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2021 (4) TMI 1116
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....10 -do-, dated 29/05/2009 -do- 05 261/CTK/2019 2010-11 -do-, dated 26/09/2011 -do- 06 262/CTK/2019 2011-12 -do-, dated 25/09/2012 -do- 07 263/CTK/2019 2012-13 -do-, dated 06/09/2013 -do- 08 264/CTK/2019 2005-06 -do-, dated 24/03/2010 -do- 09 265/CTK/2019 2007-08 -do-, dated 06/09/2013 -do- 10 266/CTK/2019 2008-09 -do-, dated 27/03/2009 -do- 11 267/CTK/2019 2009-10 -do-, dated 29/05/2009 -do- 12 268/CTK/2019 2010-11 -do-, dated 26/09/2011 -do- 13 269/CTK/2019 2011-12 -do-, dated 25/09/2012 -do- 14 270/CTK/2019 2012-13 -do-, dated 06/09/2013 -do- 15 469/CTK/2019 2005-06 CIT(A) - 1, Bhubaneswar, dated 23/10/2019, IT Appeal No. 0424/13-14. u/s 143(3)/147 16 470/CTK/2019 2006-07 CIT(A) - 1, Bhubaneswar, dated 18/10/2019, IT Appeal No. 0425/13-14. -do- 17 471/CTK/2019 2007-08 CIT(A) - 1, Bhubaneswar, dated 26/11/2019, IT Appeal No. 0426/13-14. -do- 2. On perusal of case(s) record(s), we find that there is delay in filing of the following appeals: 1. ITA Nos. 261 & 262/CTK/2019 -....
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....fit. 3. The Ld. Principal Chief Commissioner of Income-tax was not justified in denying exemption on the ground that the amended Trust Deed executed on 26.03.2012 deleting certain objects alleged to be non-educational, was not valid. 4. Assuming without admitting that the amended Trust Deed dated 26.03.2012 was not valid, the Ld. Principal Chief Commissioner of Income-tax was not justified in denying exemption as the alleged non-educational objects were not implemented or acted upon. 5. That the Ld. Principal Chief Commissioner of Income-tax was not justified in ignoring the clarification issued by the CBDT in Circular No.14/2015 dated 17.08.2015 and in denying the exemption to the appellant trust u/s 10(23C)(vi) of the Act. 6. That the Ld. Principal Chief Commissioner of Income-tax has further erred in not following the principles laid down by the Hon'ble Supreme Court in American Hotel & Lodging Association Educational Institute CBDT (2008) 301 ITR 86(SC) and ignoring that appellant trust was an institution existing solely for education eligible for exemption u/s 10(23C)(vi) of the Act and not for profit. 7. The appellant craves le....
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....er aspects. So, Pr.CCIT held that the assessee Trust does not qualify for approval u/s. 10(23C)(vi) of the Act and thereby rejected the application without going into the merits of the activities and maintenance of the accounts. 5. Feeling aggrieved with the impugned order passed by Ld.Pr.CCIT, the assessee has come up before the Tribunal by filing the present appeal. 6. We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. Undisputedly, earlier application moved by the assessee Trust for grant of approval u/s 10(23C)(vi) of the Act for FY 2009-10 was rejected on the ground that the assessee is not engaged in exclusive educational activities. It is also not in dispute that non-educational objects, namely, to contribute towards human resource development in the country; to establish, maintain or grant aid to homes for the aged, orphanages or other establishments for the relief and help to the poor, needy and destitute people, orphans, widows and aged persons; and to charge tuition fee....
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....eipts do not exceed Rs. 1 crore [sub-clause (iiiad) r.w. rule 2BC). Thus, while granting approval to entities covered under subclause (vi), the prescribed authority has to ensure that the applicant institution must exist "solely for educational purposes and not for purposes of profit". There are several Provisos to clause (23C) of section 10 and prescribe, inter alia, various monitoring conditions subject to fulfillment of which only the exemption can be availed. These monitoring conditions include mode and manner of application of funds, maintenance and audit of books of accounts in certain situations etc. Some other Provisos prescribe the manner of making application u/s 10(23C)(vi) and the circumstances when an approval granted earlier can be withdrawn. Representations have been received seeking clarification on certain issues related to operation of section 10(23C)(vi). These have been examined by the Board and following clarifications are made- 1. Scope of enquiry while granting approval 1.1 Clarification has been sought on (he score of enquiry that can be made by the prescribed authority while grunting approval u/s 10(23C)(vi), i.e., whethe....
