AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (8) TMI 32
X X X X Extracts X X X X
X X X X Extracts X X X X
....eda, Homeopathic Medical, Physiotherapy, etc. Thus the assessee Trust was running the following colleges: i) Parul Institute of Engineering of Technology (Diploma Sudies)(PIETDS) ii) Parul Institute of Engineering of Technology (Diploma 2nd Shift) (PIET-D 2nd shift) iii) Parul Plyitechnic Institute (First Shift)(PPI) iv) Parul Plyitechnic Institute (Second Shift)(PPI) v) Shanti Sadan Hostel (SSH) vi) Student Welfare Association) (SWA) 3. The assessee Trust submitted that three Trusts namely (i) Parul Arogya Seva Mandal, Vadodara, (2) Parul Trust, Limda and (3) Hariom Arogya Seva Mandal, Vadodara got merged into the present Trust namely Parul Arogya Seva Mandal Trust which was approved by the Jt. Charity Commissioner, Vadodara vide order dated 31-07- 2014. Thus the objects of the Trust are medical treatment for poor people, undertake general activities related to public health, Organize Family Planning Centres, undertaking activities for education from pre-primary to higher education at university levels, to provide and take forward necessary help/assistance for development of educational activities in different branches/facul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are briefly noted here under; Name of institution F.Y. Surplus as per Income & Expenditure account (in Rs. ) Total Receipts (in Rs. ) % of surplus to Income and Expenditure account Parul Arogya Seva Mandal(PASM)Consoli dated 2014-15 13,41,28,042 46,81,67,075 28.65 »do» 2015-16 6,34,48,968 36,44,79,232 17.41 »do- 2016-17 1,13,24,915 32,92,47,142 3.44 ; Parul Institute of Engg. And Technology (2^nd Shift) 2014-15 71,90,357 6,88,48,200 18.44 Parul Institute of Engg. And Technology(me 2^nd shift) 2014-15 24,70,143 1,42,16,350 17.38 Parul Institute of Technology (2nd Shift) 2014-15 59,17,491 4,46,86,275 13.24 Parul Institute of Technology (Me 1st Shift) 2014-15 6,08,915 90,96,800 6.69 Parul Institute of Technology -(Me 2^nd Shift) 2014-15 11,89,205 67,01,900 17.74 Parul Institute of Engg. And Technology(MCA 2nd Shift) 2014-15 7,38,095 51,81,000 14.25 Parul Institute of Engg. And Technology(MCA Integrate) 2014-15 71,511 19,47,850 3.68 Parul Institute of Engg. And Technology(Diploma 2nd Shift) 2014-15 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the trust existing solely for the purpose of education does not get fulfilled. Few examples of such violations are as under: i. Parul Trust Limda. 1. Clause No. iv relates to medical. 2. Clause v relates to social activities. ii. Shree Hariom Arogya Seva Trust. Vadodara. 1. Clause No. c for medical treatment 2. Clause No. d for public health 3. Clause No. h in respect of upbringing and training for self-reliance to orphan and deserted women and children. iii. Parul Arogya Seva Mandal Trust, Vadodara. 1. Clause No, a, b, & c with respect to medical treatment. 2. Clause No. d with respect to public health 3. Clause No. h with respect to upbringing and training for self-reliance to orphan and deserted women and children. 9.3 Considering the above facts of the case, the applicant having multiple objects cannot be said to be existing solely for the purpose of education. It is open to the trustee to pursue all or other objects of the trust under the garb of education. Therefore, the condition of section 10(23C) (vi) ie the applicant existing solely for educational purposes is not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world if you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life But that is not the sense in which the word 'education' is used in clause (15) of section 2 What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling" From the aforesaid judgment of the Hon'ble Supreme Court, the word "education" used in clause (15) of section 2 of the Act of 1961 means the process of training and developing the knowledge, skill, mind and character of the students by normal schooling. In our opinion, the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 10(22) was whether the activities of the applicant came within the definition of "income of educational institution". Under section 10(22) one had to closely analyse the activities of the institute, the objects of the institute and its source of income and its utilisation. Even if one of the objects enabled the institute to undertake commercial activity, the institute would not be entitled to approval under section 10(22) The said section inter alia excludes the income of the educational institute from the total income " From the aforesaid judgment of the Hon'ble Supreme Court, it is settled law that the sole object of the applicant seeking approval u/s 10(23C)(vi) of the IT Act has to be a educational object. 11. Further, as per the provisions of section 10(23C)(vi) of the Act of 1961, it is obligatory on the part of the authority to examine the record and object of the society objectively and therefore taking into consideration the submission made by the applicant in detail, it is held that the objects particularly 3(c)(viii) of the Applicant Trust are contrary to the object of the educational purpose and therefore, it is concluded that the applicant do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see Trust. There is a Letter of Authority in favour of Shri Samir Parikh, Chartered Accountant, he appeared before this Tribunal on 30-05-2022, wherein he was directed to file revised concise grounds. Thereafter neither the Representative nor the assessee appeared for the above appeal, when the case is re-posted for hearing for 9th times from 07-07-2022 to 13-07-2023. Thus it is presumed that the assessee Trust is not interested in conducting the above appeal, therefore we proceed to decide the appeal with available materials on record and with the assistance of Ld. CITDR. 