Rai University, Ahmedabad V. The Commissioner of Income Tax(Exemptions), Ahmedabad

ITA 3081/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5874 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL WITH A N SHAH
• Keywords: Depreciation; Charitable institution
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 3081/AHD/2015 (ASSESSMENT YEAR: 2014-15) THE RAI UNIVERSITY SARODA POST, DHOLKA, AHMEDABAD- 382280 V/S COMMISSIONER OF INCOME TAX (EXEMPTIONS), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABAR4376A APPELLANT BY :SHRI M.G. PATEL WITH A.N. SHAH, AR RESPONDENT BY : SMT. APARNA AGARWAL, CIT/DR ( )/ ORDER DATE OF HEARING : 19 -03-201 8 DATE OF PRONOUNCEMENT : 23 -03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF LD. CIT(EXEMPTIONS), AHMEDABAD DATED 16.10.2015 IN RELATION TO THE REJECTION OF THE APPLICATION FILED U/S. 10(23C)(VI) OF THE AC T. ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 2 2. REPRESENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE CIT(EXEMPTIONS) AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CON SIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. 3. FACTS ON RECORD SHOW THAT THE APPELLANT UNIVERSITY CLAIMED EXEMPTION U/S. 10(23C)(VI) OF THE ACT BY FILING APPLICATION AS PER THE PROVISIONS OF THE LAW. HOWEVER, THE SAID APPLICATION WAS REJECTED BY THE C IT(EXEMPTIONS) VIDE ORDER DATED 20.10.2014. 4. SINCE AT THAT POINT OF TIME, THE ORDER OF THE CIT(E XEMPTIONS) WAS NOT APPEALABLE, THE ASSESSEE PREFERRED A PETITION UNDER ARTICLE 226 OF THE CONSTITUTION BEFORE THE HONBLE HIGH COURT OF GUJAR AT. THE HONBLE HIGH COURT OF GUJARAT IN SPECIAL CIVIL APPLICATION NO. 6 90 OF 2015 DATED 27.07.2015 CONSIDERED THE PETITION OF THE APPELLANT UNIVERSITY AND ORDERED AS UNDER:- 10. IT IS AN UNDISPUTED FACT THAT THE PETITIONER UNIVERSITY HAS BEEN ESTABLISHED UNDER THE PROVISIONS OF THE UNIVERSITIES ACT, 2009, AND ACCOR DINGLY, THE SAME WAS INCLUDED IN THE SCHEDULE OF THE UNIVERSITIES ACT, 23009 BY PUBLICATION IN TH E GUJARAT GOVERNMENT GAZETTE ON 11.04.2012. WE HAVE PERUSED THE PROVISIONS OF THE UNIVERSITIES ACT, 2009 AS WELL AS THE FIRST STATUTES OF THE PETITIONER UNIVERSITY. SEVERAL ASPECTS HAVE BEEN PL EADED BY BOTH THE SIDES WITH REGARD TO THE ELIGIBILITY OF THE PETITIONER UNIVERSITY FOR GETT ING EXEMPTION UNDER SECTION 10 (23C) (VI) OF THE ACT. HOWEVER, WE WOULD LIKE TO DEAL WITH THE PRESEN T CASE AT THIS STAGE ONLY ON THE GROUND THAT THE CHIEF COMMISSIONER OF INCOME TAX HAD NO OCCASIO N TO DEAL WITH THE CASE OF THE PETITIONER IN ABSENCE OF SUFFICIENT MATERIALS I.E. FINAL BALANCE SHEET SHOWING INCOME AND EXPENDITURE ACCOUNT UP TO 31.03.2014 THOUGH THE ORDER HAS BEEN PASSED O N 20.10.2014. 