PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(Exemptions), Jaipur dated 29-09-2015 wherein the assessee has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the worthy CIT (Exemption), Jaipur, has grossly erred in rejecting the application in form No. 10A filed on 31/3/2015 for seeking registration under Section 12AA of the Income Tax Act, 1961 and erred in holding that the activities ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 2 of the society are not for charitable purpose as defined u/s 2(15) of Income Tax Act.

2. That the order of the worthy CIT (Exemption), Jaipur rejecting the application of assessee seeking registration of society U/s 12AA of Income Tax Act is arbitrary, whimsical, capricious, perverse and against the law and facts of the case. The order of the CIT-Exemption, Jaipur in this regard deserves to be set aside and direction be given for grant of registration to the Society u/s 12AA of Income Tax Act.

2.1 Brief facts of the case are that the assessee filed the application on 31-03-2015 in Form No. 10A seeking registration u/s 12AA of the Income Tax Act, 1961. To this effect, the ld. CIT (Exemptions) issued letter/ Notice No. 1824 dated 31-03-2015 at the assessees address requiring the assessee to submit certain documents/ explanation by 13-04- 2015 alongwith original Trust Deed/ MOA for verification. While considering the case of the assessee, the ld. CIT (Exemptions) required to examine the following issues for registration u/s 12AA of the Act. (i) Objects of the trust / society (ii) Genuineness of the activities It is noted from the order of the ld. CIT (Exemptions) that as per the rules the certified copy of instrument establishing the society/ Trust were to be verified with originals and the assessee was required to file the copy of accounts for last three years or less as the case may be. As per rule, ld. CIT (Exemptions) has been empowered to call for such documents/ or ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 3 information from the trust / society in order to satisfy himself about the genuineness of the activities of the trust or institution. He may also make such enquiry as he deemed fit. It is further noted that the assessee partly complied with the query raised by the ld. CIT (Exemptions). From the documents produced before the ld. CIT (Exemptions), he noted that the institution / society was created w.e.f. 16-01-2001. In order to verify the charitable activities of the society, the ld. CIT (Exemptions) directed the assessee trust to file the following details vide letter No. 1929 dated 28- 08-2005. (i) You are requested to provide fee structure of school fee with justification that this amounts to be a charitable activity. (ii) You are requested to provide list of persons specified u/s 13(3) of the Income tax Act in the following performa Name Address PAN Education Qualification Source of income Payment made by society/ samiti Nature of work against which payment was made (iii) Produce the books of account and vouchers of financial year 2013-14, 2012-13 and 2011-12 for verification. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 4 The ld. CIT (Exemptions) observed that no compliance was made by the assessee by the due date i.e. 03-09-2015. The ld. CIT (Exemptions) further observed on examination of the income and expenditure accounts of various years of the assessee trust as well as the other details filed during the course of proceedings that the society was paying rent to M/s. Gopi Bai Foundation Trust and M/s. Career Point Ltd. He further noticed that M/s. JBS Children Paradise School run by the society had entered into an agreement on 01-04-2013 with M/s. Career Point Ltd. for providing certain services related to education and administration of the School. Therefore, the ld. CIT (Exemptions) vide letter No. 2444 dated 24-09-2015 required the assessee society to file certain information which was submitted by the assessee vide letter dated 28-09-2015 and 8-05- 2015 to the ld. CIT (Exemptions) and the same is available at page 3 and 4 of ld. CIT (Exemptions) order. The ld. CIT (Exemptions) after taking into consideration the reply of the assessee society noticed that the assessee society had taken land on lease from M/s. Gopi Bai Foundation Trust on lease rent of Rs. 25,000/- per month which pertained to Gopi Bai Foundation Trust, Kota and there is no change of the ownership. It is further noted that on this leased land, M/s. Career Point Ltd. had constructed a building investing huge amount. The justification for ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 5 constructing a building on land belonging to other trust goes beyond understanding. As per ld. CIT (Exemptions), no business undertaking will invest huge amount without protection of title unless some benefits are ensured. It is further noted that a building constructed by M/s. Career Point Ltd. had been taken on lease by the assessee society by paying rent of Rs. 6.00 lacs per month during the F.Y. 2013-14 for 1,00,000 sq. ft @ Rs. 6/- per sq.ft per month. Under this scheme, major part of cost of construction invested by M/s. Career Point Ltd. was being recovered from the assessee society in the form of rent. The ld. CIT (Exemptions) further analyzed the income and expenditure account for the year ended on 31-03-2014 at page 4 of his order and observed that the assessee had total receipt of Rs. 81.39 lacs from fees and the assessee society was paying rent of Rs. 75.00 lacs. Thus the income and expenditure account is showing net deficit of Rs. 75.46 lacs. Hence, the society had taken a space for so called the charitable activities beyond its financial capacities. While examining the nature of charitable activity, the application of funds is also very important factor but the facts show that the assessee society is not genuine and not carried out activities for charitable purposes. The ld. CIT (Exemptions) further observed that the assessee society also reduced the premises from 1,00,000 sq.ft to 20,000 sq.ft. Thus the ld. CIT ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 6 (Exemptions) held that assessee society had diverted its fund without any justification. Further, the education activity had been handed over by the assessee society to M/s. Career Point Ltd. by entering into another agreement dated 1-04-2013 which is reproduced at pages 5 to 8 of ld. CIT (Exemptions)s order. After analying the agreement, ld. CIT (Exemptions) concluded as under:- From the close look of the agreement, it can be seen that the company has been engaged to prove:- i. Curriculum and course material (Specialized Content) ii Impart specialized training in the field of education (Specialized Training). iii. Develop teacher training programme (Faculty Development). iv. Preparing and providing course material etc. (Content for publication). v. Advising the library to procure books (Books Resource Management). vi. Providing information technology for education (IT Education). vii. Providing administrative services for admission (Admission). viii. Providing services for conduct of examinations (Examination). ix. Providing transport facilities for transport for the student staff and faculty (Transportation). x. Providing services for sport and cultural activities (Sport training). He further held that the assessee society was paying fees to Career Point Limited as under:- ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 7 Services Agreed Rate in Rupees Specialized Training (class-X) 20,000 per student Specialized Training (class-XII) 24,000 per student Specialized Training (Faculty) 1,50,000 per batch All other services On mutual agreement basis. The ld CIT(E) observed that all the education as well as administrative activities had been run by the Career Point Ltd., a public Ltd. company, which has expertise in coaching to the students for preparing for various competitive examinations like Engineer, Medical etc.. M/s Career Point Ltd. is a profit making company where profit is distributed to the shareholders. For a charitable Trust, all the profits generated, should be used towards object of the society and no profit should be distributed to any of stake holders, but in the assessees case, whole fund has been diverted to M/s Career Point Ltd., and basic purpose of charitable activity would itself be lost. It is against the basic norms of Section 2(15) of the Act and such activities cannot be held as genuine charitable activities. Therefore, ld. CIT (Exemptions) rejected the assessees application for registration u/s 12AA of the Act by observing as under:- 12. From the discussions made in preceding paragraphs it can be seen that M/s Career Point Limited has constructed the school building and is practically running the school by entering into agreement with the society. In other word the fee received by the ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 8 society is passed through to M/s Career Point Limited either in the form of rent or in the form of service providing fees. If a society wants to do a charitable activity it should be in a fair manner. All the profit generated by charitable activity should be used towards the object of the society and no profit should be distributed to any of the stake holders. In the present situation the society in collaboration with M/s Career Point Limited has created a scheme where only the name of the society is being used and the funds of the society is reaching in the hands of M/s Career Point Limited and the same will be distributed as profit to the share holders of the company. If such scheme is allowed to function, the basis purpose of the charitable activity will itself be lost. Whether the society and M/s Career Point Limited are connected directly or indirectly has no impact in deciding the charitable nature of the activities because as discussed in the preceding paragraphs, the funds of the society are being diverted and distributed to the shareholders of the company i.e. M/s Career Point Limited, which is against the basic norms of section 2(15) of the IT Act, 1961 and such activity cannot be held as genuine charitable activity.

