TaxTMI 
TaxTMI 
2010 (3) TMI 946
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....ducation to students up to any level that may be found necessary and/or desirable ; (D) to generally impart education to children and for the purpose to do all acts that may be necessary ; (E) to establish, run, manage administer any institution or university or college or school to train persons to be teachers who will impart education to children and/or students in school, colleges, university and other similar institutions ; (F) to promote adult education ; (G) to hold, arrange and organize meeting, lectures, talks, discussions, seminars, symposia, conferences, competitions, research and study visits, tours, excursions, exhibitions, debates, cinema, audio-visual programmes, the artistic performances and other cultural activities supports the games ; (H) establishment, maintenance and support of libraries, museums and reading rooms and distribution of books, etc., for advancement of education and knowledge in general ; (I) to provide and meet all expenses of the schools, colleges, university and other educational institution ; (J) advancement and propagation of education and learning including establishment, maintenance and support of schools, colleges, unive....
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....n of income would disentitle the petitioner for the benefit under section 10(23C)(vi) of the Income-tax Act. Section 10(23C)(vi) reads as follows : "any university or other educational institution existing solely for educational purposes and not for purposes for profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority." It is further conditioned by several provisos. The relevant provisos for the purpose of this case are the second and third. The second proviso, as it should at the relevant time, and the third proviso to the extent relevant, read as follows : "Provided further that the Central Government, before notifying the fund or trust or institution, or the prescribed authority, before approving any university or other educational institution or any hospital or medical institution, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, a....
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....er the first day of April, 2002, the period of the accumulation of the amount exceeding 15 per cent. of the income shall in no case exceed five years. Therefore, it is not as if the educational institution cannot generate any surplus. Generating surplus and accumulation of income will not disqualify an institution to the benefits of section 10(23C). Surplus is to be understood in contradistinction to generation of income with the sole motive of profit if one has to properly understand the legislative intent of section 10(23C)(vi). Merely because an educational institution accumulates income, it does not go out of consideration of section 10(23C)(vi). It goes out only if application of income is for the purposes other than education since the institution is to be established and maintained solely with the object of imparting education. Going through the impugned order, it appears that the authority has been slightly confused by the decision of the Uttarakhand High Court in the case of CIT v. Queens' Educational Society and CIT v. St. Pauls Sr.Secondary School [2009] 319 ITR 160 (Uttarakhand). In fact, the Uttarakhand High Court in the said judgment has referred to the decision of....
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....ion solely for educational purposes is required to be done on the basis of its objects including the utilization of its income in accordance with the conditions laid down in the third proviso to section 10(23C)(vi) of he Act. Merely because there are surplus in the hands of the educational institution would not ipso facto lead to an inevitable conclusion that such an educational institution is existing for making profits and not solely for educational purposes. Therefore, the interpretation put forth by the Chief Commissioner that there has to be reasonable profit only and then only an institution can be said to be not existing solely for the purposes of profit, is totally a misconception of law. There is a definite purpose behind the allowing of setting up educational institutions at the hands of private entrepreneurs including trusts/societies by the Government. Various other educational colleges like Engineering and Pharmacy, etc., could not have been established for want of funds. The Government with a definite idea and object purportedly opened this area of education for the private sector. The Government, who is lacking funds appears to have thought that private sector could ....