TaxTMI 
TaxTMI 
2014 (4) TMI 747
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....ses 3(b) and 3(h) in the Memorandum of objects are not connected with education and that the appellant is not existing solely for educational purpose so as to claim exemption under Section 10(23C)(iiiad) of the Act? 2. Briefly stated, the facts leading to these appeals are that the appellant is a Society registered under the Societies Registration Act, 1960 (for short 'the Society'). The Society runs primary, middle and high school in the name of Geetanjali Vidyalaya (for short 'the school'). They are not engaged in other activities except running the school. They were granted registration under Section 12A of the Income Tax Act, 1961 (for short 'the Act'). In these appeals, we are concerned with the Assessment Years 2006-07 and 2007-08. The Society filed its return of income declaring it 'Nil', claiming exemption under Section 10(23C) (iiiad) of the Act. Their case was re-opened by issuing notice under Section 148 of the Act. The Assessing Officer vide order dated 28.10.2010, concluded the assessment for both the Assessment years under Section 143(3) r/w Section 147 of the Act determining the total income of the Society at Rs.23,90,710/- for the Assessment Year 2006-07 and Rs.3....
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...., read thus:- 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included - (23C) any income received by any person on behalf of - (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts may be prescribed; 6. From bare perusal of this provision, it is clear that any income received by any person on behalf of the educational institution "existing" solely for educational purpose and not for purposes of profit and if its aggregate annual receipts do not exceed the amount of annual receipts as may be prescribed, it is entitled for exemption under this provision. The amount of annual receipts prescribed is admittedly Rs.1 crore vide Rule 2BC of the Income Tax Rules, 1962. 7. In the present cases, before we advert to the submissions advanced by learned counsel for the parties and record our reasons, it would be advantageous to state few admit....
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....randum of Association, which enabled the Society to undertake other activities, not related to the educational activities is sufficient to deny exemption as claimed by them for both the assessment years. The Institution in American Hotel, according to memorandum of understanding, had several objects and it is in this backdrop, the following observations made by the Supreme Court are relevant for our purpose:- "To make the section with the proviso workable we are of the view that the monitoring conditions in the third proviso like application/utilization of income, pattern of investments to be made, etc., could be stipulated as conditions by the prescribed authority subject to which the approval could be granted. For example, in marginal cases like the present case, where the appellant-institute was given exemption up to the financial year ending March 31, 1998 (assessment year 1998-99) and where an application is made on April 7, 1999, within seven days of the new dispensation coming into force, the prescribed authority can grant approval subject to such terms and conditions as it deems fit provided they are not in conflict with the provisions of the 1961 Act ....
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.... bare perusal of the observations made by the Supreme Court in American Hotel's case, what appears to us, is that the Assessing Officer while considering the case, such as one in hand, has to closely analyse activities of the Institute, objects of the Institute, its sources of income and utilization. In that case, the Supreme Court considered its activities as reflected in the paragraph quoted above and therefore, while remanding the matter, made it clear that the appellant had fulfilled the threshold pre-condition of actual existence of the educational institution under Section 10(23C) (vi) with further direction to the Central Board of Direct Taxes not to reject the approval application on that ground. Two of the objects in that case as reflected in the judgment were also to offer the National Council the lowest possible prices for the products and services sold to or utilized by the schools under the umbrella of the Government of India and so also to utilize Indian Authors whenever possible in the development of customized programmes. The Supreme Court, despite these objects/activities, held that the institution in American Hotel was involved only in educational activities, perh....