2.2 During the course of hearing, the ld. AR of the assessee prayed that the assessee society fulfills all the requisite conditions for granting the registration u/s 12AA of the Act by the ld. CIT (Exemptions) for which the ld. AR of the assessee filed the following written submission and the same has been taken into consideration while adjudicating upon the issue in question. 1) The assessee society is engaged in running of School naming JBS Children Paradise School which is affiliation by CBSE. The school is being run for non-profit motive which is itself covered in Charitable Purpose. The definition of Charitable Purpose under Section 2(15) of the Act includes: (a) Relief of the poor (b) Education (c) Medical relief, and (d) Advancement of any other object of general public utility. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 9 Since the society is engaged in the education activity which covered in Charitable Purpose. The only activity carried out by the society in previous years was running of school which was mainly run and managed by fees receipt from students. Thus there is no doubt that the activities of the society are in the nature of Charitable activities covered in the definition 2(15) of the Income Tax Act. This issue is not in dispute as the CIT(E) also admits that the assessee society is running a school which is providing the education to students as per rules & regulations of government. The Group summary of Gross Receipts in the books of account of assessee showing class wise breakup of fees for FY 2012- 13, FY 2013-14 and FY 2014-15 is at PB pg 136-138 (Vol-II). This conclusively proves that the assessee is not carrying out any activities other than normal schooling.

2) The only reason for not considering the activities of the society as charitable because of high payment to M/s Career Point Limited by way of rent of building and in the form of service providing fees. In this regard first of all this is to submit that M/s Career Point Limited is not an person covered u/s 13(3) of Income Tax Act, 1961 for assessee trust and this company is no way related to assessee trust. This fact was brought in knowledge of ld. CIT (Exemption) vide letter dated 28.09.2015 (Copy at PB Page 122 to 123). None of the directors and shareholders of this company are interested in the assessee trust and none of the members/office bearers of the assessee society are no way associated with this company. Therefore the assessee society and M/s Career Point Ltd cannot be treated a group concerns without having any controlling interest in management of each other.