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.... of monitoring conditions as different from compliance with these conditions. Compliance or non-compliance can be gauged at the assessment stage. So, in other words, the actual existence of educational institutions is the precondition and thereafter the applicant can approach the prescribed authorities for approval in terms of section 10(23C)(vi) of the Act by making application in the prescribed form. 12. Even otherwise, as per para 1.3 of the CBDT Circular (supra), the prescribed authority is eligible to grant approval u/s.10(23C)(vi) of the Act subject to such terms and conditions as deemed necessary including those falling with the framework of various proviso to said clause of section 10, which can be gauged while monitoring the case and in case of any breach thereof, the approval can be withdrawn. It is clarified in unequivocal terms that application seeking approval for exemption u/s 10(23C)(vi) of the Act is to be disposed off in view of law laid down by Hon'ble Apex Court in American Hotel and Lodging Association Educational Institute (supra). 13. As per amended Trust Deed dated 26-03-2012, the assessee Trust is empowered to carry out following a....
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....2) To take over, acquire, manage, control, organize or maintain or to assist in establishing, promoting, managing, organizing or maintaining any branch of the Trust and to promote or carryon with affiliation or amalgamation of such other Trust with this Trust." 14. Assessee Trust has established institutions / colleges to provide various courses, namely, BCA, +2 Science & +2 Commerce, B.Tech & MCA and +2 Science & +2 Commerce in the following educational institutions / colleges :- (i) Roland Institute of Computer and Management Studies providing Bachelor Degree in Computer Education-BCA Course (set up in 1998). (ii) Roland Supriya Junior College (set up in 1999). (iii) Roland Junior College (set up in 1999) (iv) Roland Institute of Technology (set up in 2001) started with providing MCA Course with 60 seats and in the year 2002, added an Engineering Course consisting of several engineering streams comprising of 4 years' and providing a 'B. Tech' degree. 15. Perusal of the amended Trust Deed dated 26-03-2012, available at pages 15 to 29 of the paper book, apparently goes to prove that post amendment, the assessee trust is engaged ....
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....es, Pr.CCIT travelled beyond his power by examining the validity of Trust Deed which came into existence on 26-03-2012. 19. Furthermore, when we examine audited annual accounts for FY 2013-14 and FY 2012-13 available at pages 94 to 162 of the paper book, in the light of the statement of income & expenditure account of the assessee for FY 2012-13 available at page 97 of the paper book and statement of income & expenditure account of the assessee for FY 2013-14 available at page 133 of the paper book, it is proved that the assessee Trust's expenditure was more than its income and as such, it is an educational institution existing solely for educational purpose and not for purposes of profit. 20. Moreover, vide order dated 15-01-2013, assessee Trust is registered as a charitable Trust u/s 12AA of the Societies Registration Act, copy of order available at page 43 of the paper book. This fact goes to prove that the assessee Trust is established not for profit motive. Furthermore, coordinate Bench of the Tribunal vide order dated 28-07-2015 passed in IT(SS)A.No.44/CTK/2004 in assessee's own case held the assessee Trust eligible for exemption u/s 11 of the Act for block ....
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..... The income-tax authority has to take the instrument as it exists in its actual amended form when its pressed in service for framing the assessment concerning the relevant assessment year in which such rectified instrument holds the field. 25. Ratio of the judgment in CIT vs. Kamla Town Trust (supra) is when the powers had been given to the trustee by the settler as, in the instant case, it can be amended without approaching the civil court provided all the conditions laid down by the settler are fulfilled. So, the ratio of the judgment is applicable to the facts and circumstances of the case. 26. We are of the considered view that Pr.CCIT by ignoring the basic law as enunciated in American Hotel and Lodging Association Educational Institute (supra) has exceeded his jurisdiction to decline the approval for exemption u/s. 10(23C)(vi) of the Act which is not sustainable in the eyes of law. 27. Hon'ble Apex Court in judgment cited as Queen's Educational Society vs. CIT - (2015) 372 ITR 699 (SC) explained the provisions contained u/s 10(23C)(iiiad) & (vi) as under :- "11. Thus, the law common to Section 10(23C) (iiiad) and (vi) maybe summed up as fo....
