TaxTMI 
TaxTMI 
2017 (6) TMI 434
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....thereafter, u/s. 10 (23C) (iiiab) of the Income Tax Act, till date. However, the assessee applied for registration u/s. 10(23C)(vi) before CIT(Exemption) on 13.08.2015, which was declined by the CIT (E) vide order dated 31.08.2016. 4. The learned CIT (E), inter alia, held that the provisions necessitated examination of two important conditions for grant of approval u/s. 10(23C)(vi); that the applicant needs to satisfy that it exists solely for educational purpose and that it exists not for the purpose of profit; that the legislative intent has always been that the twin criteria have to be tested at the time the aggregate receipts exceed one crore and not rely on whether it has been granted exemption under section 10(23C)(iiiad); that the applicant cannot on the same basis stake a claim that since the department has examined these conditions at the time of 10(23C)(iiiad), it is not entitled to look into the twin criteria at the time of granting approval u/s. 10(23C)(vi); that the Act allows for any enquiries to be conducted as per the second proviso vis-a-vis genuineness of activities; that it is relevant to be done when the educational institutions cross a certain threshold; tha....
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.... fees and admission fees. It is also fair to mention here that details about fee structure had been asked for, in response to which, the applicant had taken the plea that the same are approved by the Guru Nanak Dev University. On being further asked to furnish necessary approvals the applicant has failed to do so. No approvals corroborating the fee structure were filed. Its reference to issues to be seen at the time of assessment vis a vis utilization being claimed on account of depreciation etc. points to the fact that the assessee has not availed of the onus cast upon it to prove that it exist solely for educational purposes. 11. An issue was further raised by the applicants counsel that the scope of enquiry be restricted to the Circular No. 14, dated 17.08.2015 dealing with matters pertaining to approval u/s. 10(23C)(vi) approval can be claimed without registration u/s. 12AA; that mere generation of surplus from year to year cannot be a basis for its rejection. If it is used for educational purposes; collection of small amounts under different heads of fee may not be construed as profit making activity unless the amount in the nature of capitation fee is charged directly or i....
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.... to the educational institute solely established for the purpose of education without any profit motive and the order has been accepted by the department; that although the CIT (E) in para 4 of his order has clearly mentioned that for getting the approval u/s 10(23C)(vi), the applicant needs to satisfy that it exists solely for educational purposes and that it exists not for purpose of profits; that despite this, while considering the application of the assessee he completely lost the track of these two conditions and started making enquires of the application of income which was totally irrelevant; that although the assessee made the compliance of all the questions but still the attention of the CIT (E) was drawn towards the Circular No. 14/2015, dated 17.08.2015 issued by CBDT, wherein the scope of enquiry was mentioned; that the CBDT has referred to the judgment of Hon'ble Supreme Court in the case of American Hotel & Lodging Association, Educational Institute v. CBDT [2008] 301 ITR 86 2008 (5) TMI 17; that this has been mentioned by the CIT (E) in para 8 of his order; that the attention of the CIT (E) was drawn to the order of the ITAT in the case of KMV & Doaba College, wh....
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....tion of the department has been mulled by the ITAT vide its order dated 15.07.2016 (Copy enclosed) Pages No. 1 to 10. 9. The learned DR has relied on the impugned order. 10. We have heard the parties and have perused the material on record. The necessary facts have already been narrated above. The objects of the assessee society have been reproduced by the ld. CIT (E) in para 2 of his order, as follows : "2. The stated objects of the society are to provide means for giving technical, industrial, commercial and vocational education; to encourage and produce literature in Hindi and Sanskrit; to establish in Punjab and elsewhere institutions such as colleges, technical institutes and other educational institutions, schools of the Ordinary and Gurukula type, Boarding Houses, Ashrams etc with the following purposes:- (a) To promote the study of Classical Sanskrit and Vedas. (b) To encourage and promote the study of Hindi. (c) To provide instructions in (i) English and other Modern Indian Languages (ii) Arts, and (iii) Sciences both theoretical and applied including Medicine, Engineering, Vocational, Technical etc." 11. The learned CIT (E) has observed that the asses....
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....not be denied on other grounds. 15. The learned CIT (E) has observed (in paras No. 8 & 11 of the order under appeal) that CBDT Circulars are guidelines to be normally followed and that they cannot be seen to be overriding the statutory provisions. In this regard, it needs to be emphasized that the Circulars issued by CBDT are so issued by virtue of section 119 of the Income-tax Act. As per section 119(1), the Board may issue such orders, instructions and directions to other Income-tax Authorities, as it may deem fit, for the proper administration of the Income-tax Act, and such authorities and all other persons employed in the execution of the Act, shall observe and follow such orders, instructions and directions of the Board. 16. Therefore, section 119(1) contains a specific mandate that the Officers of the department shall observe and follow the orders, instructions and directions issued by the Board. The only rider is by way of the proviso to section 119(1), which states that no such orders, instructions or directions shall be issued, inter alia, so as to interfere with the discretion of the Commissioner (Appeals) in exercise of his appellate functions. 17. In the prese....
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....e Act is irrefuted. The position that it exists solely for educational purposes and not for any profit motive, stands accepted by the Department while granting exemption u/s. 10(23C)(iiiab). The only aid to the volte face challenged before us comes from the provisos to section 10(23C), recourse to which has expressly been barred by "American Hotel & Lodging Association Educational Institute (supra)," which mandate of the Hon'ble Supreme Court has been conveyed by the CBDT by way of its Circular. 19. Further, as noted above, the mandate of section 119(1) comes with a rider, i.e., that no order, instruction or directions of the Board shall be as to interfere with the discretion of the Appellate Authority in exercise of his appellate functions. In the case at hand, however, the order under appeal nowhere states that the issuance of Circular No. 14/2015, dated 17.08.2015 interferes with his appellate functions in any manner, whatsoever. 20. In Bela Singh Daulat Singh v. CIT [1966] 62 ITR 250 (All.), it has been held that if inspite of his attention, having been drawn to the Circular, the Assessing Officer [here CIT (E)], refuses to comply with its terms, the Tribunal would be....