2020 (10) TMI 883

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....Appellant/Assessee School under Section 10(23C)(vi) of the Income Tax Act, 1961. 3. The following is the substantial question of law sought to be raised by the Revenue:- "Whether on facts and circumstances of the case and in law, Tribunal was right in directing the Chief Commissioner of Income Tax to grant the approval for exemption u/s.10(23C)(vi) of the Act?" 4. The relevant portion of the order passed by the learned Tribunal is extracted hereunder for ready reference:- "4. We have heard both the parties and perused the material on record. It is admitted fact that the assessee was granted permission to run the school by the Director of School Education Chennai dated 07.10.1997 vide R.C.No.91778/E- 4/1997. Under this permission the assessee was granted permission to open Matriculation School at Tharamangalam, Salem District for classes standard 1st to 7th standard during the year 1966-1967. Again by proceedings dated 21.02.2007 in M.M.No.8064/E- 5/2005, the school has been granted further permission confirming the earlier permission and granting extension of classes from 1st to 12th Standard from 01.07.2005 to 30.06.2008. Further by another certificate of R....

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....is not having Memorandum of Association or Trust deed so as to carry on the function of the assessee. But the fact brought on record suggests that the assessee is an "AOP", managed by Sengunther Education Board which is a registered body under the Society Registration Act in the year 1946 vide Registration No.S/8/1946. The above education board is managing the assessee school with the committee Members of the said Education Board and constituted the office Bearers of the institution and duly filing the return of income. It is to be observed that there is no expressed definition for "Institution" under the Income Tax Act. Hence, we. have to consider the General meaning defined in the Webster's New Dictionary, the word "Institution" means an established or organized Society or Corporation, an establishment, especially one of Public Character, or one effecting a community; a Foundation. Further, this Tribunal, Delhi. Bench 'G' Bench. in l.T.A.No:3360(DEL) of 2008 dated 30.04.2010 in deciding the Appeal in the case St Thomas Girls Senior Secondary School, New Delhi Vs. Director of Income Tax(Exemption), New Delhi have held that the word Institution is wide enough to i....

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....s for the Start of the school. For Regulation purposes, permission has been taken from the Director of School Education, Chennai. In the absence of any objective in constitution of the AOP, school cannot said to be existing only for educational purpose. In fact, as per the copy of the Balance sheet as on 31.3.2013 of record, the assessee has shown sundry debtors of Rs. 60,38,541/-. Out of sundry debtors of Rs. 60,38,541/-, 59,08,221/- is due from Sengunthar Education Board (Society is controlling the school). A sum of Rs. 1,30,320/- is due to Sengunthar Higher Secondary School. It is seen that huge amount is due from controlling society viz. Sengunthar Educational Board. Independent existence of assessee's school vide separate memorandum, article, bye laws is not proved at all. Following ratio of the decision of Honourable Supreme Court in American Hotel & Lodging Association reported in 301 ITR 86, they should fulfil threshold conditions before the grant of registration/exemption, "solely" means exclusively and not primarily as held in New Noble Education Society vs. CCIT reported in 334 ITR 303(AP). Conclusion: Since the assessee is not hav....

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....ts Return of income as Association of Persons (Educational Institution) with the Respondent/Income Tax Department. The Assessee (AOP) is also undisputedly covered by the definition of 'Person' as defined in Section 2(31) of the Act which provision is also quoted to the relevant extent below:- ""person" includes -- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. Explanation.-- For the purposes of this clause an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains." 9. Since the AOP is recognised as a "person" for the purpose of Income Tax Act, 1961 and Section 10(23C) of the Act also grants exemption to a person engag....