TaxTMI 
TaxTMI 
2019 (11) TMI 1296
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.... educational activities; to start and conduct educational publications, issue periodicals or literature pertaining to this specific filed; to develop mind as well as physique of the children through games and extracurricular activities and create personality and leadership traits in the children; to start and run primary and secondary schools, kinder garden and Montessori or other kinds of schools Training School for teachers, institutions for higher education and educational training schools; to affiliate with or amalgamate with educational institutions or societies with similar objects; to devise ways and means for the advancement of the youth in general sports and other cultural activities in order to develop their personalities and outlook of life; to co-operate and co-ordinate with the institutions working for the enhancement of education; the society may perform all such acts may be considered necessary or conducive to the attainment of the aforesaid object; to receive donations and aids from National and International level Associations and to use for the purposes for which they were received. The application of the Appellant Society was taken into consideration by the Ld....
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....-14, 2014-15 & 2015-16 respectively) do not support the charitable intent of the applicant for the cause of promoting education as claimed and are seen as attempts to undertake all such activities that are otherwise provide on a commercial basis. The Ld. CIT(E) further observed that the applicant has received grant in aid of Rs. 2 lakh from the Punjab Govt. out of which only Rs. 1.15 lakh has been utilized during F.Y.2015-16. The transport fee received during the F.Y. 2015-16 is Rs. 30,43,010/- and the expenses under the head transportation charges was Rs. 16,00,236/- (almost 50% of the fee charged). This again exemplifies the profit motive of the applicant. The applicant society has been charging various fees like admission fee, monthly fee/ term fee etc. which mar the essence of charity as claimed. The outstanding unsecured loan for the year ending Mar, 2016 stands at Rs. 92,68,174/- yet again the applicant has advanced a loan of Rs. 7,30,000/- to M/s S.K. Education. The Ld. CIT(A) finally observed that the applicant has taken a franchise of limited company and it is a well established principle that taking franchise of a corporate company is not exempted as the charitable activi....
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....is purely commercial. Further it has deliberately not mentioned or explained the relation with franchiser M/s. S.K. Educational Pvt. Ltd. It is only after being enquired by the Department that the assessee has come with the explanation that the assessee is also running school under the franchise of M/s. S.K. Education, New Delhi. Having considered the instant ground of rejection. Delhi High Court in the case of Director of Income Tax (Exemption) vs. Delhi Public School Society reported in 92 taxmann.com 132 (Del) did not approve the reasons for rejection of registration u/s 10(23C)(vi) of the Act to the effect that the assessee is carrying a business activity for profit motives by entering into franchise agreements, whereby, it has opened and is running around 120 schools, and that these charges were received by the Assessee for using the name of Delhi Public School by the satellite schools in and outside India and no separate books of accounts were mentioned by the appellant for the business activity as required u/s 11(4A) of the Act. The Hon'ble Delhi High Court has held that this is prima facie not correct, because the appellant has maintained accounts audited in detail fo....
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...., however from 2013-14 and 2015-16 claimed exemption u/s 10(23C) (vi) of the act without having any approval of the prescribed authority. From the Paper Book dated 25.06.2019 it appears that the Co-ordinate Bench in the case of applicant society itself in ITA No.624/Asr/2016 vide its order dated 05.12.2017 directed the Ld. CIT(E) to grant registration to the applicant society u/s 10(23C)(vi) of the Act. Though, from the order it does not clear from which date and Financial Year, the order passed by the Co-ordinate Bench shall be applicable, therefore, this issue is also requires determination by the Ld. CIT(E) with regard to the claim of the appellant society u/s 10(23C)(vi) of the Act for the F.Y. 2013-14 to 2015-16. 5.2 Next reason for rejection is that the emphasis of the applicant society has over the years, shifted to acquiring of buses and as evident from the financial statements of the record that the assessee has earned income of Rs. 30,43,010/- in the form of transportation fee during the financial year 2015-16 and the expenses under the head transportation charges was Rs. 16,00,236/- only i.e. almost 50% of the fees charged exemplifies the profit motive. The Hon'ble Ap....