Surplus generated was utilised for the educational activities assessee being educational institution , cancellation of registration was not justified.(

Surplus being generated is utilized for the purpose of objects of the institution. It is nowhere provided that the trust cannot be constituted by a family and it is also not provided under the Act that trust will not have number of institutions. Education itself is charitable object and if the surplus is utilized for the purpose of charitable activities then it cannot be said that registration is to be disallowed. Chief CIT has allowed exemption under s. 10(23C) on finding that the activities of the assessee are genuine and as per its object. Assessee has explained the reasonableness is respect of the payments made to the persons covered under s. 13(3). Reasonableness is actually to be seen by the AO and not by the CIT while allowing registration or cancelling the registration. CIT was not justified in cancelling the registration.
Rajasthan Vikas Sansthan v. CIT (2012) 78 DTR 411 (Jodhpur) (Trib.)