11 WE ARE OF THE OPINION THAT THE CHIEF COMMISSIONE R OF INCOME TAX, BEFORE PASSING THE IMPUGNED ORDER DATED 20.10.2014, OUGHT TO HAVE PERU SED THE RELEVANT MATERIALS WITH REGARD TO THE INCOME AND EXPENDITURE OF THE UNIVERSITY AND OU GHT NOT TO HAVE DECIDED THE CASE ON THE REASONS ASSIGNED IN THE IMPUGNED ORDER HAVING INSUF FICIENT MATERIALS TO COME TO THE CONCLUSION THAT THE UNIVERSITY IS ESTABLISHED FOR EARNING PROF IT FROM IMPARTING EDUCATION TO THE STUDENTS. THE RESPONDENTS AUTHORITIES OUGHT TO HAVE PERUSED THE P OWERS OF THE STATE GOVERNMENT UNDER THE PRIVATE UNIVERSITIES ACT, 2009 WHILE DEALING WITH T HE CASE OF A UNIVERSITY ESTABLISHED UNDER THE SAID ACT. THE RESPONDENTS AUTHORITY OUGHT TO HAVE C ONSIDERED THE POWERS OF THE STATE GOVERNMENT PROVIDED UNDER SECTION 43 OF THE UNIVERS ITIES ACT, 2009. SECTION 43 OF THE UNIVERSITIES ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 3 ACT, 2009 EMPOWERS THE STATE GOVERNMENT TO TAKE ACT ION AGAINST THE UNIVERSITIES IN CERTAIN CIRCUMSTANCES. 12 THEREFORE, IN OUR OPINION, THE IMPUGNED ORDER RE QUIRES TO BE QUASHED AND SET ASIDE ONLY ON THE GROUND REFERRED HEREINABOVE AND ACCORDINGLY, QUASHE D AND SET ASIDE. THE MATTER IS REMANDED TO THE CHIEF COMMISSIONER OF INCOME TAX FOR A FRESH CO NSIDERATION WITH REGARD TO THE APPLICATION DATED 21.11.2013 SUBMITTED BY THE PETITIONER UNIV ERSITY FOR GRANT OF CERTIFICATE UNDER SECTION 10(23C)(VI) OF THE ACT, AFTER GIVING AN OPPORTUNITY OF HEARING TO THE PETITIONER UNIVERSITY AND AFTER CONSIDERING THE RELEVANT PROVISIONS OF THE INCOME T AX ACTS, POWERS, AND THE PROVISIONS OF THE GUJARAT PRIVATE UNIVERSITIES ACT, 2009. THE AUTHORI TIES SHALL GIVE AN OPPORTUNITY OF HEARING TO THE PETITIONER AND SHALL DEAL WITH THE SUBMISSIONS MADE BY THE AUTHORITY INCLUDING THE RATIO LAID DOWN BY EITHER OF THIS COURT OR BY ANY OTHER HIGH COURTS AS WELL AS THE HONOURABLE SUPREME COURT WHILE DEALING WITH SUCH APPLICATION MADE UNDER THE PROVIS IONS OF SECTION 10 (23C)(VI) OF THE ACT. 13 THE ABOVE REFERRED EXERCISE SHALL BE COMPLETED B Y THE RESPONDENTS AUTHORITIES WITHIN A PERIOD OF 8 (EIGHT) WEEKS FROM THE DATE OF RECEIPT OF A CO PY OF THIS ORDER. SINCE WE HAVE REMANDED THE MATTER TO THE RESPONDENTS AUTHORITIES FOR GRANT OF EXEMPTION ON SUFFICIENT MATERIALS BY THE INCOME TAX OFFICERS, WE HAVE RESTRAINED OURSELVES F ROM MAKING ANY COMMENTS WITH REGARD TO CERTAIN OBSERVATIONS MADE IN THE IMPUGNED ORDER. 14 ACCORDINGLY, PRESENT PETITION IS ALLOWED. RULE I S MADE ABSOLUTE TO THE AFORESAID EXTENT. NO COSTS. DIRECT SERVICE IS PERMITTED. 5. PURSUANT TO THE DIRECTIONS OF THE HONBLE HIGH COUR T, THE LD. CIT(EXEMPTIONS) GRANTED OPPORTUNITY TO THE APPELLANT UNIVERSITY TO PRESENT ITS CASE IN RELATION TO THE CLAIM OF EXEMPTION. 6. THE ASSESSEE FILED NECESSARY DETAILS ALONG WITH THE FINANCIAL STATEMENTS AS PER THE DIRECTIONS OF THE HONBLE HIGH COURT OF GUJARAT . 