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....same in favour of the assessee by determining the following findings :- "Held, allowing the petition without entering into the merits, (i) that the assessee was in existence since the year 1910 and on the land, which was taken for 99 years lease, it had constructed a building for a school. It was prima facie engaged for "educational activities". So, it was incorrect to say that it was not providing education. Undoubtedly, the assessee was an educational institution, which was providing education. No other activity was proved by the Department. Moreover, the Chief Commissioner had already granted exemption under section 12A / 12AA with effect from April 1, 2007. Merely because there were other objects of the society, that did not mean that the educational institution did not exist solely for educational purpose. The emphasis of the word "solely" is in relation to the educational institution, which is running not for the purpose of making profit and is not in relation to the objects of the society." 30. Judgment rendered by Hon'ble Allahabad High Court in case cited as Young Men's Christian Association (supra) is applicab....
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....stitutions viz. (i) Roland Institute of Computer & Management Studies, (ii) Supriya Junior College, (iii) Roland Institute of Technology and (iv) Roland Junior College to impart education in Computer & Management Studies, General Education and Engineering Pharmacy. application for grant of exemption 10(23C)(vi) of the I.T. Act, 1961 in form No.56D was filed in the Office of the Chief Commissioner of Income Tax, Bhubaneswar on 24.03.2004. The case was fixed for hearing on 18.02.2010. Dr. J.Surya Rao, Permanent Trustee of the Trust along with Sri S. R. Wadhwa, Advocate appeared and the case was discussed. The details and documents submitted by the assessee with the application and filed at the time of hearing were persued. The Trust was created on 19.11.1997 and registered under the Indian Trust Act vide registration No.409 of 1997. It is seen from the Trust Deed that the objects of the Trust contain both educational as well as non-educational clauses. A plain reading of the objects of the Trust shows the following non-educational and mixed purposes: "8. To train and equip the pupils so as to be self supporting in an honourable and decent way of life so as to develo....
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.... to apply its surplus for non-educational purposes, it cannot be said to exist "solely" for educational purposes and such institutions will not qualify for exemption u/s.10(22) of the Income Tax Act, 1961. Since the provisions of section 10(23C)(vi) arc similar, the same view will hold good in the context of the aforesaid provisions. The interpretations contained in the Board's instruction find support from the decision of Reliance Motor Co. Pvt. Ltd. reported in (213 ITR 733) (Madras). In the aforesaid case, the Hon'ble Court had categorically held that it is not the actual user but the likelihood of the user and the capacity of the Trust to undertake a particular activity, which is relevant. Though this case law was decided in the context of grant of exemption u/s.80G, but the interpretations will hold good in the context of the provisions of Section 10(23C)(vi) also. In the present case, the objects of the Trust very clearly show that the Trustees have the power and authority to undertake activities other than educational. Therefore, it cannot be said that the Trust exists "solely" for educational purpose. Further, there are various clauses in the Trust....
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....s, namely J. Surya Rao (supra) as well which disentitle it from blocking section 10(23C)(vi) approval relief. 7. We have given our thoughtful consideration to rival pleadings against and in support of the CCIT's order(s) denying section 10(23C)(vi) approval benefit to the assessee on the above said twin reasoning, inter-alia, that the impugned objects do not fall solely in the category of "educational purposes" and its trustees enjoyed unchecked extraordinary powers. We find no merit in Revenue's foregoing stand for the detailed reasoning in succeeding paragraphs. 7.1 There can hardly be any dispute that section 10(23C)(vi) of the Act entitles the assessee to claim exemption relief when it receives any income on behalf of any university or other educational institution existing solely for educational than profitable purposes. We wish to observe here that Revenue's emphasis is on assessee's original clauses in its trust deed dated 19/11/1997 that the same also include some of the non-educational purposes as well. We therefore deem it fit and proper to extract as follows:- "The objects of the Trust are :- 1. To open, run, continue an educational and vocatio....
