TaxTMI 
TaxTMI 
2019 (3) TMI 212
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....er passed by the CIT(A) is bad in law and thus determining the income at Rs. 12,01,906/- may please be deleted. 2. That the Ld. CIT(A) has erred in law and on facts, while confirming the addition made by the AO of Rs. 4,08,190/- and enhancing the addition to Rs. 12,01,906/-, as the belief entertained by the CIT(A) that the entire surplus shown in the income and expenditure should be the profit earned by the appellant during the year, is not justifiable and illegal. As such addition of Rs. 12,01,906/- may please be deleted. 3. That the Ld. CIT(A) has erred in law and on facts, while denying the exemption u/s. 10(23C)(iiiad) of the Income Tax Act, 1961 without appreciating the facts and submission of the assessee. As such addition of Rs. 12,01,906/- may please be deleted. 4. That the Ld. CIT(A) has erred in law and on facts, while denying the exemption u/s. 10(23C)(iiiad) of the Act merely because buying and selling of uniform and books for educational purpose is not specifically mentioned in the memorandum of association of the appellant. Thus, the order passed by the CIT(A) for not providing the benefits of the section 10(23C)(iiiad) of the Act m....
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....Rs. 14,19,339/- and sale of dress at Rs. 2,13,300/- total to Rs. 16,32,639/-, against which purchases of books, copies and uniform is shown at Rs. 12,24,454/-. Thus, there is a profit of Rs. 4,08,185/-, which the assessee has claimed exempt u/s. 10(23C)(iiiad) of the Income Tax Act, 1961. Accordingly, the assessee was asked to explain as to why the profit of Rs. 4,08,185/- on sale of books and uniform should not be taxed vide, questionnaire dated 19.7.2016 and in response to the same, the assessee filed the reply, which was duly considered by the AO, who held that assessee has claimed exemption u/s. 10(23C)(iiiad) of the Act. He held that the purchase and sale of books and uniform is not educational activity. Therefore, the assessee is not entitled for exemption u/s. 10(23C)(iiiad) of the Act on profit of Rs. 4,08,185/- on sale and purchase of books and uniform and the gross sale and purchase shall be deducted from the gross receipts and from the gross expenses and the surplus of Rs. 4,08,185/- is liable for tax at MMR as business income. Thus, the profit arisen on sale of books and uniform worked out at Rs. 4,08,185/-, vide order dated 21.11.2016 passed u/s. 143(3) of the I.....
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....total receipts for the year under consideration was less than 1 Crore and thus, entire surplus of Rs. 12,01,906/- is not taxable as per provision of law and in this regard, she attached the utilization of surplus generated during AY 2014-15, over the years alognwith supporting documents. She also filed the copy of the Income Tax Department Circular No. 11/2008 dated 19.12.2008 stipulating therein the Definition of 'Charitable purpose' under section 2(15) of the Income Tax Act. In support of her contention she also filed another Paper Book containing pages 1-310 in which she has attached the copy of judicial pronouncements covering the case of the assessee viz. St. Lawrence Educational Society (Regd.) vs. CIT (2013) 353 ITR 320 (Delhi); CIT vs. Surat Art Silk Clothes Manufacturers Association (1980) 121 ITR 1 (SC); IILM Foundation vs. ADIT, ITA No. 1142/Del/2011, dated of pronouncement on 8.11.2017 (ITAT, Delhi). Pinegrove International Charitable Trust vs. UOI 188 taxmann 402 (2010) (P&H); Queen's Educational Society vs. CIT (2015) 372 ITR 699 (SC); Hosiarpur Improvement Trust vs. ITO, ITA Nos. 497/Asr/2013 for AY 2009-10 Date of pronouncement 10.9.2015 ITAT Amritsar; Association o....
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.... during the year have not been solely for the purpose of education, makes it ineligible for the benefits of section 10(23C)(iiiad) of the Act. Therefore, he stated that the entire profit earned during the year i.e. Rs. 12,01,906/- was chargeable to tax and therefore, Ld. CIT(A) has held that the income of the assessee as assessed by the AO Rs. 4,08,190 was rightly enhanced to Rs. 12,01,906/- which does not need any interference. Hence, he requested to uphold the order of the Ld. CIT(A) and dismiss the appeal of the assessee. 8. I have heard both the parties and perused the records, especially the impugned order. I note that the assessee is a society, registered under Society Registration Act and has been claiming exemption u/s 10(23C)(iiiad) of the Income Tax Act, 1961. The Assessee is running a school namely New Amazing Children Academy recognized under U.P. state Board and income tax return for A.Y. 2014-15 was filed on 26-12-2014 declaring Nil income. Notice u/s 143(2) of the Act was issued on 18-09-2015 and further Notice u/s 142(1) dated 11-07-2016 was issued. During the concerned year, the assessee has disclosed total receipts of Rs. 99,14,564/- which is less than Rs. 1 cr....
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....ks results in making a surplus, it becomes an activity for profit. It would not lose its character of an educational purpose merely because some surplus arises from the activity. Further, it does not require that the activity must be carried on in such a manner that it does not result in any profit. Moreover, the assessee used the surplus generated for educational purpose. Therefore, it cannot be said that the educational institution ceases to exist solely for the educational purposes and becomes an institution only for the purpose of making profit. I further note that section 10(22) explains any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit and whereas new section 10(23C)(iiiad) provides Any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed Rs. 1 crore. Therefore, the intent of the law while introducing section 10(23C)(iiiad) and section 10(23C)(vi) is same as behind section 10(22), therefore all the judgement passed u/s 10(22) sh....
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....he American Hotel and Lodging case. It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit"....... 8.1 Further, the dispute in the case of the assessee relates to the applicability of the provisions of section 10(23C)(iiiad) of the Act. This section reads as under: - "Any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed." 8.2 Thus, from the plain reading of section 10(23C)(iiiad) of the Act, it is apparent that any income of any university or other educational institutional existing solely for educational purposes and not for the purpose of profit is totally exempt if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipt as may be prescribed. This means that there is no restriction on the generation of surplus u/s 10(23C)(iiiad). It c....
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....vided with all necessary facilities so as to help them pursue education in the school. The availability of books, both NCERT and non NCERT, stationery items and uniform in the School premises would only add to the convenience of the parents and the students. The admitted case of the parties is that the aforesaid items in the school shops would be available only to the students of the school and not to outsiders and, therefore, I see no element of commercialization in sale of these essential items in the school shops. If the sale of books and uniform in the school shops without any coercion on the students/parents to buy the same from these shops, is treated as "commercialization", there is no reason as to why even the sale of food items in canteen facilities would also not be treated as "commercialization". Such an interpretation would lead to a wholly absurd situation where on the analogy sought to be propounded by the Respondents, a request for prohibition of sale of food items may also be raised. This, in my opinion, cannot be the intent of the provisions in the bye-laws or the Rules, relied on by Respondents, while prohibiting commercialization in schools. The term "commerciali....