TaxTMI 
TaxTMI 
2010 (12) TMI 513
X X X X Extracts X X X X
X X X X Extracts X X X X
.... personal hearing on March 26, 2009, whereat they were informed that, against column No. 10 of Form 56D, the income of the society only for the preceding two years was shown, and not the income for the previous year for which exemption was sought ; and similarly in column Nos. 11 and 12 also the information furnished was merely for the preceding two years. They were also informed that the application was not made within time. The petitioner submitted their detailed explanation on March 30, 2009, stating that, since they had submitted an application on March 26, 2008, seeking exemption for the assessment year 2008-09, their application was within time ; by the time the institution was required to file its application, under the proviso to section 10(23C)(vi), its accounts for the financial year would not be closed, and its income would not be ascertained ; a practical difficulty had arisen in reporting the income of the current year ; hence the particulars of the preceding two years were given ; and, along with their application submitted on March 30, 2009, they had enclosed copies of the audited accounts for the assessment year 2008-09. 3. In her order dated March 31, 2009, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontribution to a chit fund scheme which was considered by the Assessing Officer as a contravention of section 13(1)(d) of the Act ; the said infirmity did not exist in the assessment year 2008-09 inasmuch as the instalment had been fully paid in the earlier year itself ; in the financial year, relevant to the assessment year 2008-09, all the petitioner's funds stood invested in the forms approved under section 11(5) of the Act ; each assessment year should be examined independently for the purpose of approval under section 10(23C)(vi) of the Act, and the claim has to be considered on the facts for each year without reference to omissions and commissions in the past years which have no bearing on the present year ; and the first respondent, without considering the explanation of the petitioner, had rejected their claim by her order dated March 30, 2009 on wholly unreasonable and untenable grounds. 5. Under section 10(23C)(vi) of the Act in computing the total income of a previous year of a person any income received by the person on behalf of an educational institution, (existing solely for educational purposes and not for profit and which may be approved by the prescribed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jects of the educational institution. Form 56D is a statutory form prescribed by rule 2CA(2) of the Income-tax Rules, 1962, and forms a part of the said rule. The statutory requirement in Form 56D, of furnishing copies of the audited accounts, balance-sheets, and annual reports for the past three years, is not without significance. 7. The second proviso to section 10(23C) of the Act enables the prescribed authority, before approving any educational institution under sub-clause (vi), to call for such documents (including audited annual accounts), or information from the educational institution, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such an educational institution. The second proviso also enables the prescribed authority to make such enquiries as it deems necessary in this behalf. The activities of the institution, its objects, its source of income and its utilization, must be analysed by the prescribed authority to ascertain whether it exists solely for education, and not for profit, and it is his duty to ascertain whether the income is applied wholly and exclusively for the educational objects for which purpose the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grant approval, or renew the approval granted earlier, under section 10(23C)(vi) of the Act. 9. Accepting the submission of the learned counsel for the petitioner that, since the petitioner's investment in a chit fund, (which is not one of the modes and forms specified in section 11(5) of the Act), was in the assessment year 2007-08, prior to the assessment year 2008-09 for which approval was sought, such investment or deposit cannot result in denial of grant of exemption, would render the requirement of furnishing the audited annual accounts for the previous three years, as stipulated in Form 56D, wholly unnecessary. A logical corollary of the aforesaid submission would be that only the income of the previous financial year, relevant to the assessment year in question, would be required to be examined by the prescribed authority, and not the two previous years prior thereto. 10. The very purpose of requiring the applicant to furnish the audited annual accounts, balance-sheets and annual reports for the previous three years is to ascertain whether the objects of the applicant-society, and the application of its income, is solely for the purpose of education and ....