AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 713
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....ed 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 & Social Science, (iv) School of Engineering & Technology, (v) School of Bankin....
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....ependent 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 sufficient indicator and evidence for the fact that all the receipts and expenditures were that of Xavier Institute of Management, B....
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....t 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 that such institution does not exist 'solely' for the purpose of education, and the nature of activities undertaken by it amounts to carrying out business. Such....
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....f 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 any other organization, in India or abroad. (e) to conceptualize, design and develop specific educational and research programmes, training programmes and exchange programmes for students, faculty members and others; (f) to establish the ....
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....ce 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 the State Government in this behalf. (4) If the' State Government considers it necessary to suspend the Board of Management, it shall, by notification published in the Official Gazette, order suspension of the Board of Management and shall make such arrangements in consultation with the Sponsoring Body for the administration of the business of the University till the completion of investigation as it may c....
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....e 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 assigned. (c) purchase books and journals at least worth Ten Lakhs rupees or as per the norms of the Regulatory Bodies, whichever is higher in the first year and to invest not less than Fifty Lakhs rupees or as per norms of the Regulatory 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 bo....
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....de 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 University is put into place. 19. The Pr. CCIT has not pointed out any of the students of whose fee was credited in the assessee University account was conferred degree by the said XIMB. The Pr. CCIT failed to appreciate the fact in the proper perspective. It was also submitted that XIMB is duly registered u/s.12AA of the Act and its income also exempted u/s.11 & 12 of the Act. Therefore, there could not have been any motive to transfer actual educational income and expense of the said XIMB to the account of the assessee University. The....
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....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." 23. In respect of above, the assessee contended that the findings of the ld Pr. CCIT that the assessee has applied only 81.69% for educational purposes is factually incorrect. Further, it was pointed out that the entire interest income of Rs. 83,61,613/- was duly accounted for in the books of account of the assessee by crediting Rs. 70,22,466/- under the head "University Endowment Fund Account" and Rs. 13,39,147/- under the head "University Other Asset Fund Account". It was clarified that the aforesaid interest income of Rs. 83,61,613/- was....
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....n 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 Professors and adequate number of Assistant Professors and Senior Lecturers on full-time basis along with necessary supporting staff in each School or Department or Discipline of the University prior to the date such School or Department or Discipline is started; (ii) to take up co-curricular activities to foster a proper academic and healthy socio-cultural environment, such as seminars, debates, quiz programmes and extra curricular activities like games, sports, and such other activities for the benefit of the students as per the norms laid down by the Regulatory Bodies; (iii) to establish welfare programmes for the employees of the University; (iv) ....