Kerala H.C : Where assessee-trust collected capitation fees in addition to prescribed fees, object of assessee-trust could no more be said to be charitable in nature and, hence, registration granted to it was to be rejected

High Court Of Kerala

Travancore Education Society Vs. CIT

Section 2(15)

Antony Dominic And Anil K. Narendran, JJ.

IT Appeal No. 194 Of 2014

October 27, 2014

JUDGMENT

Antony Dominic, J. – This appeal is filed against the order passed by the Income-tax Appellate Tribunal, Cochin Bench in ITA No. 134 of 2014 which was filed by the appellant herein against the order passed by the Commissioner rejecting their application for registration under section 12AA of the Income-tax Act, 1961.

2. We heard the counsel for the appellant and the learned standing counsel appearing for the respondent.

3. The appellant is a society registered under the Travancore-Cochin Literary, Science and Charitable Trust Act, 1955. The society has established an engineering college by name “Travancore Engineering College”. During a search operation in the office of the appellant, several incriminating materials were found which disclosed the receipt of capitation fee for admission of students. It was collected by the trust in addition to the fee prescribed. The fact that capitation fee was being collected was admitted by the treasurer of the trust, Shri Shajahan, and the secretary of the trust, Shri Sainulabdeen, in the statements given by them. These facts revealed that the object of the trust was not charitable and it was, therefore, that the registration under section 12AA of the Act was rejected.

4. The facts being as above, we are fully in agreement with the Tribunal that on materials it was evident that the trust was not carrying on any charitable activities entitling it for registration under section 12AA of the Act.

5. In this appeal, the appellant has produced annexures A5 and A6, affidavits filed before the Commissioner of Income-tax (Appeals) and before the Income-tax Appellate Tribunal, which show that the endeavour made therein is mainly to retract from the statements given by them. Insofar as the affidavit filed before the Commissioner of Income-tax (Appeals) is concerned, that appeal arising out of assessment order is still pending. The other affidavit filed before the Tribunal shows that for the first time before the Tribunal such an attempt was made. Having regard to the fact the affidavit only contained unsubstantiated claims made therein, we do not think that this affidavit would improve the case of the appellant.

6. The learned counsel for the appellant also placed reliance on the judgments in Fifth Generation Education Society v. CIT [1990] 185 ITR 634/[1991] 54 Taxman 237 (All.), New Life In Christ Evangelistic Association (NLC) v. CIT [2000] 246 ITR 532/111 Taxman 16 (Mad.) to contend that when application is made under section 12AA, the Commissioner is not required to examine the application of income of a trust. In our view, this principle has no application to the facts of the case. The rejection of the application made by the petitioner, as we have already noted, was for the reason that they were collecting capitation fee for admission and not on the ground that the funds of the trust were not applied for charitable purpose. For all these reasons, we do not find any merit in this appeal.

7. The income-tax appeal is dismissed.

[Citation : 369 ITR 534]