TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 62
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.... the Memorandum of association as under: a) To encourage sportsman and adventurous spirit in the pupils and those connected with the institution. b) to print, publish and exhibit films, journals, periodicals, books for the diffusion of useful knowledge. c) To provide residential accommodation either free of cost and educate, train, assist financially the social workers, staff, students, orphans. 3. The primary requirement for approval u/s 10(23C)(vi) of the Act is solely educational objects, since the assessee is also having other than educational objects, the assessee's application for grant of approval u/s 10(23C)(vi) of the Act was rejected by an order dated 30.09.2015. Against the order of the Commissioner of Income Tax u/s 10(23C)(vi), the assessee filed a writ petition before the Hon'ble High Court of Andhra Pradesh and Telengana State and the Hon'ble A.P. High Court in it's order in Writ petition No.8375 of 2016 dated 22/03/2016 observed that the objects of the assessee are not solely for educational purposes and directed the Ld. CCIT to verify whether objects other than for education are held to be ancillary and incidental to the primary dominant object of the ass....
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.... by the order of the CIT(E), the assessee is in appeal before this Tribunal. Appearing for the assessee, Ld. A.R. argued that the above objects are ancillary or incidental to the objects of the primary objects, hence requested for conditional exemption considering the objects of the society mentioned (supra). The Ld. A.R. argued that though there are objects other than educational objects, the assessee society is engaged solely for the purpose of education. Hence, argued that the assessee society is entitled for approval u/s 10(23C) of the the above objects are ancillary or incidental to the objects of the primary objects, hence requested for conditional exemption considering the objects of the society mentioned (supra). The Ld. A.R. argued that though there are objects other than educational objects, the assessee society is engaged solely for the purpose of education. Hence, argued that the assessee society is entitled for approval u/s 10(23C) of the Act. The Ld. A.R. relied on the decision of ITAT 'B' Bench Hyderabad in the case of Ganga Educational Society, Nizamabad Vs. CIT (E), Hyderabad in ITA No.1471/Hyd/2016 dated 20.12.2017 and the decision of Allahabad High Court in the c....
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....rposes, and no part of its income the institution may be held entitled for the benefit under section would be exempt from tax. In other words, where the main objects are distributive, each and every one must relate to "education" in order that the institution may be held entitled for the benefit under section 10(23C)(vi) of the Act." 7. Further, the Ld. CIT(E) relied on the decision of Hon'ble High Court of Madras in the case of Reliance Motor Company Limited Vs. CIT (supra), wherein it was held as follows: "The argument of learned counsel that though the trust deed mentions charitable and religious purposes, but in actuality only a school has been run, has no relevant in view of the clear language of clause of (ii) and (iii) of sub-section (5) of section 80G of the Act. It is not the actual user but the likelihood of it being used and the capacity of the trust to do so, which is important. In this view of the matter the assessee is not entitled to the relief under section 80G of the Act in respect of the donations made to the said trust." 8. The CIT(E) considered the decision of Hon'ble A.P. High Court in WPA No.12076, 26976, 27599, 27600, 27601, 27602 and 27603 of 2010 in o....
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....up on by the assessee do not any way come to it's help. In the instant case the other objects are clearly non educational and are the main objects of the society. As observed by the Ld. CIT(E), they cannot be considered as ancillary or incidental objects to the primary objects as argued by the Ld. A.R. The assessee argued for conditional grant of approval but there is no such provision in the Act for conditional grant of approval. As discussed earlier the approval would be granted only if the institution exists solely for educational purposes. Hon'ble A.P High Court in New Noble Educational Society considered the identical issue and held as under: "9. In order to be eligible for exemption, under section 10(23C)(vi) of the Act, it is necessary that there must exist an educational institution. Secondly, such institution must exist solely for educational purposes and, thirdly, the institution should not exist for the purpose of profit.-CIT v. Sorabji Nusserwanji Parekh [1993] 201 ITR 939/ 66 Taxman 411 (Guj.). In deciding the character of the recipient of the income, it is necessary to consider the nature of the activities undertaken. If the activity has no co-relation to education,....