3) Regarding objection of the CIT (Exemption) on payment made to M/s Career Point Limited against building taken on rent we may submit as under: - i) The building which was taken on rent by the assessee society was constructed by M/s Career Point Limited on the land owned by M/s Gopi Bai Foundation. The land from Gopi Bai foundation was taken on lease by the assessee society w.e.f. 01/03/12 on the basis of oral agreement. However the formal written lease agreement was executed on 21/01/13 (Copy at PB pg 110-114) but the effective date of lease was mentioned 01/03/2012. (PB pg 111). The agreement of building taken on lease from Career Point Ltd was executed on 1 st April 13. The ld. CIT (Exemption) held in para 8 of the order that justification for constructing a building on land belonging to other trust goes ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 10 beyond understanding. He held that that normally, no business undertaking will invest huge amount without protection of title, unless some benefits are ensured. In this regard this is to submit this is a fact that the land on which the building was constructed is being owned by M/s Gopi Bai Foundation and it is also fact that M/s Career Point Ltd has constructed the building thereon and in lieu of such this company is charging the rent from assessee society. M/s Gopi Bai foundation was not having required funds and infrastructure for constructing of building on the lands owned by it, therefore it was not possible for it to construct the building on this land. Further the assessee society was also not having required funds and infrastructure for construction of building but it was requiring the building for expansion of its school, therefore it approached to M/s Career Point Limited for construction of building in lieu of rent and M/s Career Point Limited agreed to construct the building. Further, the construction of the building by M/s Career Point Ltd is not in dispute and let out of the building to the assessee is also not in dispute. Why M/s Career Point Ltd agreed to construct the building on the lands owned by other is purely decision of M/s Career Point Ltd and the assessee is nothing to do in this regard. Further the assessment of M/s Career Points Ltd for AY 2012-13 and AY 2013-14 were completed u/s 143(3) and the AO of M/s Career Point Ltd has not objected over the construction of building by M/s Career Point Ltd. The copy of assessment orders of M/s Career Point Ltd is at PB pg 145-152. ii) It is admitted fact that the assessee society is not owing its own building and for expansion of its schooling activities the assessee society requiring the building. Therefore the assessee has taken the land on lease, on which the school building is being run, from Gopi Bai Foundation Trust, Kota for lease rent of Rs. 25,000/- P.M. The building on leased land was constructed by Career Point Limited and in FY 2013-14 and 1,00,000 sq. feet constructed area was taken on rent from Career Point Ltd for a rent of Rs. 6 per sq. feet per month i.e. Rs. 6,00,000/- per month. In FY 2014-15 (from July 2014) the part of building was vacant by the assessee as the entire building could not be utilized by the assessee society as per its plans and expectations. Out of total constructed area of 1,00,000 sq. feet only 20,000 sq. feet constructed area was retained by the assessee thus the rent of building also modify accordingly from July-2014. The Career Point Ltd and Gopi Bai Foundation Trust are not related person for the assessee and ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 11 whatever the rent was paid was based on fair market value of the rent. The ld CIT(E) has not cited any comparable case showing the lesser amount of the rent. In this regard, the findings of Honble Gujrat High Court in the case of Shree Kamdar Education Trust vs ITO (Copy at PB pg 171-176) is very relevant reproduced as under:-

10. We may deal with these issues one after another. Insofar as the lease rent is concerned, the revenue had not brought on record any evidence to suggest that such lease rent was either excessive or even higher than the normal market rate prevailing in the region at the relevant time. In fact, the assessee produced material to show that a part of the land belonging to the trustees was leased to one Max New York Life Insurance Co. Ltd. at the rate of
5/- per sq. ft. as against the rate of
1/- per sq. ft. being paid by the assessee. The CIT (Appeals) discarded such comparison on the ground that the area occupied by the Max New York Life Insurance Co. Ltd. was much smaller, as compared to the area leased to the assessee. The size of the land under occupation may have some bearing on the lease rent which the land may fetch, nevertheless, in the present case, the difference of rate between two cases was nearly five times. Without there being any further material on record, the Commissioner could not have come to the conclusion that the rent paid by the assessee to the trustees for the leased land, was excessive.

11. Similarly, the assessee pointed out to the authorities that it needed to raise a fund of
2 crores by taking loan from the financial institutions for which permission was also granted by the Charity Commissioner. The Bank had offered loan at the interest rate of
12.50% per annum which would also require giving securities and executing documents. As against this the trustees offered unsecured loan at the interest rate of
9% per annum. Here again, the CIT (Appeals) discarded such comparison by contending that the trustees themselves would have fetched lower fixed deposit rate from the Bank.

12. For multiple reasons, this was not a correct approach. First, we are trying to ascertain whether the trust was paying the interest at the rate higher than the market rate. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 12 What the trustees could have got from the Bank was not correct comparison. Secondly, the trustees were offering unsecured loan, which with inherent risks, invites higher interest than the bank loans. Last but not the least, if the trustees had parked their money in the Bank fixed deposits, the liquidities and security of such investment would be much higher than lending substantial amount to the trust without a collateral security.

