Case Law Details
DR R N Gupta Technical Education Society Vs Union of India (Delhi High Court)
Indisputably, if the respondents had found any cogent material to indicate that the petitioner or any of the institutions run by them, were in violation of its charter or had diverted any part of its receipts for personal benefits of its promoters and not in accordance with its objects, the respondent would be well within its right to refuse registration under Section 12 of FCRA.
However, despite being called upon, the respondents have been unable to show any material, whatsoever which would justify such a conclusion. It is apparent form the above that the impugned orders have been passed without any material except a bald report, which inter alia, states that “it is learnt that the colleges are run on purely for commercial purposes for personal gains of the office bearers”.
One of the pre condition for availing exemption from charge of Income Tax is that the charitable society/trust would utilize all funds for the purposes of its object and no part of it can be distributed as dividends or profits. Any society/trust which is run for the commercial benefits of its founders or trustees would plainly be ineligible for being accorded the certificate under Section 12A of the Income Tax Act. This is also the principal consideration, which is set out in Section 12(4)(vi) of the Act.
Notwithstanding the registration granted to the petitioner under the Income Tax Act, the permission sought by the petitioner could have been refused if there was any evidence to show that the foreign contribution is likely to be used for personal gains or diverted for undesirable purposes. But, as stated earlier, there is no material to indicate that these conditions were satisfied. There is no material which would justify the conclusion that the petitioners were likely to divert the foreign contribution for personal gains or utilize it for any undesirable purposes. In this view, the impugned orders cannot be sustained and are consequently, set aside.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
