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Case Law Details

Case Name : M/s Sree Anjaneya Medical Trust Vs CIT (ITAT Cochin)
Appeal Number : I.T.A No. 85/Coch/2012
Date of Judgement/Order : 14/08/2014
Related Assessment Year :

Hon’ble Cochin ITAT has in the case of M/s Sree Anjaneya Medical Trust while disposing off the appellant’s plea for registration u/s 12A has held that collection of money for admission of students in the professional colleges is not only inhuman but also against the scheme of the Constitution of sec 12A.

Application of Registration u/s 12A was rejected by the Commissioner as he  found that the assesseehas collected money even before commencement of the medical college and therefore he found that there was a financial irregularity.  Accordingly, the registration was rejected. Referring to the statement said to be recorded from the Managing Director, Shri Anil Kumar, the assessee admittedly collected around Rs.4 crores from the prospective employees. The assessee has also collected money from four parties and an agreement was entered into to provide admission under NRI quota for medical education. In case the medical seat could not be provided the amount received by the assessee would be returned with 12% interest per annum.. The object of granting registration u/s 12AA of the Act and exemption u/ss 11 and 12 is to encourage the non governmental organization to establish educational institution and to run the same in a charitable manner after collecting the fees prescribed by the government or the committee appointed by the state government. In this case, even before starting the college and even before obtaining recognition from the MCI and affiliation from the concerned university, the assessee mobilized funds on the assurance of employment and admission in the medical college.
THE Hon’ble tribunal held as under

10. In view of the above factual situation, this Tribunal is of the considered opinion that the activities of the trust was not carried out in accordance with the object of the trust. The assessee trust administer and manage the so-called medical college in a commercial manner with profit motive. The assessee trust gone to the extent of entering into agreement for offering employment and admission for medical education and collects money. It is to be remembered that admission in any educational institution including medical college has to be made only on merit basis. Therefore, entering into agreement for admission in medical college after collecting money is not only inhuman but also against the scheme of the Constitution as held by the Apex Court in Mohini Jain’s case (supra). This Tribunal is of the considered opinion that there is no genuineness in the activity of the assessee trust and it exist only for profit motive to administer and manage the medical college in a commercial manner, therefore, it is not entitled for registration as a charitable institution u/s 12AA of the Act. This view of the Tribunal is fortified by the decision of this bench of the Tribunal in Travancore Educational Society in ITA No.134/Coch/2014 order dated 26- 06-2014.

11.  In view of the above, this Tribunal finds no infirmity in the order of the lower authority. Accordingly, the same is confirmed.

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June 2024