TaxTMI 
TaxTMI 
2021 (10) TMI 468
X X X X Extracts X X X X
X X X X Extracts X X X X
...."Whether, in view of the law laid down in CIT Vs. Children's Education Society [2013] 358 ITR 373 (Kant.) and the order passed by this Hon'ble Court in CIT (Exemption) v. Chironji Lal Virendra Pal Saraswati Shiksha Parishad [2016] 380 ITR 265 (All), the order of the Tribunal denying the exemption under Section 10 (23C) (iiiad) and clubbing the voluntary contributions received by the appellant Society with the receipts of the educational institution is justified in law?" 4. Having heard the learned counsel for the parties, it transpires that the appellant/assessee Manas Sewa Samiti is a Society (hereinafter referred to as "Society"). It is registered under the Societies Registration Act, 1860. Under its registered objects, it established an educational institution in the name, Institute of Information Management and Technology at Aligarh (hereinafter referred to as "Institution"). For the previous year relevant to A.Y. 2007-08, undisputedly the said Institution received fees Rs. 85,95,790/- and interest on FDR Rs. 86,121/-. Thus the total receipts of the Institution were Rs. 86,81,911/-. After deducting expenditure of the Institution, the excess of Income over Expenditure....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t order on the further reasoning that there was no evidence that the donations had been received by the Society with any specific direction that they will form part of the corpus of the Institution. Reliance has also been placed on the fact that there exists no registration under Section 12AA of the Act. Hence the assessee was not entitled to the benefit and it did not exit solely for education purpose of imparting education. 9. In support of his submission, learned counsel for the assessee has relied on the decisions in the case of CIT vs M/S Childrens Education Society reported in (2013) 358 ITR 373 (Kar); M/S Vivekanand Society of Education and Research vs. CIT another, dated 29.12.2017 in ITA No.23/2014 and a division bench of this Court in ITA No.258 of 2013 (The CIT Alld. Vs. Wachaspati Madhupati Prani Sewa Sansthan) decided on 30.10.2017. 10. On the other hand, Sri Gaurav Mahajan, learned counsel for the revenue has relied on a decision of the Supreme Court in Visvesvaraya Technological University Vs. Assistant Commissioner of Income-tax reported in (2016)384 ITR 37(SC). 11. Having considered the submissions advanced by the learned counsel for the parties and having....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Legislature, they would not have introduced separate sub- clauses as (iii)(ab) and (iii)(ad). If such interpretation is placed, sub-clause (iii)(ab) becomes otiose. Therefore, it is not possible to place such an interpretation. If an assessee society is running several educational institutions, if some of them are wholly or substantially financed by the Government in terms of sub-clause (iii)(ab), the income on behalf of such educational institution received by the assessee is exempted from being computed the total income of the assessee. If the assessee is running other educational institutions which are not wholly or substantially financed by the Government, then the benefit of that exemption is also extended to the income derived from such educational institutions and received by the assessee under sub-clause (iii)(ad) reading with sub-clause (iii)(ad) along with Rule2BC. It was contended, the Legislature used the word "aggregate annual receipt" and "amount of annual receipts" and therefore, the provisions are not one and the same. The word "aggregate" has been defined in Chambers 21st Century Dictionary as under: "aggregate - noun = a collection of separate units broug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ogether, probably, the said provision regarding exemption would be of no use at all. Especially, if the society is running a medial college or any engineering college or other professional courses, then the annual receipt of each institution would run to few crores and therefore, the very object of granting exemption to such genuine institution would be lost. Therefore, the word "aggregate annual receipt" has to be understood with the context in which it is used and the purpose for which the said provision was inserted, keeping in mind, the Scheme of the Act. Therefore, if an assessee is running several educational institutions, if any of them is wholly or substantially financed by the Government, then the income from such educational institution received by the assessee is not included while computing his total income. Similarly, income from each educational institution if they are not receiving any aid from the Government wholly or substantially in respect of which the aggregate annual receipt do not exceed Rs. 1 crore received by the assessee, is also not included while computing annual total income of the assessee." 16. Similar view was taken by the Jammu and Kashmir High Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....behalf of the Institution A, would not be included in the total income of that person (such as the assessee society). At the same time, if the aggregate annual receipts of Institution B exceeds Rs. 1.00 crore, then any income received by any person on behalf of Institution B would be included in the total income of that person. Similarly, by taking this logic further, if neither Institution A nor Institution B has aggregate annual receipts of Rs. 1.00 crore or more, any income received by any person on behalf of these institutions, would not form part of the total income for the purposes of income tax." 17. Thereafter, the Jammu and Kashmir High Court concurred with the opinion of the Karnataka High Court in CIT Vs. Children's Education Society [2013] 358 ITR 373. 18. A coordinate bench of this Court also appears to have offered a similar reasoning in ITA No.258 of 2013 (The Commissioner of Income Tax Alld. Vs. Wachaspati Madhupati Prani Sewa Sansthan) wherein, it was observed as under:- "We are in full agreement with the finding of the ITAT as we find that the assessee society is running a school and has admittedly received the tuition fee being the annual recei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the Institution did not exist on its own and was run by the Society could never be a valid consideration to disallow that benefit. It is clearly not contemplated under the Act. Here, we may further note, according to the assessing authority itself, there were two accounts maintained. One for the Institution and the other of the Society. After the Income and Expenditure account of the Institution had been made, its excess of Income over Expenditure were carried to the account of Society for taxation and other purposes. That did not and it could not lead to the inference that the receipts of the Society were also the receipts of the Institution. That reasoning is based on no material or evidence on record. 24. Legally, it is only a figment of imagination. Even in the computation of the income, the assessing authority has recognized the difference between the two receipts being "Surplus as per Income/ Expenditure A/c of college". It was taken at Rs. 38,54,310 and, "Surplus as per Income/Expenditure A/c of Society" of the of society which was taken at Rs. 47,62,000/-. 25. Once that difference of the receipts was acknowledged by the assessing authority, there was absolutely no ....