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....nd for the management of the affairs thereof and/or running any institution in furtherance of the objects of the Trust and otherwise for giving effect to the objects of the Trust. 16. To apply to the Government, Publis Bodies, Urban, Local, Municipal, District and other bodies, Corporations etc. for and accept grant of money and of aid, donation gifts, subscriptions and other assistance with a view to promoting the objects of the Trust and to discuss and negotiate with the Government Department, Public and other bodies, corporations, persons scheme and other work and matters within the frame work of the objects of the Trust and to confirm to any proper condition upon which such grants and other payments may be made. 17. To take over, acquire manage, control, organise or maintain or to assist in establishing, promoting, managing, organising or maintaining any branch of the Trust or any other Trust or its branch with objects similar to those of this Trust and to promote or carry on with affiliation or amalgamation of such other Trust with this Trust. 7.2 There is further no issue that as per the learned coordinate bench's discussion that assessee had in fact set ....
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....l activities only. An institution wise chart also forms part of the case files to this effect. We sought to know from the Revenue side during the course of hearing as to whether there is any material suggesting that this taxpayer has ever undertaken other than educational activity till date. The reply coming from the departmental side is in negative only. It emphasizes that the assessee trust deed's object clauses have seen amendment much later (supra) and therefore, it would not be held that the said amendment would apply from retrospective effect. Mr. Goutham has placed reliance on various case law quoted in CCIT's order as well (supra). 7.4 The issue therefore arises for our adjudication in view of the foregoing pleadings is as to whether the clinching statutory expression employed in section 10(23C)(vi) "existing solely for educational purposes" has to be read in isolation or in complete sense i.e. " any university or college existing solely for educational purposes and not for purposes of profit". In our considered opinion, we ought to read this statutory provision as a whole only than in piece-meal. This is for the reason that the legislature has itself made it clear that ....
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....cates fees, duplicate Identity card fees and attendance fines etc. We see no substance forthcoming in Revenue's foregoing argument. We notice that assessees' educational institutions are duly affiliated under the corresponding regulators like education board and council of technical education etc. getting renewals from them after due disclosure of all the fee(s) collected from its students. Furthermore, none of the above items have been found to be in the nature of capitation fees as is the Revenue's stand going by the case law Mohini Jain Vs. State of Karnataka and P.A. Inamdar Vs. State of Maharashtra, Civil Appeal No. 5041 of 2005 (supra). We thus reverse the CCIT's findings as well as Revenue's argument on the latter account as well. 7.8 Lastly comes the Revenue's concluding argument that the CCIT has rightly held that assessee's trustees had unbridled powers and they had also received payments from the former. We make it clear that there is no such condition in section 10(23C)(vi) of the Act qua the internal day to day running of an institution set up solely for carrying out educational activities. Hon'ble apex court's decision Commissioner of Customs (Imports) Vs. M/s Dili....
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....in AYs 2006-07 & 2007-08 as well:- "1. That, the Ld. Dy Commissioner erred in initiating proceedings u/s 148 and completing the assessment u/s 143(3)/147 and the Ld. CTT(A)-l, Bhubaneswar confirming the same is in clear violation of the settled law laid down by the Hon'ble Supreme court in case of GKN Driveshaft (India) Ltd. Vs. ITO [2003] 252 ITR 19 (SC). 2. That, the Ld. Dy Commissioner erred in law and facts by passing the assessment order on 26.03.2013 and the Ld. CTT(A)-l, Bhubaneswar confirming the same is in clear violation of the order dated 15.12.2009 by the Hon'ble High Court of Odisha and hence, the assessment made on 26.03.2013 is barred by limitation. 3. That, the Ld. Dy Commissioner and the Ld. CIT(A) - I Bhubaneswar confirming the same failed to appreciate that the fact I that the Statute u/s 153 of the IT Act categorically states that 'immediately after period of stay order if the time available is less than sixty days then such remaining period shall be extended to sixty days, but the order was passed on 26.03.2013 and hence, the assessment made on 26.03.2013 is barred by limitation. 4. That, the Ld. Dy Commissioner e....
