TaxTMI 
TaxTMI 
2018 (8) TMI 713
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....ly incorrect in this regard. 04. The Ld. Pr. CCIT has ignored the legitimacy of inter charity grant between Xavier Institute of Management and Xavier University which is permissible income tax provisions and legally mandated by the Xavier University, Odisha Act 2013." 3. As all the grounds are inter-connected, they are being disposed of together as under: 4. The sole issue involved in this appeal is that the Pr. CCIT was not justified in not granting approval u/s.10(23C)(vi) of the Act. 5. The brief facts of the case as emanating from the order of the Pr. CCIT, Odisha, Bhubaneswar is that Xavier University Odisha has filed an application in Form No.56D on 30.06.2014 seeking approval u/s.10(23C)(vi) of the Income Tax Act, 1961 for the financial year 2013- 14. The Pr. CCIT observed that Xavier University Odisha was formed vide an enactment of Govt, of Odisha Notification No.4989/Legis/30/2012/L dated 13.05.2013, which came into existence on 06.07.2013. The objectives of Xavier University Odisha, as per the Odisha Gazette Notification, is to establish various schools, namely, (i) School of Management, (ii) School of Natural Sciences, (iii) School of Humanities & Soci....
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....eswar, which is the sponsoring body, as its own in its accounts, whereas Xavier Institute of Management, Bhubaneswar had its own independent and separate existence from the earlier times with the claim to be engaged in the activity of imparting management related education. He observed that in order to decide the eligibility of an institution for exemption u/s.10(23C)(vi), the test of predominant object and activity of education needs to be applied by posing the question whether it exists 'solely' for education during the relevant period or not. From the facts and circumstances in the applicant university's case, it is crystal clear that it did not commence any educational activities of its own during the relevant period in order to make itself eligible for claim of exemption u/s.10(23C)(vi) of the Act. A perusal of the details of the account extracts furnished during the course of the hearing of the case, it was seen that each and every piece of document relating to admission of students, receipt of course fees, expenditure involving campus recruitment and even fixed deposit receipts, prominently bear the name of Xavier Institute of Management, Bhubaneswar, which is a ....
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....rved that as per sub-clause (a) of third proviso to section 10(23C)(vi), any university, as prescribed u/s.10(23C)(vi), shall have to apply its income or accumulate it for its application wholly and exclusively to the objects for which it is established, and in a case where more than 15% of its income is accumulated on or after 01.04.2002, the period of the accumulation of the amount exceeding 15% of its income, shall in no case exceed five years. In the instant case, it is observed that the applicant university has applied only a sum of Rs. 3,73,06,692/- against its total income of Rs. 4,56,68,305/-, which constitutes only 81.69% of its income during the year. Since the percentage of income applied for its object of education is less than the prescribed limit of 85%, the applicant university has failed to fulfill the condition prescribed under the third proviso referred to earlier, and as such, it is clearly disentitled from claiming exemption u/s.10(23C)(vi) of the Act. 9. The Pr.CCIT further observed that it is pertinent to mention that the sponsoring body i.e. Xavier Institute of Management, Bhubaneswar had been denied the benefit of exemption u/s.10(23C)(vi) on the grounds ....
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..... The said Special Act came into force on 13.5.2013 by issuance of a Notification No.890, Cuttack, which was published in the official Gazette on 13.5.2013. The objects of the assessee University as per Section 5 of the said Special Act are as under: "5. The objectives for which the University is established are as follows: - (a) to disseminate advance knowledge by providing academic and research facilities in such branches of learning which includes Engineering and Technology, Humanities and Social Science, Management, Law, Medical Science and Genetics, Vocational Education and Training, Tribal and Development Studies and in other fields as it may deem fit; (b) to offer continuing and distance education programmes as per norms of the Distance Education Council of the Government of India or any other body constituted by the State Government; (c) to institute Degrees, Diplomas, Charters, Designations, Certificates and other academic distinctions on the basis of examination or any other method of evaluation; (d) to collaborate with other colleges or Universities, research institutions, industrial ^associations, professional associations or....