7. IN SPITE OF THE SPECIFIC DIRECTIONS OF THE HONBLE HIGH COURT IN RELATION TO THE FINANCIAL STATEMENTS OF THE APPELLANT UNIVERSITY, T HE LD. CIT(EXEMPTIONS) DISMISSED THE APPLICATION OF THE ASSESSEE ON THE GR OUND THAT THE APPELLANT UNIVERSITY IS A PROFIT MAKING UNIVERSITY. THE LD. C IT(EXEMPTIONS) EMPHASIZED ON THE FACT THAT THE APPELLANT UNIVERSITY IS TOTALL Y DEPENDENT UPON SPONSORING BODY AND WHENEVER THE SPONSORING BODY WANTS THE UNI VERSITY CAN BE DISSOLVED. THE CIT(EXEMPTIONS) WAS OF THE FIRM BELI EF THAT ON SUCH DISSOLUTION ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 4 ALL THE ASSETS OF THE APPELLANT UNIVERSITY WILL GO BACK TO SPONSORING BODY WHICH IS AGAINST THE SPIRIT OF CHARITABLE TRUST WHEREUPON ON DISSOLUTION NO ASSETS ARE ALLOWED TO GO BACK TO FOUNDER TRUSTEES OR DONORS. T HE CIT(EXEMPTION) CAME TO THE CONCLUSION THAT THE APPELLANT UNIVERSITY IS NOT INDEPENDENT BUT IS FULLY CONTROLLED BY THE SPONSORING BODY TRUST. HE WAS OF THE OPINION THAT IF THE APPELLANT UNIVERSITY IS NOT AN INDEPENDENT BODY, IT S EXISTENCE AS A LEGAL JURIDICAL PERSON GETS COMPROMISED. THE CIT(EXEMPTIONS) CONCL UDED BY HOLDING THAT THE APPELLANT UNIVERSITY DOES NOT FULFILL THE CONDI TIONS LAID DOWN U/S. 10(23C)(VI) OF THE ACT AND ACCORDINGLY DENIED THE APPROVAL FOR EXEMPTION UNDER THE SAID SECTION. 8. AGGRIEVED BY THIS, THE APPELLANT UNIVERSITY IS BEFO RE US. 9. BEFORE PROCEEDING FURTHER LET US FIRST EXAMINE THE PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT WHICH READ AS UNDER:- (VI) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIO N 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 PRESCRIBED AUTHORITY. 10. REFERENCE TO CLAUSE (IIIAB) AND (IIIAC) RELATES TO THOSE APPELLANT TRUST WHICH ARE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 11. APPELLANT UNIVERSITY HAS BEEN ESTABLISHED UNDER GUJ ARAT PRIVATE UNIVERSITY (AMENDMENT) ACT, 2012 PUBLISHED IN GUJARAT GOVERNME NT GAZETTE EXTRAORDINARY APRIL 11, 2012. RAI FOUNDATION IS THE SPONSORING BODY OF THE APPELLANT UNIVERSITY WHO HAS DEPOSITED RS. 5 CRORES TOWARDS ENDOWMENT FUND. THE OBJECT OF THE UNIVERSITY IS FOR PROVIDING FREE EDUCATION UNDER VARIOUS ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 5 PROGRAMMES TO UNDER PRIVILEGED GIRLS FROM STATE OF GUJARAT WITH ACCOMMODATION AND MEALS TO SUCH STUDENTS AS NOMINAT ED BY GOVERNMENT OF GUJARAT. THIS IS IN ADDITION TO THE OBJECTS OF THE APPELLANT UNIVERSITY WHICH ARE TO CREATE ORGANIZE PRESERVE AND DISSEMINATE KNOWLED GE IN THE FIELD OF SCIENCE, TECHNOLOGY, HUMANITIES, SOCIAL SCIENCES, EDUCATION, MANAGEMENT, COMMERCE, LAW, PHARMACY, HEALTHCARE AND OTHER FIELD FOR ADVAN CING OF MANKIND IN PARTICULAR. THE INCOME EXPENDITURE OF THE APPELLAN T UNIVERSITY FOR THE YEAR ENDED 31.03.014 IS AS