DCIT (Exemptions), Bhubaneswar V. M/s. Sikshya 'O' Anusandhan, Bhubaneswar

ITA 244/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5343 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIT KUMAR MOHAPATRA
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 73; 13; 11

Judgement Text

1 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.244 /CTK/2016 ASSESSMENT YEAR : 2012 - 2013 DCIT (EXEMPTION), A A YA KAR BHAVAN, BHUBANESWAR. VS. SIKSHYA O ANUSANDHAN, 224, DHARMA VIHAR, KHANDAGIRI, BHUBANESWAR. PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI RAJAT KAR, AR REVENUE BY : SHRI ASIT KUMAR MOHAPATRA , CIT DR DATE OF HEARING : 06 /11 / 2017 DATE OF PRONOUNCEMENT : 08 /11 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 23.3.2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN ALLOWING THE BENEFITS OF EXEMPTION U/S.11 OF THE ACT TO THE ASSESSEE, WHEN THE ACTIVITIES OF THE ASSESSEE ARE FOR THE PURPOSE OF PROFIT AND NOT CHARITABLE IN NATURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NO T JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE 2 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 ADDITION MADE BY THE AO ON ACCOUNT OF SURPLUS OF REVENUE OVER EXPENDITURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN EXCESS INCOME OF RS. 18,44, 98,876/ - OVER EXPENDITURE, WHICH HAD BEEN TRANSFERRED TO CAPITAL ACCOUNT. THE ASSESSEE HAD CLAIMED EXEMPTION U/S.11 OF THE ACT SINCE IT HAD BEEN GRANTED REGISTRATION U/S.12AA AND WAS CARRYING ON CHARITABLE ACTIVITIES OF IMPARTING EDUCATION. ACCORDINGLY, THE EXCESS OF INCOME OVER EXPENDITURE WAS CLAIMED TO BE EXEMPT U/S.11. THE ASSESSING OFFICER, HOWEVER, DENIED EXEMPTION AND TAXED THE SURPLUS, BEING EXCESS OF INCOME OVER EXPENDITURE, IN THE ASSESSMENT. THE REASONS GIVEN BY THE ASSESSING OFFICER FOR DENYI NG EXEMPTION ARE AS UNDER: I) THE ASSESSEE'S CASE IS A CLEAR CASE OF SALE OF EDUCATION AND AS DECIDED BY THE ITAT, HYDERABAD BENCH IN THE CASE OF VODITHALA EDUCATION SOCIETY VS. ADIT (EXEMPTION) - LL, HYDERABAD (2008) 20 SOT 353 (HYD ), IF ANY MONEY IS COLLECTED OVER AND ABOVE THE FEES PRESCRIBED BY CONCERNED THE AUTHORITY FOR ADMISSION OF STUDENTS, SUCH AN AMOUNT HAS TO BE CLASSIFIED AS CAPITATION FEE. THE ASSESSEE'S BEING A CLEAR CASE OF SALE OF EDUCATION, IT COULD NOT BE CONSIDERED AS A CHARITABLE INSTITUTION U/S.2(15) THE PURPOSE OF THE ORGANIZATION AS A WHOLE BEING TO MAKE PROFIT. II) LIKE ANY OTHER BUSINESS ESTABLISHMENT THE ASSESSEE SOCIETY INCURS ESTABLISHMENT EXPENSES OF CONSIDERABLE AMOUNT FROM YEAR TO YEAR WHICH INCLUDES CON SIDERABLE AMOUNT SPENT FOR ADVERTISEMENT. IT RUNS ITS EDUCATIONAL INSTITUTIONS MAINLY THROUGH THE FEES COLLECTED AS CONSIDERATION FOR IMPARTING TRAINING OR EDUCATION AND THE SURPLUS FUND CREATED FROM THE FEES RECEIVED FROM STUDENTS AFTER DEDUCTION OF ADMIN ISTRATIVE AND OTHER EXPENSES AND INTEREST ON BANK LOANS. IN COMMERCIAL PARLANCE, THE INSTITUTION HAS BEEN RUNNING PROFITABLY AND THE INSTITUTION