Withdrawal of educational institution approval requires statutory grounds and proved lack of genuineness, not mere objections to courses or ancillary activity.

Approval under section 10(23C)(vi) could be withdrawn only on the statutory grounds in the proviso, namely non-genuine activities, improper application or investment of funds, or breach of approval conditions. On the record, the show-cause notice was held valid because the prescribed authority's application of mind and approval were evident, despite the final notice being signed by an subordinate. On the merits, the university's courses were found to be educational in nature and there was no adverse material showing profit-oriented or non-educational activity; alleged hospital-related activity and course objections were insufficient to establish loss of educational character. The approval was therefore directed to be restored.

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Issues: (i) Whether the show-cause notice initiating withdrawal of approval under section 10(23C)(vi) was jurisdiction and invalid for not reflecting the prescribed authority's satisfaction; (ii) Whether the withdrawal of approval under section 10(23C)(vi) was justified on the grounds that the university's activities were not genuine and it was not existing solely for educational purposes.

Issue (i): Whether the show-cause notice initiating withdrawal of approval under section 10(23C)(vi) was without jurisdiction and invalid for not reflecting the prescribed authority's satisfaction?

Analysis: The record showed that the draft notice was put up before the prescribed authority, corrections were made in its handwriting, and the final notice was issued on that basis by the office on behalf of the authority. The notice, read as a whole, disclosed the authority's application of mind and satisfaction for initiating action under the thirteenth proviso to section 10(23C). A mere signing by a subordinate did not invalidate the proceedings where the prescribed authority's approval and reasoning were otherwise evident from the record.

Conclusion: The notice was not invalid or jurisdiction; the additional ground was rejected.

Issue (ii): Whether the withdrawal of approval under section 10(23C)(vi) was justified on the grounds that the university's activities were not genuine and it was not existing solely for educational purposes?

Analysis: The power to withdraw approval under the thirteenth proviso is confined to the statutory conditions of non-application of income, improper investment of funds, non-genuine activities, or activities not carried out in accordance with the conditions of approval. The Court found that the courses conducted by the university were educational in nature, the validity of degrees awarded in several courses had been upheld in other proceedings, and there was no adverse material showing that the university was carrying on non-educational or profit-oriented activity. The alleged hospital-related activity and objections regarding courses were insufficient to establish that the institution had ceased to exist solely for educational purposes or that its activities were not genuine.

Conclusion: The withdrawal of approval was unjustified and could not be sustained.

Final Conclusion: The approval granted under section 10(23C)(vi) was directed to be restored, and the assessee's appeal succeeded.

Ratio Decidendi: Approval under section 10(23C)(vi) can be withdrawn only on the statutory grounds specified in the proviso, and an educational institution does not lose eligibility merely because its educational courses or ancillary activities are questioned unless the revenue establishes lack of genuineness, non-educational purpose, or violation of the approved conditions.

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