Registration u/s 12A cannot be denied to a Trust for mere Fee Collection

The CIT(E) has concluded that the assessee trust is not genuine and does not exist for charitable purpose for the sole reason that it charges fees from the students undergoing course in garment making and designing. In our view this can neither be the basis to conclude that the activities of the assessee are not genuine or the first proviso to section 2(15) of the Act would be applicable. The decision rendered by the Honorable Delhi High Court in the case of India Trade Promotion Organization Vs DGIT (Exemption) (supra) clearly supports the plea of the assessee in this regard. There is no material brought on record to show that the primary desire or motive is to earn profit. On the other hand, the objects of the assessee are admittedly advancement of any other object of general public utility. The decision rendered by the Honorable Delhi High Court in the case of CIT Vs Shri Ram Education Foundation (supra) also supports the plea of the assessee that training women in the art of stitching and embroidery by running a vocational training center would constitute the object of general public utility. As already observed there is nothing brought on record to show that the activities of the assessee are driven by profit motive. In these circumstances we are of the view that the conditions for grant of registration u/s 12AA of the Act are duly satisfied as the activities of the assessee are genuine and its objects are also charitable. We therefore direct the registration u/s 12AA of the Act be granted. Since the registration u/s 12AA of the Act is being granted to the assessee, the assessee would also be entitled to grant of approval u/s 80G(5)(vi) of the Act. The same is also directed to be granted.

Full Text of the ITAT Order is as follows:-

These are appeals by the Assessee against two orders dated 18.11.2015 of C.I.T.(Exemptions), Kolkata rejecting the application of the assessee for grant of registration u/s 12AA of the Income Tax Act, 1961 (Act) and rejecting the application for grant of approval u/s 80G (5)(vi) of the Act.

2. The Assessee is a Trust which came into existence pursuant to a deed of trust dated 27.02.20 15 executed at Siliguri by one Shri Balwant Rai Jain. The main objects of the trust as contained in clause-4(a) of the trust deed reads as follows :

“To open, found, establish, promote, set up, take over, run, maintain, assist, finance, support and/or aid or help in the setting up and/or running schools, colleges, universities, lecture halls, reading rooms, libraries, hostels, boarding houses, training and vocational institutions and other establishments or institutions for advancement of education, knowledge and learning and for training in arts, crafts, commerce, science, literature, humanities and other useful subject in all their manifestations.”

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