UNDER:- PARTICULARS AS AT 31.03.2014 INCOME FEES AND OTHER CHARGES RECEIVED CONTRIBUTIONS MADE BY THE SPONSORING BODY INCOME RECEIVED FROM CONSULTANCY AND OTHER WORK GRANTS INTEREST RECEIVED OTHER RECEIPTS EXPENDITURE SALARY AND WAGES LEGAL & PROFESSIONAL EXPENSES ADVERTISEMENT & PROMOTIONAL EXPENSES ELECTRICITY & FUEL EXPENSES TRAVELING & CONVEYANCE EXPENSES TELEPHONE & INTERNET EXPENSES STAFF & STUDENTS WELFARE EXPENSES BOOKS & PERIODICAL EXPENSES POSTAGE & COURIER EXPENSES BANK CHARGES MISC. EXPENSES FEES & SUBSCRIPTION EXPENSES PRINTING & STATIONARY EXPENSES REPAIR & MAINT. EXPENSES RENT EXPENSES INSURANCE EXPENSES MESS EXPENSES PROPERTY TAX LAB/PRACTICAL EXPENSES DEPRECIATION SURPLUS/(DEFICIT) FOR THE YEAR BALANCE TRANSFER TO GENERAL FUND 8,84,39,989 - - - 13,94,371 41,20,144 9,39,54,504 3,84,92,508 36,52,983 1,17,17,734 51,29,563 1,23,72,023 14,14,687 17,30,708 50,217 4,10,495 23,590 8,11,036 3,31,622 23,35,684 46,77,227 3,48,000 2,58,584 66,11,229 5,48,418 2,52,432 93,60,853 10,05,29,593 (65,75,089) (65,75,089) ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 6 12. AND THE BALANCE SHEET AS ON 31.03.2014 IS AS UNDER:- RAI UNIVERSITY BAL ANCE SHEET AS AT 31.03.2014 PARTICULARS SCH. AS AT 31.03.2014 SOURCES OF FUNDS 1. DEVELOPMENT FUND 2. UNSECURED LOAN 3. GENERAL FUND TOTAL II. APPLICATION OF FUNDS 1. FIXED ASSETS GROSS BLOCK LESS:- DEPRECIATION NET FIXED ASSETS CAPITAL WORK IN PROGRESS TOTAL FIXE ASSETS 2. CURRENT ASSETS, LOANS & ADVANCES CASH & BANK BALANCES SUNDRY DEBTORS, LOANS AND ADVANCE LESS : CURRENT LIABILITIES NET CURRENT ASSETS TOTAL A B C D E F G 16,23,84,444 8,06,03,057 (3,60,18,363) 20,69,69,138 19,83,94,461 1,03,17,106 18,80,77,355 90,20,1227 19,70,97,482 65,96,945 1,04,83,923 1,70,80,868 72,09,212 98,71,656 20,69,69,11138 13. THE DETAILS OF FEES RECEIVED IS AS UNDER:- RAI UNIVERSITY DETAILS OF RECEIVED FOR THE ASSESSMENT YEAR 2014-15 COURSE NAME BATCH GRAND TOTAL AUG'2012 JULY 2013 JAN 2014 ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 7 B.TECH ( COMP. SCIENCE) - 3,051,500 - 3,051,500 B.TECH (BIO - TECH) - 933,000 - 933,000 B.T ECH (CIVIL) 45,000 6,490,300 - 6,535,300 B.TECH (E.C.) - 1,187,000 - 1,187,000 B.TECH (ELECTRICAL) 295,000 4,789,500 - 5,084,500 B.TECH (IT)' 45,000 2,742,000 - 2,787,000 B.TECH (MECHANICAL) 202,500 10,349,639 - 10,552,139 TOTAL-B-TECH 587,500 29,542,939 - 30,130,439 BBA - 1,025,000 - 1,025,000 BSC. (BIO - TECH) - 480,000 - 480,000 BSC. (MICROBIOLOGY) 30,000 490,000 - 520,000 TOTAL - GRADUATE COURSE 30,000 1,995,000 - 2,025,000 DIPLOMA (CIVIL ENGG.) - 1,650,000 - 1,650,000 DIPLOMA (COMPUTER SCIENCE) - 682,000 - 682,000 DIPLOMA IN AUTOMOBILE - 1,241,000 - 1,241,000 DIPLOMA IN ELECTRICAL - 1,447,000 - 1,447,000 DIPLOMA IN IT - 213,000 - 213,000 DIPLOMA IN MECHANICAL - 4, 634,000 - 4,634,000 TOTAL - DIPLOMA - 9,867,000 - 9,867,000 MBA 84,400 2,082,600 - 2,167,000 TOTAL - MBA 84,400 2,082,600 - 2,167,000 PHD - 11,275,065 7,786,935 19,062,000 TOTAL - PHD - 11,275,065 7,786,935 19,062,000 ONLINE COU RSE FEES - 8,494,950 - 8,494,950 HOSTEL FEES - 11,689,000 - 11,689,000 TRANSPORTATION FEES - 5,004,600 - 5,004,600 GRAND TOTAL 701,900 79,951,154 7,786,935 88,439,989 ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 8 14. THE GUJARAT PRIVATE UNIVERSITIES ACT, 2009 INCLUDED THE APPELLANT UNIVERSITY IN ITS SCHEDULE VIDE A GAZETTE NOTIFICATION DATED 11.0 4.2012. 15. THE SAID INCLUSION BY THE STATE GOVERNMENT WAS AFTE R SATISFACTION THAT THE SPONSORING BODIES HAVE COMPLIED WITH THE CONDITIONS OF LETTER OF INTENT AS PROVIDED IN SECTION 10 OF THE GUJARAT PRIVATE UNIVE RSITIES ACT, 2009 AND HAVE ALSO ESTABLISHED THE ENDOWMENT FUND AS PER THE LETT ER OF INTENT. THUS THE APPELLANT UNIVERSITY CAME INTO THE CONTROL OF GUJAR AT GOVERNMENT AND WAS BOUND BY THE GUJARAT PRIVATE UNIVERSITIES ACT, 2009 . AS PER THE SAID ACT, THE APPLICATION OF GENERAL FUND WAS TO BE UTILIZED FOR THE FOLLOWING OBJECTS:- 38. THE GENERAL FUND SHALL BE UTILIZED FOR THE FOLL OWING OBJECTS NAMELY:- (A) FOR THE REPAYMENT OF DEBTS INCLUDING INTEREST C HARGES THERETO INCURRED BY THE UNIVERSITY FOR THE PURPOSES OF THIS ACT AND THE STA TUTES, THE ORDINANCES, THE REGULATIONS AND THE RULES MADE THREUNDER WITH THE P RIOR APPROVAL OF THE GOVERNING BODY. (B) TO UPKEEP THE ASSETS OF THE UNIVERSITY. 16. THE LD. CIT(EXEMPTIONS) HAS HEAVILY EMPHASIZED ON THE FATE OF THE ASSETS OF THE APPELLANT UNIVERSITY ON ITS DISSOLUTION. HOWEVE R, THE GUJARAT PRIVATE UNIVERSITIES ACT, 2009 HAS SPECIFICALLY PROVIDED F OR WINDING UP OF UNIVERSITY AND THE SAME IS AS UNDER:- CHAPTER IX WINDING UP OF UNIVER SITY 41 (1) IF THE SPONSORING BODY PROPOSES TO DISSOLVE ITSELF TO THE PROVISIONS OF LAW GOVERNING ITS CONSTITUTION OR INCORPORATION , IT SHALL GIVE AT LEAST SIX MONTHS PRIOR NOTICE TO THE STATE GOVERNMENT. (2) THE STATE GOVERNMENT SHALL ON RECEIPT OF SUCH N OTICE MAKE SUCH ARRANGEMENTS AS MAY BE NECESSARY FOR THE ADMINISTRA TION OF THE UNIVERSITY FROM THE DATE OF DISSOLUTION OF THE SPON SORING BODY TILL THE COMPLETION OF SYLLABUS BY THE LAST BATCH OF STUDENT S ADMITTED TO THE ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 9 UNIVERSITY AND MAY ALSO CAUSE THE FUNCTIONING OF TH E UNIVERSITY TO CONTINUE BY APPOINTING AN ADMINISTRATOR IN PLACE OF THE SPONSORING BODY, WHO SHALL BE ENTRUSTED WITH THE POWERS, DUTIES AND FUNCTIONS OF THE SPONSORING BODY AS PRESCRIBED UNDER THIS ACT. 42(1) THE SPONSORING BODY WHO INTENDS TO DISSOLVE T HE UNIVERSITY SHALL GIVE A NOTICE TO THAT EFFECT IN THE PRESCRIBED MANN ER TO THE STATE GOVERNMENT. THE STATE GOVERNMENT, AFTER DUE CONSIDE