WITH THE CHARACTERS OF A SOCIETY AMENABLE TO PUBLIC CHARITY. HAD OTHERS BEEN ALLOWED TO CONTRIBUTE TO THE SOCIETY THROUGH CORPUS DONATIONS ETC. THE SOCIETY WOULD HAVE LENT ITSELF TO GREATER OVERSIGHT AND CONTROL. 5 (C) IT IS ALSO OBSERVED THAT THE LAND BELONGS TO TH E FAMILY AND HAS BEEN GIVEN ON LEASE TO THE SOCIETY. THIS ARRANG EMENT DOESN'T PRECLUDE THE POSSIBILITY OF STRANGLE HOLD OVER THE LEASEHOLD. THE LAND HAS BEEN LEASED FOR A PALTRY LEASE RENT OF RS. 100 PER MONTH FROM THE SOCIETY. THE LEASE DEED ALSO SPEAKS OF EXEMPTION GRANTED BY THE STATE OF HIMACHAL. PRADESH TO THE LESSEE TO EXEMPTION FROM OWNERSHIP OF LAND. HOWEVER THIS MILITATES AGAINST THE REQUIREMENT OF OWNERSHIP UNDE R SECTION 11 OF THE INCOME TAX ACT OF PROPERTY VESTING IN THE SOCIETY THE INCOME FROM WHICH IS SOUGHT TO BE EXEMPTED FROM TAXATION. (D) IT IS OBSERVED FROM THE BALANCE SHEET OF 2013-1 4 THAT FEES RECEIVABLE TO THE EXTENT OF RS. 45.46 LAKHS HA D BEEN REFLECTED IN THE BALANCE SHEET UNDER THE HEAD SUNDR Y DEBTORS. LACK OF EXPLANATION ABOUT THE SAME HAD BEEN THE REA SON FOR REJECTION OF THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA LAST YEAR. IT IS PERTINENT TO MENTION THAT THIS WHEN ADDED TO THE FEES RECEIVED WOULD HAVE EXCEEDED 1 CRORE AND INCOME WOU LD NOT HAVE BEEN EXEMPT U/S 10(23C)(IV) IN THE ABSENCE OF APPROVAL OF THE COMPETENT AUTHORITY. (E) INCOME FOR YEAR ENDING 31 ST MARCH 2015 IS AN APPROXIMATE SUMMATION OF THE FEES SHOWN TO HAVE BEE N RECEIVED IN FY 2013-14 AND THE FEES RECEIVABLE THAT WAS SHOWN AT THE END OF THE FY. THE FEES RECEIVED DURIN G FY 2014- 15 HAS BEEN SHOWN AS RS.1 32 35 591/- THE SUMMATIO N OF THE TWO AMOUNTS MENTIONED EARLIER IS RS.1 32 25 339 /- (RS. 86 79 339 + 44 46 000). THIS LEADS ONE TO CONCLUDE THAT THE FEES RECEIVED B Y THE SCHOOL IN THE SECOND YEAR IS SAME AS THAT OF THE FI RST YEAR. THIS IS VERY CONFOUNDING GIVEN THE FACT THAT SCHOOL WAS ABLE TO ATTRACT A SIZEABLE NUMBER OF STUDENTS AND FEES IN I TS VERY FIRST 6 YEAR AND HAS NOT BEEN ABLE TO IMPROVE IN THE NEXT Y EAR. THIS IS ALL THE MORE INTRIGUING GIVEN THE FACT THAT THER E IS AN ASTRONOMICAL HIKE IN THE SALARIES IN THE NEXT YEAR FROM 26 LAKHS TO 45 LAKHS. THE OTHER MAJOR SOURCE OF EXPEND ITURE IN FY 2014-15 IS BANK INTEREST. EVEN THIS ASPECT OF BANK INTEREST IS PERPLEXING GIVEN THE FACT THAT IT HAS GONE UP FROM RS. 35 LAKH TO RS. 51 LAKHS EVEN AS THE LOAN AMOUNT HAS DE CREASED FROM RS. 4.99 CRORES TO RS. 3.71 CRORES. (G) ANOTHER ISSUE THAT EMERGES FROM A COMPARATIVE S TUDY OF THE ACCOUNTS