13. Section 13(1)(c) of the Act does not prohibit normal transactions between the trust and the persons referred to in sub-section (3) of the Act. What is relevant is the use or application of any part of the income of the trust directly or indirectly for the benefits of any such person referred to in subsection (3). Mere payment of lease rent or interest on borrowed funds, without there being any element of such payments being excessive or unreasonable compared to the normal rates prevailing, would not fall within the mischief of section 13(1)(c).

iii) The society was running school since a long time in RBSE Board, and has decided to get affiliation from CBSE Board to start school in CBSE board, The CBSE board has its own Guidelines, rules and regulation to run a school in their board which also include minimum prescribed infrastructure requirement, to meet this requirement the assessee society taken building and land on lease, and this rental was not associated or had any link with receipts as generally happened that rent does not have any rational with the revenue. While developing the infrastructure further projections can only be keep in mind and no one can surely guess it will achieve such projections. In the case of the assessee also the building was taken on rent as per future planning but in FY 2013-14 the fess could not be received as per future planning. The society has taken this infrastructure on lease as per guidelines/Parameters of CBSE board. (PB pg 65-68) The society is registered with educational and charitable objective and society were not concerned with the revenue from students. The society delivered best education to students with best possible efforts to meet all standards of quality education and since the society is not running ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 13 school with profit motive, and running it to spread education to students so rent does not bear and relation or rational with the revenue. It is further relevant to mention here to submit the chart of fees receipt of assessee society of few years which is as under: - FY Gross Fees receipts 2011-12 10,61,100 (PB Page 43) 2012-13 23,05,400 (PB Page 49) 2013-14 82,51,00 (81,39,100+1,12,000) (PB Page 55) 2014-15 3,10,17,129 (PB Page 125) The building was taken on rent in the FY 2013-14 and after taking the building on rent there was drastically increase in fees receipts and its actual and effective outcome came in FY 2014-15. The ld. CIT (Exemption) compared the receipts of FY 2013-14 only to justify the rent payment as excessive. He not considered the receipts of FY 2014-15. iv) The ld. CIT (Exemption) has held that the under the scheme of payment of rent the major part of cost of construction invested by M/s Career Point Limited is recovered from the applicant society in the form of rent. In this regard this is to submit that the total investment in construction of school building by Career Point Ltd was over 10 Crores (PB pg 143) and if this amount would have been invested by the assessee society in construction of building by taking the funds from market and if the reasonable cost of interest on finance is assumed @ 12% then the assessee society would have to pay interest of 1.47 crores PA against which the rent payment in FY 2013-14 was Rs. 72,00,000/- (@ Rs. 6,00,000/- PM) and in FY 2014-15 Rs. 27,00,000/- (@ 6,00,000/- PM for first three month and @ 1,00,000/- PM for rest of year). Thus the assessee society paid very nominal rent to the Career Point Ltd in comparison to financial cost that would involve if the same building would have been constructed by the assessee itself. Thus this is not a case where the assessee society has diversified its income to M/s Career Point Ltd in the shape of rent but ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 14 it is the case where assessee obtained the building of M/s Career Point Ltd for very nominal financial cost in the shape of rent. v) The ld. CIT (Exemption) has held that the against the fess receipt of Rs. 81,39,100/- the society is paying Rs. 75,00,000/- as rent. Thus the society has taken a space for so called the charitable activities beyond its financial capacity. In this regard this is to submit that the figures given by CIT (Exemption) are of FY 2013-14. In FY 2014-15 the total fees receipts were of Rs. 3,10,17,129/- while rent payment to M/s Career Point Ltd was Rs. 27,00,000/- only. Further the payment of rent does not depend on the income inflow of one or two years but the same depends on the future expansion plans. No one can achieve the targets in one or two years. All the decisions are taken considering the future projections and plans. The ld CIT(E) held that the assessee did not require such big space but at the same time he overlooked the requirements and guidelines of CBSE which prescribes minimum requirement of land and building for grant of affiliation with CBSE. It is further relevant to mention here when the space initially taken on rent (1,00,000/ sq feet) could not fully utilized by the assessee society than the assessee society itself vacant the 80,000 sq. feet space in July 2014 and occupy only 20,000 sq. feet space. If the assessee wants to diversify its funds than there was no need to modify the rent payments and vacant the excess space. In fact the assessee has not diversified its funds but paid nominal amount of rent to a person not related in any way with the assessee. Most importantly it is also relevant to mention here that during the FY 2013-14 and 2014-15 the assessee society incurred loss and the same was not c/f for subsequent year as the income of the society was claimed exempt u/s 10(23C)/12AA of Income Tax Act, 1961. On the other hands whatever payment made to M/s Career Point Ltd is taxable in the hands of M/s Career Point Ltd. Thus no prudent person will plan to diversify the funds in a way which increases tax liability in totality.

