TaxTMI 
TaxTMI 
2006 (3) TMI 239
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....iiad) of IT Act, 1961 by observing that during the course of survey it was found that in fact the society is formed to earn profit and the surplus is utilized in acquiring assets. This fact is also strengthened from the returns tiled for the subsequent assessment years. Receipts of donation are admitted to be from the students, which is sort of forced amount of receipt in the shape of donation. The AO further observed that copy of the minutes dt. 23rd April, 1993 tiled by the society reveals that there is a mention of classwise fees to be charged from the students. However, there is no mention about the donations, which are being charged. Also there is no such clause in the objects of the society to collect donation from students. The profit earned is diverted to family members of the president, as the wife of the president is principal in the institute and father of the president is getting rent on account of building, rented to the institute. Also the president himself is getting remuneration from society. From the income and expenditure account, it is noticed that the assessee is claiming depreciation on assets. As per s. 32(1) of the IT Act, depreciation is allowable to the ass....
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....versity or educational institution do not exceed the amount of annual receipts as may be prescribed. The prescribed limit is Rs. 1 crore. The receipt of the assessee society is only Rs. 40,24,906 (Rs. 34,91,251, paper book 14-15, Rs. 5,33,655 paper book 20) for asst. yr. 2001-02 and Rs. 64,82,411 (51,98,411, paper book 24-25 + 12,84,000, paper book 30) for asst. yr. 2002-03. Thus one of the conditions of 10(23C)(iiiad) is fulfilled. The second condition is that the educational institution should exist solely for educational purposes and not for the purpose of profit. In the present case as per its constitution, the society exists solely for educational purpose and not for profit. Eminent persons of Jhunjhunu and District Education Officer are members of the society who are duly elected from time to time. The lower authorities have treated the society as existing for profit solely for the reason that the appellant assessee paid salary to the president of society and his wife and rent to the father of the president, received donation from the students and utilized the surplus for purchase of asset. These observation are neither fully correct nor can be a basis for treating the assess....
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....on 3,59,684 44,84,601 Land 6,35,000 Furniture & fixtures 1,708 5,41,705 Computer 10,650 2,51,177 Thus it can be noted that the surplus has been used for the object of the society. The Rajasthan High Court in case of Asstt. CIT vs. Rajasthan State Text Book Board (1999) 157 CTR (Raj) 207 : (2000) 244 ITR 667 (Raj) has held that where the assessee society was an educational institution existing solely for the purpose of education and even if it had surplus, the assessee would not be disentitled for exemption if the same has been utilized for the purpose of education. On the assets of the society depreciation has been claimed. The AO assumed that claiming depreciation m....
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.... of the AO in this regard are as under: "A bare reading of s. 10(23C)(iiiad) shows that this section exempts the income of educational institutions which exist solely and exclusively for educational purposes and not for the purpose of profit. During the course of survey it was found that in fact the society is formed to earn profit and the surplus is utilized in acquiring assets. This fact is also strengthened from the returns filed for the subsequent assessment years. It is also seen that the receipts of donations is admitted to be from the students which is sort of forced amount of receipt in the shape of donation. Copy of the minutes dt. 23rd April, 1993 filed by the society reveals that there is a mention of classwise fees to be charged from the students. However, there is no mention about the donations which are being charged. Also there is no such clause in the objects of the society to collect donation from the students. The surplus is increasing from year to year. This shows the assessee's motto to earn profit and not for solely and exclusively for educational purposes. The break-up of surplus generated by the assessee during the previous years relevant to asst. yrs. 199....
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....Therefore in the present case, we have to peruse whether all the conditions of S. 10(23C)(iiiad) have been fulfilled or not. First and foremost condition in the said section is that the educational institution should be solely for educational purposes and not for the purpose of profit. In the present case the assessee has claimed to have received donations of Rs. 18,49,725 during the asst. yr. 2001-02 and Rs. 27,12,750 during the asst. yr. 2002-03 out of total receipts of Rs. 40,24,906 and Rs. 64,82,411 declaring a surplus of Rs. 7,75,424 and Rs. 15,76,201 respectively. The findings of the AO in this regard are that these receipts are in the shape of donations. There are also minutes of the society dt. 23rd April, 1993 filed by the society, which reveal that there is mention of classwise fees charged from the students and there is no mention about the donations which are being charged by the assessee from the students. This indicates that the receipts from the students as fees for rendering educational services have independently been mentioned in the minutes book and also shown in the P&L ale separately appearing at paper book 14 and 24 filed by the assessee. The bifurcation of th....
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.... further investigation to find out the source of such donations received that whether they are in comparison with other institutions operating in that area or these are the incomes brought by the assessee from some other sources in the garb of donations from students for claiming exemption under s. 10(23C)(iiiad) of the Act. 11. Neither the objects of the society mention such amount to be received as donations as a part of rendering the educational services and also nowhere this has been mentioned to achieve the object of the society. The learned counsel for the assessee had mentioned that the secretary of the society has the power to collect the donations at paper book 10 the copy of bye-laws of the society. We have perused the said clauses wherein we do not find any object of the society, where receipt of donations can be said to be the object of the society for the educational purposes. There is a mention in the power of treasurer, where he is authorized to issue receipt only for donations This is an administrative action and such power to the treasurer cannot be said as the object of the society to receive donations for educational purposes. 12. It is also important to me....