HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 434 / 2009 Commissioner of Income Tax, Jaipur-II, Jaipur. ----Appellant Versus Govindam Education Trust, A-1, Shakti Nagar, J.L.N. Marg, Jaipur. ----Respondent For Appellant(s) : Mr. R.B. Mathur with Mr. K.D. Mathur For Respondent(s) : Mr. Anant Kasliwal HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment Per Hon ble Jhaveri, J. 25/05/2017 1. By way of this appeal, appellant has challenged judgment and order of Tribunal whereby Tribunal has allowed appeal preferred by assessee. 2. This Court while admitting appeal on 20.01.2010 has framed following substantial question of law: Whether on facts and in circumstances of case, ITAT was justified in directing to grant registration u/s 12AA despite of fact that trust failed to furnish required details and prove that it was not working on commercial lines? 3. Mr. Mathur has contended that view taken by CIT(A) is just and proper in as much as activity was charitable but (2 of 3) not commercial activity and therefore, CIT(A) has rightly rejected registration. 4. However, while considering case Tribunal has observed as under: We are of view that under section 12AA (the scope of enquiry) while deciding whether to grant registration or not, ld. CIT can call for such document or information, which he thinks necessary to satisfy himself about genuineness of activities and similarly if ld. CIT is satisfied about object of Trust, he shall pass order granting registration. Section 12AA confers power on ld. CIT while considering application for registration of trust or institution. Section 12AA does not speak any where that ld. CIT, while considering application for registration, shall also see that income purpose or such institution is earning profit. Profit earning or misuse of income derived by charitable institution from its charitable activities may be ground for refusing exemption only with respect to that part of income but cannot be taken to be synonym to genuineness of activities of trust or institution. There is no adverse remark by ld. CIT about diversion of funds for benefit of trustees or their relatives. There is small surplus of Rs. 17,272/- (page 21) nor is there any adverse remarks on receipt from tution fees, details of which were furnished before ld. CIT. It was mere presumption of ld. CIT that appellant might have taken franchise of Dolphin Group to run school. Disbelieving submissions of assessee in this regard that no such agreement was entered into with this group and know how about school procedure, curriculums and other systems were supplied by them free of cost. Under circumstances, we are of view that ld. CIT was not justified in rejecting application for registration keeping in mind that Trust was set up only on (3 of 3) 14.03.2007 and, therefore, accounts prior to date was not possible and appellant trust had furnished copies of income and expenditure account and balance sheet for period after formation as well as books of account for that period with copies of bank statements, details of salary expenses and advance fee received etc. Under these circumstances, we while setting aside order of ld. CIT in question direct ld. CIT to grant registration on application filed by assessee under section 12A(a) of Act on 8.2.2007 for applied period. ground is accordingly allowed. 5. Taking into consideration observations made by Tribunal that profit earning or misuse of income derived by charitable institution from its charitable activities may be ground for refusing exemption only with respect to that part of income but cannot be taken to be synonym to genuineness of activities of trust or institution is required to be accepted. Therefore, view taken by Tribunal is just and proper. 6. In that view of matter, issue is answered in favour of assessee and against department. 7. appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/101 Commissioner of Income-tax, Jaipur-II, Jaipur v. Govindam Education Trust