RATION MAY DISSOLVE THE UNIVERSITY IN THE MANNER AS MAY BE PRESCRIBED. PROVIDED THAT THE DISSOLUTION OF THE UNIVERSITY SHA LL HAVE EFFECT ONLY AFTER THE LAST BATCHES OF STUDENTS OF THE REGULAR COURSES HAVE COMPLETED THEIR COURSES AND THEY HAVE BEEN AWARDED DEGREES, DIPLOMA S OR, AS THE CASE MAY BE, AWARDS. (2) ON THE DISSOLUTION OF THE UNIVERSITY ALL THE AS SETS AND LIABILITIES OF THE UNIVERSITY HALL VEST IN THE SPONSORING BODY IN THE MANNER AS MAY BE PRESCRIBED. (3) WHERE THE STAT GOVERNMENT DECIDES UNDER SUB-SEC TION (1) TO DISSOLVE THE UNIVERSITY, IT MAY VEST THE POWERS OF THE GOVER NING BODY IN THE PRESCRIBED MANNER TO OTHER SOCIETIES HAVING SIMILAR OBJECTS TILL THE DISSOLUTION OF THE UNIVERSITY TAKES EFFECT UNDER TH E PROVISO TO SUB-SECTION (1). 17. THE ACT FURTHER PROVIDES 43. (1) WHERE THE STATE GOVERNMENT IS OF THE OPINI ON 'THAT THE UNIVERSITY HAS CONTRAVENED ANY OF IF IT; PROVISIONS OF TIN'S ACT, THE RULES, THE STATUTES OR THE ORDINANCES MADE THEREUNDER OR HAS VIOLATED ANY OF T HE DIRECTIONS ISSUED BY IT UNDER THIS ACT OR A SITUATION OF FINANCIAL MISMANAG EMENT OR MALADMINISTRATION HAS ARISEN IN THE UNIVERSITY., IT SHALL ISSUE THE N OTICE REQUIRING THE 'UNIVERSITY TO SHOW CAUSE WITHIN FORTY-FIVE DAYS AS TO WHY AN ADMI NISTRATOR BE NOT APPOINTED. (2) ON RECEIPT OF REPLY OF DIE UNIVERSITY ON THE NO TICE ISSUED UNDER SUBSECTION (I.),, IF THE STATE GOVERNMENT IS SATISFIED THAT THERE IS A PRIMA FACIE CASE OF CONTRAVENTION OF ANY OF THE PROVISIONS OF THIS ACT, THE RULES, THE STATUTES OR THE ORDINANCES MADE THEREUNDER OR VIOLATION OF DIRECTIO NS ISSUED BY IT UNDER THIS ACT OR THERE IS FINANCIAL MISMANAGEMENT OR MALADMINISTR ATION IT SHALL MAKE AN ORDER OR SUCH INQUIRY AS IT MAY CONSIDER NECESSARY. (3) THE STATE GOVERNMENT SHALL, FOR THE PURPOSES OF ANY SUCH INQUIRY UNDER SUB SECTION (2), APPOINT AN INQUIRY OFFICER OR OFFICERS TO INQUIRE INTO ANY OF THE ALLEGATIONS AND TO MAKE REPORT THEREON. ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 10 (4) THE INQUIRY OFFICER OR OFFICERS APPOINTED UNDER SUB-SECTION (3) SHALL HAVE THE SAME POWERS AS ARE VESTED IN A CIVIL COURT UNDER TH E CODE OF CIVIL PROCEDURE 1908 WHILE TRYING A SUIT IN RESPECT OF THE FOLLOWING MAT TERS, NAMELY:- (A) SUMMONING AND ENFORCING THE ATTENDANCE OF ANY P ERSON AND EXAMINING HIM ON OATH: (B) REQUIRING THE DISCOVERY AND PRODUCTION OF ANY S UCH DOCUMENT OR ANY OTHER MATERIAL AS MAY BE PREDICABLE IN EVIDENCE; (C) REQUISITIONING ANY PUBLIC RECORD FROM ANY COURT OR OFFICE. (5) ON RECEIPT OF THE INQUIRY REPORT FROM THE OFFIC ER OR OFFICERS APPOINTED UNDER SUB-SECTION(3) IF THE STATE GOVERNMENT IS SATISFIED THAT THE UNIVERSITY HAS CONTRAVENED ALL OR ANY OF THE PROVISIONS OF THIS AC T, THE RULES THE STATUTES OR THE ORDINANCES MAD THEREUNDER OR HAS VIOLATED