TaxTMI 
TaxTMI 
2007 (7) TMI 298
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.... after the assessment year 1983-84, consequent upon simultaneous amendment of sections 11 and 2(15) of the Income-tax Act, 1961 ? 2. Whether, on the facts and circumstances of the case, the activities and object of teaching and imparting training in computer science with no profit motive as per the memorandum of association, do not qualify for exemption under section 10(22) as 'educational institute' ?" 2. The facts in brief may first be noticed. The assessee RCC is a society registered under the Societies Registration Act, 1860. The assessee RCC had filed its return on August 28, 1984, for the assessment year 1984-85, showing a profit of Rs. 2,84,984 with the claim of exemption under sections 11 and 10(22) of the Act. However, the Assessing Officer rejected the claim of the assessee RCC for exemption, vide order dated February 27, 1987, holding that the income of the assessee RCC is taxable. Accordingly, net taxable income of the assessee RCC has been assessed at Rs.19,64,024. 3. The assessee RCC went in appeal before the Commissioner of Income-tax (Appeals), who examined the provisions of section 11(4A) read with section 10(22) of the Act and vide order dated August 29, ....
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....regarding institutions wholly for charitable purposes where the work in connection with the business is mainly carried on by the beneficiaries of the institution. While the purpose of the assessee is no doubt charitable in nature, the work in connection with the business is not mainly carried on by the beneficiaries of the institution. We, therefore, hold that whatever may be the position for the earlier years, the position for the assessment year 1984-85 has to be deter-mined in the light of the amendment of section 2(15) and the insertion of section 11(4A) of the Act. We, therefore, uphold the finding of the learned Commissioner of Income-tax (Appeals) that the assessee's income is not exempt under section 11 of the Act. This ground is, therefore, rejected." 5. With regard to grant of exemption under section 10(22) of the Act, the Tribunal has further held that one of the objects of the assessee RCC was to impart training but that was not the sole purpose. It was held that the major source of income of the assessee RCC has come from consultancy work. Simply because the users of the services rendered by the assessee RCC were colleges, universities, Government departments and or....
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....arh and three representatives from the State of Haryana were to be nominated. On the basis of the aforementioned constitution of the executive council, it has been urged that the assessee RCC is a body which enjoys public character structurally. He has then referred to various purposes by drawing our attention to the objects in the memorandum of association, which provides that the assessee RCC is to encourage and promote the development and progress of electronic data processing towards achieving self-reliance in the field of computer sciences and technology and to advance interdisciplinary co-operation amongst scientists, technologists, engineers, administrators and commercial entrepreneurs for the growth of teaching research, etc. It further provides for dissemination of knowledge on all aspects of electronic data processing systems and allied subjects and to stimulate and offer aid for research and development for the benefit of manufacturers and users of electronics data processing systems. A number of other objects listed in various clauses (d), (e), (f), (g) and (h) have also been relied upon to show that the trust is aimed at achieving self-sufficiency in electronic data pr....
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....or object what to say of sole activity. The assessee RCC has itself admitted in the written submissions before the Assessing Officer that consultancy was its major activity. The Assessing Officer also referred to the profit and loss account to show that the asses-see RCC had earned income from various sources like income from project and CPU hours purchased, F.D.Rs. and data entry, etc. 9. Learned counsel has then argued that the assessee RCC has been enjoying exemption till the assessment year 1983-84 but by virtue of amendment carried in sections 2(15) and 11(4A) with effect from April 1, 1984, the amended provisions of the Act have been rightly applied by the Tribunal in respect of the assessment year 1984-85 and the assessee RCC has lost its earlier charitable character which was qualified for exemption. Learned counsel has pointed out that the definition of the expression "charitable purpose" was amended by excluding the words "not involving the carrying on of any activity for profit". Therefore, it has been submitted that the order of the Tribunal does not suffer from any legal infirmity and the questions framed must be answered in favour of the Revenue and against the ass....
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....] 2 SCC 707. Dealing with the controversy relating to the assessment years 1984-85 to 1991-92 and applying the provisions as it existed at that time, which is relevant to the case in hand, their Lordships' observed as under (page 795 of 247 ITR and page 716 of [2001] 2 SCC) : "22. Sub-section (4) of section 11 remains on the statute book, and it defines property held under trust for the purposes of that section to include a business so held. It then states how such income is to be determined. In other words, if such income is not to be included in the income of the trust, its quantum is to be determined in the manner set out in sub-section (4)." 12. It is true in respect of the assessment year 1992-93, the benefits of section 11 was extended because sub-section (4A) of section 11 had further undergone change with effect from April 1, 1992. However, in respect of the assessment year of 1984-85, which is relevant to the case in hand, the benefit could not be extended. 13. In the present case, there are categorical findings recorded by the Tribunal that although one of the objects of the assessee RCC was to impart computer training but that was not its sole purpose. It has fu....