TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 461
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....ce no. F.No./10/CIT(E)/JPR/Withdwl-10(23C)(vi)/2015-16/648 dated 3.05.2016 was issued asking the assessee University to show cause as to why the exemption granted under Section 10(23C)(vi) of the Income Tax Act should not be withdrawn. The assessee University submitted its reply dated 06.06.2016 to the aforesaid show cause notice. However, the Ld. CIT(E) vide impugned order dated 14.09.2016 withdrawan the exemption given to the assessee University under Section 10(23C)(vi) of the Income Tax Act from the A.Y 2013-14 and onwards which is under challenge before us. 3. In its appeal, the assessee University has raised the following grounds of appeal: "1 That on the facts and circumstances of the case and in law, the CIT (Exemptions) erred in withdrawing, from assessment year 2013-14 onwards, exemption granted to the appellant under section 10(23C)(vi) of the Income-tax Act, 1961 (`the Act'). 2. That the CIT (Exemptions) erred grossly on facts and in law in treating the Appellant, a self-regulated autonomous statutory body established by an Act of State Legislature, as a society and passing the impugned order based on that. 3. That the CIT (Exemptions) erred on facts and in l....
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....t appreciating that practical training and hospital teaching amounts to imparting education. 6.3 That the CIT (Exemptions) erred on facts and in law in overlooking that it is the function of the Appellant to provide for health care facilities to its staff and students." 4. At the outset, the ld. AR sought permission to raise the following additional ground of appeal:- "That the impugned order passed by CIT(E), Jaipur is bad in law as show cause notice dated 03/11-05-2016, U/s 10(23C)(vi) is issued and signed by the Income Tax Officer (Hqrs.) as it should have been issued and signed by CIT(E)." 5. The ld. AR of the assessee has submitted that the additional ground is legal in nature and all relevant facts are available on record as emerging out of the notice issued by the ITO (Hqr.) u/s 10(23C)(vi) of the Act. Since, no new facts are required to be evaluated nor any further enquiry is needed and the issue raised in the additional ground can be adjudicated on the basis of the facts and material available on record and by applying the provisions of law, therefore, the additional ground raised by the assessee be admitted for adjudication. In support of his contention, he has reli....
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.... ld. AR has submitted that the show cause notice dated 03.05.2016 being signed and issued by the Income Tax Officer (Hqrs.) and not by the CIT(E), is not signed and issued by the prescribed authority and hence, the consequential impugned order dated 14.09.2016 passed by the CIT(E) is without jurisdiction, void ab-initio and the impugned order is liable to be quashed on this ground. 9. It was submitted by the ld AR that under law, the show cause notice dated 03.05.2016 being a statutory legal document is required to be issued and signed by the competent authority i.e. persona designata as laid down by this Tribunal in the case of Modern School Society v. CIT(E) (ITA No.1118/JP/2016 dated 20.12.2017). It was submitted that the case of the assessee University is squarely covered by the case of Modern School Society (supra) as paragraphs 2 and 6 of the impugned show cause notice dated 03.05.2016 are identical to the paragraphs considered by the Tribunal in the Modern School Society case (supra). Our attention was drawn to paragraphs 2 and 6 of the impugned cause notice dated 03.05.2016 which is reproduced herein below: "2. In this regard, I am directed to state that your institutio....
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....ated 14.09.2016 is liable to be quashed on this ground. 12. It was further submitted that reference to extraneous material such as internal noting etc. by the ld. CIT/DR is irrelevant as according to this Tribunal in the Modern School Society judgment (supra), what is relevant is the language and tenor of the show cause notice and it is the show cause notice itself that should bring out the thought process and application of mind of the CIT(E). Thus, reference to extraneous material is not relevant. Further, in cases where any matter is reduced in writing, then as per the Evidence Act, 1872 any extraneous matter such as internal noting etc. referred by the DR is neither relevant nor admissible. 13. It was accordingly submitted that the impugned show cause notice dated 03.05.2016 is not valid, the jurisdiction assumed by the prescribed authority is invalid and therefore, the consequential order passed by the authority is invalid and void abinitio for want of jurisdiction. It has been held by the Hon'ble Supreme Court in a catena of judgments that want of jurisdiction goes to the root of the matter and can be brought out at any stage of the proceeding, even at the stage of exec....