4) Regarding objection of the CIT (Exemption) on payment made to M/s Career Point Limited against service charges against various services we may submit as under: - i) In para 9 of the order CIT (Exemption) has held that the society has handed over almost all the activities of education to M/s Career Point ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 15 Limited by entering into another agreement dated 01.04.2013 (Copy at PB Page 85 to 105). He further held that as per this agreement the applicant has handed over the complete management of the school to the company M/s Career Point Ltd. In this regard this is to submit that the assessee society not handed over the management of the school to this company. The management of the society is with the executive body listed at PB pg 69. The findings of ld CIT(E) is not based on inquiry, evidence but on surmises and conjectures. The management of the society and Career Point Ltd is separate and no intermixing, inter lacing affairs are there. The society entered into agreement with this company for only for providing certain specified services, as listed in Annexure-A of the agreement (Copy at PB Page 103 to 104) and mention in page 6 to 7 of the order and in lieu of such services certain charges was paid to this company. The management of the school was not transferred to this company. All the staff of the school was employed by the assessee society, the management of the school was with assessee society and entire activities of the school were being governed by the assessee society. There was payment of only Rs. 6,00,000/- to M/s Career Point Ltd against the auxiliary Educational Services out of total expenses of Rs. 1,58,22,404/- in Financial Year 2013-14. ii) The agreement was made with the Career Point Ltd because the assessee society was new in the CBSE schooling and it was not having required trained team to run the school according to standards of CBSE. The assessee society took certain specialized services by outsourcing. The whole intention was to provide the excellence services in the line of education. iii) The ld. CIT (Exemption) has perversely held that under the present agreement M/s Career Point Limited has practically taken over whole of running of the school and the society is simply acting as a facilitator to allow the M/s Career Point Ltd to run such activity. The ld. CIT (Exemption) failed to appreciate the fact that the payment to this company was made against the particular services and at fair market value. In this regard, the findings of Honble Gujrat High Court in the case of Shree Kamdar Education Trust vs ITO (Copy at PB pg 171-176) in para 10 to 13 are very relevant.

5) The ld. CIT (Exemption) held that if the society wants to do a charitable activity it should do in a fair manner. He further held that all the profits generated by charitable activity should be used towards the object of ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 16 the society and no profit should be distributed to any of the stake holders. In this regard this is to submit that there is nothing in the activities being carried out by the society and all the payments made to this company was in relation to activities carried out by the assessee society. The rent was paid against premises taken on rent wherein the school is running and the payment was made against required service. All the receipts were utilized for the object of the society and no profit has been distributed to any stakeholder. M/s Career Point Ltd is not stakeholder of the assessee society as the same is no manner interested in the assessee society. Further whatever payment made to this company is taxable in the hands of this company.

6) The ld. CIT (Exemption) further perversely held that in the present situation the society in collaboration with M/s Career Point Limited has created a scheme where only the name of the society is being used and the funds of the society is reaching in the hands of M/s Career Point Limited and the same will be distributed as profit to the share holders of the company. In this regard this is to submit that the ld. CIT (Exemption) failed to appreciate the facts that the appellant paid the rent and service charges to M/s Career Point Ltd against the building occupied by it and services obtained by it and that too at fair market value. This is not a case where the tax free funds are passed on in the hands of M/s Career Point Limited. Whatever payment made to this company has been subject to tax and this cannot be said to be part of diversion of tax free funds from one hand to another hands.

7) The ld CIT has unjustified in rejecting the application filed by the assessee in violation of the plain and simple procedures laid down in section 12AA. At the time of considering the application for grant of registration u/s. 12A, the CIT was not required to examine the application of income or carrying on of any activity by the Trust or who are the trustees of the Trust. The CIT has to look into the object of the Trust and genuineness of the activities of the Trust. In this regard the reliance is placed on the decision of Honble Rajasthan High Court in the case of CIT vs Vijay Vargiya Vani Charitable Trust (2014) 369 ITR 0360 (Raj) PB pg 153-159. The relevant findings are as under:-

8. In our view, the object of section 12AA is to examine the genuineness of the objects of the trust but not the income of the trust for charitable or religious purpose. The Commissioner cannot sit in the chair of the Assessing Officer to look into the amount spent on charitable activities at the time of creation of the trust. The stage for reviewing the application of income has not arrived at when such trust or institution files application for registration of the trust/society.

ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 17 The Allahabad High Court in the case of Fifth Generation Education Society ((185 ITR 634), PB pg157-159) also had opined on the issue. The Court, while considering the provisions of registration of trust/institution u/s. 12A of the Act relating to assessment years prior to Finance (No. 2) Act, 1996, held that at the time of considering the application for grant of registration u/s. 12A, the CIT was not required to examine the application of income or carrying on of any activity by the trust. The Court further held that the CIT may at this stage examine whether the application was made in accordance with the requirements of section 12A r.w. Rule 17A, Form 10A was properly filled, along with determination of whether the objects of the trust were charitable or not. Similar views have been given by following other High Courts (i) Honble Delhi High Court in the case of Director of Income Tax Vs Foundation of Ophthalmic & Optometry Research Education Centre (2013) 355 ITR 0361 (PB pg 160-166) (ii) Honble Karnataka High Court in the case of Director of Income Tax (Exemption) Vs Meenakshi Amma Endowment Trust (2013) 354 ITR 0219. ITAT Jaipur Bench in the case of Career Point Education Society ITA No 709/JP/2014 order dated 04/12/2015 (copy at PB pg 132-135) wherein Honble ITAT has held that

5. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee had filed application in Form No. 10A alongwith required details. The society is registered from 7 ITA No. 709/JP/2014 Career Point Education Society Vs. CIT 1998 under the Societies Registration Act. The copy of the society are charitable and activity are genuine. At the time of registration of Trust/Institution, the ld CIT is to be judged the object of the Trust, which should be charitable in nature as the assessee is imparting the education programme through college and school education programme and he also provided various charitable services to the society as per object of the Trust. The case laws relied by the assessee are squarely applicable in the case of the assessee, accordingly, order of the ld CIT is set aside the directed to grant registration from the financial year 2012-13 as per application filed in the Form 10A.

8) Additional documents and grounds taken by ld CIT (DR) During the course of last hearing of the case, the ld CIT DR has filed printouts taken from http://www.cpgurukul.com which were additional documents and also raised certain additional oral grounds. In this regard, we submit as under:- ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 18

8.1 As per Rule 29 of ITAT Rules 1963, no party can produce additional evidence either oral or documentary before the Tribunal. Further, no application was filed by ld DR for admission of additional evidence. Therefore, these desire to be rejected in limine.

8.2 Ld CIT-DR argued that the appellant is dummy school and running coaching classes for imparting ITI Coaching. The ld CIT(E) has examined the records of the assessee and no where he made such findings. However, the ld CIT-DR argued this additional ground for rejection of application u/s 12AA. In this regard, we deny the allegation. The allegation is on surmises, conjectures and without making any proper inquiry. The appellant has filed Group Summary of Gross receipts showing receipt of class wise fees for FY 2012-13. FY 2013-14 and FY 2014-15 at PB pg 136-138. Your honor would find that the entire fees is against normal schooling and the appellant is not carrying out any coaching activities. The appellant is affiliated with CBSE and CBSE is monitoring the activities of the assessee by regular inspections. Further, the examinations are also conducted by CBSE . In this regard, it is useful to refer the following findings of Honble ITAT Visakhapatnam Bench in the case of R.K. Educational Society Vs CIT(V) in ITA No 369/Vizag/2012 order dated 04/03/15 PB pg 177-188. 11. A plain reading of the aforesaid provision will make it clear that the expression charitable purpose is an inclusive one which amongst other things includes relief to the poor, education, medical relief etc. The restrictions imposed in the proviso relating to carrying of any activity in the nature of trade business or commerce is only in respect of the activity relating to any other objects of general public utility and not in relation to any other activities.

12. Keeping in view the aforesaid statutory provisions, let us examine the validity of reasons for refusing registration to the assessee. The first objection of the CIT is with regard to the fact that the assessee is not imparting any education, but only giving coaching for EAMCET examination. However, in our view such finding of the CIT is not based on facts on record. As can be seen the assessee has established a Jr. College in the name and style of R.K. Science and Commerce Jr. College which is imparting education in two year intermediate course. This fact is clearly evident from the affiliation granted on 9.4.2012 by the Board of Intermediation, A.P. Therefore, there cannot be any doubt that the assessee is running an educational institution which is as per the objects of the society.

13. It may be a fact that in addition to the general curriculum of intermediate course, assessee is also giving training/preparing students for various entrance examinations like EAMCET, IIT, AIEEE etc. However, that cannot take us away from the fact that the basic object of the assessee is imparting of education which the assessee in fact is carrying on. The other activities like preparing students for EAMCET, IIT, AIEEE entrance examinations is only ancillary to the main objects. That being the case, it cannot be said that the ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 19 assessee is not imparting education. The term education in our view would mean training and developing the skill, knowledge, mind and character of students which the assessee is actually carrying on. 8.3) As regard to printout taken from site of Gurukul.com we submit that Gurukul is a name of campus where the assessee provides the schooling and Career Point Ltd provides the hostel and Coaching. The assessee and M/s Career Point Ltd have separate building, separate staff and separate management. There is no intermixing or interlacing affairs. It is not a case where the building occupied by the appellant is used for coaching. 8.4) Affiliation from CBSE was obtained by misrepresentation of facts:- In this regard we submit as under:- i) The ld CIT-DR alleged that the appellant has obtained affiliation from CBSE by misrepresenting the facts. First of all this has no bearing with the object and genuineness of the society. If CBSE finds that the appellant has misrepresented the facts for obtaining the affiliation from CBSE, it would cancel the affiliation. But in fact, the affiliation is still going on. (ii) The appellant has not misrepresented the facts as may be seen from the followings:- (a) Play Ground 32000 Sq Mt. This land belongs to Gopi Bai Foundation Trust and Career Point Infra Ltd, and they have granted no objection to assessee to use this land for playground for children. Copy of NOC with papers showing ownership of land is at PB pg 139-142. (b) Gopi Bai Foundation Trust was granted lease to assessee on 21/01/13 whereas the application for affiliation was filed on 29/06/12. In this regard we submit that the lease was w.e.f. 01/03/12 as per clause 3 of lease agreement (PB pg 111). There was oral agreement and the formal lease deed was executed on 21/01/13. Therefore, the land was taken on lease on 01/03/12 and construction of building was in progress on the date of filing the application before CBSE for affiliation. 8.5) Loss of assessee was funded by outside agency i.e M/s Career Points Ltd. In this regard we submit that the loss was not funded by M/s Career Point Ltd. The assessee has not received donation or subsidy from M/s Career Point Ltd but unsecured loan which was repayable. In this regard, the findings of Honble Gujarat High Court in the case of Shree Kamdar Education Trust PB pg 171-176 is very relevant. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 20 Therefore, the humble assessee prays your honour kindly to set aside the order of CIT (Exemption) and direct the CIT (Exemption) to grant the registration seeking by the trust u/s 12A(a) of Income Tax Act.

