TaxTMI 
TaxTMI 
2009 (10) TMI 61
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....ertiorari or Writ, Order of direction in the nature of Certiorari or any other appropriate Writ order of Direction under Articles 226/227 of the Constitution of India directing the respondent to allow exemption u/s 10(23C)(vi) of the Act to the petitioner society; (iv) Writ of Mandamus directing the respondent to allow exemption u/s 10(23C)(vi) of the Act of the petitioner society; (v) To pass ad interim orders in terms of prayer above; and (vi) such further or other relied as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 2. As is clear from the reading of the prayers itself, the petitioner claims that it is a charitable society and is, thus, entitled to exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). But this contention of the petitioner has not been accepted by the respondent, who has rejected the application of the petitioner seeking exemption under the aforesaid provision, by impugned order dated 28.4.2008. Therefore, the issue which arises in this petition is as to whether the petitioner qualifies to be exempted under Section 10(23C)(vi) o....
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....essment years 2005-06 to 2007-08 on 18.1.2005 before the Director General (Exemptions), New Delhi. The petitioner, however, is not aware about the fate of the aforesaid applications as no order till date, either allowing renewal of exemption or refusing to grant continuation of exemption, had been served upon the petitioner. The petitioner, having failed to get any response, again applied on 5.4.2007 for further necessary approval for the assessment years 2008-09 to 2010-11 before the Director General of Income Tax (Exemptions), New Delhi, which has since been refused by the impugned order. 6. Perusal of the impugned order would reveal that the respondent has refused to grant continuation of exemption on the following reasons:- (i) As per sub-clause (d), (e), (f), (m) and (o) of clause (3) of the Memorandum of Association, the petitioner society does not exist solely for educational purposes. (ii) The petitioner is having multiple objects, of which education is only one of them. Each object is independent of the other. (iii) As the petitioner is having multiple objects, it would mean that the petitioner can pursue even the non-educational objects in th....
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....remained the same, which existed under Section 10(22) of the Act. Thus, effect of the insertion of the 3rd proviso is to be examined, which is to the following effect: "Provided also that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) - or sub-clause (vi) or sub-clause (via) - (a) Applies its income, or accumulates it for application 278a, wholly and exclusively to the objects for which it is established; and (b) Does not invest or deposit its funds, other than - (i) Any assets held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution. where such assets form part of the corpus of the fund, trust of institution or any university or other educational institution or any hospital or other medical institution. as on the 1st day of June, 1973; (ii) Any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution or any university or other educational institution or any hospital or other medical....
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....rt in the following words :- "The most relevant proviso for deciding this appeal is the thirteenth proviso. Under that proviso, the circumstances are given under which the prescribed authority is empowered to withdraw the approval earlier granted. Under that proviso, if the prescribed authority is satisfied that the trust, fund, university or other educational institution, etc. has not applied its income in accordance with the third proviso or if it finds that such institution, trust or fund, etc. has not invested/deposited its fund in accordance with the third proviso or that the activities of such fund or institution or trust, etc. are not genuine or that its activities are not being carried out in accordance with the conditions subject to which approval is granted then the prescribed authority is empowered to withdraw the approval earlier granted after complying with the procedure mentioned therein. Having analysed the provisos to Section 10(23C)(vi) one finds that there is a difference between stipulation of conditions and compliance therewith. The threshold conditions are actual existence of an educational institution and approval of the prescribed authority ....
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....e an opportunity to the applicant institute to comply with the monitoring conditions which have been stipulated for the first time by the third proviso. Therefore, cases where earlier the applicant has obtained exemptions(s), as in this case, need not be reopened on the ground that the third proviso has not been complied with. However, after grant of approval, if it is brought to the notice of the prescribed authority that conditions on which approval was given are breached or that the circumstances mentioned in the third proviso exist then the prescribed authority can withdraw the approval earlier given by following the procedure mentioned in that proviso." 11. It follows from the aforesaid judgment that when an application for exemption is to be moved by any trust, fund, university or other educational institution, the threshold conditions which are to be examined at that stage are actually existence of an educational institution and approval of the prescribed authority, for which every applicant has to move an application in the standardized form in terms of the first proviso. Insofar as newly added third proviso is concerned, which relates to application of funds, namely to ....
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....sioner of Income Tax, 224 ITR 310, has held that a society or a trust or other similar body running educational institutions solely for educational purposes and having the overall object of not to make any profit can be regarded as 'other educational institution' even if some surplus arises from its activities. 15. When we apply the principles laid down by the Apex Court in the aforesaid judgments, it becomes clear that the petitioner society has mainly been formed with the objective of carrying out educational activity. There is no the purpose of profit. As of today, its only activity is education, namely, running of various schools and no other activity. It is not the allegation against the petitioner that it has deviated from its aforesaid object, namely, the 'education'. The petitioner society had been granted exemption till assessment years 2001-02 and the application for and upto the assessment years 2007-08 were pending. The respondent has denied exemption to the petitioner society merely on suspicion that it may deviate from it in future. The income of the petitioner society had been assessed at NIL under Section 11 of the Act till the assessment year 200....