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....section. The said proviso reads as under:- "Provided also that where the fund or institution referred to in subclause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that- (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not- (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution- (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions su....
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....ay also be noted that only uncorrected draft was put up before CIT(E) vide order sheet noting dated 03.05.2016 as evident from the noting "DFA (Draft For Approval) of show cause letter issued to the assessee is put up for kind perusal, approval and signature please." Thus, there is complete application of mind on the part of CIT(E). 18. It was further submitted that the provisions for issue of show cause notice u/s 263 and under thirteenth provision to section 10(23C) are pari materia vide a later judgement of this Tribunal in the case of Shri Hari Ram Yadav Vs PCIT (ITA No. 215/JP/2018 dated 31.12.2018) wherein the issue has been decided in favour of the Department and therefore, the decision in case of Modern School Society stand distinguishable. 19. The ld CIT/DR further drawn our attention to the Sec. 292BB of the IT Act, 1961, which read as under:- "292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and suc....
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....ised this ground as additional ground in the appellate proceedings after lapse of so much time, which very well establishes the fact that it is an afterthought, and assessee fears to lose the ground on merit. It was accordingly submitted that the additional ground of appeal so taken by the assessee should be dismissed. 21. We have heard the rival contentions and pursued the material available on record. The ld AR has placed heavy reliance on the decision of the Coordinate Bench in case of Modern School Society Vs CIT(E), Jaipur (supra) and we therefore deem it appropriate to refer to its relevant findings which are reproduced in verbatim as under: "10. We have considered the rival submissions as well relevant material on record. The first objection of the assessee is regarding the validity of show cause notice that it was not signed by the competent authority and therefore, it is invalid. The power and jurisdiction to withdraw the approval granted u/s 10(23C)(vi) of the Act is provided under 13th proviso to the said section which reads as under:- "Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (....
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....ion of the prescribed authority and non else. In case in hand the impugned show cause notice dated 08.07.2016 was signed by the DCIT (Hqr.) and issued as per directions of the ld. CIT(E). In paras 2 and 6 Of the show cause notice in our opinion are relevant to the issue and the same are reproduced as under:- "2. In this regard, I am directed to state that your institution/society has violated the provisions of Section 10(23C)(vi) of the Act in respect of following issues:- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 6. Your case is fixed for hearing before the Commissioner of Income Tax (Exemptions), Jaipur on 25.07.2016 at 12.30 P.M. in the Income Tax office (Exemptions) room No. 303, 3rd floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. You may attend either personally or through an authorized representative in this behalf (holding valid Power of Attorney). Any failure to comply may lead to the conclusion that the assessee has nothing further to say from his side in this regard, and the case may therefore, be accordingly decided." The language and tenor of the show cause notice do not exhibit any thought process of ld. CIT(E) but it reveals it was issued and signed by ....
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....e assessee u/s. 263 of the Act in these case, was issued by letter dated 06-03-2007. The said notice was signed by ACIT, Hqrs., Burdwan for Commissioner. Referring to this aspect, the Ld. counsel for the assessee pleaded that Section 263 of the Act provides for notice and adjudication by the Ld. CIT. Ld. counsel for the assessee claimed that since notice u/s. 263 of the Act has not been signed by the Ld. Commissioner. The jurisdiction assumed is defective and the order u/s 263 of the Act, is liable to be quashed on this ground itself. In this regard, Ld. counsel for the assessee referred to the decision of Hon'ble Allahabad High Court in the course of cit v. Rajesh Kumar Pandey (2012) 25 taxmann.com 242 (All.). The Ld. counsel for the assessee further referred to the decision of the Tribunal in the case of Satish Kumar Kashri v. ITO 104 ITD 382 (Pat). ITA No.706/Kol/2013 M/s. Assam Bengal Carriers. A.Yr.2008-09 4 6. Ld. DR on the other hand submitted that above is not the material defect and he submitted that there is no reason to set aside the order u/s. 263 of the Act, on this account. 7. We have carefully considered the submissions and perused the record. We find that Sectio....
