2016 (7) TMI 956

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rom Government was only 25.6% of the total receipts . 3. Briefly the facts of the case are that assessee society was running educational institution and claimed its income as exempt under section 10(23C)(iiiab), 10(23C)(iiiad) and 10(23C)(vi) of the Act. The assessee claimed before ld. CIT(Appeals) that Assessing Officer failed to deduct the grant-in-aid and other receipts which are not includible in the total income. The assessee filed written submissions before ld. CIT(Appeals) which are reproduced as under : "The society was setup in the year 1975 with the object of imparting education. A school and art college was setup. The government gave grant in-aid of 95% to run the school and college. Till 2000, the expenditure was more than the receipts and upto 2002, the receipts were also less than one crore, as such there was no need to file any application for exemption. The Commissioner of Income Tax-I has passed order on 25.09.2008 u/s 12AA of the IT. Act, 1961 granted registration u/s 12AA(l)(b)of the I. T. Act, 1961. Similarly, Chief Commissioner of Income Tax has also passed the order on 17.09.2010 u/s 10(23C)(vi) of IT Act, 1961. Exemption has been granted ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....also covered u/s 10(23C)(iiiab), any university or other educational institution existing solely for educational purposes and not for purposes of profit and which is wholly or substantially financed by the government. Grant in aid, donations and vocational course grant does not form part of the total receipts. The receipts being less than Rs. 1 crore and the society was setup with the object of imparting education without any motive of profits and the receipts being less than 1 crore is exempt from tax." 4. The ld. CIT(Appeals) allowed the appeal of the assessee. His findings are reproduced as under : 4.2 1 have considered the submission of the Ld. Counsel for the appellant and perused the various documents filed by the Ld. Counsel. The appellant had applied for exemption u/s 10(23C)(vi) to the Ld. Chief Commissioner of Income Tax, N.W. Region, Chandigarh from A.Y. 2004-05 onwards and the same was granted. The Ld. Counsel for the appellant has argued before me that application for exemption u/s 10(23C)(vi) for A.Y. 2003-04 was not made before the Chief Commissioner of Income Tax, N.W. Region, Chandigarh because the receipts of the appellant were less than Rs. 1 crore in....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... government, which is also correct because Punjab Govt. has been financing almost entire salary of the teachers employed by the society. Thus, the case of the appellant is also covered by Section 10(23C)(iiiab) of the Act. In view of this discussion, it is held that the Assessing Officer was not right in taxing the surplus of income over expenditure in the case of the appellant, as appellant's case was covered u/s 10(23C)(iiiab)/ (iiiad) of the Act. Grounds of appeal No. 2 to 5 are allowed". 5. The ld. DR relied upon order of the Assessing Officer. The ld. DR submitted that Section 10(23C)(iiiad) nowhere specifies as to what constitutes aggregate annual receipt. He has submitted that no words have to be added in the statute. He has referred to Rule 2BBB of the IT Rules and submitted that as per this rule, the substantial finance by the Government would be considered in favour of the assessee if the Government grant to such University or other educational institution etc. exceeds 50% of the total receipts including any voluntary contributions. The ld.DR, therefore, submitted that assessee, would not be entitled for deduction under both the provisions. 5(i) On the other han....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d that the total finance received from the Government was only 25.6% of the total receipts as is mentioned by the Assessing Officer in the assessment order as well. Hon'ble Karnataka High Court in the case of DIT(Exemptions) Vs Dhamapakasha Rajakarya Prasakta B.M. Sreenivasaiah Educational Trust 372 ITR 307 held as under : "The assessee was running a number of educational institutions. The Assessing Officer, for the assessment years 2003-04 and 2005-06, held that the assessee was not entitled to the benefit claimed under section 11 of Income-tax Act, 1961. He did not go into the question of exclusion claimed by the assessee under section 10(23C)(iiiab). The Commissioner (Appeals) granted the relief to the assessee but he declined to grant the relief under section 10(23C)(iiiab). The Tribunal granted relief to the assessee. On appeals: Held, dismissing the appeals, that the material on record disclosed that the Government has financed the assessee- institutions and its share was 25 cent. It was not in dispute that the assessee is carrying on its activities of imparting education. It is not existing for the sake of profit-making. When 25 per cent, of the finance....