TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 96
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.... "1. A writ, order or direction in the nature of certiorari quashing the impugned order dated 20.09.2013 (Annexure No. -01) passed by the respondent. 2. A writ, order or direction in the nature of mandamus directing the respondent for de-novo consideration of the application dated 20.09.2013 on full and correct facts and to grant to exemption u/s 10(23C)(vi) of the I.T. Act, 1961 to the petitioner society." 5. Briefly put, the case of the petitioner is as follows: Petitioner is a registered Society, duly registerd under the Societies Registration Act, 1860. The purpose and aim objects, as stated in the Memorandum of Association of the society clearly states that the petitioner Society exists for educational purpose amongst other ancillary objects. It is involved in running of an educational institution in the name of J.B. Memorial Manas Academy, Pithoragarh for students of nursery upto Class XII, which is affiliated to the CBSC and except for the said institution, there is no other source of receipts for the petitioner society. Petitioner is not running any other educational institution or pursuing any other activity except the one mentioned hereinbefore and as such is existi....
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....rther reiterate that the Society has various other objects. In other words, Society's objects embraced running of educational institution as only one of their objects, therefore, the benefit under Section 10 (23C)(vi) may not be available. 10. In fact, we notice from the impugned order that there are two reasons, which have been mentioned. It is stated in the order that a perusal of the objectives of the Society makes it clear that the objectives of the Society are multiple; it is after referring to as many as nine objects of the memorandum of objects of the Society. Thereafter, it is stated that in order to qualify for grant of exemption, under the provision, the assessee institution should exist 'solely' for educational purpose, which is not the case of the petitioner Society. Thereafter, the Officer has referred to the Accounts and, apparently, has found that the Assessee's disproportionate fee structure is devised to earn maximum from fee simply to invest it for expansion of the institution, which may not fall within the ambit of charitable activity. Next, it is stated that the Society is also not registered under Section 12A of the Income Tax Act. Reference is made to the jud....
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....ar the object is to make profit as opposed to educating persons. The correct tests which have been culled out would apply to determine whether an educational institution exists solely for educational purposes and not for purposes of profit. In addition, we hasten to add that the 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C) read with Section 11 of the Income Tax Act." 11. Therefore, the fact that imparting education results in making a profit do....
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....ne by this Court and since there is an educational institution, and, according to him and as per the memorandum, the institution is not meant to make profit, there cannot be withholding of approval of Section 10(23C)(vi). 14. We notice the judgment of the Hon'ble Apex Court in American Hotel and Lodging Association Educational Institute v. CBDT reported in (2008) 10 SCC 509. This judgment is referred to in the later judgment of the Hon'ble Apex Court in the case of Queen's Educational Society vs. Commissioner of Income Tax reported in (2015) 8 SCC 47. We also notice that the judgment of this Court was set aside on the reasoning that it was not in accordance with the law laid down inter alia in the case of American Hotel and Lodging Education Institute (supra) (see Paragraph 19 of the judgment). 15. There remains the question, which is raised by the appellant, namely, that the Society has moved the Application and not the Institution. We notice in the first place that the impugned order does not recite this as a ground for rejection of the Application. In fact, Mr. Mohit Maulkehi, learned counsel for the respondent / writ petitioner, in this regard, would draw our attention to the....
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....ome of a previous year of any person, any income falling within any of the following clauses shall not be included, and it is thereafter that Sub-Section (23C), which was inserted with effect from 01.04.1976 provided for any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority. 18. It is to be noted that Section 4 is charging section under the Act. It reads as follows: "4. Charge of income-tax.-(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged ac....
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....d exist solely for educational purpose, which is not the case of the assessee Society. It is true that under the Memorandum of objects, there are various objects, other than education. What Section 10(23C)(6) of the Act actually does contemplate is that income received by any person on behalf of the Institution, which is an educational institution and that Institution should exist solely for educational purpose and not for the purpose of profit, other than those mentioned in Clauses (iiiab) & (iiiad). It is also to be approved by the Prescribed Authority. Therefore, the requirement of law must be that the educational institution is to exist solely for educational purpose and it should not exist for the purpose of profit. Underlying object appears to be that the words 'existing solely' are to be understood in the context of the words 'not for the purpose of profit'. In other words, it is only meant for educational institutions, which exist solely for the purpose of imparting education. This is contra-distinguished from an educational institution, which exists for the purpose of making profits. In the light of this, we would think that the Appeal must be partly allowed and the portio....