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...." 8. Similarly, we note that in the case of Satish Kr. Keshari (supra), the Tribunal had held that when the notice u/s. 263 of the Act was not under the seal and signature of Ld. CIT and suffered for want of details on the basis of which Ld. CIT came into conclusion that the order of Assessing Officer is erroneous and prejudicial to the interest of Revenue, assumption of jurisdiction u/s. 263 of the Act by the Ld. CIT was invalid. ITA No.706/Kol/2013 M/s. Assam Bengal Carriers. A.Yr.2008-09 5 9. From the above discussion regarding the provision of law and the case law in this regard, it is clear that for a valid assumption of the jurisdiction u/s. 263 of the Act, the notice issued u/s. 263 of the Act should be issued by the Ld. CIT. In this case, it is undisputed that notice was issued by ACIT, Hqrs, Burdwan who is not competent to assume jurisdiction u/s. 263 of the Act. Hence, the notice was not under the seal and signature of Ld. CIT. Hence, as per the precedents referred to above, the assumption of jurisdiction u/s. 263 of the Act in this case is not valid. Accordingly, the order u/s. 263 of the Act passed in these cases are quashed." 8. Facts of the present case being identi....
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....g the show cause notice for the proposed action of the withdrawal of the approval granted u/s 10(23C)(vi) of the Act. Therefore, what is material and mandatory condition is the satisfaction of the ld CIT(E) and no one else. Further, the language and tenor of the show cause notice must exhibit the thought process and application of mind by the ld. CIT(E) and thus an expression of the satisfaction of ld. CIT(E) even though the same may be signed by the DCIT (Hqr.) or any other subordinate authority. However, where the ld. CIT(E) has delegated his powers to any other authority to issue show cause notice and it is based on the satisfaction of that other authority and not of ld. CIT(E), it won't satisfy the mandatory condition. 23. In the instant case, we find that the draft of the show-cause notice was prepared by ITO (Hqrs) and put up for perusal, approval and signature of the ld CIT(E) on 3.5.2016. Thereafter, the ld CIT(E) has carried out certain corrections/modifications in the language, as evident from the draft of the show-cause and the corrections/modification so made by the ld CIT(E) in his own hand writing, and thereafter, after seeking the approval of the ld CIT(E) as evide....
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....has submitted that the assessee University is established under a statute by the State of Rajasthan vide Act No. 6 of 2008 namely, Singhania University Pacheri Bari (Jhunjhunu) Act, 2008. It is submitted that a University is a different and distinct class from societies, trusts and other educational institutions. Unlike trusts, societies and other educational institutions that can have different objects and may undertake activities other than education, a University is established with the sole object of education. Similarly, the Appellant University is an autonomous, statutory, existing solely for the purpose of education and not-for-profit body and all the powers and functions of the Appellant University are related to its sole object of education. Furthermore, the Appellant University being a statutory body belongs to the public and is not a private property of any person and its objects cannot be changed and continue to be only education till its legal status as a University is intact. 26. It was submitted that being a university established under a State Act i.e. the Singhania University Act, the Appellant University is recognised under Section 2(f) of the University Grants....
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.... made a reference to the Ld. CIT(E) for withdrawal of exemption under Section 10(23C)(vi) of the Income Tax Act. Thereafter, a show cause notice no. F.No./10/CIT(E)/JPR/Withdwl-10(23C)(vi)/2015-16/648 dated 03.05.2016 was issued by the Income Tax Officer (Hqrs.) asking the Appellant University to show cause as to why the exemption granted under Section 10(23C)(vi) of the Income Tax Act should not be withdrawn. The Appellant University submitted its reply dated 06.06.2016 to the aforesaid show cause notice. However, the Ld. CIT (E) vide impugned order dated 14.09.2016 passed order of withdrawal of the exemption given to the Appellant University under Section 10(23C)(vi) of the Income Tax Act from the AY 2013-14 and onwards which is the subject matter of present appeal. 30. It was submitted that the case of the ld CIT(E) for withdrawing the exemption of the Appellant University under Section 10(23C)(vi) is summed up in paragraph 9 of the impugned order dated 14.09.2016 as under: "9. In the case of Applicant the condition mentioned in the clause (vi) of Sec. 10(23C) that the society must exists solely for education is violated and also university has not carried out the activities ....