ANY OF TH E DIRECTIONS ISSUED BY IT UNDER THIS ACT OR A SITUATION OF FINANCIAL MISMANAG EMENT AND MALADMINISTRATION HAS ARISEN IN THE UNIVERSITY WHICH THREATENS THE AC ADEMIC STANDARD OF THE UNIVERSITY IT MAY APPOINT AN ADMINISTRATOR. (6) THE ADMINISTRATOR APPOINTED UNDER SUB-SECTION ( 5) SHALL EXERCISE ALL THE POWERS AND PERFORM ALL THE DUTIES OF THE GOVERNING BODY AND THE BOARD OF MANAGEMENT UNDER THIS ACT AND SHALL ADMINISTER THE AFFAIRS OF THE UNIVERSITY UNTIL THE LAST BATCH OF THE STUDENTS OF THE REGULAR COURSES HAVE COMPLETED THEIR COURSES AND THEY HAVE BEEN AWARDED WITH DEGREES, DI PLOMAS OR, AS THE CASE MAY BE, AWARDS; (7) AFTER HAVING BEEN AWARDED THE DEGREES, DIPLOMAS OR, AS THE CASE MAY BE, AWARDS TO THE LAST BATCHES OF THE STUDENTS OF THE R EGULAR COURSES, THE ADMINISTRATOR SHALL MAKE A REPORT TO THAT EFFECT TO THE STATE GOVERNMENT. (8) ON RECEIPT OF THE REPORT UNDER SUB-SECTION(7) T HE STATE GOVERNMENT HALL DISSOLVE THE UNIVERSITY AND ON DISSOLUTION OF THE U NIVERSITY ALL THE ASSETS AND LIABILITIES OF THE UNIVERSITY SHALL BEST IN THE SPO NSORING BODY. 18. IN THE LIGHT OF THE AFORE-STATED FACTS, WE HAVE CAR EFULLY CONSIDERED THE FIRST STATUTES OF THE APPELLANT UNIVERSITY WHICH IS EXHIB ITED AT PAGES 41 TO 60 OF THE PAPER BOOK. 19. IN OUR CONSIDERED OPINION, IT IS A FALLACY TO STATE THAT THE APPELLANT UNIVERSITY HAS BEEN CONSTITUTED FOR PROFIT MOTIVE. IT IS EQUAL LY A FALLACY TO DENY THE EXEMPTION SOLELY ON THE CONCERN ABOUT THE ASSETS OF THE APPELLANT UNIVERSITY IN ITA NO. 3081 /AHD/2015 . A.Y. 2014-15 11 THE EVENT OF DISSOLUTION AND WHAT WOULD BE THE FATE OF THE ASSETS CREATED IN THE EVENT OF DISSOLUTION OF UNIVERSITY. THE CIT(EXEMPTI ON) HAS GROSSLY ERRED IN NOT CONSIDERING THE FINANCIALS OF THE APPELLANT COMPANY IN THE LIGHT OF THE SPECIFIC DIRECTIONS OF THE HONBLE HIGH COURT OF GUJARAT. THE FEES STRUCTURE OF THE APPELLANT UNIVERSITY IS RELATED TO THE PROVISIONS O F THE STATE GOVERNMENT RELATING TO ADMISSIONS. IT IS PROVIDED THAT THE MEA NS MAY BE DETERMINED BASED ON ECONOMIC CONDITION OR THE SITUATION OF THE STUDE NT. 20. CONSIDERING THE OBJECTS OF THE APPELLANT UNIVERSITY IN THE LIGHT OF THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD WE ARE OF T HE OPINION THAT THE APPELLANT UNIVERSITY IS NOT ESTABLISHED WITH THE PR OFIT MOTIVE. THEREFORE, WE DO NOT FIND ANY REASON FOR DENYING THE EXEMPTION U/S. 10(23C)(VI) OF THE ACT. CONSIDERING THE FACTS IN TOTALITY, WE SET ASIDE THE FINDINGS OF THE CIT(EXEMPTIONS) AND DIRECT HIM TO GRANT EXEMPTION U /S. 10(23C)(VI) OF THE ACT. 21. APPEAL FILED BY THE APPELLANT UNIVERSITY IS ACCORDI NGLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 03- 2018 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 23/03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)