FOR THE TWO YEARS SHOW THAT ZEE LEARN WAS SHOWN AS A SUNDRY DEBTOR IN 2014 TO THE EXTENT OF R S. 2 10 938/- THE SAME AMOUNT IS SHOWN AS EXPENSE IN 2 015. (H) THE BANK ACCOUNTS REVEAL THAT THERE ARE A HOST OF CASH TRANSACTIONS. MOST OF THE CREDITS IN THE BANK ACCOU NTS ARE REGULARLY IN CASH. CASH WITHDRAWALS HAVE ALSO BEEN MADE ON SEVERAL OCCASIONS FROM THE BANK ACCOUNTS. SUCH LARG E SCALE CASH DEALINGS ARE POINTERS TOWARDS A SYSTEM THAT IS NOT TRANSPARENT. 9. CONSIDERING ALL OF THE ABOVE AND ALSO GIVEN THE FACT THAT THE APPLICANT HAS NOT PROVIDED THE FEE STRUCTURE D ETAILS OF NUMBER OF STUDENTS ACTUALLY STUDYING DETAILS OF ST UDENTS BEING SUBSIDIZED / PROVIDED FREESHIPS ETC IT IS SA FE TO CONCLUDE THAT THE SOCIETY AND ITS SCHOOL IS INTENDE D AND DESIGNED PURELY FOR IMPARTING EDUCATION ON COMMERCI AL PRINCIPLES AND THAT THERE IS NO ALTRUISTIC INTENT B UILT INTO THE SCHEME OF ACTIVITIES. THE DISCUSSION IN PRECEDING P ARAGRAPHS PROVES THAT THE ACTIVITIES OF THE SOCIETY DO NOT ST AND CORROBORATED VIS-A-VIS THE STATED OBJECTS. IN THE L IGHT OF ABOVE I HAVE NO OPTION BUT TO DENY REGISTRATION TO THE APPLICANT U/S 12AA OF INCOME TAX ACT 1961. 7 6. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT F OR THE PURPOSE OF GRANTING REGISTRATION THE ONLY CONDITION S TO BE SEEN ARE WHETHER THE OBJECTS AND THE ACTIVITIES OF THE TRUST ARE GENUINE. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT NONE OF THE DISCREPANCIES HIGHLIGHTED BY T HE LEARNED COMMISSIONER OF INCOME TAX IN HIS ORDER HA S A BEARING EITHER ON THE GENUINENESS OF THE OBJECTS OR GENUINENESS OF THE ACTIVITIES OF THE TRUST. THEREF ORE THE SAME OUGHT TO BE SET ASIDE AND THE ASSESSEE BE GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. THE ASS ESSEE REFERRED TO A NUMBER OF CASE LAWS IN SUPPORT OF ITS ABOVE CONTENTIONS : I) ADDL.CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1980) 121 ITR 1(SC) II) DHARMADEEPTI VS. CIT (1978) 114 ITR 454 (SC) III) CIT VS. SURYA EDUCATIONAL & CHARITABLE TRUST (2013) 355 ITR 280 (P&H) IV) CIT VS. BABA KARTAR SINGH DUKEE EDUCATIONAL TRUST (2014) 221 TAXMAN 493 (P&H) V) CIT VS. BKK MEMORIAL TRUST (2013) 256 CTR 424 (P&H) VI) ANJANEYA MEDICAL TRUST VS. CIT (2016) 382 ITR 399 (KER) VII) CIT VS. RED ROSE SCHOOL (2007) 212 CTR 394(ALL) 8 8. THE LEARNED D.R. ON THE OTHER HAND RELIED UPO N THE ORDER OF THE COMMISSIONER OF INCOME TAX. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS ALSO DOCUMENTS P LACED AND REFERRED TO BEFORE US. THE SOLE ISSUE IN THE P RESENT APPEAL PERTAINS TO REFUSAL OF GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961. 