HAS ALL THE INGREDIENTS OF A BUSINESS UNDERTAKING EXCEPTING ONE, AS CLAIMED BY THE SOCIETY, I.E. PROFIT MOTIVE. ALTHOUGH THE INSTITUTION HAS BEEN RUNNING PROFITABLY ONE HAS TO ASSUME THAT IT HAS NO PROFIT MOTIVE ONLY BECAUSE IT HAS ITS OBJECT OF 'EDUCATION' AS IT IS CLAIMED. HOWEVER, HON'BLE HIGH COURT OF 3 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 UTTARAKHAND IN A RECENT CASE IN CIT VS. NATIONAL INSTITUTE O F AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY (2009) 226 UTTARAKHAND 582 HAS OBSERVED THAT 'THOUGH EXPRESSION 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' CANNOT BE READ WITH THE EXPRESSION 'EDUCATION', BUT THAT DOES NOT MAKE EVERY KIND OF P URE COMMERCIAL ACTIVITY IN THE NAME OF EDUCATION A CHARITABLE ONE' AND THE HON'BLE COURT HELD THAT 'MERE IMPARTING EDUCATION FOR PRIMARY PURPOSE OF EARNING PROFITS CANNOT BE SAID TO BE A CHARITABLE ACTIVITY. WE ARE OF THE FIRM VIEW THAT, IN THE EXPRESSION 'CHARITABLE PURPOSE' 'CHARITY' IS THE SOUL OF THE EXPRESSION. MERE TRADE OR COMMERCE IN THE NAME OF EDUCATION CANNOT BE SAID TO BE A CHARITABLE PURPOSE'. LIKE THE ASSESSEE, IN THAT CASE THE SOCIETY HAD BEEN CHARGING SUBSTANTIAL FEES FROM THE STUDENTS AND M AKING HUGE PROFIT. III) IT IS ALSO OBSERVED THAT THE ASSESSEE IS HAVING BUSINESS OF SALE AND PURCHASE OF MEDICINE. ON THE VERIFICATION OF SALES LEDGER IT IS NOTICED THAT SALES OF MEDICINE OF RS.47,733,093/ - RELATED TO MEDICAL EDUCATIONAL ACTIVITIES CARRIED IN THE NAME OF INSTITUTION OF MEDICAL SCIENCE & SUM HOSPITAL & INSTITUTION OF DENTAL SCIENCE IMPARTING MBBS & BDS COURSES RESPECTIVELY. USER FEES COLLECTED FROM THE PATIENTS COMING TO THE SUM HOSPITAL IS RS. 12,12,74,575/ - , AND ALSO THE ASSESSEE HAS BUSI NESS MOTIVE BY INCURRING SUBSTANTIAL EXPENSES FOR ESTABLISHMENT AND ADVERTISEMENT. IN THE VIEW OF THE ABOVE SOCIETY OBJECTIVE IS DIVERTED FROM IMPARTING EDUCATION TO MAKING AND PROFIT FROM EDUCATION. HUGE ADVERTISEMENT EXPENSES ALSO STRENGTHEN THIS VIEW. ALTHOUGH THE INSTITUTION HAS BEEN RUNNING PROFITABLY, ONE HAS TO DISCERN THAT IT HAS NO PROFIT MOTIVE BECAUSE IT HAS ITS OBJECT OF EDUCATION. THE HON'BLE HIGH COURT OF UTTARAKHAND IN CIT VS NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATION SOCIETY (2009) 226 UTTARAKHAND 582 OBSERVED THAT 'THOUGH EXPRESSION NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT CANNOT BE READ WITH EXPRESSION 'EDUCATION ' BUT THAT DOES NOT MAKE EVERY KIND OF PURE COMMERCIAL ACTIVITY IN THE NAME OF EDUCATION OR CHARI TABLE ONE' AND THE HON'BLE COURT HELD THAT THERE IMPARTING EDUCATION FOR PRIMARY PURPOSE OF EARNING PROFITS CANNOT BE SAID TO BE A CHARITABLE ACTIVITY. WE ARE OF THE FIRM VIEW THAT, IN THE EXPRESSION 'CHARITABLE PURPOSE' CHARITY IS THE SOUL OF EXPRESSION. MERE TRADE OR COMMERCE IN THE NAME OF EDUCATION CANNOT BE SAID TO BE A CHARITABLE PURPOSE. IN THE PRESENT CASE ALSO, THE SOCIETY HAS BEEN CHARGING SUBSTANTIAL FEE FROM STUDENTS TO MAKE PROFIT. IT VARIED STUDENT STUDENT