TaxTMI 
TaxTMI 
2016 (1) TMI 42
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....hority has filed its affidavit-in-reply opposing the grant of any relief as prayed for by the petitioner. 3 The brief facts emerging on the record are that the petitioner is a society registered under the Societies Registration Act, 1860 as well as under the provisions of the Bombay Public Trusts Act, 1950. It is the case of the petitioner that the institution is engaged in imparting higher and specialised education. It is specialised in imparting education in the field of communication including advertising and its related subjects. The petitioner has also been granted the registration under Section 12A of the Act. The Director of Income-tax (Exemption) had issued a notice under Section 12AA(3) of the Act and called upon the petitioner to explain as to why its registration under Section 12A of the Act should not be withdrawn. The said notice came to be challenged by the petitioner in this court by filing a writ petition, which was withdrawn at a later stage in view of the fact that only show-cause notice was under challenge. However, the procedure initiated by the Director of Incometax (Exemption) under Section 12AA(3) of the Act were dropped by an order dated 3rd March 2014 an....
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....rmation about the market condition through service, research, report, etc. and publish the same through magazine and other printing material. 7 By relying upon the above referred objects, Mr Soparkar would submit that his case would be covered under Section 2(13) i.e. 'charitable purpose' since it provides education in a specific field. He would further submit that the petitioner educational institution is existing solely for the educational purposes and not for the purpose of profit though the petitioner institution might have surplus funds after the expenditure for the purpose of imparting education in better and different ways. He would, therefore, submit that the conclusions arrived at by the respondent that the applicant does not have the education as the sole purpose, is on wrong premise and therefore the same is required to be discarded. As regards the conclusion that the applicant is engaged in conducting coaching/training courses for and on behalf of industry, trade and commercial organisations is concerned, he would submit that the institution is established to provide education to those persons who might be working with some company or private organisations so....
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....cational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. He would submit that it is not the case of the respondent that the surplus of the institution has been used for any other purpose than the objects of the petitioner institution. He would further submit that the authority has erred in holding that the fees charged by the institution are not for the general public, but for the people who are either affluent and who are sponsored by the trade, commerce, etc. and therefore the findings recorded only on this ground, that the petitioner is created for earning profit is on a wrong footing and therefore these observations are also contrary to the provisions of law as well as ratio laid down by the Honourable Supreme Court as well as different High Courts. He would further submit that the objects referred to in clause 3 of the Memorandum of Association are interwoven and are meant for providing education only. 9 Mr Soparkar has also relied upon a decision in the case of....
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....ries. 12 Mr Bhatt would submit that the petitioner is entitled for the certificate under Section 10(23C)(vi) of the Act only if the institution exists solely for educational purpose, which is not the case of the petitioner. He would further submit that even if it is believed that most of the activities of the petitioner institution are relating to education, but if it is found that one of the objects of the present petitioner is not imparting education, then the petitioner would not be entitled for the certificate as claimed by it. He would submit that the authority had rightly observed that the fee collected by the petitioner institution is exorbitant, which would not benefit the public at large and only affluent individuals would be able to train themselves through the petitioner institution. Only the companies which can afford such high fee can sent their employees for special training so that they would be benefited and it would lead to only conclusion that the petitioner institution is established to earn the profit. He, therefore, would submit that the petition be dismissed. 13 We have heard learned counsel appearing for the respective parties. 14 It is an admitted p....
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....nditions for introducing new products, promotional sales of existing products etc., though surveys, research reports and publication of periodicals, magazines and other printing material. (j) to determine the rates of remuneration and conditions of service for professional, technical, administrative and other posts under the Society and to make appointments there to. (k) to cooperate with educational, research or other institutions in any part of the world having objects wholly or partly similar to those of the Society by exchange of teachers, scholars and generally in such manner as may be conducive to their common objects: and (l) to create patronship, affiliation and other classes of professional or honorary or technical membership of office as the Society may consider necessary; (ii) to establish and administer or assist in establishing and administering schools, colleges, training centers and the like which would help the objects of the Society. (iii) to institute chairs, subscribe or give donations to and financially or otherwise aid to any other Society, Institution whose objects and activities are similar to the objects of the So....
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.... and structures or any of them of any part thereof and to pay into such fund annually or at such longer period, as the Governing Council of the Society think fit. (xi) To take over, purchase, acquire, hold securities of the Government of India or of any State Government of Public Body or Post Office or National Savings Certificates or stocks, shares and securities, to which the Society is legally entitled to subscribe and hold. (xii) To take, receive, hold, expend, administer and use any gift whether of monies or other property movable or any bequests of Foundation, whether subjects to any special trust or not, for the objects of the Society or any of them and to accept the office of and act as trustees, managers and administrators whether solely or jointly, with another or others, for or in respect of, any gift or any other property whether subject to any trust or not and notwithstanding that the carrying out of such trusts, management and administration would involve the exercise by the Society of power not specifically mentioned in these presents. (xiii) To raise funds as and when necessary by means of borrowing from the banks, Government or any other ....
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....will be maintained for such fund generating activities. (xxiii)to delegate any of its powers to the Management Committee of the Sub-system or any of the committee or Sub-Committees constituted by it." 16 If the objects mentioned in the memorandum of association as mentioned in paragraph 3(i) and more particularly (a), (b) and (c) are perused, it appears that the institution is awarding diplomas, certificates, etc. after providing training in communication, advertising and related subjects to equip them thoroughly to practice the art and profession of Communication in which they have been trained and by giving special training they do prepare the outstanding and talented mature young persons for careers leading to Communication including advertising with teaching them their responsibilities towards the public at large. Clause (f) makes it clear that the fee collected shall no exceed the cost of training, hostel expenses etc., and the petitioner society shall not be precluded from subsidising such costs. As far as object 3(i) which has been relied upon by Mr Bhatt, learned Senior Counsel, we are of the opinion that by providing training to the individuals as well as those persons ....
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....e institution is not established solely for the educational purpose. After considering several decision, certain criteria have been laid down in paragraph 11 of the judgment, which reads as under: "11. Thus, the law common to Section 10(23C) (iiiad) and (vi) may be summed up as follows: (1) Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied - the purpose of education should not be submerged by a profit making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on "for profit". No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes. (5) The ....