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g) That the without prejudice to our above said contention the institution assessee above was also got registered on 22.01.2007 as charitable trust with all corpus fund and assets accumulated as on that date (copy enclosed). As per trust deed "none of the objects of the trust shall' at any time involve carrying on of any activity for profits; income or the assets of the Trust fund shall not be applied or transferred in whole or in part for any purpose other than charitable and or educational purposes; the income or assets of the trust shall not be applied or used for the benefit of the authors of Gandhi College of Pharmacy the Trust, or any person who makes substantial contribution or donations to the trust or any trustee or manager of this Trust and in the event of dissolution of the Trust the trust fund or surplus of the funds shall not be transferred to the trustees in any manner. However the same shall be transferred to a like minded trust duly approved by not less than ¾ of the trustees present at the meeting. Therefore, the assessee has also completed the requirement of a registered body under a statute, on which much impetus was given by the then Ld. AO and Ld. CIT(A) in proceedings relating to AY 2003-04, though not necessary. It is also pertinent to mention here that the Income Tax Act has no where provided that for claim of exemption under section 10(23C)(iiiad) the educational institution has to be a registered body under Societies . Registration Act or Indian Trust Act under any act.

In view of above it is requested that, no addition is called for disallowance of exemption U/S 10(23C)(iiiad) of the Act, as proposed in the notice in view of the facts of the case and law on the subject."

6. The AO after considering the submissions of the assessee observed that for the assessment year 2003-04, it was held that the assessee's society solely exited for the purpose of profit and the exemption claimed u/s 10(23C)(iiiad) of the Act at Rs.3,04,893/- was denied. The AO also reproduced relevant para of the said assessment order in para 5 of the assessment order dated 06.08.2009, for the cost of repetition, the same is not reproduced herein. He further observed that appeal of the assessee filed against the order dated 24.04.2008 of the ld. CIT, Karnal was dismissed by the ITAT vide order dated Gandhi College of Pharmacy 12.06.2009 in ITA No. 2185/Del/2008. The AO also observed that during the course of assessment proceedings for the assessment year 2003-04, the assessee vide its reply dated 22.12.2006 admitted that no trust deed was executed, however, it ran under a management committee which was committed for the cause of education and had basic object of imparting education without any motive to earn profit and that it had not applied for the registration u/s 12A or 80G of the Act since the income was exempt u/s 10(23C)(iiiad) of the Act. The AO further observed that the copy of trust deed filed by the assessee was unsigned, unwitnessed and unregistered which revealed that Mr. Kapur Singh and some of his relatives managed an organization, named, Sh. Satya Sain Farming Matroli and that a sum of Rs.1.25 lakh was saved from the farming venture between 1972 and 1980 which was distributed as charity, stipend and scholarship. Later on, it was resolved by the trustees, on 03.03.1983 to start an institution for imparting education, both technical and vocational with the name of Sh. Satya Sain Educational and Vocational Trust-Matroli (Karnal), but the founder of the trustees did not set apart any money for the purpose of trust. Therefore, in the absence of any transfer of money on the trust by the founder, no trust could have come into existence. The AO also observed that in the present case, it appears that it was resolved to adopt Gandhi College of Pharmacy for management and control under the trust but it was not known as to whom the aforesaid Gandhi College of Pharmacy college belonged prior to its adoption by the assessee trust and that the trust deed did not contain any clause regarding non-distribution of profit to the founder of the trustees and also did not contain any clause as to how the assets would be disposed off in case of dissolution of the trust. He, therefore, held that the trust did not exist for charitable purposes. Accordingly, the AO did not accept the contention of the assessee and rejected the reply by observing as under: 

          Dharam Vati              600000/-
          Shamsher Singh           200000/-
          Lalit Mann               200000/-
The above figures of profit proves beyond doubt that the assessee is earning sustained profits and diverting the funds of the trust for personal benefits of the trustees. The definition of institution defined in the judgement relied upon by the assessee merely defines the word institution. There is nothing in the alleged trust deed, preventing the application Gandhi College of Pharmacy of profits or assets of the trust for the benefits of founder or anyone claiming through them the trustees. In the year under consideration, as mentioned above, assets worth Rs.10 lacs have been diverted to the alleged trustees. The trust deed does not mention against non-application of profit or assets for the benefit of founder to trustees. There is also no clause in the trust deed regarding non-distribution of assets in case of dissolution of the trust.