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....that the withdrawal of exemption by the CIT(E) is on the primary ground that the Appellant University is running some courses like A.N.M., G.N.M. and B.Ed. without legal authority and hence, these courses cannot be held to be genuine courses. It is not the case of the CIT(E) that the Appellant University is doing any activity other than education or that the hospital is being run for commercial purpose or any purpose other than teaching as a lab for medical courses and taking care of the health and welfare of the students and staff of the Appellant University. 32. It was submitted that the finding of the CIT(E) is grossly erroneous, presumptive, without any basis, in ignorance of the relevant law governing universities and suffers from non-application of mind by treating the Appellant University as a society and not as a university being a statutory body established under a State Act and governed by the provisions of the UGC Act. It is submitted that even factually, there is nothing on record to show that the courses run by the Appellant University are invalid rather as a matter of fact, the pass-out students of the Appellant University are well placed and employed in various Stat....
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....a) Page 800 Paper Book 5)." It was submitted that when it is settled proposition of law that degree/diplomas or any other qualification awarded by the Appellant University are sui-generis and self-validating and need recognition of no other authority, it naturally follows that the Appellant University can run and impart education in those courses. It cannot be said that running of courses is not valid but resulting degrees are valid. Thus, it is settled position of law that the Appellant University can run all courses of education. 34. It was submitted that reference to Section 4 of the Singhania University Act is not relevant and the position in law that whether a university requires approval from State Government for running any course is well settled and squarely covered by the judgment of the Hon'ble Supreme Court in the case of Maharshi Mahesh Yogi Vedic Vishwavidyalaya v. Sate of M.P. & Ors. reported in (2013) 15 SCC 677 in which it has been held that neither the State Government nor the State Legislature is empowered to regulate running of courses by a university or to require the university to take State Legislature's or State Government's approval for running any cou....
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.... hence, null and void and of no effect. The relevant portion of the Maharshi Mahesh Yogi judgment are extracted hereinbelow for convenience of ready reference: "68. Having heard the learned senior counsel for the Appellant, as well as the learned Counsel for the State, and having bestowed our serious consideration to the respective submissions and having perused the scholarly judgment of the Division Bench and other material papers, at the very outset we are of the view that providing education in an University is the primary concern and objective, while all other activities would only be incidental and adjunct.(Page 180 Paper Book 2) 80. ....we have held that the establishment of the Appellant University was mainly for the purpose of imparting education, while promotion of Vedic learning is one of the primary objectives of the University. Any attempt on the part of the State to interfere with the said main object viz., imparting of education, would amount to an infringement of the Fundamental Right guaranteed under the Constitution. Consequently, the amendment, which was introduced under the 1995 Act to Section 4(1) and also the insertion of the proviso, has to be held ultra....
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....on 5(e) of the Singhania University Act is reproduced as under: "5. Powers and functions of the University: The University shall have the following powers and functions, namely: (e) to provide instruction, including correspondence and such other courses, as it may determine" 39. It is fundamental principle of law that no words can be added or deleted from the statute and literal and plain interpretation should be given to the provisions of the statute. Thus, Section 4 cannot be held to be regarding running of courses and it is Section 5(e) that speaks of courses. Rather, Section 5(e) empowers the Appellant University to run all such courses as it may determine. Further, Section 4 speaks about "undertaking research and studies" and not "running of courses" which are two different things. It is submitted that running of courses is related to awarding of degrees. Reference in this regard may be made to Section 2(w) of the University Act which provides as under: "2. Definitions: (w) "student of the University" means a person enrolled in the University for taking a course of study for a degree, diploma or other academic distinction duly instituted by the University, including a....
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....e Income Tax Act, 1961 does not condition the grant of an exemption under Section 10(23C) on the requirement that a college must maintain the status quo, as it were, in regard to its knowledge based infrastructure. Nor for that matter is an educational institution prohibited from upgrading its infrastructure on educational facilities save on the pain of losing the benefit of exemption under Section 10(23C). Imposing such a condition which is not contained in the statute would lead to perversion of the basic purpose for which such exemption have been granted to educational institutions. Knowledge in contemporary times is technology driven. Educational institutions have to modernize, upgrade and respond to the changing ethos of education. Education has to be responsive to a rapidly evolving society. The provisions of Section 10(23C) cannot be interpreted regressively to deny exemptions. So long as the institution exists solely for educational purposes and not for profit, the test is met." 42. Reference was also drawn to the judgment of the Hon'ble Supreme Court in the case of Oxford University Press v. CIT, (2001) 3 SCC 359 wherein the Hon'ble Court held that in case of a un....