10. THE SCOPE OF POWER OF THE COMMISIONER WHILE GRANTING REGISTRATION U/S 12AA HAS BEEN DEALT WITH IN A NUMBER OF DECISIONS OF THE HIGH COURTS WHEREIN TIM E AND AGAIN IT HAS BEEN HELD THAT THE SECTION ITSELF CLEA RLY DEFINES THE SCOPE AS BEING LIMITED TO THE COMMISIO NER BEING SATISFIED ABOUT THE GENUINENESS OF THE OBJEC TS AND ACTIVITIES OF THE TRUST/SOCIETY. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN A NUMBER OF DECISIONS CIT VS SRI GURU GORAKHNATH CHARITABLE EDUCATIONAL SOCIETY (2015)378 ITR 685(P&H) CIT VS SURYA EDUCATIONAL AND CHARITABLE TRUST (2013) 355 ITR 280 AND CIT VS BAB A KARTAR SINGH DUKEE EDUCATIONAL TRUST (2014) 221 TAX MAN 493 HAS REITERATED THIS PROPOSITION. 11. ADVERTING TO THE FACTS OF THE PRESENT CASE WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT T HE OBJECT OF THE ASSESSEE SOCIETY WAS IMPARTING EDUCATION. PA RA 2 OF THE ORDER OF THE CIT STATES THAT THE ASSESSEE TRUST WAS CREATED WITH THE OBJECT TO PROMOTE EDUCATION AMONG THE STUDENTS AT LARGE IRRESPECTIVE OF THEIR CASTE CREE D 9 RELIGION REGION OR SOCIAL STATUS. THE AIMS AND OBJ ECTS OF THE ASSESSEE SOCIETY OUTLINED ABOVE ALSO REVEAL THE ABOVE FACT. EDUCATION AS PER THE PROVISIONS OF SECTION 2 (15) OF THE ACT WHICH DEFINES THE TERM CHARITABLE PURPOSE IS A CHARITABLE PURPOSE. THUS UNDISPUTEDLY THE OBJECTS OF THE ASSESSEE SOCIETY ARE CHARITABLE. 12. AS FOR THE GENUINENESS OF THE ACTIVITIES OF TH E ASSESSEE SOCIETY ALSO THE FINANCIAL STATEMENTS OF THE ASSESSEE SOCIETY FOR THE FINANCIAL YEARS 2013-14 &2 014-15 PLACED AT PAPER BOOK PAGE NO.25-34 CLEARLY REFLECT THE FACT OF ASSESSEE CARRYING OUT THE ACTIVITY OF IMPARTING EDUCATION BY SHOWING RECEIPTS OF FEES AND OTHER CHA RGES FROM STUDENTS AND ALSO EXPENSES INCURRED ON RUNNING THE SCHOOL. THESE FACTS HAVE NOT BEEN DISPUTED BY THE COMMISSIONER BEFORE WHOM THESE DOCUMENTS WERE ALSO PLACED VIDE ASSESSES LETTER DATED 10-02-2016 PLACED AT PB-22-24. MOREOVER THE DISCREPANCIES/DEFICIENCIES POINTED OUT BY THE COMMISSIONER OF INCOME TAX WE F IND HAVE NO BEARING AT ALL ON THE GENUINENESS OF THE AC TIVITIES OF THE TRUST. THE FACT THAT NO DONATIONS HAVE BEEN RECEIVED BY THE SOCIETY THAT IT IS FINANCED ENTIRE LY BY LOANS FROM MEMBERS OF THE SOCIETY THAT LAND BELONG TO THE MEMBERS OF THE SOCIETY THAT FEES ARE OUTSTANDING F OR RECOVERY THAT THERE HAS BEEN NO INCREASE IN THE FE ES RECEIVED IN THE FINANCIAL YEAR 2014-15 AS COMPARED TO FY 2013-14 AND ALSO THE FACT THAT