2.3 The ld. DR relied on the order of the ld. CIT (Exemptions).

2.4 We have heard the rival contentions and perused the materials available on record. It is noted from the records that the above society had filed application in Form No 10A u/s 12A(1)(a) of Income Tax Act on 31-03-2015 (Copy at PB Page 1 to 8) for seeking registration u/s 12AA(1) of Income Tax Act. However, the ld. CIT (Exemptions) rejected the application of the assessee society vide order dated 29.09.2015 by observing at para No. 12 at pages 9 to 10 of his order as under:- From the discussions made in preceding paragraphs it can be seen that M/s Career Point Limited has constructed the school building and is practically running the school by entering into agreement with the society. In other word the fee received by the society is passed through to M/s Career Point Limited either in the form of rent or in the form of service providing fees. If a society wants to do a charitable activity it should be in a fair manner. All the profit generated by charitable activity should be used towards the object of the society and no profit should be distributed to any of the stake holders. In the present situation the society in collaboration with M/s Career Point Limited has created a scheme where only the name of the society is being used and the funds of the society is reaching in the hands of M/s Career Point Limited and the same will be distributed as profit to the share holders of the company. If such scheme is allowed to function, the basis purpose of the charitable activity will itself be lost. Whether the society and M/s Career Point Limited are connected directly or indirectly has no impact in deciding the charitable nature of the activities because as discussed in the preceding paragraphs, the funds of the society are being diverted and distributed to the shareholders of the company i.e. M/s Career Point Limited, which is against the basic norms of section 2(15) of the IT Act, 1961 and such activity cannot be held as genuine charitable activity. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 21 It is further noted form the available records that J.B.S. Shikshan Sanstha was formed under the Societies Registration Act. J.B.S. Shikshan Sanstha was incorporated on 16.01.2001 and the Sanstha is registered with Registrar of Society w.e.f. 16.01.2001 (Copy of registration certificate at PB Page 15). The main object of the society as per object clause of registration deed (Copy at PB Page 16 to 38) is to provide education and to achieve its object. The Society is running a School naming JBS Children Paradise School which is affiliation by CBSE. The copy of affiliation letter of CBSE is at PB Page 65 to 68. The affiliation was granted to society vide letter dated 14.05.2013 for the period from 01.04.2013 to 31.03.2016. The other objects of the society are also for advancement of benefit of general public. The School run by the society is being run for non-profit motive which is itself covered u/s 10(23C)(vi) of Income Tax Act, 1961 (PB pg 19, 20, 28 & 29) . Further, the profits of the society cannot be distributed among the members of the society. On the dissolution of the society its all movable and immovable assets are required to be transferred to other society having the same objects. (clause 20 of Constitution PB pg 35). The only activity carried out by the society in previous years was running of school which was ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 22 mainly run and managed by fees receipts from students. It is further noted that the objects of the society is as under:- 1- laLFkk }kjk fk{kk rFkk Kku dk izpkj o izlkj djukA 2- kkjhfjd o lkekftd fodkl ds fo"k; esa tkudkjh iznku djukA 3- Hkkjrh; lH;rk o laLd`fr dk fodkl djukA 4- /keZ fujis{krk ds izfr lkdkjkRed n`f"Vdks.k fodflr djukA 5- lekt lsok ds izfr bPNk fDr tkx`r djukA 6- lkekftd dkSky ls tqM+ukA 7- fk{kk o Lojkstxkj dh vko;drkvksa o rR~lEcfU/k izfrf;kvksa dh fnkk esa ;ksxnku djukA 8- lHkh oxkZas foks"kr% fiNM+s o lk/kughu oxksZ dks kS{kf.kd o 9- [ksyksa ds izfr :>ku o [ksyksa ds Lrj dks c<+kus esa ;ksxnku djukA 10- lkekftd dqjhfr;ksa ds izfr psruk tkx`r djukA It is also noted from the trust deed that at the time of dissolution of the trust, the movable and immovable property of the assessee society would be vested into trust who has similar objects and will not be disputed among the settler of the Trust. It is further noted that the ld. CIT(E) had rejected the registration of assessee society u/s 12AA of the Act on the ground that the assessee society was paying rent to Gopal Bai Foundation ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 23 Trust, Kota (leased land) and rent to M/s. Career Point Ltd. (on leased bulding) for running the education institution. It is noted that the assessee trust had required the land as well as building to provide the education for students. It is further noted that if any unreasonable rent/ fee is being paid by the assessee then it can be examined by the Assessing Officer at the time of assessment. The ld. AR during the course of prayed that the institution