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....articulars Amount 1. Total receipts of the Appellant in the previous year Rs. 21,44,86,849/- 2. Amount of receipts of the previous year applied during the previous year Rs. 16,62,08,293/- 3. Amount to the extent of 15% of the total receipts = 15% of Rs. 21,44,86,849/- Rs. 3,21,73,027/- 4. Amount of receipts exceeding 15%, accumulated in accordance with clause (a) of the third proviso to Section 10(23C) Rs. 1,61,05,529/- iii. Without prejudice, it is submitted that during the course of hearing before the Hon'ble Tribunal, the Ld. DR accepted the submission of the Appellant University in this regard and submitted that the grievance of the CIT(E) in this regard was that no explanation was given earlier which has been satisfied now. 45. It was further submitted that the Ld. CIT/DR relying on the judgment of the Maharshi Mahesh Yogi case (supra) submitted that the Apex Court has settled that the State Government has no power to impose restrictions on the university and it is the UGC that has the power. The Ld. DR then placed reliance on the judgment dated 04.12.2015 of the Hon'ble Delhi High Court in the case of Sam Higginbottom University of Agriculture,....
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....stinct classes. Reference may be made to paragraph 1of the Sam Higginbottom case (supra). The finding of the Hon'ble Court that prior approval of UGC is required for running courses applies to Deemed Universities. Regarding the universities which have been established by a State Act, such as the Appellant University, the position is very clear that no prior approval of UGC is required and such university can run all courses as per Section 22 of the UGC Act. Thus, by Ld. DR's own submissions, the Appellant University's case is proved and it is settled that the Appellant University does not require either the permission of the State Government or the UGC for running of courses. As submitted above, Appellant University is an autonomous, self-regulated, statutory body established by State Act with the sole object of education and empowered to impart education in all courses of education. 48. Without prejudice to the foregoing, it was submitted that the Appellant University has been running the hospital in a small portion of the old Administrative Block building since 2015 and neither the hospital nor the medical courses were running in the A.Y 2013-14 or in A.Y 2014-15 and A.Y 20....
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....ption u/s 10(23C)(vi) of the Act. In this regard, it was submitted that in the case of Visvesvaraya Technological University vs ACIT [2016] 68 taxmann.com 287 (SC), the assessee-University had been constituted under the Visveswaraiah Technological University Act, 1994 ('VTU Act') and the issue before the Hon'ble Apex Court was whether the assessee university was eligible for exemption u/s 10(23)(iiiab) of the Act. It has been held by the Hon'ble Apex Court that the entitlement for exemption under section 10(23C)(iiiab) is subject to two conditions. Firstly the educational institution or the university must be solely for the purpose of education and without any profit motive. Secondly, it must be wholly or substantially financed by the government. Both conditions will have to be satisfied before exemption can be granted under the aforesaid provision of the Act. It has been further held that since the appellant University does not satisfy the second requirement spelt out by section 10(23C)(iiiab) of the Act, as it is neither directly nor even substantially financed by the Government so as to be entitled to exemption from payment of tax under the Act. Thus, it is evident from ....
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...."University" and a "technical institution". The Hon'ble Apex Court has also held that the Regulations made by the AICTE under section 10(1)(k) of AICTE Act requiring a University also to seek its prior approval for starting a new programme or course in technical education cannot be enforced against a "University" as it is not in consonance with the provisions of AICTE Act. 54. It may be mentioned that in the instant case, the assessee has also started MD (Doctor of Medicine) courses, which is covered by the provisions of Indian Medical Council Act, 1956 (IMC Act). Further, provisions of section 10A of IMC Act specifically prohibit establishment of an medical institution or starting of a new course of study without the previous approval of the Central Government. It is evident from the above provisions of section 10A of IMC Act that this section has overriding effect not only on the other provisions of IMC Act but also on other Acts for the time being in force. Further, as per section 10A(1) of IMC Act, no person shall establish a medical college except with the previous permission of the Central Government obtained in accordance with the provisions of section 10A(1) of IMC Act. He....