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....nces of the officers and employees of the University, members of the teaching and research staff, and payment of any Provident Fund Contributions, gratuity" and other benefits to any such officers, employees, members of the teaching and research staff; 13. Section 47 of the said Special Act provides as under: "47. (1) If the Sponsoring Body proposes dissolution of the University in accordance with the law governing its constitution or incorporation, it shall give at least three months notice in writing to the State Government. (2) On identification of mismanagement, maladministration, indiscipline, failure in the accomplishment of the objects of the University and economic hardships in the management systems of the University, the State Government shall, subject to and in accordance with relevant law, if any, for the time being in force, issue directions to the Sponsoring Body of the University and if the directions are not followed within such time as may be prescribed, the right to take decision, for dissolution of the University, shall vest in the State Government. (3) The manner of dissolution of the University would be such as may be prescribed by....
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....ts. The entire receipt of fee and related expenditure were recorded in the books by passing journal entries in the name of Xavier Institute of Management, Bhubaneswar 'XIMB'. The said XIMB is an independent educational institute. From the above, the Pr. CCIT inferred that no educational activity was, in fact, carried out by the assessee University and income and expenditure which was actually of XIMB was diverted in the account of the assessee University. 17. The assessee pointed out that the said XIMB is sponsoring body of the assessee University as per Section 2(p) of the Special Act (quoted above. Further, our attention was invited to sub-section (2) of Section 3 of the Special Act, which reads as under: "2. The Sponsoring Body shall: (a) provide thirty-five acres of land in Industrial Estate Kurki, Viilage-Nijigardh, P.S: Pipli in the district of Puri which shall be the campus of the University; (b) assign a minimum built-up area of Twenty thousand square meters to the University in the form of buildings, and ancillary structures for administrative and academic purposes; which shall not be used for any purpose other than that for which the same is ....
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....he relevant regulations or norms of tine UGC and the concerned Regulatory Body, as amended from time to time; (vi) that the admission procedure and fixation of fees shall be in accordance with the norms or guidelines, if any, prescribed by the Regulatory Bodies; (vii) that the teaching staff of the University shall have at least the minimum qualifications prescribed by the UGC or other concerned Regulatory Bodies, and be paid appropriate emoluments; and (viii)to fulfill such other conditions and provide such other information as may be prescribed by the Regulatory Bodies. 18. It was submitted that the fee which was credited in the account of assessee University was charged from 60 students of the assessee University to whom degree was to be conferred by the assessee University and not by the XIMB i.e. Sponsoring Body. The Sponsoring Body, being responsible for the commencement of the educational activity of the assessee society merely helped the assessee University by collecting fee from the students of the assessee University and discharging the assessee University expenses on the related education till the own infrastructure of the assessee Universit....
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....ed deposits not accounted for : Rs. 83,61,613/- Total : Rs.4,56,68,305/- Less: Total expenditure as per Income & Expenditure A/c : Rs.3,73,06,692/- Net surplus of income over expenditure : Rs. 83.61,613/- 4.1 As per sub-clause (a) of third proviso to section 10(23C)(vi), any university, as prescribed u/s.10(23C)(vi), shall have to apply its income or accumulate it for its application wholly and exclusively to the objects for which it is established, and in a case where more than 15% of its income is accumulated on or after 01.04.2002, the period of the accumulation of the amount exceeding 15% of its income, shall in no case exceed five years. In the instant case, it is observed that the applicant university has applied only a sum of Rs. 3,73,06,692/- against its total income of Rs. 4,56,68,305/-, which constitutes only 81.69% of its income during the year. Since the percentage of income applied for its object of education is less than the prescribed limit of 85%, the applicant university has failed to fulfill the condition prescribed under the third proviso referred to earlier, and as such, it is clearly disentitled from claiming exem....
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....ulatory Bodies. whichever is higher, on books, journals, computer networking and other facilities to make the library facilities adequate for contemporary teaching and research within the first three years and the existing library books, journals, computer networking and other facilities of the Society which shall constitute part of the requirement. (d) purchase equipment, computers, furniture, other movable and immovable assets and infrastructure facilities other than buildings, referred to in clause (b), worth twenty Lakhs rupees or as per the norms of Regulatory Bodies, whichever is higher, and give undertaking to procure within the first five years, equipment, computers, furniture, other movable and immovable assets and infrastructure facilities other than buildings referred to in clause (b) worth not less than One Crore rupees or as per norms of the Regulatory Bodies, whichever is higher and the existing equipment, computers, furniture, other movable and immovable assets and infrastructure facilities other than buildings shall constitute part of the requirement" (e) give an undertaking, - (i) to appoint at least one Professor, two Associate Professor....