TaxTMI 
TaxTMI 
2018 (6) TMI 290
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....ncome Tax (Appeals), Dehradun is based on conjectures, surmises, assuming incorrect facts and incorrect application of Law. 2. That the Ld. Commissioner of Income Tax (Appeals), Dehradun has erred in law and on facts in cancelling the approval u/s 10(23C)(vi) by making the following observations: a. That there "is No Element of Charity and the activities are purely commercial in character. b. That the main aim of the assessee seems to be to earn huge surplus every year and invest it in the form of addition to school building and other infrastructure. 3. That in any case and in any view of the matter, action of Ld.CCIT is cancelling the approval U/S 10(23C)(vi) is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impinged order has been passed without granting adequate opportunity of hearing, by recording incorrect facts and findings and without providing the opportunity of cross examination and appellant ought to have been granted benefit of approval under the law. 4. That the appellant craves for right to amend /modify/drop or add to the above grounds of appeal. ....
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....th the parties and perused all the records placed before us. The Hon'ble Uttarakhand High Court decision in case of CIT vs. Queens' Education Society was overruled by the Hon'ble Supreme Court wherein it is held that: 23. The Punjab and Haryana High Court, by the impugned judgment dated 29th January, 2010 expressed its dissatisfaction with the view taken by the Uttarakhand High Court in the case of Queen's Educational Society as follows: "8.8 We have not been able to persuade ourselves to accept the view expressed by the Division Bench of the Uttrakhand High Court in the case of Queens Educational Society (supra). There are variety of reasons to support our opinion. Firstly, the scope of the third proviso was not under consideration, inasmuch as, the case before the Uttrakhand High Court pertained to Section 10(23C)(iiiad) of the Act. The third proviso to Section 10(23C)(vi) is not applicable to the cases falling within the purview of Section 10(23C)(iiiad). Secondly, the judgment rendered by the Uttarkhand High Court runs contrary to the provisions of Section 10(23C)(vi) of the Act including the provisos thereunder. Section 10(23C)(vi) of the Act is equi....
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....arting education would not result in change of character of the institution that it exists solely for educational purpose. A workable solution has been provided by Hon'ble the Supreme Court in para 33 of its judgment in American Hotel and Lodging Association's case (supra). Thus, on an application made by an institution, the prescribed authority can grant approval subject to such terms and conditions as it may deems fit provided that they are not in conflict with the provisions of the Act. The parameters of earning profit beyond 15% and its investment wholly for educational purposes may be expressly stipulated as per the statutory requirement. Thereafter the Assessing Authority may ensure compliance of those conditions. The cases where exemption has been granted earlier and the assessments are complete with the finding that there is no contravention of the statutory provisions, need not be reopened. However, alter grant of approval if it comes to the notice of the prescribed authority that the conditions on which approval was given, have been violated or the circumstances mentioned in 13th proviso exists, then by following the procedure envisaged in 13th proviso, t....
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................The fact that the Petitioner has a surplus of income over expenditure for the three years in question, cannot by any stretch of logical reasoning lead to the conclusion that the Petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that the Petitioner exists for profit. The test to be applied is as to whether the predominant nature of the activity is educational. In the present case, the sole and dominant nature of the activity is education and the Petitioner exists solely for the purposes of imparting education. An incidental surplus which is generated, and which has resulted in additions to the fixed assets is utilized as the balance-sheet would indicate towards upgrading the facilities of the college including for the purchase of library books and the improvement of infrastructure. With the advancement of technology, no college or institution can afford to remain stagnant. The Income-tax Act 1961 does not condition the grant of an exemption under Section 10(23C)on the requirement that a college must maintain the status-quo, as it were, in regard to its knowledge based infrastructure. Nor for that matter is an educational instit....