THERE ARE CASH TRANS ACTIONS IN ITS BANK ACCOUNT HAVE NO REFLECTION ON THE FAC TUM OF 10 THE ASSESSEE CARRYING OUT ITS STATED OBJECT OF IMPA RTING EDUCATION. IN FACT WE FIND THAT THE LD.CIT HAS NOT QUESTIONED THE GENUINENESS OF THE ACTIVITY CARRIED OUT BY THE ASSESSEE BUT HAS ONLY QUESTIONED THE ALTRUIST IC INTENT BUILT INTO THE SCHEME OF ACTIVITIES OF THE A SSESSEE SOCIETY. MEANING THEREBY THAT THE LD.CIT WAS OF TH E BELIEF THAT THE SCHOOL WAS BEING RUN PRIMARILY FOR THE BE NEFIT OF THE MEMBERS OF THE SOCIETY . BUT THE FINDINGS ON WH ICH THIS BELIEF IS BASED REPRODUCED ABOVE ARE MERE SU SPICION TO THIS EFFECT. THAT THE SOCIETY IS CLOSELY HELD MANAGED AND FINANCED DOES NOT LEAD TO THE CONCLUSION THAT I T IS BEING RUN FOR THE BENEFIT OF ITS MEMBERS. AT THE M OST THERE CAN BE A POSSIBILITY OF SUCH A SITUATION ARIS ING BUT ON THE BASIS OF THESE OBSERVATIONS ALONE IT CANNOT BE SAID THAT THE SOCIETY IS RUNNING ONLY FOR THE BENEFIT OF ITS MEMBERS AND THEREFORE ITS ACTIVITIES ARE NOT GENUIN E. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS BABA KARTAR SINGH DUKEE EDUCATIONAL TRUST (2014) 221 TAXMAN 493 HAS HELD THAT ANY SUSPICION REGARDING T HE GENUINENESS OF ACTIVITIES OF THE TRUST CANNOT BE TH E SOLE REASON FOR REJECTING AN APPLICATION MADE U/S 12A OF THE ACT. MOREOVER THE ISSUES HIGHLIGHTED BY THE LD.CIT BEING APPREHENSIONS RELATED TO APPLICATION OF INCOME OF T HE SOCIETY MAY HAVE A BEARING WHILE DETERMINING T HE EXEMPT INCOME OF THE SOCIETY AS PER THE PROVISIONS OF SECTIONS 11 & 12 OF THE ACT WHICH IS A STAGE SUBS EQUENT TO GRANT OF REGISTRATION AND IS THEREFORE NOT RELEV ANT FOR THE PURPOSE OF GRANTING REGISTRATION U/S 12AA OF TH E ACT. 11 THE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS SURYA EDUCATIONAL AND CHARITABLE TRUST (2013) 355 I TR 280 HAS HELD THAT THE OBJECT OF SECTION 12AA IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST AND NO T THE APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE P URPOSES WHICH STAGE ARISES LATER ON ON FILING OF RETURN OF INCOME. 13. CLEARLY THEREFORE THE GENUINENESS OF THE OBJE CTS AND ACTIVITIES OF THE ASSESSEE SOCIETY NOT BEING QUESTIONED THE LD CIT COULD NOT HAVE REFUSED GRAN T OF REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE SO CIETY . WE THEREFORE SET ASIDE THE ORDER OF THE LD CIT AND DIRECT THAT THE ASSESSEE BE GRANTED REGISTRATION U/S 12A O F THE ACT. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST OCTOBER 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR ITAT CHANDIGARH 12