TaxTMI 
TaxTMI 
2025 (3) TMI 138
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....section 10(23C) (vi) of IT Act to the Appellant as the Appellant has duly complied with all the conditions as prescribed under law for grant of approval under section 10(23C) (vi) of the Act. 3. On the facts and circumstances of the case and in law, the learned CIT Exemption, Pune has grossly erred in holding that the objects of the appellant are not solely and/or incidental to educational activities. 4. The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of Appeal." 3. Facts in Brief:- The assessee was incorporated on 18/02/2024 under section 8 of the Companies Act with the main object "To convert existing Society "G.H.R. Education Foundation" having registration no. MAH/830/04 dated 21/12/2004 (PAN: AAATG7303E) as going concern under Section 366 to 374 of Part-1, Chapter-XXI of the Companies Act, 2013 r/w with the Companies [Authorised to be Register] Rules, 2014 as amended from time to time, on its incorporation under the Companies Act, 2013 to "G.H.R. Education Foundation", a Section 8 Company, limited by guarantee and not having share capital under the Companies Act, 2013. The predecessor society was an approved educational....
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....ndation (Co) and GHR Edu Foundation Society (Trust), copies of resolution and minutes of proceedings of the trust and the company regarding transfer and taking over of activities has not been furnished. (ii) Year-wise details of donations with full name, address, PAN of donors, date and mode of donation, amount, receipt no. issued. has not been furnished. (iii) Present application has been filed u/s 10(23C) (iv) (B) for grant of registration u/s 10(23C) (vi) of the Act. Provisions of said section applies to an institution existing solely for educational purposes. However, as noticed from the MOA of the institution, the objects provide for many activities other than education, for e.g. running rehabilitation centre, clinics etc. as well. Therefore, the assessee is not eligible for registration under said section." 3.1 The assessee was requested to submit the compliance by 06/08/2024. The notice was duly served on the assessee through e-portal and e-mail. In compliance to the notice, the assessee submitted its reply on 05/08/2024 wherein the assessee contended that G.H.R. Education Foundation is incorporated on 18.02.2024 under section 8 of the Companies Act with the main objec....
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....tals Ayurvedic College, Homeopathic College, Dental College, Nursing College, Law College, Institution of Management etc. 3) To create self-discipline value of manual labour, feeling of equality and morality amongst the students. 4) In general to provides an ideal education without any religion bias with the principles of equality, Liberty, Justice and respect for all. 5) To undertake and facilitate research in all branches of knowledge and establish institutions of this purpose. 6) To work for promotion and over all educational development of Hindi Speaking community according to Government Strategy 7) To promote education among economically backward classes and providing free medical services and providing free services to poor people. 8) To aid, help and donate to a registered Public trust having exclusive objects of promoting and advancement of secular education, Medical education and research thereon. 9) To do all such necessary things which are incidental or conducive to the attainment of the aforesaid objects. 10) To grant stipends scholarship, studentship and other allowances, concessions and gratuities to deserving scholars, students and other candidates. ....
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....ion of Schools, Colleges, Institutions and Universities for imparting higher education in all disciples of education in India including collaborations with foreign universities where considered necessary. 4. To start institutions and organization like Pre-Primaries, Primaries, Secondary, School, Colleges, Hostels, Institutions, Universities, Guidance Centres, Physical Training Institutions, Teachers Training organization, Rehabilitation Centres, Libraries, Institution of Social Science, Engineering Colleges, Medical Colleges, Hospitals, medical centres, medical institutions, clinics, Ayurvedic College, Homeopathic College, Dental College, Nursing College, Law College, Institute of Management etc, etc, Vocational courses like Industrial training Institutes Centers And Vocational Certificate Courses, ITI, Technical High School (Bi-Focal Courses as well as degree courses in Vocational Education). 5. To create self-discipline value of manual labour, feeling of equality and morality amongst the students. In general to provides an ideal education without any religion bias with the principles of equality Fraternity, Liberty, Justice and respect for all. 6. To undertake and facilitie....
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....ncidental while achieving the sole object of education. 5.1 The law does allow the assessee to interpret the words as per its own convenience when their plain and ordinary meaning are clear and unambiguous. The assessee in its deed/MoA has consciously inserted these words which in fact was not available (excluding word of rehabilitation centres) in the deed of 'GHR Educations Foundation Society Nagpur These words have also not been used as conjunction with previous objects as claim by the assessee. The assessee has applied for registration u/s 10(23C)(vi) of the Act which says "10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (23C) any income received by any person on behalf of- (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the 72[Principal Commissioner or Commissioner]; or (via) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiv....
