TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 280
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds: 1. "Whether on the facts and circumstances of the case, and in law, the CTT(A) was justified in directing the AO to grant exemption u/s. 10(22) of the I.T. Act, 1961 inspite of the fact that the assesses cannot be treated as educational institution for exemption as the activities of the assessee are business in nature" 2. "Whether on the facts and circumstances of the case, and in law, the CIT(A) was justified in directing the AO to grant exemption u/s. 10(22) of the I.T. Act, 1961 inspite of the fact that the assessee trust is a beneficiary trust whose beneficiaries are foreigners." 3. "Whether on the facts and circumstances of the case, and in law, the CIT(A) was justified in directing the AO to grant exemption u/s. 10(22) or the I,T. Act, 1961 inspite of the fact that the assessee way receiving part fees from students in India and part of fees was collected in foreign exchange abroad by an arrangement with an organization SAIESF (South Asia International Education Service Foundation), Princeton, New Jersey, USA) which is out of purview of audit in India and how the funds are utilized by the said organization cannot be ascertained. 4. ''Whether on the fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) passed order u/s. 251 of the Act, after considering the submissions of assessee vide order dated 27-06-2014, allowed the claim of exemption u/s. 10(22) of the Act vide paras 7 to 7.5 as under: "7. I have considered the facts and circumstances of the case, submissions of the appellant and the assessment order. It is noticed that the assessment proceedings were restored back to the A.O. for deciding the issue of taxability and computation of income in reference to section 10(22) of the I.T. Act, 1961. It has been noted by A.O. on page 3 of the assessment order as also reproduced above that "the assessee was engaged in imparting education but was carrying out business activity for the purpose of earning profit as per findings given in the original assessment order passed on 27.02.2006". The A.O. has further concluded that "on the facts and circumstance of the case, the Assessing Officer has assessed the income of the assessee at Rs. 17,50,02,804/- under various receipts. In view of the above, the assessee is not entitled for exemption u/s. 10(22) for the income assessed in the original assessment order". (para 4 of the assessment order). The specific direction under the order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re is no discussion and material bringing out business activity for the purpose of earning profit so as to deny exemption u/s. 10(22) of the I.T.Act as claimed by the appellant in the assessment order under appeal. The observations contained in the assessment order relating to various additions are mainly connected to tuition fees- Rs. 2,02,46,320/- + Rs. 2,02,46,320/-, donations-Rs.5,73,69,137/-, interest income -Rs-1,53,897/- and other income Rs. 85,739/- (page 1 of the assessment order) which prima facie do not reflect or denote any activity and income for the earning profit so as to debar the appellant under section. 10(22) of the I.T. Act, 1961. 7.2 Section 10(22) of the I.T. Act, was omitted by Finance (No.2) Act, 1998 w.e.f. 1-4-1998 i.e. was applicable for assessment year 1998-99 (F.Y, ending March,1998) which is the current year under Appeal. Therefore, the reason given by A.O. for denial of exemption u/s 10(22) of the IT Act 'in absentia', without taking into account the existence and applicability of section 10(22) is prima facie invalid and contrary to law. In this context, the A.O. has noted on-page 3 of the assessment order that - "Moreover, it is pertinent to men....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;ble higher Judicial authorities - . 1. Exemption cannot tie denied merely because there is a surplus - After meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes, since the object is not one to make profit. The decisive or acid test is whether on an overall! view of the matter the object is to make profit. In evaluating or appraising the above, one should also bear in mind the distinction/difference between the corpus, the objects and the powers of the concerned entity - Aditanar Educational Institution v Addl. CIT [1997] 90 Taxman 528/224 ITR 310 (SC) 2. Income from any other source will also be exempt, if that income is used for educational purposes - If an institution exists solely for the purpose of education and it derives income from any other source and if that income is used only for the purpose of education, then it will come under section 10(22) - Brahmin Educational Society v. Asstt, CIT [1996] 89 Taxman 434 (Ker.). 7.5. In view of the above settled positions for applicability of section 10(22) of the I.T. Act, 1961....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal Baccalaureate (IB) program was established at ASB in 1998. ASB has been authorised by the International Baccalaureate, an international educational foundation headquartered in Geneva, Switzerland to offer the IB Primary Years Program (PYP) and the IB Diploma Program, and is thus, recognized as an 'IB World School'. The IB Diploma, is recognized by universities across the world. It has also been recognized in India since 1983 by the Association of Indian Universities (AIU) an organization responsible for determining equivalency of foreign degrees/certificates in India, as an entry qualification to Indian universities. It equates the IB Diploma Program with grade 12 (10+2) of an India Board Assessment. 5.1. Ld. Counsel for the assessee drew our attention through assessee's Paper Book, wherein the following documents are enclosed: Sr. No. Particulars Page Nos. 1 Copy of the Trust deed of the assessee dated 10 May 1990 as amended till date 1-35 2 Copy of the letter dated 16 June 1988 issued by the Ministry of External Affairs granting approval to the assessee to open a School in India 36-37 3 Copy of the Certification of Accreditation issued by International Baccalaure....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... so, also directed that the concerned authority would be free to incorporate stipulations and conditions in terms of the third proviso. We find that it is an admitted fact in the present case that the petitioner exists solely for educational purposes and not for the purposes of profit. These are the only requirements for grant of approval and, therefore, in the same manner as in the case of Digember Jain Society (supra) we issue a writ of mandamus directing the respondents to grant approval to the petitioner under section 10(23C)(vi) of the said Act for the Assessment Years 1999-2000 to 2001-02. However, we are making it clear that as the assessments for the three years in question are open, the Assessing Officer can certainly go into the question as to whether the conditions stipulated in the third proviso and the 13th proviso to Section 10(23C)(vi) of the said Act have been met and appropriate orders can been passed by the Assessing Officer in accordance with law. The writ petition is allowed to the aforesaid extent. There shall be no order as to costs". It was contended that the SLP filed by the Department against the judgment of Hon'ble Delhi High Court was dismissed by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the heads of expenses claimed in the Income and Expenditure statements it is evident that these are the expenses which are necessarily required to have incurred for the purposes of running the school. Without the teachers and staff to whom salaries are required to be paid, school administration cannot be run. Similarly without the electricity the school cannot function. The school premises are taken by assessee on rental basis without which one cannot run a school. Similarly repairs and maintenance expenses, legal and professional fees, general expenses, administration expenses etc., are all found to be in relation to the running of school. Without incurring these expenses, it is not possible to run a school. Therefore, the AO in our view was not justified in disallowing the entire expenses claimed in the Income and Expenditure statement filed along with the return of income, merely on the ground that assessee could not furnish the details and supporting evidences. The AO has also not appreciated the fact that the records of assessee pertaining to these expenses were destroyed during the worst flood hit of Mumbai. Despite the fact that the records were damaged in the flood a....