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....nted before the prescribed activity. Any Departure from the approved objects needs prior approval of the prescribed authority and in the present case, the assessee university has violated the regulations laid down in the Act beyond its approved objects, which were definitely the subject matter of approval of exemption U/s 10(23C)(vi) of the Act. Referring to the objects of the university and the Gazette Notification dated 29.03.2008 of the Government of Rajasthan, the ld. CIT/DR submitted that the assessee university is approved to undertake courses as per scheduled-II of the Gazette Notification. It was submitted that it is not an open ended schedule and inclusive in nature. Rather all the courses which the university can conduct has been specifically listed and as per approval granted, the university can conduct only the courses listed in the Schedule-II, however, it was noticed by the Assessing Officer that the university is conducting courses which are not listed in Schedule-II. And some of these courses are B.Ed., M.Ed., ANM, GNM, M.D. (Doctor of Medicine), Public Health, Pharmceutical, Medical Laboratory Technology and Physiotherapy. 56. It was submitted by the ld CIT/DR th....
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....erein he has finally concluded his observations which are reproduced as under:- "9 In the case of applicant the condition mentioned in the clause (vi) of Sec. 10(23C)(vi) that the society must exists solely for education is violated and also the university has not carried out the activities as per the objects by running courses beyond its objects and approved by State legislature as well as prescribed authority us 10(23C)(vi). Therefore its activities cannot be held as genuine charitable activities. Therefore, the proviso 13th of Sec. 10(23C)(vi) is attracted. In the light of the discussion made above, exercising the power given under the above said Proviso, it is held that the activities of the assessee are not genuine as being carried out beyond the approved objects and it is not an education institution which is existing solely for education purposes, therefore, exemption u/s 10(23C)(vi) granted earlier vide Notification No. 01/2008-09 dated 04.04.2008 is hereby withdrawn. 10. Date of Withdrawal of Exemption:- In this case, the conditions for granting approval U/s 10(23C)(vi) were violated on start of hospital. From the details submitted before the Assessing Officer. It is s....
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....al accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and the prescribed authority may also make such inquiries as it deems necessary in this behalf:] Provided also that the fund or trust or institution 92[or any university or other educational institution93 or any hospital or other medical institution] referred to in sub-clause (iv) or subclause (v) 92[or sub-clause (vi) or sub-clause (via)]- 94[(a) applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and] 95[(b) does not invest or deposit its funds, other th....
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....or subclause (v) 6[or sub-clause (vi) or sub-clause (via)] shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third proviso to this sub-clause, subject to the condition that such voluntary contribution is not held by the trust or institution 8[or any university or other educational institution or any hospital or other medical institution], otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later:] Provided also that nothing contained in sub-clause (iv) or subclause (v) 9[or sub-clause (vi) or sub-clause (via)] shall apply in relation to any income of the fund or trust or institution 9[or any university or other educational institution or any hospital or other medical institution], being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business: Provide....
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....on (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 17[2004] shall be deemed to be the income of the previous year and shall accordingly be charged to tax:] Provided also that where the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) does not apply its income during the year of receipt and accumulates it, any payment or credit out of such accumulation to any trust or institution registered under section 12AA or to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established : Provided also that where the fund or institution referred to in sub-clause (iv) or trust or ins....
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....ich no notification has been issued under sub-clause (iv) or sub-clause (v) before the 1st day of June, 2007, shall stand transferred on that day to the prescribed authority and the prescribed authority may proceed with such applications under those sub-clauses from the stage at which they were on that day:] 25[Provided also that the income of a trust or institution referred to in sub-clause (iv) or sub-clause (v) shall be included in its total income of the previous year if the provisions of the first proviso to clause (15) of section 2 become applicable to such trust or institution in the said previous year, whether or not any approval granted or notification issued in respect of such trust or institution has been withdrawn or rescinded :] 26[Provided also that where the fund or institution referred to in sub-clause (iv) or the trust or institution referred to in sub-clause (v) has been notified by the Central Government or approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), has been approved by the prescribed au....
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....nce with the stated objects, it will not result in such activity to be classified as nongenuine. The term "genuine" has been defined to mean true, authentic, real, actual, original and in context of a person or action means sincere, honest, truthful, straightforward, direct, frank, candid, and open. The genuineness of the activity thus has to be tested on the touchstone of above parameters. Where the activities are not carried out in accordance with the stated objects or necessary approvals/permission/clearances are not obtained before carrying out such activities, there may be violation, irregularity or even a case of illegality which is subject matter and domain of the relevant authority. However, even such activities which satisfy the test as stated above would be classified as genuine activities. 63. In the instant case, we find that the whole case of the Revenue rest on the finding that the assessee university has not carried out the activities as per the objects by running certain courses beyond its objects and which are not approved by State Legislature as well as prescribed authority under Section 10(23C)(vi). Therefore, its activities cannot be held as genuine charitabl....