AND 4 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 STREAM TO STREAM WHICH CLEARL Y INDICATES BUSINESS ACTIVITIES. FOR THE CHARITABLE PURPOSE, FEE SHOULD BE MINIMUM FULFILL THE OBJECTIVES AND TO GIVE BENEFIT TO THE SOCIETY IN THE AREA EDUCATION. IV) SECTION 13 ENUMERATES CERTAIN CIRCUMSTANCES UNDER WHICH THE BENEFIT OF SECTIONS 11 AN D 12 WILL BE LIABLE TO BE DENIED. THE PROVISIONS OF SECTION RUN AS UNDER: 'NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF - (A) B) . (C) IN THE CASE OF ... A CHARITABLE INSTITUTION, ANY INCOME THEREOF (I) IF SUCH ... INSTITUTION HAS BEEN ... ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND ... THE RULES GOVERNING THE INSTITUTION, ANY PART OF SUCH INCOME ENSURES, OR (II) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INSTITUTION (WHENEVER ... ESTABLISHED) IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB - SECTION (3):' AND SUBSECTION (3) OF SECTION 13 MENTIONS INTER ALIA THE FOUNDER OF THE INSTITUTION, ANY RELATIVE OF SUCH FOUNDER AND ANY CONCERN IN WHICH SUCH FOUNDER OR HIS RELATIVE HAS A SUBSTANTIAL INTEREST TO BE SUCH PROHIBITED PERSONS. IN THE PHRASEOLOGY 'NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF - ' THE WORD 'THEREOF IS REFERRING TO 'TOTAL INCOME' AND NOT MERELY 'INCOME AS REFER TO IN CLAUSE (A) OF SUB SECTION (1) OF SECTION 11 WHICH RUNS AS 'INCOME DERIVED FROM P ROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE.. PURPOSES' WHICH BUT FOR THE EXEMPTION U/S 11 WOULD HAVE BEEN OTHERWISE CONSIDERED IN THE 'TOTAL INCOME'. IN OTHER WORDS, IF THE CASE OF THE SOCIETY IS COVERED BY ANY OF THE CIRCUMSTANCES AS MENTIONED IN SECT ION 13(1), THE INSTITUTION WILL BE LIABLE TO BE DENIED OF THE BENEFIT OF SECTION 11 OR 12. THUS THE BENEFIT OF SECTION 11 IS ALSO RESTRICTED BY THE PROVISIONS OF SECTION 11(4A) INTRODUCED AFTER OMITTING THE PROVISION OF SECTION 13(L)(BB). IT IS NOTICED TH AT ASSESSEE IS CARRYING OUT EDUCATION FOR COMMERCIAL MOTIVE AND MAKING PAYMENTS TO THE INTERESTED PERSONS. 5 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 AND AS SUCH, IN VIEW OF THE ABOVE VIOLATIONS OF SECTION 13(L)(D), THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 11 ALT HOUGH IT STANDS REGISTERED U/S .1 2AABY THE CIT. 4. ON APPEAL, THE CIT(A) VACATED THE DISALLOWANCE BY OBSERVING AS UNDER: 4. I HAVE CONSIDERED THE MATTER CAREFULLY, PERUSED THE MATERIALS ON RECORD AND ORDERS OF THE ID. CIT(A) AND THE HON'BLE UAT, CUTTACK BENCH, CUTTACK FOR THE AYS 2 007 - 08 TO 2011 - 12. I ALSO FIND THAT THE FACTS OF THE CASE FOR THE AY 2011 - 12 ARE ALMOST IDENTICAL WITH THE FACTS OF THE YEAR UNDER APPEAL, I.E. AY 2012 - 13. THE AO HAD DISALLOWED EX EMPTION U/S.11 FOR THE AY 2011 - 12 FOR THE SAME REASONS AS ARE GIVEN IN THE ASSESSMENT ORDER FOR THE AY 2012 - 13. MY ID. PREDECESSOR, THE THEN CIT(A) - 1, BHUBANESWAR, IN HIS ORDER DT. 1.8.2014 FOR THE AY 2011 - 12 IN ITA L \ LO.0413/13 - 14 WHILE HOLDING THAT THE AO WAS NOT JUST I FIED IN DENYING EXEMPTION U/S.11 OF THE ACT HAS OBSERVED AS UNDER: '7. TO SUM UP THE DISCUSSION, THE AO'S OBSERVATION THAT THE ASSESSEE IS GENERATING THE INCREASING SURPLUS FROM YEAR TO YEAR IS NOT CORRECT, IN ANY CASE THAT DOES NOT PROVE PROFIT MOTIVE. SIMPLY BECAUSE THERE IS SURPLUS DOES NOT AUTOMATICALLY LEADS TO PROFIT MO TIVE. THE AO'S CONCLUSIONS THAT SINCE SOCIETY'S FUND HAS BEEN USED FOR BENEFIT OF THE PROHIBITED PERSONS AS MENTIONED IN SECTION 13(3), THE ASSESSEE IS NOT ENTITLED FOR BENEFIT OF SECTION 11 IS NOT CORRECT. THE AO'S OBSERVATIONS THAT ASSESS EE IS NOT ELIGIBLE FOR BENEFITS OF SECTION 11, IN VIEW OF MISCHIEF OF SECTION 13(L)(C) R EAD WITH SECTION 13(3) IS NOT LEGALLY AND FACTUALLY SUSTAINABLE. KEEPING IN VIEW THE ABOVE DISCUSSION, IT IS HELD THAT THE AO WAS NOT JUS TIFIED IN DENYING EMPTION U/S.11 OF THE ACT. HOWEVER, THE AMOUNT OF RS.6 LACS PAID TO SMT. SASWATI DAS IS TAXABLE AT THE MAXIMUM MARGINAL RATE IN VIEW OF THE PROVISIONS OF SECTION 13(L)(C)(II).' 4.1 BEFORE HOLDING AS ABOVE, MY ID. PREDECESSOR HAS DISCUSSED IN DETAIL THE RELE VANT PROVISIONS OF LAW AND THE FACTS OBTAINING IN THE CASE OF THE ASSESSEE. I FULLY AGREE WITH MY ID. PREDECESSOR IN THIS REGARD. I ALSO FIND THAT THE HON'BLE ITAT HAS CONFIRMED THE ORDER OF MY ID. PREDECESSOR FOR ALL THE ASSESSMENT YEARS 2007 - 08 TO 2011 - 1 2 WHILE DISMISSING THE APPEAL OF THE DEPARTMENT. RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE ITAT FOR THE AFORESAID ASSESSMENT YEARS, IT IS HELD THAT THE ASSESSEE IS ENTITLED TO 6 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 EXEMPTION U/S.11 AND THE AO IS NOT JUSTIFIED IN DENYING THE EXEMPTIONS. HENCE, THE SURPLUS OF RS.18,44,98,876/ - REPRESENTING EXCESS OF INCOME OVER EXPENDITURE CANNOT BE TAXED AS INCOME OF THE ASSESSEE. 5. LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS LD A.R. OF THE ASSESSEE SUPPORTED T HE ORDER OF THE CIT(A) AND SUBMITT ED THAT THE CIT(A) FOLLOWING THE ORDER OF THE CUTTACK BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007 - 08 TO 2009 - 2010 PASSED IN ITA NOS. 473, 474, 475/CTK/2012 AND C.O. NOS.36 TO 37/CTK/2012 ORDER DATED 23.11.2012 AND PASSED IN ITA NO.430/CTK/2014 FOR THE ASSESSMENT YEAR 2011 - 12 ORDER DATED 2.2.2015 DELETED THE DISALLOWANCE OF E XEMPTION U/S.11 OF THE ACT. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE TRIBUNAL IN ITS CONSOLIDATED ORDER DATED 23.11.2012 FOR THE ASSESSMENT YEARS 2007 - 08 TO 2009 - 2010 PASSED IN ITA NOS.473, 474 & 475/CTK/2012 OBSERVED HAS UNDER: 6 CONSIDERING THE APPEALS BY THE ASSESSEE BEFORE HIM, THE LEARNED CIT(A) HAS EXAMINED THE ORDERS PASSED BY THE ASSESSING OFFICER AND FOUND THAT THE ASSESSING OFFICER'S CONCLUSION IS NOT IN ACCORDANCE WITH LAW AS THE AS SESSEE IS TO BE TAXED ONLY ON THE AMOUNTS PAID TO THE PROHIBITED PERSON I.E., VICE - PRESIDENT OF THE ASSESSEE - SOCIETY ONLY AT THE MAXIMUM MARGINAL RATE BUT NOT DISENTITLED FOR EXEMPTION U/S.11 OF THE IT ACT, WHILE COMING TO THAT CONCLUSION, THE LEARNED CI T( A) HAS RELIED ON THE DECISION OF HON'BLE ANDHRA PRADESH HIGH, COURT IN THE CASE OF GOVERNING BODY OF RANGARAYA MEDICAL COLLEGE V. ITO [1979] 117 TTR 284, 287 WHEREIN HON'BLE COURT HAS HELD THAT MERELY BECAUSE CERTAIN SURPLUS ARISES FROM ITS OPERATIONS, IT CANNOT BE HELD T HAT THE INSTITUTION IS BEING RUN FOR THE PURPOSE OF PROFIT SO LONG AS NO PERSON OR INDIVIDUAL IS ENTITLED TO ANY PORTION OF THE SAID PROFIT AND THE SAID PROFIT IS USED FOR THE PURPOSES AND FOR THE PROMOTION OF THE OBJECTS OF THE INSTITUTION. THERE AFTER WARDS THE LEARNED CIT(A) CONSIDERED THE DECISION OF HON'BLE APEX COURT IN THE CASE OF ADITANAR EDUCATIONAL 7 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 INSTITUTION ETC., V. ADDL.CIT (1997) 139 CTR (SC) 7 WHERE IN IT IS HELD THAT THE AVAILABILITY OF EXEMPTION MUST BE EVALUA TED BY FINDING OUT WHETHER THE EDUCATIONAL INSTITUTION EXISTED DURING THE RELEVANT YEAR SOL ELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. THE HON'BLE APEX OBSERVED AS UNDER : '8. ,.,,, AFTER MEETING THE EXPENDITURE, IF ANY SURPLUS RESULTS INCIDENTALLY FROM THE ACTIVITY LAWFULLY CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL NOT CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES SINCE THE OBJECT IS NOT ONE TO MAKE PROFIT. THE DECISIVE OR ACID TESTIS WHETHER ON AN OVERALL VIEW OF THE MATTER, THE OBJECT IS TO MAKE PROFIT IN EVALUATING OR APPRAISING - THE ABOVE, ONE SHOULD ALSO BEAR IN MIND THE DISTINCTION/DIFFERENCE BETWEEN THE CORPUS, THE OBJECTS AND THE POWERS OF THE CONCERNED ENTITY. IF ONE LOO KS AT THE OBJECTS CLAUSE, THERE ARE OTHER NOBLE AND PIOUS OBJECTS BUT ASSESSEE SOCIETY HAS DONE NOTHING TO ACHIEVE TIRE OTHER OBJECTS EXCEPT PERUSING MAIN OBJECT OF PROVIDING EDUCATION AND EARNING PROFIT. FURTHER, WITH PROFIT EARNED THE SOCIETY HAS STRENGTHENED OR ENHANCED ITS CAPACITY TO EARN MORE RATHER THAN TO UNDERTAKE ANY OTHER ACTIVITIES TO FULFILL OTHER NOBLE OBJECTS FOR THE CAUSE OF POOR AND NEEDY PEOPLE OR ADVANCEMENT OF RELIGIOUS PURPOSE.' THE LEARNED CIT(A) ALSO CONSIDERED THE DECISION IN THE CASE OF AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTE V. CBDT (2008) 301 ITR 86 (SC),WHEREIN HON'BLE APEX COURT HAS LAID DOWN THE PRINCIPLES AS UNDER: 'IN ADDL. C1T V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCI ATION REPORTED IN [1980] 121 ITR 1, IT HAS BEEN HELD BY THIS COURT THAT THE TEST OF PREDOMINANT OBJECT OF THE ACTIVITY IS TO BE SEEN WHETHER IT EXISTS SOLELY FOR EDUCATION AND NOT TO EARN PROFIT HOWEVER, THE PURPOSE WOULD NOT LOSE ITS CHARACTER MERELY BECA USE SOME PROFIT ARISES FROM THE ACTIVITY. THAT, IT IS NOT POSSIBLE TO CARRY ON EDUCATIONAL ACTIVITY IN SUCH A WAY THAT THE EXPENDITURE EXACTLY BALANCES THE INCOME AND THERE IS NO RESULTANT PROFIT, FOR, TO ACHIEVE THIS, WOULD NOT ONLY BE DIFFICULT OF PRA CTICAL REALIZATION BUT WOULD REFLECT UNSOUND PRINCIPLES OF MANAGEMENT. IN ORDER TO ASCERTAIN WHETHER THE INSTITUTE IS CARRIED ON WITH THE OBJECT OF