TaxTMI 
TaxTMI 
2012 (5) TMI 334
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....ms of the said Section. 1(a). That, on the facts and in the circumstances of the case, and specially in view of the direction of the Hon'ble Tribunal to the Ld. CIT, Siliguri to grant registration to the appellant u/s.I2AA of the I.T. Act, the Ld. CIT(A) erred in holding that the appellant university did not exist solely for educational purposes but for making profit. 1(b). That, the Ld. CIT(A) erred in holding that the appellant university was not substantially financed by the Government as required u/s. 10(23C)(iiiab) of the I.T. Act. 1(c). That, while holding that the appellant was not substantially financed by the Government, both the Ld. A.O. and the CIT(A) erred in comparing each year's Government Grant with its gross receipt from tuition fees etc. instead of taking into account the total Government grant from the beginning till date. 1(d). That, the Ld. CIT(A) erred in observing that the land provided by the State Government to the appellant-University did not form part of substantial fund by the Government. 1(e). That, the Ld. CIT(A) was not justified in observing that since the receipt and application of the sum of Rs.3 0.00 crs. giv....
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....) of the Act dated 12.07.2010. The AO also rejected the claim of the assessee u/s. 10(23C)(iiiab) of the Act by holding that the assessee University is not wholly or substantially funded by the Government and Grant in aids provided by the State Government of Sikkim for the year ending is only 2.06 crore. According to him, this is supplemented by grant of Rs.331,331/- by Entrepreneurs Dev. Fund, Rs.28,904/- by CSIR Project Fund and Rs.90,248/- by Students' Benevolent Fund. According to him, total grant in aids from the State Government and other agencies come to Rs.2.10 crore which is a lowly 2% of the gross receipts recorded by the University during the financial year under scrutiny. According to AO, this is not a Government organization and even receipts collected by Institution are not deposited of State Government and even expenses incurred is also not regulated by State Government. Hence, according to AO the assessee does not satisfy the conditions either of section 10(23C)(vi) or 10(23C)(iiiab) of the Act. and he disallowed the exemption claimed by assessee in all these years on the same premise. Aggrieved assessee preferred appeal before CIT(A) and CIT(A) also confirmed the a....
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....ption u/s. 10(23C)(vi) and 10(23C)(iiiab) of the Act and assessed the income as under: Asstt. Year Returned income which was claimed exempt Assessed income after rejecting the claim of exemption 2004-05 Rs.5,82,83,070 Rs.5,82,83,070 2005-06 Rs.2,34,26,883 Rs.2,34,26,883 2006-07 Rs.8,68,36,389 Rs.8,68,36,389 2007-08 Rs.12,70,13,367 Rs.12,70,13,367 Ld. Counsel stated that the assessee University was created by an Act of Sikkim Legislative Assembly and placed copy of Sikkim Manipal University of Health, Medical and Technical Sciences Act 1995, in the Paper Book, and referred to the objects of assessee University, which are as follows: (a) to create a centre of excellence for providing health, medical care, educational and research facilities of a high order in the field of medical science and technology including continuing medical education, hospital administration, technological education and education in facilities like dental, nursing or any other subject to be started from time to time with the prior approval in writing of the respective accrediting bodies, if any, in the union of India; (b) to develop patterns of teaching in the under-gradu....
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....er in ITA No.633/Kol/2010 dt.20.8.10 to grant registration u/s. 12AA of the Act and observed as follows: "Regarding the other observation raised by the CIT justifying his action of rejecting the application for registration is that the fees charged are very high and exorbitant and accessible to those who can afford the existing fees which goes to prove that the educational facilities are to a privileged few and not to the people at large xx xx xx xx xx It is an admitted fact that for running an institution, a reasonable revenue generation by it for the purpose of development of education and expansion of the institution does not mean against its charitable character. The fee structure must take into consideration the need to generate funds to be utilized for the survival and growth of the educational institution, the betterment of education in that institution and to provide facility necessary for the benefit of students. xx xx xx xx xx xx xx xx Therefore, there cannot be any limit on the fees charged in order to fulfill such object. Therefore, the scale of fees provided was in consonance with the class of education being imparted taking into consideration the high expenses incurr....
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....aid by the Sikkim State Government to the assessee was not part of the total funding by the Government Finally, in supporting he pointed out that while rejecting its claim of exemption of its income both A.O. and CIT(A) erred in ignoring the findings of the CCIT, Jalpaiguri that its case is covered by Sec. 10(23C)(iiiab) of the Act. 7. On the other hand, Ld. CIT DR Shri D. R. Sindhal heavily relied on the order of AO and that of CIT(A). 8. We have heard rival contentions and gone through facts and circumstances of the case. We find that the first objection of the lower authorities was that the assessee was not a government organization and State Government had no control over its receipt and expenditure. We find that the assessee is a University, governed by Governing Council consisting of 10 Members including the Chancellor, who is the Governor of the State of Sikkim. A majority of other members are also officers of Sikkim Government representing its various Deptts. From Clauses 23(2) and (3) and 25(2) of the Sikkim Manipal University of Health, Medical and Technological Sciences Act 1995(copy filed by assessee in its Paper Book), it is seen that the Accounts of th....
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....termining whether any one of the persons mentioned in section 13(3)(a), (b) and (d) of the Act had made substantial contribution to the assessee trust for AYs 1972-73 and 1973-74. The Hon'ble High Court's exact findings are as under: "So far as the third question is concerned, the assessee's stand before the Tribunal was that the contributions in order to become substantial contribution have to be invested during a particular previous year. The language of the provision is crystal clear and it is not permissible to read the expression "during the previous year" into section 13(3)(b). That being the position, the Tribunal was justified in its conclusions. The answer to the question, therefore, is answered in the affirmative, in favour of the Revenue and against the assessee." We find that the decision of Hon'ble Delhi High Court will be of help in deciding this issue whether the assessee University was "wholly and substantially financed by the Government" the entire government contributions upto the date has to be taken into account. We are of the view that the lower authorities were not justified in making a year-wise comparison between the gross receipt from tuitio....
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....s fair and reasonable restriction and CIT(A) should not have considered clause 5 in isolation of clause 4 of said lease deed. Even we find that the allegation of the lower authorities that the contribution of Rs.30 crore is not recorded in assessee's books of account is not correct, whereas the assessee has recorded in Schedule 15 of audited balance sheet for the period ending as on 31.03.1999. 9. Another aspect ignored by CIT(A) in rejecting the claim of exemption of assessee by ignoring the findings of CCIT, Jalpaiguri. The assessee filed application in Form No. 56D before CCIT, Jalpaiguri claiming exemption of its income u/s. 20(23C)(vi) of the Act and CCIT vide his order dt.12.07.2010 (copy placed in assessee's Paper Book) rejected its application with the following observations. As the institution is substantially financed by the Government of Sikkim (Rs.23.37 crs.) and by the Deptt of North-Eastern Council of India to the extent of Rs.4.78 crs., the case of the assessee is covered by the provisions of Sec. 10(23C)(iiiab) of the Income Tax Act. The application in Form No. 56D seeking approval u/s. 10(23C)(vi) is misconceived as assessees "other than those menti....