ORDER
Hemant Gupta, J. - This order shall dispose of two appeals bearing ITANos.190 of 2011 and 285 of 2012, as both appeals arise out of same order of the Income Tax Appellate Tribunal (for short 'the Tribunal').
2. The revenue has filed ITANo.190 of 2011 under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') against an order dated 28.05.2010, whereby Tribunal has allowed the registration to the assessee under Section 12AA of the Income Tax Act, but declined request for exemption under Section 80G of the Act. The Revenue has raised the following substantial questions of law:
"(i)
Whether on the facts and circumstances of the case the ITAT was right in law in holding that the assessee's activities are of charitable nature, notwithstanding the fact that the assessee has been charging hefty fees as mentioned in para 5(iv) of the CIT's order dated 24.07.2009 passed u/s 12 AA of the Income Tax Act, 1961, which is not a charitable activity as per the provisions of Section 2 (15) of the Income Tax Act, inserted by the Finance Act, 208 entitled for registration u/s 12AA?
(ii)
Whether ITAT is justified in holding the university as an institution as envisaged in sections 12A & 12AA of the Income Tax Act as against the fact that the self financed applicant university, though a body corporate, is not a company u/s 25 of the Company Act, 1956 neither a society, nor a trust, nor a deity or wakf & thus not an institution eligible for making application u/s 12AA of the Income Tax Act?
(iii)
Whether the ITAT is justified in law in holding that the applicant university is a legal entity separate from its sponsoring body & an institution competent for applying for registration u/s 12AA of the Income Tax Act in spite of the fact that the sponsoring body (O.P. Jindal Jan Kalyan Sansthan) is an applicant for establishing the O.P. Jindal Global University, has a right to possess all assets & liabilities of the university on its dissolution and characterises the applicant university as merely its activity, nor separate from the parent body?"
3. The assessee, in his appeal (ITA No.285 of 2011) directed against an order declining exemption sought by it under Section 80G(5) of the Act, has raised the following substantial question of law:
"Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the denial of registration/approval under Section 80G(5) of the Act?"
4. Subsequently, the assessee filed an application on 09.11.2010 for fresh approval under Section 80G of the Act, which was declined by the Commissioner of Income Tax on 25.04.2011. The revenue is in appeal (ITA No.282 of 2012) against the order dated 12.02.2012 passed by the Tribunal setting aside the said order, which is listed for hearing separately today.
5. The assessee was constituted as an University on 27.01.2009 under the Haryana Private Universities Act, 2006, when the Schedule to the aforesaid Act was amended vide ordinance No.4 of 2009. The assessee sought approval as an educational institute in terms of Section 10(23C) (vi) of the Act. Chief Commissioner, Income Tax declined approval on 18.01.2010. The assessee aggrieved against the said order filed CWP No.6171of 2010 before this Court. This Court allowed the writ petition on 11.11.2011. The Court inter alia observed as under:
"In view of the said judgment, the main and primary objects of a Trust or institution are relevant to determine the nature of such trust or institution. The petitioner is a University created under a statute, when the schedule in terms of Section 3 of the Haryana Act was amended so as to incorporate the petitioner - University as one of the University established under the Act. Such University has to satisfy the objective as delineated in Section 3 of the Haryana Act, which are undisputedly for the educational purposes. The said aspect has not been controverted by the authority in the order impugned or by the learned counsel for the Revenue during the course of arguments before this Court. Therefore, we have no hesitation to hold that the petitioner is a University established solely for educational purposes and not for the purposes of profit."