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....ducation. It claimed charitable status as an institution set up to advance objects of general public utility. The Surat Art (supra) decision picked the first among the several objects (some of them being clearly trading or commercial objects) as the 'predominant' object which had to be considered while judging the association's claim for exemption. The approach and reasoning applicable to charitable organizations set up for advancement of objects of general public utility are entirely different from charities set up or established for the object of imparting education. In the case of the latter, the basis of exemption is Section 10(23C) (iiiab), (iiiad) and (vi). In all these provisions, the positive condition 'solely for educational purposes and the negative injunction 'and not for purposes of profit loom large as compulsive mandates, necessary for exemption. The expression 'solely is therefore important. Thus, in the opinion of this court, a trust, university or other institution imparting education, as the case may be, should necessarily have all its objects aimed at imparting or facilitating education. Having regard to the plain and unambiguous terms of ....
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....ily be construed: "29. It is no doubt, true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter". 54. It is only when the application of literal interpretation gives rise to an absurdity, should the interpretation be expansive. This was reiterated in Mangalore A. V. Fernandez v State of Kerala, 1957 SCR 837. Chemicals and Fertilisers Ltd. v Deputy of Commercial Taxes &Ors.24: "24. ... The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where....
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....or set at naught the real object of the main enactment. After quoting previous decisions and authoritative texts, this court summarized the correct legal position, as follows: "43. We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established. To sum up, a proviso may serve four different purposes: (1) qualifying or excepting certain provisions from the main enactment: (2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable: (3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself: and (4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision." 58. 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 ....
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....those circumstances that 'business' income can be permitted-provided, as stated earlier, that the activity is education, or relating to education. The judgment in American Hotel (supra) as well as Queens Education Society (supra) do not state the correct law, and are accordingly overruled. ........" 6. As such, the Hon'ble court has held the principle of sole objects of education and/ or incidental objects relating to activity of education, to get registered u/s 10(23C) (vi) of the Act. The Hon'ble Apex Court has also held that the judgement will be prospective so that the educational institutions have time to amend its objects accordingly to continue benefits of section 10(23C) (vi) of the Act. Relevant part of the judgement is reproduced hereunder for sake of reference: "This court is further of the opinion that since the present judgment has departed from the previous rulings regarding the meaning of the term 'solely', in order to avoid disruption, and to give time to institutions likely to be affected to make appropriate changes and adjustments, it would be in the larger interests of society that the present judgment operates hereafter. As a result....
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....ached to it which is a prerequisite for running an effective medical education institution. The learned Counsel for the assessee further argued that these words must be read in conjunction with previous words of the main object clause. They cannot be read in isolation. The specific words in the main object are to start institutions like pre-primary, Primaries, Secondary Schools, Colleges, Universities etc which are followed by the general words like rehabilitation centre, clinics, etc. The specific words are solely related to education and as such the general words would take colour from the specific words which are related to education only. He further argued that all the objects of the assessee exists solely for the purpose of imparting education and none of the objects can be read in a manner so as to infer that the said object firstly is an independent object and that secondly it is not in any way connected with the main object of imparting education. The learned Counsel for the assessee further submitted that the assessee is presently engaged only in providing education related to the field of engineering apart from also running certain junior colleges and the Assessee does no....
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....CIT(E) has compared object clauses of both the entities i.e., Society (prior to conversion) and Section 8 Company (after conversion) and noticed that certain objects like Rehabilitation Centre, Medical Centre, Medical Institutions, Clinics, providing free medical services to poor people have been added in the present object clauses which were not there in the previous object clauses of the Society. He held that these objects are related to medical facilities and not related to education hence assessee is not eligible for approval under section 10(23C)(vi). We further find that upon conversion of Society into Section 8 Company there is no change in activities of the assessee. There is no finding in the impugned order passed by learned CIT(E) that the assessee is carrying on any activity other than education and more importantly the conversion has been made on the basis of going concern implying that the entire activities of the erstwhile society has been taken over by the assessee company and the assessee company is carrying on exactly the same operations as were being performed by the erstwhile society. The main objection of the learned CIT(E) that the words used "Rehabilitation Ce....
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....n including cancellation of registration if they so deem fit. However, rejecting the application for registration, for the acts which have not yet been undertaken by the assessee would amount to and be equivalent to punishing someone for a crime which he is not yet committed and which in the opinion of the officer in charge he might commit in future. Such presupposition while evaluating application for registration under section 10(23C), in our opinion, is not proper and cannot be sustained. Under any case, the assessee has already modified its objects by removing the "objectionable" objects referred to and relied upon by the learned CIT(E) and as such there remains no cause for rejection of the registration applied for by the assessee under section 10(23)(vi) as apart from the inclusion of certain objects in the object of the assessee, which as per the submission of the learned Counsel for the assessee as well as on perusal of the revised object clause submitted before us, there is no other ground raised by the learned CIT(E) for rejection of the application for grant of approval under section 10(23)(vi). On a conspectus of the above facts, firstly wherein the assessee has not und....