- (1.) The present appeal has been filed under section 260A of the Income-tax Act, 1961, hereinafter referred to as "the Act" against the order dated October 8, 2009, passed by the Income-tax Appellate Tribunal, Allahabad. The Revenue has proposed the following three substantial questions of law said to be arisen out of the order of the Tribunal. (1) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that registration under section 12AA cannot be cancelled by taking into consideration an order passed under section 10(23C)(vi) of the Act by the Chief Commissioner as both the proceedings are independent proceedings? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in not appreciating the fact that the assessee was not doing any charitable activity as found by the Assessing Officer. During the assessment proceedings as such the provisions of sections 11, 12, 12A, 13 of the Act had been violated by the assessee, therefore, the cancellation of registration by the Commissioner of Income-tax was justified? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in not taking into consideration the decisions relied upon by the Commissioner of Income-tax in his order under section 12AA(3) of the Act while cancelling the registration of the assessee-society? Briefly stated that the facts giving rise to the present appeal are as follows: The respondent-assessee was granted registration under section 12A of the Act being a charitable institution. It claimed exemption under section 10(23C)(vi) of the Act on the ground that the income earned by it is relating to educational institution as the institution is solely for the education purposes. The claim of exemption under section 10(23C)(vi) of the Act was disallowed by the Chief Commissioner of Income-tax, Varanasi, vide order dated February 25, 2009, on the ground that in the objects of the institution there are certain other objects, which proves that the institution has not solely been established for educational purposes. Relying on the said order proceeding under section 12AA(3) of the Act was initiated and, vide order dated May 22, 2009, the Commissioner of Income-tax, Varanasi, cancelled the registration granted to the respondent-assessee under section 12A of the Act. Feeling aggrieved by the order dated May 22, 2009, cancelling the registration granted under section 12A of the Act, the respondent-assessee preferred an appeal before the Income-tax Appellate Tribunal, Allahabad, which was registered as I.T.A. No. 143 (Alld) 09. The Tribunal, vide impugned order dated October 8, 2009, had allowed the appeal and set aside the order of the Commissioner of Income-tax dated May 22, 2009 and the registration had been restored. The Tribunal had come to the conclusion that the proceeding under section 10(23C)(vi) of the Act is an independent proceeding and cannot be made the sole ground for cancellation of the registration granted under section 12A of the Act. It further found that the deduction under section 11 of the Act has been allowed to the respondent-assessee herein for the assessment year 2006-07 and in the assessment order passed for the assessment year 2004-05 exemption under section 11 of the Act was disallowed, which order was reversed in appeal by the Commissioner of Income-tax (Appeals), Varanasi, allowing the deduction under section 11 of the Act, vide order dated October 3, 2007, which order has been accepted by the Revenue as no second appeal was preferred against the said order.
(2.) We have heard Sri Shambhu Chopra, learned senior standing counsel for the Revenue and Sri Kunal Ravi Singh, learned counsel appearing for the respondent-assessee.
(3.) Sri Chopra, learned counsel, submitted that as the institution has been established solely for the educational purposes and is a profit-earning institution exemption under section 10(23C)(vi) of the Act having been rightly denied to it as it ceased to be a charitable institution, therefore, the Tribunal has erred in restoring the registration. The submission is wholly misconceived. Admittedly, one of the objects of the trust was for running educational institutions and imparting education. The trust, however, has other objects also, which are reproduced below: (i) Development of scientific education amongst Indian children. (ii) Modern education with moral duty and character building in accordance with the Indian culture as well as development of educational atmosphere. (iii) To provide as well as arrange commercial and practical education to children. (iv) Development as well as publicize the Indian culture and arts. (v) To establish the school and management thereof from primary education to intermediate education. (vi) To publicize as well as to educate and propagate the cottage industries as well as industries based on village amongst the youth so that they may lead their life independently and freely.;