Case Law Details
Section 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit.
The language used in the section only requires that activities of the trust or the institution must be genuine. The profit earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. Accordingly, keeping in view the peculiar facts and circumstances as noticed above, we are of the opinion that the CIT was not justified in passing the impugned order for withdrawing the exemption as admittedly, the assessee is carrying out educational activities by running a large number of educational institutions all over the country and, therefore, both the income tax appeals were dismissed
