INCOME TAX ACT, 1961

Section 12AA

Charitable trust - Registration under section 12AA - Educational society collected donation over and above tution fee - No material to find that assessee indulged in collection of capital fees

Assessee, an educational society applied for registration under section 12AA. CIT noticed that assessee had received by way of donation from students over and above the tuition fees. Accordingly, CIT took the view that assessee was receiving donation connected with admission of students and, therefore, it has to be treated as collection of capitation fees and therefore, could not be considered as a charitable institution under section 2(15) because purpose of assessee as a whole was to make profit. Thus, CIT denied registration under section 12AA. Held: If CIT had nursed any doubt about nature of donation after perusal of entries in the books showing that students gave donation, then it should have been starting point of enquiry to unravel the truth. Since address of students who gave donations were furnished by assessee, then in all fairness he should have enquired by issuing summons under section 131 and/or notices under section 133(6) or the CIT ought to have called for some reports from the field and collected some materials which could have cleared the doubt in his mind and in that process could have been able to bring out the truth, which unfortunately the CIR failed to carry out and moreover, there was no complaint from any quarters in the public domain that assessee society insisted or indulged in nefarious practice of collecting donation/capitation fee for giving admission in Management quota, etc. Therefore, CIT erred in finding that donation collected by assessee was Capitation fee or was indulged in collection of in-voluntary donation or the assessee society was running the Institute for making profit or it was selling the seat. So, there was no material to find that assessee had or is indulged in collection of capitation fees for admission or allotment of seats in management quota and is running the institute for making profit. Accordingly, assessee society was eligible for grant of registration under section 12AA.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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