6.1. The assessee filed a submission on record which reads as under: "....7 Hence it is clear that appellant trust is existing solely for educational purpose and is eligible to get exemption under section 10(23C)(vi) of the Income Tax Act, 1961. 8. Without prejudice to above, it is submitted that having multiple objectives along with educational object cannot be said that the institution/trust does not exist solely for educational purpose. In the decision of Hon. High Court of Delhi in case of Jaypee Institute of Information Technology Society Vs. Director General of Income-tax (Exemptions) [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lus and total receipts. The said figures are not correctly understood by the Hon. Commissioner of Income tax so far as trust has spent more than 85% of its aggregate income including capital expenditure incurred by the trust. 11. Hon. CIT (Exemption) is not correct in holding that applicant trust has earned a huge profit from its educational activities. While giving surplus and total income as per audited income & expenditure account, he has only considered revenue expenses and has not considered capital expenses incurred by various educational institutions and by the trust. It is submitted that trust has utilized more than 85% of its total receipts in the A.Y. 2017-2018, details is as under: Detailed application of funds of the trust for A.Y. 2017-2018 towards educational purpose as per return of income is as under: Particulars Amount Rs. A.Y. 2016-2017 Amount Rs. A.Y. 2015-2016 Income of the trust 364506028 468465500 Educational Income including Fees and other educational receipts 566133867 1315531244 Total Income 930639895 1783996744 Application of Fund for Educational purpose Expenses incurred by ed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....purposes of the trust, is to survive, it will have to be brought into relation with the life of the community as a whole, not only with the refined delight of a few gentlemen of leisure. Real education is one which makes a student socially relevant. It was in that mind that other "Social Activities" objects are incorporated in the trust deed so that students in the institution were able to get "real" education. The sole/main purpose therefore remained "education". If a trust incorporated the other objective of "greater interface with the society" through extra mural, extension and field action related programmes" these are not the objectives independent of education but are an aid to the education." 16. Appellant trust is existing solely for educational purpose and not for the purpose of profit motive, it has satisfied all the conditions laid down under the provision of section 10(23C(vi) of the I.T. Act, application for approval be granted to the applicant trust under section 10(23C) (vi) of the Income Tax Act, 1961. 17. Appellant trust is relied on following judicial pronouncements: a. Jaypee Institute of Information Technology Society V. Director Gener....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t submitted documentary evidence, which could establish its contention that such scholarships are in fact been used by those students for the purpose of education. Thus the contention of the assessee that the activities of the Trust are only for education is also not correct. The Hon. Supreme Court in the case of Dharamposhanam 114 ITR 463 has held that whether a Trust is for charitable purpose or not is to be determined by reference to all the objects for which the trust has been brought into existence and for considering the claim of exemption, the activities under the provisions of its memorandum of association are relevant and not the activity actually conducted by the assessee. The relevant portion of the judgment is reads as under: "It has been urged on behalf of the appellant that what should be taken into consideration is the activity actually conducted by the assessee, and not what is open to it under the provisions of its memorandum of association. We do not agree. Whether a trust is for charitable purposes falls to be determined by reference to all the objects for which the trust has been brought into existence" 8.1. Considering the above facts of the case, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... plain and unambiguous terms of the statute and the substantive provisions which deal with exemption, there cannot be any other interpretation. [Para 51] The seventh proviso to section 10(23C)(vi) alludes to business and profits (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'). The interpretation of section 10(23C), therefore, is that the trust or educational institution must solely exist for the object it professes (in this case, education, or educational activity only), and not for profit. The seventh proviso however carves an exception to this rule, and permits the trust or institution to record (or earn) profits, provided the 'business' which has to be read as the education or educational activity and nothing other than that is incidental to the attainment of its objectives (ie., the objectives of, or relating to, education). [Para 58] The interpretation adopted by the judgments in American Hotel and Lodging Association v. Central Board of Direct Taxes [2008] 170 Taxman 306/301 ITR 86 (SC)/[2008] 10 SCC 509 as ....