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....issued by the Revenue before grant of registration under section 12AA talks about the same reasons in terms of conducting courses not in approved list which are subject matter of withdrawal of exemption under section 10(23C)(vi) of the Act and after taking the assessee's submissions which is on the same lines as in the instant appeal, has granted the registration under section 12AA of the Act. 67. To our mind, where the Revenue has already accepted the genuineness of the activities of assessee University, the withdrawal of exemption under section 10(23C)(vi) of the Act on this ground is not warranted. 68. Further, we find that where the degrees awarded by the assessee University in courses of A.N.M., G.N.M. and B.Ed. are held valid by the Hon'ble Rajasthan High Court in case of Rajasthan Nursing Counil vs Singhania University & Others (supra), Sunil Bishnoi & Ors. v. State of Rajasthan & Ors. (supra) and Shanti Lal v. State of Rajasthan (supra), there cannot be any dispute regarding genuineness of the activities of the assessee University whereby such courses are genuinely conducted by the assessee University. We are therefore of the considered view that the genuineness of co....
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.... of education of the Trust etc. laid down under Section 10(23C) of the Act which are relevant and not the admission procedure undertaken by the petitioner Trust. Nexus between the profit motive and alleged illegal admission is too remote and cannot be presumed without any other adverse material on record against the assessee, for drawing such adverse inference. Learned Chief Commissioner of Income Tax vide order dated 27/1/2010 has only assigned one single reason as stated above to deny the approval under Section 10(23C) of the Act. The relevant portion of the impugned order dated 27/1/2010 is reproduced hereunder for ready reference:- "11. It is also apparent that the Trust is not satisfying essential condition for exemption u/s 10(23C)(vi) and (via). As per the relevant clause, any income received by any person on behalf of any university or other educational purposes. Moreover, the income earned should be applied wholly and exclusively to the objects for which it is established, i.e. for educational purpose. In the institution's case, the Hon'ble High Court has held that the admissions made for Academic Year 2008-2009 were illegal. The purpose of education would not ....
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....Act as laid down in the provisions of Section 10(23C) itself and if there are other grounds made out of rejection of its case under Section 10(23C) of the Act or say if Hon'ble Supreme court of India also holds against the petitioner, the authority concerned may be justified in denying the exemption under Section 10(23C) of the Act. 10. Consequently, the present writ petition is allowed & setting aside the impugned order Annex. 16 dated 27/1/2010 passed by the learned Chief Commissioner of Income Tax under Section 10(23C) of the Act, the said authority is left free to decide afresh the said proceedings for A.Y. 2008-09 and onwards till A.Y. 2010- 11 by passing fresh speaking order under Section 10(23C) of the Act for Assessment Year 2008-09 to Assessment Year 2010-11 after affording opportunity of hearing to the petitioner Trust. No order as to costs." 70. As held by the Hon'ble High Court, the parameters like no profit motive and object of education of the Trust etc. laid down under Section 10(23C) of the Act are relevant and not the admission procedure undertaken by the petitioner Trust which is sub-judice before the Hon'ble Supreme Court. The relevant consideration while ....
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....e ld CIT/DR has drawn reference to regulations of Indian Medical Council and a public notice stating that the assessee University has not been approved by MCI for starting medical courses. In our view, whether the assessee University is required to obtain approval from MCI for conducting medical courses is a matter for the MCI or concerned appellate authority to decide, as far as the genuineness of activities of conducting such courses is concerned, there is no adverse material on record. Therefore, we find that the aforesaid decision in case of Geetanjali University support the case of the assessee university. 73. Regarding other contention of the ld CIT(E) that the assessee university is running a hospital, there is nothing on record to suggest that such hospital was run on commercial basis and there are any earnings from such hospital. Even the income and expenditure account which has been relied upon by the Revenue only talks about the hospital construction expenditure and not actually running and maintenance expenditure or any earnings from such hospital. Therefore, we find force in the arguments of the ld AR that it is a medical research and teaching hospital with the sole ....