6. On 11.05.2009, the assessee applied for registration under Section 12AA of the Act as well as for exemption under Section 80G(5) of the Act. The Commissioner of Income Act declined registration under Section 12AA of the Act and also exemption under Section 80G(5) of the Act, but the Tribunal in two separate appeals filed by the assessee in respect of two applications submitted by the assessee, granted registration under Section 12AA of the Act but declined request for exemption under Section 80G(5) of the Act for the reason that in the event of dissolution of the University, the assets will vest in the sponsoring body i.e. Om Parkash Jindal Gramin Jankalyan Sansthan - trust registered under Section 12AA of the Act, whereas object 27 of the said trust is to apply the funds to construct, alter, maintain, improve, develop, manage and control Dharmshalas, Ashrams, Auditoriums and temples and to provide all kind of required facilities and worship materials to devotees. Therefore, the said trust is charitable and religious, which are not permissible in terms of Section 80G (5)(ii), which is reproduced as under:
"(ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;"
7. After the said order was passed by the Tribunal, the trust - the sponsoring body amended Objects of that Trust, which led to the filing of the fresh petition by the assessee on 09.11.2010, which has since been allowed by the Tribunal. The Revenue's appeal i.e. ITANo.282 of 2012 is also separately listed for hearing today.
8. Learned counsel for the revenue has vehemently argued that the application for registration submitted by the University could not be entertained as it is charitable or religious trust alone which can seek registration under Section 12AA of the Act. The said provisions contemplate that contribution received by a trust wholly for charitable and religious purpose or an institution established wholly for such purposes is eligible for registration. Since the University is not established for a charitable purpose, it is not eligible to seek registration under Section 12AA of the Act.
9. On the other hand, learned counsel for the assessee referred to Section 7 of the Haryana Private University Act, 2006 to contend that the University is a body corporate to sue or be sued in its own name. Such University is a person within the meaning of Section 2(13) of the Act. It has also been pointed out that Section 15(2) of the Act provides that the charitable purpose includes the purpose of education. Therefore, University which is established for the purpose of education is established for charitable purpose and is therefore eligible to seek registration under Section 12AAof the Act.
10. Having heard learned counsel for the parties, we do not find any merit in the revenue appeal i.e. ITA No.190 of 2011. The university is a body corporate and established for the cause of education. It is, thus, a Institution eligible for registration within the meaning of Section 12AA of the Act. In the earlier writ petition, a categorically finding has been recorded that the university has been established solely for educational purpose and not for profit therefore, it is a charitable institution read with Section 15(2) of the Act.
11. In view of the said fact, the assessee was, thus, rightly found eligible to seek registration under Section 12AA of the Act by the Tribunal vide order dated 08.05.2012 and consequently no substantial questions of law, as framed by the Revenue, arise for consideration.
12. In respect of the assessee's appeal, declining the request for exemption under Section 80G of the Act, learned counsel for the assessee has argued that firstly it is hypothetical that the university will be dissolved and in the event of dissolution of the university, the sponsoring body will appropriate the fund for religious purposes in excess of 5% of receipt of a total receipt of the said trust. It is also contended that the exemption under Section 80G of the Act is one time event though the assessee is required to carry out its charitable activities without fail. In the event of not performing any charitable activities, the authorities under the Act have jurisdiction to assess such charitable institution in accordance with law but that will not dis-entitle the assessee from exemption under Section 80G of the Act.
13. In ITANo.701 of 2010 titled CIT v. Surya Educational & Charitable Trust [2011] 203 Taxman 53/15 taxmann.com 123 (Punj & Har.) it has been held by this court that at the stage of registration under Section 12AA of the Act, the extent and nature of activities are not required to be examined. That question is required to be examined in assessment proceedings. The Court observed as under:
"Therefore, the object of Section 12AA of the Act, is to examine the genuineness of the objects of the Trust, but not the income of the Trust for charitable or religious purposes. The stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Therefore, we find that the judgments referred to by the learned counsel for the appellant are not applicable to the facts of the present case arising out of the question of registration of the Trust and not of assessment."
14. The issue has been examined that at the stage of registration and for exemption under Section 80G of the Act, the stated object of the trust is required to be examined. Whether the funds are properly applied or not, can be examined by the Assessing Officer at the time of framing the assessment.
15. In view of the above, we find that the Tribunal has erred in law in refusing exemption to the assessee under section 80G(5) of the Act. Consequently, the assessee's appeal i.e. ITA No.285 of 2012 is allowed in view of the fact that the Tribunal erred in law in upholding the denial of exemption to the assessee.
POOJA