is running classes from 6 th to 12 th standards and providing education to them. Thus the objects of the trust are charitable and there is no reason before the ld. CIT(E) that activities carryout by the assessee are not genuine. On perusal of the order of the ld. CIT(Exemptions), it is also observed that he has not given any finding about the object of the society whether any aims and objects are not charitable in nature. It is noted that Honble Allahabad High Court in the case of Fifth General Education Society vs. CIT , 185 ITR 634 had also opined that at the time of considering the application for grant of registration u/s 12A, the ld. CIT was not required to examine the application of income or carrying on of any activity by the trust. The Court further held that the CIT may at this stage examine whether the application was made in accordance with the requirement of Section 12A r.w.rule 17A, and Form 10A was properly filled alongwith the determination whether the objects of the trust were ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 24 charitable or not. It is also observed that Honble Delhi High Court in the case of Director of Income Tax vs. Foundation of Ophthalmic and Optometry Research Education Centre (2013) 355 ITR 361 held as under:- The Director of Income-tax (Exemption) refused to grant registration to the assessee on the ground that no charitable activity had in fact taken place since the assessee society was a newly established one. The Tribunal held that non-commencement of charitable activity had no justification in rejecting the claim of the assessee. On appeal : Held, dismissing the appeal, that under section 12AA of the Income-tax Act, 1961, there are no restrictions of the kind which the Revenue was reading into in this case. In other words, the statute does not prohibit or enjoin the Commissioner from registering a trust solely based on its objects, without any activity, in the case of a newly registered trust. The statute does not prescribe a waiting period, for a trust to qualify itself for registration. If the Revenues contentions were correct then, necessarily, a condition would have to be read into the provision that the Commissioner should be satisfied that the trust was in fact engaged in charitable activities which would in turn inject considerable deal of subjectivity. It is quite possible that if such flexibility is introduced, it would be susceptible to varied interpretation by the different authorities, in that some would be satisfied with the activity of few months, while others may wish to examine the activities of the organization for longer time. DIRECTOR OF INCOME-TAX (EXEMPTIONS) v. MEENAKSHI AMMA ENDOWMENT TRUST [2013] 354 ITR 219 (Karn) followed. Further, the ITAT Jaipur Bench vide its order dated 4-12-2015 in ITA No. 709/JP/2014 in the case of Career Point Education Society vs. CIT, Kota observed as under:- 5. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee had filed application in Form No. 10A ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 25 alongwith required details. The society is registered from 1998 under the Societies Registration Act. The copy of the society are charitable and activity are genuine. At the time of registration of trust/ institution, the ld. CIT is to be judged the object of the trust which should be charitable in nature as the assessee is imparting the education programme through college and school education programme and he also provided various charitable services to the society as per object of the trust. The case laws relied by the assessee are squarely applicable in the case of the assessee, accordingly order of the ld. CIT(A) is set aside and directed to grant registration from the financial year 2012-12 as per application filed in form 10A.

6. In the result, the assessees appeal is allowed. It is noteworthy to mention that the registration u/s 12AA and the assessment are separate proceedings. At the stage of registration u/s 12AA only object and genuineness of the trust can be examined and not the activities as well as application of the funds of the assessee trust. This view has been taken by this Coordinate Bench vide its order dated 3-11- 2016 in the case of IMC of ITI Chhabra vs. CIT (Exemptions) in ITA No. 816/JP/2015. In view of the above facts, circumstances of the case and the case laws cited (supra), the CIT (exemptions) is directed to grant registration to the assessee society. Thus the appeal of the assessee is allowed. ITA No. 794/JP/2015 J.B.S. Shikshan Sanstha, Kota vs. CIT (Exemptions), Jaipur . 26

3.0 In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 21/12/2016. Sd/- Sd/- dqy Hkkjr HkkxpUn (KUL BHARAT) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 21/12/ 2016 *Mishra vknsk dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- J.B.S. Shikshan Sansthan, Kota

2. izR;FkhZ@ The Respondent- The CIT (Exemptions), Jaipur

3. vk;dj vk;qDr@ CIT,

4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

5. xkMZ QkbZy@ Guard File (ITA No. 794/JP/2015) vknskkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar