Dharmaj Kelvani Mandal, Vadodara V. The Chief CIT, Baroda

ITA 2913/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0339 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 16-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: DEEPAK R SHAH
• Keywords: Charitable institution; Period of limitation; Source of fund
• Section: 80G; 12A; 12AA; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA.NO.2913/AHD/2015 / ASSTT. YEAR: 2013-2014 DHARMAJ KELVANI MANDAL POST BOX NO.31 DHARMAJ ANAND 388 430. PAN : AAATD 1986 G VS CHIEF CIT, AYAKAR BHAVAN VADODARA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI DEEPAK R. SHAH, AR REVENUE BY : SHRI JAGDISH, CIT-DR / DATE OF HEARING : 23/08/2016 / DATE OF PRONOUNCEMENT: 07/10/2016 $%/ O R D E R PER RAJPAL YADAV, ACCOUNTANT MEMBER ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF CHIEF COMMISSIONER OF INCOME-TAX DATED 29.9.2014. 2. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CCIT HA S ERRED IN REJECTING APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 10( 23C)(VI) OF THE INCOME TAX ACT FOR THE ASSTT.YEAR 2013-14. 3. REGISTRY HAS POINTED OUT THAT APPEAL IS TIME BAR RED BY 311 DAYS. IN ORDER TO EXPLAIN THE DELAY, AFFIDAVIT OF SHRI HARES H V. PATEL, A TRUSTEE OF APPELLANT TRUST HAS BEEN FILED. IN THIS AFFIDAVIT, IT HAS BEEN DEPOSED THAT LD.CIT ITA NO.2913/AHD/2015 2 HAS REJECTED APPLICATION OF THE ASSESSEE VIDE ORDER DATED 29.9.2014 AND APPEAL BEARING ITA NO.2930/AHD/2014 WAS FILED BEFORE THE T RIBUNAL ON 10.10.2014. THIS APPEAL WAS DISMISSED BY THE TRIBUNAL ON 10.4.2 015 BEING NOT MAINTAINABLE. AT THAT POINT OF TIME, NO APPEAL WA S PROVIDED AGAINST ORDER PASSED UNDER SECTION 10(23)(C)(VI) OF THE INCOME TA X ACT. THEREFORE, THE ASSESSEE HAS FILED SPECIAL CIVIL APPLICATION NO.102 33 OF 2015 BEFORE THE HONBLE GUJARAT HIGH COURT. THIS APPLICATION WAS F ILED ON 9.6.2015 I.E. IMMEDIATELY AFTER WITHDRAWAL OF THE APPEAL FROM THE TRIBUNAL. DURING THE PENDENCY OF THIS APPEAL, THERE HAS BEEN AMENDMENT I N THE INCOME TAX ACT WHEREBY CLAUSE (F) TO SECTION 253(1) HAS BEEN ADDED . BY VIRTUE OF THIS AMENDMENT AN APPEAL HAS BEEN PROVIDED BEFORE THE TR IBUNAL AGAINST THE ORDER OF THE PRESCRIBED AUTHORITY PASSED UNDER SECTION 10 (23)(C)(VI) OF THE ACT. THE ASSESSEE HAS WITHDRAWN SCA FROM THE HONBLE HIGH CO URT AND FILED PRESENT APPEAL BEFORE THE TRIBUNAL ON 16.10.2015. ON THE S TRENGTH OF THESE DETAILS, IT HAS BEEN PLEADED THAT APPEAL IS NOT TIME BARRED, RA THER, THERE IS A PROCEDURAL DELAY. AFTER GOING THROUGH THE RECORD, WE FIND THA T THE ASSESSEE WAS ALWAYS VIGILANT. IT HAS WRONGLY AVAILED REMEDY OF APPEAL BEFORE THE TRIBUNAL IN 2014, BUT AFTER DISPOSAL OF THE APPEAL, BEING NOT M AINTAINABLE, IT WENT TO HONBLE HIGH COURT BY WAY OF SCA. ALL THESE STEPS HAVE BEEN TAKEN WITHIN PERIOD OF LIMITATION THAT WAS AVAILABLE FOR FILING THE APPEAL. THESE STEPS INDICATE THAT THE ASSESSEE WAS ALWAYS SERIOUS AND V IGILANT IN SAFEGUARDING ITS RIGHT. THERE IS NO DILATORY STRATEGY BY THE ASSESS EE IN PROSECUTING THE LITIGATION. CONSIDERING THE ABOVE FACTS AND CIRCUM STANCES, WE CONDONE THE DELAY OF 311 DAYS IN FILING THE APPEAL BEFORE THE T RIBUNAL AND PROCEED TO DECIDE THE APPEAL ON MERIT. 4. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT THE ASSESSEE-TRUST CAME INTO EXISTENCE ON 1.1.2015. IT WAS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 ON 29.10.1954. FIRST PAGE OF THE REGISTRATION ITA NO.2913/AHD/2015 3 HAS BEEN PLACED ON PAGE NO.1 OF THE PAPER BOOK. CO PY OF THE TRUST DEED HAS ALSO BEEN PLACED ON PAGENO.1 TO 9. THE TRUST HAS A PPLIED FOR REGISTRATION UNDER SECTION 12A(A) OF THE ACT ON 18.2.1999. REGISTRATI ON HAS BEEN GRANTED TO THE TRUST VIDE ORDER DATED 25.8.1999. THIS REGISTRATIO N HAS BEEN GRANTED W.E.F. 1.4.1998. THE ASSESSEE HAS ALSO BEEN GRANTED REGIS TRATION UNDER SECTION 80G OF THE ACT. COPIES OF THESE REGISTRATION CERTIFICA TES ARE AVAILABLE AT PAGE NOS.103 AND 104 OF THE PAPER BOOK. THE ASSESSEE FI LED AN APPLICATION IN FORM NO.56D ON 29.9.2011 SEEKING ISSUANCE OF EXEMPTION C ERTIFICATE UNDER SECTION 10(23)(C) (VI). THE STAND OF THE ASSESSEE WAS THAT IT HAS BEEN EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND IT FULFILLED ALL OTHER REQUISITE CONDITIONS. LD.CIT HAS MADE REFERENCE TO OBJECT CLAUSE OF THE TRUST DE ED AND OBSERVED THAT UNDER CLAUSES (B) AND (C), THE APPLICANT TRUST IS EMPOWER ED TO COLLECT FUNDS AND ACCEPT FUNDS AND IT CAN MANAGE OTHER INSTITUTIONS. THEREFORE, IT CANNOT BE CONSTRUED THAT ASSESSEE SOLELY EXISTING FOR THE EDU CATIONAL PURPOSE. THIS APPLICATION OF THE APPLICANT-TRUST HAS BEEN REJECTE D. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF THE CCIT CONT ENDED THAT THE LD.CCIT HAS MADE REFERENCE TO THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF DHARAMPOSHANAM, 114 ITR 463. THE LD.CCIT HAS M ADE REFERENCE TO LAST PARAGRAPHS OF THIS JUDGMENT, BUT FAILED TO NOTE COM PLETE PARAGRAPHS. HE HAS JUST PICKED UP FEW LINES AND DREW INFERENCE CONTRAR Y TO PROPOSITION LAID DOWN IN THIS DECISION. HE FURTHER CONTENDED THAT THE LD .CCIT NOTED THAT IN THE MAIN OBJECT OF THE TRUST UNDER CLAUSE (2)(C) OF THE TRUS T DEED IT HAS BEEN PROVIDED THAT TRUST CAN MANAGE ANY PUBLIC INSTITUTION OF VIL LAGE. BUT IT IS ONLY ANCILLARY OBJECT. IT HAS NEVER BEEN ACTED UPON BY THE ASSESS EE. THE HONBLE SUPREME COURT IN THE CASE OF DHARAMPOSHANAM (SUPRA) HAS ALS O OBSERVED THAT IF THERE IS AN EVIDENCE, POINTING OUT TO THE CONCLUSION THAT ASSESSEE HAS NOT CARRIED OUT ANY OTHER ACTIVITY, AS MENTIONED IN ANCILLARY OBJEC T, BUT EXCLUSIVELY CARRIED OUT AGRICULTURE ACTIVITY, THEN STATUS OF THE ASSESS EE WILL BE DECIDED BY IGNORING ITA NO.2913/AHD/2015 4 THE EXISTENCE OF SUCH ANCILLARY OBJECTS. HE EMPHAS ISED THAT THE LD.CIT(A) HAS MADE REFERENCE TO FEW LINES FROM THE JUDGMENT OF TH E HONBLE SUPREME COURT AND USED THEM OUT OF CONTEXT. HE TOOK US THROUGH C OMPLETE PARAGRAPH WHICH READ AS UNDER: IT HAS BEEN URGED ON BEHALF OF THE APPELLANT THAT WHAT SHOULD BE TAKEN INTO CONSIDERATION IS THE ACTIVITY ACTUALLY CONDUCT ED BY THE ASSESSEE, AND NOT WHAT IS OPEN TO IT UNDER THE PROVISIONS OF ITS MEMORANDUM OF ASSOCIATION. WE DO NOT AGREE. WHETH ER A TRUST IS F OR CHARITABLE PURPOSES FALLS TO BE DETERMINED BY REFERENCE TO ALL THE OBJE CTS FOR WHICH THE TRUST HAS BEEN BROUGHT INTO EXISTENCE. SEE TENNENT PLAYS, LTD . V. COMMISSIONER OF INLAND REVENUE(3) AND INCORPORATED COUNCIL OF LAW R EPORTING FOR ENGLAND AND WALES V. ATTORNEY- GENERAL AND COMMISSI ONERS OF INLAND REVENUE(4). IN REX V. THE SPECIAL COMMISSIONERS OF INCOME-TAX(5), IT WAS POINTED OUT BY THE COURT OF APPEAL IN ENGLAND THAT IF THE SETTLOR RESERVES TO HIMSELF THE POWER OF APPOINTMENT UNDER WHICH HE MIG HT APPOINT TO NON- CHARITABLE PURPOSES, THE TRUST CANNOT CLAIM EXEMPTI ON EVEN THOUGH THE POWER OF APPOINTMENT IS IN FACT EXERCISED IN FAVOUR OF A CHARITABLE OBJECT. IT WOULD BE A DIFFERENT CASE WHERE ONE OR MORE OF T HE OBJECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION ALTHOUGH INCLUDED THE REIN WERE NEVER INTENDED TO BE UNDERTAKEN. IF THERE IS EVIDENCE POI NTING TO THAT CONCLUSION CLEARLY THE COURT WILL IGNORE THE OBJECT AND PROCEE D TO CONSIDER THE CASE AS IF IT DID NOT EXIST IN THE MEMORANDUM. IN C.I.T. KE RALA V. DHARMODAYAM CO. (SUPRA), IT WAS THAT BASIS ON WHICH THIS COURT PROCEEDED WHEN IT OBSERVED THAT THE ASSESSEE HAD NEVER ENGAGED ITSELF IN ANY INDUSTRY OR IN ANY OTHER ACTIVITY OF PUBLIC INTEREST. ON THE AFORESAID CONSIDERATIONS, WE ENDORSE THE FINA L CONCLUSION OF THE HIGH COURT AND HOLD THAT IT RIGHTLY ANSWERED THE QU ESTION REFERRED TO IT IN THE SEVERAL REFERENCES IN THE NEGATIVE, IN FAVOUR O F THE RESPONDENT AND AGAINST THE APPELLANT. THESE APPEALS ARE DISMISSED WITH COSTS, LIMITED TO ONE SET ONLY. 5. APART FROM THE ABOVE, HE MADE REFERENCE TO THE F OLLOWING DECISIONS AND CONTENDED THAT IN ALL THESE DECISIONS, IT HAS BEEN CONSIDERED THAT IF THE ASSESSEE HAS NOT UNDERTAKEN OTHER OBJECTS MENTIONED IN THE OBJECT CLAUSE OF THE TRUST-DEED, AND ONLY WORKING FOR EDUCATION, THE N EXEMPTION UNDER SECTION 10(23C)(VI) WILL NOT BE DENIED TO THE ASSESSEE. I) C.P. VIDYA NIKETAN INTER COLLEGE SHIKSHABN SOCIETY, 359 ITR 322 (ALL) II) HARDAYAL CHARITABLE & EDUCATION TRUST, 355 ITR 0534 (ALL) ITA NO.2913/AHD/2015 5 III) VANITA VISHRAM TRUST, 327 ITR 121 (BOM) IV) GEETANJALI EDUCATION SOCIETY, 339 ITR 333 (KAR) 6. ON THE OTHER HAND, THE LD.DR CONTENDED THAT PRES ENT APPEAL IS NOT MAINTAINABLE BEFORE THE TRIBUNAL, BECAUSE POWER TO GRANT APPROVAL UNDER SECTION 10(23C)(VI) HAS BEEN CONFERRED UPON THE COM MISSIONER W.E.F 15.11.2014. HE MADE REFERENCE TO RULE 2CA AND FORM NO.56D OF THE INCOME TAX RULES,1962. PRIOR TO THIS, CCIT WAS AUT HORIZED TO GRANT SUCH APPROVAL. AFTER CONFERMENT OF THE POWER UPON THE C OMMISSIONER, AMENDMENT HAS BEEN MADE IN SECTION 253 OF THE INCOM E TAX ACT, WHEREBY, CLAUSE (F) HAS BEEN APPENDED W.E.F. 1.6.2015. IN T HE PRESENT CASE, IMPUGNED ORDER WAS PASSED BY CCIT AND THEREFORE, IT IS NOT A MENABLE TO APPEAL BEFORE THE TRIBUNAL. HE MADE REFERENCE TO THE DECISION OF THE HONBLE HIGH COURT OF ORISSA IN THE CASE OF ORISSA TRUST OF TECHNICAL EDU CATIONAL VS. CCIT, 178 TAXMAN 363 (ORI.). HE PLACED ON RECORD COPY OF THE HONBLE HIGH COURT. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 253 OF THE INCOME TAX ACT PROVI DES A RIGHT TO THE ASSESSEE TO FILE APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDE RS MENTIONED THEREIN. IT IS PERTINENT TO TAKE NOTE OF THIS SECTION. IT READS A S UNDER: 253. (1) ANY ASSESSEE AGGRIEVED BY ANY OF THE FOLLO WING ORDERS MAY APPEAL TO THE APPELLATE TRIBUNAL AGAINST SUCH ORDER (A) . .. .. [(F) AN ORDER PASSED BY THE PRESCRIBED AUTHORITY UN DER SUB-CLAUSE (VI) OR SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10] 8. IN THE APPEAL TO THE TRIBUNAL UNDER SECTION 253( 1) OF THE ACT, ANY ASSESSEE AGGRIEVED BY ANY OF THE FOLLOWING ORDERS M AY APPEAL TO THE APPELLATE TRIBUNAL AGAINST SUCH ORDERS. ITA NO.2913/AHD/2015 6 9. ORDER PASSED BY THE PRESCRIBED AUTHORITY UNDER S UB-CLAUSE (VI) AND SUB- CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10. A BARE PERUSAL OF THE ABOVE PROVISION WOULD INDICATE THAT APPEAL HAS BEEN PROVI DED AGAINST THE ORDER OF THE PRESCRIBED AUTHORITY PASSED UNDER SECTION 10(23 C)(VI). THE PRESCRIBED AUTHORITY CAN BE COMMISSIONER OR CHIEF COMMISSIONER OR ANY OTHER AUTHORITY. IF LEGISLATURE HAS NO INTENTION TO PROVI DE AN APPEAL AGAINST THE ORDER PASSED BY THE CHIEF COMMISSIONER OF INCOME TA X, THEN THAT COULD HAVE BEEN SPECIFICALLY PROVIDED IN THE CLAUSE. IT COULD BE PROVIDED THAT APPEAL WOULD LIE TO THE TRIBUNAL AGAINST THE ORDER PASSED BY THE COMMISSIONER OR ANY OTHER PRESCRIBED AUTHORITY BELOW THE RANK OF COMMIS SIONER. BUT NO SUCH PROCEDURE HAS BEEN PROVIDED. AS FAR AS THE DECISIO N RELIED UPON BY THE LD.DR IS CONCERNED, THAT IS NOT APPLICABLE ON THE FACTS O F THE PRESENT CASE. IN THAT CASE, THE ASSESSEE HAS FILED AN APPLICATION TO THE CHIEF COMMISSIONER FOR SEEKING APPROVAL UNDER SECTION 10(23C). THESE WERE APPLICABLE FOR F.Y.1998- 99 TO 2005-06. THE LD.CHIEF COMMISSIONER KEPT THE APPLICATION PENDING, AND ULTIMATELY REJECTED THEM BY ORDER DATED 2.2.2007. THE ASSESSEE ALLEGED THAT WHEN THE APPLICATIONS WERE MADE TO THE CHIEF COMMIS SIONER HE WAS NOT EMPOWERED TO GRANT APPROVAL. IT WAS CBDT WHICH ALO NE COULD GRANT APPROVAL. THEREFORE, CCIT WAS NOT COMPETENT TO REJ ECT OR ALLOW THE APPLICATION OF THE ASSESSEE. IN THAT CONTEXT, THE HONBLE COURT HAS HELD THAT THE CCIT HAS NO POWER TO ADJUDICATE THE APPLICATION S. ADMITTEDLY, IN THE PRESENT CASE, NO SUCH FETTER HAS BEEN IMPOSED UPON THE TRIBUNAL. NO DOUBT THE ORDER WAS PASSED BY THE CCIT AND WHEN HE PASSED THE ORDER, APPEAL TO THE TRIBUNAL WAS NOT PROVIDED. BUT TRIBUNAL HAS POWER TO CONDONE THE DELAY FOR ENTERTAINING ANY APPEAL AND THE POWER OF THE TRIBUN AL HAS NOT BEEN RESTRICTED AGAINST THE IMPUGNED ORDER. THE LD.DR CANNOT DRAW ANY BENEFIT FROM THIS DECISION, AND THE APPEAL IS MAINTAINABLE BEFORE THE TRIBUNAL. ITA NO.2913/AHD/2015 7 10. AS FAR AS MERIT OF THE CASE IS CONCERNED, WE FI ND THAT FOLLOWING CLAUSE OF THE TRUST-DEED HAS BEEN CONSIDERED BY THE PRESCR IBED AUTHORITY: '(A) TO SPREAD AMONGST THE PEOPLE OF DHARMAJ PRIMAR Y, SECONDARY, HIGHER, COMMERCIAL, INDUSTRIAL AS WELL AS AGRICULTU RAL EDUCATION AND TO EMPLOY SUITABLE MEANS FOR THE SPREAD OF INTELLECTUA L, PHYSICAL AND MORAL EDUCATION IN THE TOWN. B) TO COLLECT FUNDS, TO ACCEPT TRUST FUNDS, TO EXEC UTE THEM, AND TO WHATSOEVER IS NECESSARY FOR THE ACCOMPLISHMENT OF T HE ABOVEMENTIONED AIMS. C) TO MANAGE ANY PUBLIC INSTITUTION OF THE VILLAGE. ' 11. THE LD.PRESCRIBED AUTHORITY WAS OF THE OPINION THAT UNDER CLAUSE (B) AND (C), THE ASSESSEE COULD ENTERTAIN ANY OTHER OBJECTS THAN EDUCATION. THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR APPROVAL UNDER SEC TION 10(23C)(VI) OF THE ACT. THIS SITUATION HAS BEEN CONSIDERED IN THE JUDGEMENT RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. IT IS PERTINENT TO MA KE REFERENCE TO THE OBSERVATIONS OF THE HONBLE ALLAHBAD HIGH COURT IN THE CASE OF C.P. VIDYA NIKETAN INTER COLLEGE SHIKSHAN SOCIETY VS. UOI, 40 TAXMANN.COM 76. IT READS AS UNDER: 23. IN THE PRESENT CASE THE PETITIONER SOCIETY IS REGISTERED CHARITABLE SOCIETY WITH THE REGISTRAR OF SOCIETIES AND IS ALSO REGISTERED UNDER SECTION 12A WITH ITS OBJECTS OF ESTABLISHING, RUNNI NG AND MAINTAINING EDUCATIONAL INSTITUTIONS. IT HAS A SCHOOL BY THE NA ME OF C.P. VIDYA NIKETAN INTER COLLEGE. AT PRESENT THE SOCIETY DOES NOT HAVE ANY ACTIVITY OTHER THAN RUNNING AND MAINTAINING EDUCATIONAL INST ITUTIONS. THE OTHER OBJECTS AND PURPOSES IN THE 'SMRITI PATRA' MAY, IF SUCH OBJECTS ARE UNDERTAKEN, MAY CONSTITUTE SUCH PURPOSE, TO BE OTHE R THAN EDUCATIONAL PURPOSE, BUT AT PRESENT IT CANNOT BE SAID NOR THERE IS ANY ALLEGATION OR MATERIAL EITHER BROUGHT BEFORE THE CHIEF COMMISSION ER OF INCOME TAX, GHAZIABAD OR REFERRED TO IN THE COUNTER AFFIDAVIT, WHICH MAY BE OTHER THAN EDUCATION. THERE ARE ADEQUATE SAFEGUARDS, THAT IF THE ACTIVITIES OTHER THAN EDUCATIONAL ACTIVITIES ARE UNDERTAKEN, T HE EXEMPTION MAY BE WITHDRAWN, BUT IN THE ABSENCE OF ANY SUCH ALLEGATIO N IT CANNOT BE SAID MERELY ON THE ENUMERATION OF THE ACTIVITIES, WHICH ARE ALL PRIMARILY CONNECTED WITH EDUCATION AND CHARITY THAT THE SOCIE TY DOES NOT EXIST ITA NO.2913/AHD/2015 8 SOLELY FOR THE PURPOSE OF IMPARTING EDUCATION. THE CASE IN HAND IS QUITE SIMILAR TO THAT OF VANITA VISHRAM TRUST V. CHIEF CO MMISSIONER OF INCOME TAX & ANR. (SUPRA), AND SATISFIES THE TESTS LAID DOWN IN AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTE (SUPRA) AS WELL AS THE VIEW TAKEN BY THIS COURT IN EWING CH RISTIAN COLLEGE SOCIETY (SUPRA) IN WHICH IT WAS HELD THAT WHERE IT IS NOT DISPUTED THAT THE SOCIETY RUNS AN EDUCATIONAL INSTITUTION, AND IS NOT FOR THE PURPOSES OF MAKING PROFIT, MERELY BECAUSE THE OBJECT OF THE SOCIETY IS ALSO TO SERVE THE CHURCH AND THE NATION WOULD NOT MEAN THAT THE EDUCATIONAL INSTITUTION NOT EXISTING SOLELY FOR EDUCATIONAL PUR POSE. 24. IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE O PINION THAT AS OF NOW THE PETITIONER SOCIETY RUNNING EDUCATIONAL INSTITUT ION BY THE NAME OF C.P. VIDYA NIKETAN INTER COLLEGE AT KAIMGANJ, DISTT . FARRUKHABAD IMPARTS EDUCATION TO STUDENTS FROM CLASS VI TO XII, IN THE ABSENCE OF ANY ALLEGATION OR MATERIAL, THE OBJECT CLAUSE PROVI DING FOR OTHER CHARITABLE ACTIVITIES, WOULD NOT DISENTITLE THE SOC IETY FROM APPROVAL UNDER SECTION 10 (23C) (VI) OF EXEMPTION. THE PROVI SO ADDED TO SECTION 10 (23C) (VI), SPECIALLY PROVISO 2, 3, 12 AND 13, G IVE SUFFICIENT POWERS TO CHECK THE ABUSE OF THE EXEMPTION. THE MERE POSSI BILITY, THEREFORE, THAT THE SOCIETY MAY IN FUTURE PURSUE ACTIVITIES, W HICH ARE NOT CHARITABLE, OR CLOSELY CONNECTED WITH EDUCATION FOR MAKING PROFIT, WOULD NOT CONSTITUTE THE GROUNDS TO REJECT THE APPR OVAL UNDER SECTION 10 (23C) (VI). 25. ON THE QUESTION OF SATISFACTION OF THE PRESCRIB ED AUTHORITY OF THE CONDITIONS OF THE SECOND PROVISO TO SECTION 10 (23C ) (VI), WE ARE OF THE VIEW THAT THE CHIEF COMMISSIONER OF INCOME TAX DID NOT GIVE SUFFICIENT OPPORTUNITY TO THE PETITIONER, TO PLACE DOCUMENTS R ELEVANT TO THE ENQUIRY BEFORE REJECTING THE APPLICATION. THE CONTE NTS OF PARAGRAPH 9 OF THE WRIT PETITION THAT THE HEARING PROCEEDED ON THE SAME DAY ON 27.5.2011, WHEN THE PETITIONER WAS REQUIRED TO PROD UCE THE AUDIT REPORT UNDER RULE 16CC IN FORM 10BB, AND THE PETITIONER WA S GRANTED TIME TO FURNISH THE SAME WITHIN THREE DAYS, HAS NOT BEEN SP ECIFICALLY DENIED IN THE COUNTER AFFIDAVIT. THE REPLY IS RATHER ARGUMENT ATIVE. WE ALSO FIND THAT THERE WAS NO HURRY TO CLOSE THE ENQUIRY IN AS MUCH AS THE REJECTION OF THE APPLICATION WILL VISIT SERIOUS CONSEQUENCE O N THE PETITIONER IN AS MUCH AS HAVING EXCEEDED THE AGGREGATE RECEIPTS OVER AND ABOVE RUPEES ONE CRORE, THE INCOME OF THE SOCIETY IN THE ABSENCE OF THE EXEMPTION UNDER SECTION 10 (23C) (VI) WOULD NOT QUA LIFY FOR EXEMPTION. ITA NO.2913/AHD/2015 9 12. SIMILARLY, THE HONBLE ALLAHABAD HIGH COURT HAS AGAIN CONSIDERED IN THE CASE OF CIT VS. HARDAYAL CHARITABLE & EDUCATION TRUST, 46 TAXMANN.COM 16 (ALL). THE OBSERVATION OF THE HONBLE HIGH COUR T READS ASUNDER: 6. BEFORE THE TRIBUNAL, IT WAS SOUGHT TO BE ASSERT ED ON BEHALF OF THE DEPARTMENT THAT THE ASSESSEE DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES SINCE IN ITS MEMORANDUM, IT IS PERMITTED T O FOLLOW, WHAT THE TRIBUNAL DESCRIBED, CERTAIN GENERALISED OBJECTS WHI CH GO BEYOND EDUCATIONAL ACTIVITIES. IN THIS REGARD, THE TRIBUNA L RELIED UPON A DECISION OF THIS COURT IN NEERAJ JANHITKARI GRAMIN SEWA SANSTHAN V. CHIEF CIT [2014] 360 ITR 168/[2013] 218 TAXMAN 61/36 TAXMANN.COM 105 (ALL.), IN HOLDING THAT WHERE A SOC IETY IS PURSUING ONLY EDUCATIONAL OBJECTS AND NO ACTIVITY IS CARRIED OUT, AN APPLICATION FOR APPROVAL UNDER SUB-CLAUSE (6) OF SECTION 10(23C ) CANNOT BE REJECTED ON THE GROUND THAT THE OBJECT CLAUSE MAY C ONTAIN SEVERAL OTHER OBJECTS APART FROM EDUCATIONAL OBJECTS. THE TRIBUNA L HELD THAT THERE MAY BE CERTAIN DORMANT OBJECTS WHICH HAVE NEVER BEE N PURSUED IN REALITY BY THE ASSESSEE AND THE MERE EXISTENCE THER EOF IN A MEMORANDUM CONSTITUTING THE ASSESSEE WOULD NOT BE S UFFICIENT TO DECLINE AN EXEMPTION. 7. IN DETERMINING AS TO WHETHER THE ASSESSEE IS ENT ITLED TO THE BENEFIT OF CLAUSE (IIIAD) OF SECTION 10(23C), THE FOLLOWING RE QUIREMENTS MUST BE FULFILLED: FIRSTLY THE ASSESSEE SHOULD BE A UNIVERS ITY OR EDUCATIONAL INSTITUTION; SECONDLY, THE ASSESSEE MUST NOT EXIST SOLELY FOR THE PURPOSES OF PROFIT; THIRDLY THE AGGREGATE ANNUAL RECEIPTS MU ST NOT EXCEED THE AMOUNT AS PRESCRIBED. THE AMOUNT PRESCRIBED IS RS.1 CRORE. AN ASSESSEE CANNOT BE HELD NOT TO EXIST SOLELY FOR EDU CATIONAL PURPOSES MERELY ON THE BASIS THAT THE OBJECT CLAUSE UNDER WH ICH THE ASSESSEE IS CONSTITUTED CONTAINS CERTAIN GENERALISED OBJECTS, S O LONG AS THE ASSESSEE HAD CARRIED ON NO OTHER ACTIVITY SAVE AND EXCEPT CO NDUCTING EDUCATION. THIS PRINCIPLE HAD BEEN LAID DOWN IN A JUDGMENT OF THE BOMBAY HIGH COURT IN VANITAVISHRAM TRUST V. CHIEF CIT [2010] 32 7 ITR 121/192 TAXMAN 389 (BOM.). THIS VIEW HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN C.P. VIDYANIKETAN INTER COLLEGE SH IKSHAN SOCIETY V. UNION OF INDIA [2013] 359 ITR 322/213 TA XMAN 139/40 TAXMANN.COM 76 (ALL.) AND NEERAJ JANHITKARI GRAMIN SEWA SANSTHAN (SUPRA). 8. IN THE PRESENT CASE, IT HAS NEVER BEEN THE CONTE NTION OF THE REVENUE EITHER BEFORE THE CIT(A) OR BEFORE THE TRIBUNAL THA T THE ASSESSEE HAD CARRIED ON ANY ACTIVITY OTHER THAN EDUCATION. THE A SSESSING OFFICER, IT MAY BE NOTED, RELIED ON THE PROSPECTUS OF THE ASSES SEE WHICH MADE A ITA NO.2913/AHD/2015 10 REFERENCE TO THE BUSINESS CARRIED ON BY A PRIVATE L IMITED COMPANY IN THE SAME 'GROUP' AS THE ASSESSEE. THESE OBSERVATION S WHICH ARE EXTRACTED IN THE ORDER OF THE ASSESSING OFFICER ARE FROM THE ORDER PASSED BY THE CIT-II, AGRA ON 23 AUGUST 2011 REJECT ING THE REQUEST OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12AA. T HIS VIEW WAS, HOWEVER, AS NOTED EARLIER, REVERSED IN A JUDGMENT O F DIVISION BENCH OF THIS COURT DATED 15 MARCH 2013 AGAINST WHICH NO CHA LLENGE HAS BEEN PREFERRED BY THE REVENUE BEFORE THE SUPREME COURT. BUT THAT APART, IT MUST BE NOTED THAT THE ASSESSEE IS A TRUST AND NOT A PRIVATE LIMITED COMPANY. THE TRUST ADMITTEDLY DOES NOT CARRY ON ANY OTHER BUSINESS SAVE AND EXCEPT CONDUCTING EDUCATION. 9. FINALLY, IT MAY BE NECESSARY TO NOTE THAT THE EN TITLEMENT OF THE ASSESSEE TO THE EXEMPTION UNDER SECTION 10(23C) WAS DEALT WITH BY THE CIT(A). WE FIND NO REASON OR JUSTIFICATION TO HOLD THAT THE CIT(A) OUGHT TO HAVE REMITTED THE PROCEEDINGS BEFORE THE ASSESSI NG OFFICER. THE MATERIAL TO ARRIVE AT SUCH A CONCLUSION WAS BEFORE THE CIT(A). THE ONLY OBJECTION WHICH WAS RAISED ON BEHALF OF THE REVENUE HAS BEEN FOUND TO BE UNTENABLE. 13. THE HONBLE KARNTAKA HIGH COURT HAS ALSO GOT OC CASION TO CONSIDER THE ISSUE. THE HONBLE KARNATAKA HIGH COURT HAS MADE R EFERENCE TO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF C.P. VIDYA NIKETAN INTER COLLEGE SHIKSHAN SOCIETY (SUPRA) AND CONCURRED WITH THIS. THE FINDING RECORDED BY THE HONBLE KARNATAKA HIGH COURT IS ALS O WORTH NOTE. 10. AFTER MAKING THESE OBSERVATIONS, THE SUPREME CO URT SET ASIDE THE ORDER PASSED BY THE CENTRAL BOARD OF DIRECT TAXES A ND REMITTED THE MATTER FOR FRESH CONSIDERATION IN ACCORDANCE WITH L AW AND WHILE DOING SO, CLARIFIED THAT, IN THAT CASE, THE APPELLANT HAD FULFILLED, THE THRESHOLD PRE-CONDITION OF ACTUAL EXISTENCE OF AN EDUCATIONAL INSTITUTION UNDERSECTION 10(23C) (VI) AND THEREFORE, ON THAT CO UNT, THE CENTRAL BOARD OF DIRECT TAXES, WOULD NOT REJECT THE APPROVA L APPLICATION MADE BY THE APPELLANT THEREIN. 11. FROM BARE PERUSAL OF THE OBSERVATIONS MADE BY T HE SUPREME COURT IN AMERICAN HOTEL'S CASE, WHAT APPEARS TO US, IS TH AT THE ASSESSING OFFICER WHILE CONSIDERING THE CASE, SUCH AS ONE IN HAND, HAS TO CLOSELY ANALYSE ACTIVITIES OF THE INSTITUTE, OBJECTS OF THE INSTITUTE, ITS SOURCES OF INCOME AND UTILIZATION. IN THAT CASE, THE SUPREME C OURT CONSIDERED ITS ACTIVITIES AS REFLECTED IN THE PARAGRAPH QUOTED ABO VE AND THEREFORE, ITA NO.2913/AHD/2015 11 WHILE REMANDING THE MATTER, MADE IT CLEAR THAT THE APPELLANT HAD FULFILLED THE THRESHOLD PRE-CONDITION OF ACTUAL EXI STENCE OF THE EDUCATIONAL INSTITUTION UNDERSECTION 10(23C) (VI) W ITH FURTHER DIRECTION TO THE CENTRAL BOARD OF DIRECT TAXES NOT TO REJECT THE APPROVAL APPLICATION ON THAT GROUND. TWO OF THE OBJECTS IN T HAT CASE AS REFLECTED IN THE JUDGMENT WERE ALSO TO OFFER THE NATIONAL COU NCIL THE LOWEST POSSIBLE PRICES FOR THE PRODUCTS AND SERVICES SOLD TO OR UTILIZED BY THE SCHOOLS UNDER THE UMBRELLA OF THE GOVERNMENT OF IND IA AND SO ALSO TO UTILIZE INDIAN AUTHORS WHENEVER POSSIBLE IN THE DEV ELOPMENT OF CUSTOMIZED PROGRAMMES. THE SUPREME COURT, DESPITE T HESE OBJECTS/ACTIVITIES, HELD THAT THE INSTITUTION IN AM ERICAN HOTEL WAS INVOLVED ONLY IN EDUCATIONAL ACTIVITIES, PERHAPS ON THE GROUND THAT IT WAS NOT CARRYING ON THOSE ACTIVITIES. 12. SRI. SHANKAR, LEARNED COUNSEL APPEARING FOR THE APPELLANT AT THE OUTSET, INVITED OUR ATTENTION TO THE JUDGMENT OF AL LAHABAD HIGH COURT IN C P VIDYA NIKETAN INTER COLLEGE SHIKSHAN SOCIETY -VS- UNION OF INDIA AND OTHERS (2013) 359 ITR 322 (ALL) (FOR SHOR T C P VIDYANIKETAN') AND SUBMITTED THAT AFTER CONSIDERING THE JUDGMENT O F THE SUPREME COURT IN AMERICAN HOTEL, THE HIGH COURT HELD THAT W HERE IT IS NOT DISPUTED THAT A SOCIETY RUNS AN EDUCATIONAL INSTITU TION AND IS NOT FOR THE PURPOSES OF MAKING PROFIT, MERELY BECAUSE THE OBJEC T OF THE SOCIETY IS ALSO TO SERVE THE CHURCH AND THE NATION WOULD NOT M EAN THAT THE EDUCATIONAL INSTITUTION NOT EXISTING SOLELY FOR EDU CATIONAL PURPOSE. THIS OBSERVATION WAS MADE BY THE HIGH COURT AFTER REFERR ING TO THE JUDGMENTS IN C P VIDYA NIKETAN AND AMERICAN HOTEL. THE BOMBAY HIGH COURT IN VANITA VISHRAM TRUST -VS- CHIEF COMMI SSIONER OF INCOME-TAX AND ANOTHER (2010) 327 ITR 121 (BOM) AFT ER CONSIDERING THE PROVISION CONTAINED IN SECTION 10(23C)(VI) OF T HE ACT OBSERVED THAT THOUGH THE OBJECTS CLAUSE CONTAINED VARIED OBJECTS INCLUDING THE MANAGEMENT AND DEVELOPMENT OF MOVEABLE AND IMMOVEAB LE PROPERTIES, THE STATEMENT OF FACT BEFORE THE COURT, WHICH WAS N OT DISPUTED, WAS THAT THE ONLY ACTIVITY CARRIED OUT BY THE TRUST EVER SIN CE ITS INCEPTION WAS THE CONDUCT OF EDUCATIONAL INSTITUTIONS. THE INSTIT UTION, IN THAT CASE, HAD A HISTORY OF OVER 80 YEARS DURING THE COURSE OF WHI CH THE ONLY ACTIVITY WAS OF CONDUCTING EDUCATIONAL INSTITUTION. 13. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE SOCIETY HAS BEEN CONDUCTING THE PRIMARY AND SECONDARY SCHOOL IN THE STATE OF KARNATAKA SINCE 2002. NOR IS THERE ANY DISPUTE BEFORE US THAT SAVE AND EXCEPT FOR CONDUCTING SCHOOL, THE SOCIETY HAS CARRIED ON ANY O THER ACTIVITIES SINCE THEN. WITHOUT EXPRESSING ANY OPINION WHETHER THE OB JECT, AS REFLECTED IN ITA NO.2913/AHD/2015 12 CLAUSE 3(B) AND 3(H) OF THE MEMORANDUM OF ASSOCIATI ON, ARE RELATED TO EDUCATION, IT IS CLEAR THAT SAVE AND EXCEPT EDUCATI ONAL ACTIVITY THE ASSESSEE DID NOT/DO NOT CARRY ON ANY OTHER ACTIVITY IS THE FACT, WHICH IS NOT IN DISPUTE. IN OTHER WORDS, THOUGH THE ACTIVITI ES AS REFLECTED IN CLAUSE 3(B) AND 3(H), MAY CONSTITUTE THE PURPOSE, O THER THAN THE EDUCATIONAL PURPOSE, BUT, DURING THE RELEVANT ASSES SMENT YEAR, IT IS NOT THE CASE OF THE REVENUE NOR IS THERE ANY MATERIAL T O SHOW, THAT THE SOCIETY WAS RUNNING ANY ACTIVITIES OTHER THAN THE E DUCATIONAL ACTIVITY. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERE D OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS NOT CORRECT AND DESER VES TO BE SET ASIDE. THERE ARE ADEQUATE SAFEGUARDS THAT IF THE ACTIVITIE S OTHER THAN EDUCATIONAL ACTIVITIES ARE UNDERTAKEN BY THE SOCIET Y, EXEMPTION GRANTED CAN BE WITHDRAWN. MERELY, BECAUSE THERE EXISTS OBJE CT, WHICH IS NOT RELATED TO EDUCATIONAL ACTIVITIES, IN OUR OPINION, IS NOT SUFFICIENT TO DENY THE EXEMPTION/BENEFIT OF SECTION 10(23C)(IIIAD)OF T HE ACT. IN SHORT, IN THE ABSENCE OF ANY ALLEGATION OR MATERIAL AGAINST T HE SOCIETY SHOWING THAT THEY ARE INVOLVED IN ANY OTHER ACTIVITIES THAN THE EDUCATIONAL ACTIVITIES, IN OUR OPINION, IT CANNOT BE DENIED EXE MPTION UNDER SECTION 10(23C)(IIIAD). IN THE CIRCUMSTANCES, WE ANSWER BOT H THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. 14. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FA CTS OF THE PRESENT CASE, THEN IT WOULD REVEAL THAT THE ASSESSEE TRUST CAME T O EXISTENCE IN 1954. IT IS RUNNING EDUCATIONAL INSTITUTIONS. IT HAS BEEN REGI STERED UNDER SECTION 12AA OF THE ACT SINCE 25.8.1998. IT IS ALSO ENJOYING TH E EXEMPTION UNDER SECTION 80G. THUS, THE DEPARTMENT HAS NEVER DOUBTED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AND PURPOSE OF ITS EXISTENC E. WHILE REJECTING THE APPLICATION OF THE TRUST UNDER SECTION 10(23C), THE LD.CCIT HAS NOT POINTED OUT ANY SPECIFIC ASPECT. HE ONLY HARBOURED A BELIE F THAT ASSESSEE MIGHT HAVE SOME ANCILLARY ACTIVITIES NOT ASSOCIATED WITH EDUCA TION. THIS IS ONLY A HYPOTHETICAL OBSERVATION. IN ALL THESE DECISIONS, IT HAS BEEN PROPOUNDED THAT IF THE ASSESSEE HAS NOT TAKEN OTHER OBJECTIONS MENTION ED IN THE TRUST DEED, AND EXCLUSIVELY CARRIED OUT ACTIVITIES OF EDUCATION, TH EN APPROVAL UNDER SECTION 10(23C) WILL NOT BE DENIED. RESPECTFULLY FOLLOWING THESE DECISIONS, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE PRESCRIBE D AUTHORITY TO GRANT APPROVAL ITA NO.2913/AHD/2015 13 UNDER SECTION 10(234C)(VI) OF THE INCOME TAX ACT TO THE ASSESSEE FOR THE ASSTT.YEAR 2013-14. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH OCTOBER, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/10/2016