MAKING - PROFIT OR NOT IT IS DUTY OF THE PRESCRIBED AUTHORITY TO ASCERTAIN WHETHER THE BALANCE OF INCOME IS A PPLIED WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH THE APPLICANT IS ESTABLISHED' THE LEARNED CIT(A} HAS ALSO RELIED ON THE DECISION OF HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PINEGROVE INTERNATIONAL 8 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 CHARITABLE TRUST V. UOI (2010) 327 ITR 73 (P & H), WHEREIN THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF CIT V. SURAL ART SILK CLOTH MANUFACTURERS ASSOCIATION REPORTED IN [1980J 121 ITR 1 AND ADITANAR EDUCATIONAL INSTITUTION ETC, V. ADDL.CIT (1997 ) 139 CTR (SC) 7 HAVE BEEN APPLIED. WE FIND THAT THE LEARNED CIKA) HAS DISTINGUISHED THE DECISION OF THE ITAT, HYDERABAD BENCH IN THE CASE OF VODITHA LA EDU CATION SOCIETY V, ADIT (EXEMPTION ) - II, HYDERABAD (2008) 20 SOT 353 (HYD)] STATING THAT IT WAS IN THE CONTEXT OF AN INSTITUTION WHICH WAS CHARGING FEES OVER AND ABOVE THE PRESCRIBED FEES AND THE PROMOTERS WERE TAKING AWAY THE EXCESS FOES, WHEREAS IN THE PRESENT CASE THE ASSESSEE SOCIETY IS CHARGING FEES AS PRESCRIBED BY THE CONCERNED AUTHORITIES AND THE ASSESSING OFFICER IS NOT ABLE TO SAY THAT THE ASSESSEE IS COLLECTING MORE THAN THE FEES PRESCRIBED BY THE CONCERNED AUTHORITIES. HENCE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE CANNOT BE CONSIDERED AS RUNNING ANY COMMERCIAL ACTIVITIES AND HENCE, FO UND THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 11. .. . 7. ON CAREFUL ANALYSIS OF THE IMP UGNED ORDER PASSED BY THE LEARNED CIT( A) , IT IS FOUND THAT THE SAME IS WELL REASONED ONE HAVING BEEN IN C ONSONANCE WITH THE RATIOS OF VARIOUS JUDICIAL PRONOUNCEMENTS NARRATED THEREIN. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDERS OF THE LD CIT(A) ARE NUT INFIRM ANY WAY REQUIRING ANY INTERFERENCE. 7. FURTHER, FOR ASSESSMENT YEAR 2011 - 12 IN ITA NO.430/CTK2014, THE TRIBUNAL FO LLOWED ITS ORDER DATED 23.11.2012 PASSED IN ITA NOS.473, 474 & 475/CTK/2012 FOR THE ASSESSMENT YEAR 2007 - 08 TO 2009 - 2010 AND ALLOWED EXEMPTION U/S.11 OF THE ACT TO THE ASSESSEE. 8. DURING THE COURSE OF HEARING, LD DEPARTMENTAL REPRESENTATIVE COULD NOT SHOW ANY GOOD REASON TO NOT TO FOLLOW THE ABOVE QUOTED ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE ITSELF PASSED IN ASSESSMENT YEAR 2011 - 12. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE ABOVE ORDERS OF THE TRIBUNAL HAS BEEN VARIED IN APPEAL BY ANY HIGHER AUTHORITY. THEREFORE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE 9 ITA NO.244/CTK/2016 ASSESSMENT YEAR : 2012 - 2013 CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRON OUN CED ON 8 /11 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 8 /11 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : DCIT (EXEMPTION), AAYAKAR BHAVAN, BHUBANESWAR 2. THE RESPONDENT: SIKSHYA O ANUSANDHAN, 224, DHARMA VIHAR, KHANDAGIRI, BHUBANESWAR. 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//