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.... the country. Clause 12: To establish, maintain or grant aid to homes for aged, orphanages or other establishments of the relief and help to the poor, needy and destitute people, orphans, widows and aged persons. " 7. Such objects are clearly not connected with education. Section 10(23C)(vi) of the I.T. Act, 1961 stipulates that in order to qualify for approval of exemption, the following basic conditions should be satisfied: (i) It has to be a University or other educational Institution. (ii) It has to exist solely for educational purposes. (iii) It should not be for purposes of profit. 7.1 One of the basic pre-requisites for considering claim of exemption u/s.10(23C)(vi) is that the educational institution must exist 'solely' for educational purposes. The expression 'solely' came up for consideration before the Rajasthan High Court in the case of Maharaja Sawai Mansinghji Museum Trust (169 ITR 379). The Hon'ble Court had held that the expression 'solely' means exclusively and not primarily. This case was decided in the context of erstwhile provisions of section 10(22) of the Income tax Act,....
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....eping powers to the Permanent Trustees to have absolute control over the management of the Trust and utilize the property of the Trust for their own advantage. Some of such clauses 2:C reproduced below: "Clause 18: The funds of the Trust shall be kept in a Scheduled Bank and shall be operated by either of the permanent trustees. Clause 20: The Permanent Trustees may appoint THREE more Trustees of their choice GBP0 function as co-trustees and their tenure of office shall be not more than two 'ears from the date of appointment unless they are re-nominated for further period Clause 21: The temporary Co-managing Trustee will exercise their duties as co-trustees subject to the control and supervision of the permanent trustees and in case of any mal-feasance or mis-feasance or negligence in discharging their duties in the management of the educational institution The said temporary managing co-trustees may be dismissed by The Permanent Trustees prior to the expiry of the stipulated period of two years. Clause 23: That the Permanent Trustees shall have the power to nominate their successors to be Permanent Trustees, failing which two of their heirs ....
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....nal institutions namely (i) Roland Supriya Public School; (ii) Roland Institute of Computer & Management Studies; (iii) Roland Supriya Junior College and (iv) Roland Institute of Technology. During the course of assessment proceedings, it is found that the assessee-trust has collected development fees from the students of +2Commerce and Science. As per the fee structure, the development fees charged per student is as under: Class 1st Year (Fee per student) 2nd Year (Fee per student) +2 Commerce Rs. 2,000/- Rs. 1,900/- +2 Science Rs. 2,000/- Rs. 1,900/- From the above, it can be seen that the assessee-trust has collected the development fees over and above the normal fees collectible from the students which is not in accordance with the aims and objectives of the trust as it does not come within the meaning of 'charitable purposes' as per the provisions of Section 2(15) of the Income tax Act, 1961. Further, it is also pertinent to mention here that the development fees charged by the assessee-trust from the students are much higher than the other fees collected. Thus, as per the decision of the Hon'ble ITAT, Hyderabad in the case of Vo....
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....l also be clearly evident from para 2 of the respective Assessment Orders for the A.Ys. 2005-06, 2006-07 and 2007-08. Further from the 'reasons recorded' reproduced, it is clear that the appellant's respective assessments for the captioned A.Y.s have been reopened on the alleged premise that in the absence of approval uls 10(23C)(vi) of the LT. Act, 1961 to the appellant for the A.Y. 2007-08 (incorrectly mentioned in the reasons recorded as A.Y. 200607) and also in earlier A.Y.s., the appellant's income over expenditure in all the captioned A.Y.s have not been applied or accumulated by it for application, wholly and exclusively to the objects for which it is established. In other words, the Ld. AO has impliedly alleged that in the absence of approval u/s 10(23C)(vi) of the I.T. Act, 1961 the appellant's income over expenditure to the extent of Rs. 26,29,697/-, Rs. 53,74,823/- and Rs. 35,07,429/- for the captioned A.Y.s have escaped assessment uls 147 of the LT. Act, 1961 as the same have not been applied or accumulated by it for application. However there is no express allegation of escapement of income by the Ld. AO in the reasons recorded. ....
