TaxTMI 
TaxTMI 
2013 (3) TMI 150
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....iled writ petition before this Court with the averments, inter-alia, that the Trust was established in the year 2006 solely for educational purpose and since its inception; and was imparting education in several of its institutions. To indicate the main objects of the Trust, a copy of the Trust deed was filed with the writ petition. It was further stated that the Trust applied for and was registered under the provisions of Section 12A(a) of the Act for availing exemption under Sections 11 and 12 thereof. The registration was granted on 13.2.2007 from the date of inception of the Trust i.e. 29.9.2006. It was then stated in the petition that on 9.1.2009, the Trust filed an application seeking exemption of its income under Section 10(23C)((vi) of the Act. After exchange of several letters between the Trust and the authorities whereby several queries were raised and the same were answered, the application of the Trust was rejected by the order dated 27.1.2010, inter-alia, on the ground that the Trust was not satisfying the essential conditions for exemption under Section 10(23C). It was also pointed out in the writ petition that for the assessment year 2010-11 and onwards, the Trust ha....
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....ould be formed by the learned Chief Commissioner of Income Tax so long as the matter is pending before the Supreme Court of India and is not decided against the petitioner Trust. 6. Right to litigate a particular issue in the Court of Law is a legal right of any Institution or a Charitable Trust, who is seeking exemption from income tax for which sanction is required by the competent authority within the parameters like no profit motive, or object of education of the Trust etc. laid down under Section 10(23C) of the Act which are relevant and not the admission procedure undertaken by the petitioner Trust. Nexus between the profit motive and alleged illegal admission is too remote and cannot be presumed without any other adverse material on record against the assessee, for drawing such adverse inference. Learned Chief Commissioner of Income Tax vide order dated 27/1/2010 has only assigned one single reason as stated above to deny the approval under Section 10(23C) of the Act. The relevant portion of the impugned order dated 27/1/2010 is reproduced hereunder for ready reference: "11. It is also apparent that the Trust is not satisfying essential condition for exemption u/s 10 (23C)....
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....is court also, this ground alone as such could not be relevant and a valid basis for refusing the approval under Section 10(23C) of the Act to the petitioner Trust especially since the matter is still pending before the Hon'ble Supreme Court. Of course, the authority concerned is free to apply its mind and take into account the relevant consideration while deciding the case of petitioner Trust under Section 10(23C) of the Act as laid down in the provisions of Section 10(23C) itself and if there are other grounds made out of rejection of its case under Section 10(23C) of the Act or say if Hon'ble Supreme court of India also holds against the petitioner, the authority concerned may be justified in denying the exemption under Section 10(23C) of the Act." Consequently, the writ petition was allowed in the terms as indicated herein-before. Assailing the order so passed by the learned Single Judge, it was contended on behalf of the appellants that the Trust was not satisfying the essential condition for exemption under Section 10(23C)(vi) of the Act because the income received is exempted only if the institution is existing for educational purposes and as the Court has held that the ad....
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....eginning of the section have to be understood and read in a logical manner in the light of common principles of law. The words should denote an university or an institution which otherwise exists within the four corners of law. Any institution which has violated the procedure of admission as laid down by the Govt./Medical Council will not qualify as an institute as understood in the phrase used in this section. The admission to a college is the starting point of the college and the very foundation of its existence. If admission process is illegal, it does not qualify as an 'Institution' as envisaged in the opening lines of the section. It is common understanding that if any entity is referred to in any beneficial provision of law for approval / registration / exemption etc., it would necessarily mean an entity which is otherwise free of any defect. An entity which has violated the prescribed procedure of admission would not qualify as an institute referred to in any law granting any benefit to such institute. In my opinion, having violated the system of admission as laid down by the State Govt., Rajasthan University and the Medical Council of India, the Institute does not qualify f....
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....any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in subclause (iiiac) or sub-clause (iiiae) and which may be approved by the prescribed authority:" A plain reading of the said provisions would reveal that what is required for the purpose of seeking approval thereunder is that the University or other educational institution should exist 'solely for educational purposes and not for purposes of profit'. It is nowhere the case and / or finding of the learned CCIT that on account of the said defect in the admission procedure, the Trust ceased to exist solely for educational purposes and / or it existed for the purposes of profit. Further, it is not the case of the appellants that the students who were admitted were not imparted education in the college in which they were admitted and / or the admissions granted were fake or non-existent or that the income generated by admitting the said....
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....tution as explained by this Court in T.M.A. Pai Foundation and P.A. Inamdar. 47.3. In exercise of our power under Article 142 of the Constitution, we direct that none of the 117 students who were otherwise eligible for admission to the MBBS course will be disturbed from pursuing their MBBS course, subject to the condition that they will each pay a sum of Rs.3 lakhs within a period of three months from today to the State Government and in the event of default, the students will not be permitted to take the final year examination and the admission of the defaulting students shall stand cancelled and the College will have no liability to repay the admission fee already paid. The amount so paid to the State Government shall be spent by the State Government for improvement of infrastructure and laboratories of the Government medical college of the State and for no other purpose. 47.4. The College which was responsible for making the admissions in violation of clause (2) of Regulation 5 of the MCI Regulations will surrender 107 (117 - 10) MBBS seats to the State Government phase wise, not more than ten in any academic year beginning from the academic year 2012-2013 and these surrendere....