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..... T. Act, 1961 is not available to the appellant it would not make a difference to its income being exempt U/S 11 of the L T. Act, 1961, if the conditions under this section are satisfied. Reliance in this regard is placed on the following judicial pronouncements: * The Hon'ble Supreme Court of lndia in the case of CIT vs. Bar Council of Maharashtra, [1981]130 ITR 28 (SC). * The Hon'ble Punjab & Haryana High Court in the case of CIT vs, Mahasabha Gurukul Vidyapeeth Haryana, [2010] 326 ITR 25 (P&R). Having submitted the above, the appellant would like to reproduce section 11(1)(a) of the I.T. Act, 1961: [Income from property held for charitable or religious purposes. 11. (1) Subject to the provisions of section 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (1)(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India, and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income....
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....the Ld. AO and confirmed by the Ld. CTT(A). Hence the appellant's income during the A.V.s. 2005-06, 2006-07 & 2007-08 is exempt u/s 11 of the LT. Act, 1961. Escapement of income from chargeability to tax being the jurisdictional requirement for invoking section 147 of the LT. Act, 1961, the same being absent in the present case for the A.V.s. 2005-06, 2006-07 and 2007-08. the impugned Assessment Orders for the captioned AY.s passed by the Ld. AO u/s 147/143(3) of the I.T. Act, 1961 (and further confirmed by the Ld. CIT(A» is without jurisdiction. void ab initio and hence should be quashed. Having submitted the above the appellant would further like to submit that the Ld. AO has denied exemption u/s 11 of the LT. Act, 1961 to the appellant during the captioned A.V.s (2005-06,2006-07 and 2007-08) and treated it as an AOP alleging certain violations including some in the nature of sections 13(1) and 13(2) of the LT. Act, 1961. Such denial of exemption U/S 11 of the LT. Act, 1961 has been made by the Ld. AO in spite of the fact that the appellant's registration U/S 12AA of the LT. Act, 1961 has always been valid (including the captioned AY.s) an....
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....law and consequently, the assessment order made u/s .147/143 is also bad in law. 14. On the other hand, the ld. DR relied on the orders of revenue authorities. The ld. CIT-DR submitted that the order has been passed by the ld. AO within the stipulated time. In this regard, he referred to the provisions of section 153 of the IT Act for time limit for passing the order. He further submitted that there is no proof for filing the objections for reopening u/s 143(3)/147 by the assessee. The ld. CIT-DR also submitted that the reopening of assessment made by the AO is not on change of opinion. 15. We have considered the rival submissions and perused the material on record. The main contention of the assessee is that the order(s) passed by the AO u/s 143(3)/147 are in clear violation of the order passed by the Hon'ble High Court of Odisha dated 15/12/2009 wherein the Hon'ble Court directed the department to pass the order within two months from the date of their order, whereas the AO passed the reassessment order u/s 147 on 26/03/2013, which is barred by limitation, as contended by the assessee. Referring to the Written Synopsis, the ld. AR stated that once 12AA granted and it has....
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.... In this regard, we find substance in the submission of the ld. AR that the orders passed by the AO is time barred. Further, we also note that in the remand proceedings the AO has categorically stated as under in regard to not disposing off the objections raised by the assessees', which read as under: "II) AO has not passed any order in respect of objections filed by the appellant against the reasons recorded for reopening: The assessee has filed a written submission on 26.08.2009 in which it has objected to the reasons recorded for reopening of the assessment for the Asst. Yr.20065-06 and requested to drop the proceedings. But there is nothing found on the face of the record as well as order sheet regarding passing of any speaking order in response to such objection raised by the assessee with regard to reasons recorded (or reopening of the assessment u/s.147." (emphasis provided). 15.2 It is clear from the above that the ld. AO has not disposed off the objections filed by the assessee as per the ratio laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra). Therefore, we conclude on the basis of material available on record ....