M/s. Xavier University Odisha, Puri V. Principal CCIT, Bhubaneswar

ITA 366/CTK/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4905 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 21-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: P S PANDAKAMAL AGRAWALLA ARS
• Keywords: Benefit of exemption; Revenue expenditure; Capital expenditure

Judgement Text

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. 366 /CTK/201 5 M/S. XAVIER UNIVERSITY, ODISHA, PLOT NO.12(A), NIJIGADA KURKI, HARIRAJPUR - 752050, PURI. VS. PR. C CIT, ODISHA, BHUBANESWAR. PAN/GIR NO. AAALX 0001 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.S.PANDA/KAMAL AGRAWALLA, ARS REVENUE BY : SHRI SAAD KIDWAI, CIT DR DATE OF HEARING : 0 7 /0 8 / 2018 DATE OF PRONOUNCEMENT : 10 /0 8 / 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR. CIT , BHUBANESWAR DATED 17 TH JUNE, 2015. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 01. THE LD. PR. CCIT HAS LEGALLY AND FACTUALLY ERRED IN REJECTING THE APPLICATION FOR REGISTRATION UNDER SECTION 10(23C)(VI) OF THE INCOME TAX ACT. 02.THE LD. PR. CCIT HAS ERRED LEGALLY IN ASSUMING THAT THE ASSESSEE HAS NOT COMMENCED ACTIVITIES. FURTHER, COMMENCE MENT OF ACTIVITIES, IN ANY CASE SHOULD NOT HAVE BEEN A GROUND OF REJECTION. 03. THE LD. PR. CCIT HAS ERRED LEGALLY BY LOOKING INTO THE 85% APPLICATION WHICH IS AN ASSESSMENT ISSUES. FURTHER, THE APPLICANT HAS APPLIED THE FUNDS AS PER THE INCOME TAX PROVIS IONS AND THE LD. PR. CCIT IS FACTUALLY INCORRECT IN THIS REGARD. 2 M/S. XAVIER UNIVERSITY, ODISHA 04. THE LD. PR. CCIT HAS IGNORED THE LEGITIMACY OF INTER CHARITY GRANT BETWEEN XAVIER INSTITUTE OF MANAGEMENT AND XAVIER UNIVERSITY WHICH IS PERMISSIBLE INCOME TAX PROVISIONS AND LEGALLY MAND ATED BY THE XAVIER UNIVERSITY, O DISHA ACT 2013. 3. AS ALL THE GROUNDS ARE INTER - CONNECTED, THEY ARE BEING DISPOSED OF TOGETHER AS UNDER: 4. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE PR. C CIT WAS NOT JUSTIFIED IN NOT GRANTING APPROVAL U/S.10(23 C )(VI) OF THE ACT. 5. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF THE PR. C CIT, ODISHA, BHUBANESWAR IS THAT XAVIER UNIVERSITY ODISHA HAS FILED AN APPLICATION IN FORM NO.56D ON 30.06.2014 SEEKING APPROVAL U/S.10(23C)(VI) OF THE INCOME TAX ACT, 1961 FOR THE FINANCIAL YEAR 2013 - 14. THE PR. C CIT OBSERVED THAT XAVIER UNIVERSITY ODISHA WAS FORMED VIDE AN ENACTMENT OF GOVT, OF ODISHA NOTIFICATION NO.4989/LEGIS/30/2012/L DATED 13.05.2013, WHICH CAME INTO EXISTENCE ON 06.07.2013. THE OBJECTIVES OF XAV IER UNIVERSITY ODISHA, AS PER THE ODISHA GAZETTE NOTIFICATION, IS TO ESTABLISH VARIOUS SCHOOLS, NAMELY, (I) SCHOOL OF MANAGEMENT, (II) SCHOOL OF NATURAL SCIENCES, (III) SCHOOL OF HUMANITIES & SOCIAL SCIENCE, (IV) SCHOOL OF ENGINEERING & TECHNOLOGY, (V) SCH OOL OF BANKING & FINANCIAL SERVICES, (VI) SCHOOL OF VOCATIONAL EDUCATION & TRAINING, (VII) SCHOOL OF TRIBAL & DEVELOPMENT STUDIES, (VIII) SCHOOL OF LAW AND (IX) SCHOOL OF VOCATIONAL EDUCATION. DURING THE FINANCIAL YEAR 2013 - 14, NONE OF THESE SCHOOLS HAVE C OME INTO EXISTENCE AND THE ACADEMIC ACTIVITIES THEREOF HAVE NOT COMMENCED. HE OBSERVED THAT A S PER THE AUDITED PROVISIONAL INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD 3 M/S. XAVIER UNIVERSITY, ODISHA 06.07.2013 TO 31.03.2014, A GROSS INCOME OF RS. 3,73,06,692/ - IS SHOWN, WHICH COMPRISED OF THE INCOMES UNDER THE FOLLOWING HEADS: HEADS OF INCOME AMOUNT (RS. ADMISSION INCOME 50,69,467/ - FEES 3,13,00,500/ - OTHER INCOME 9,36,725/ - TOTAL 3,73,06,692/ - ON VERIFICATION OF THE GENERAL LEDGER ACCOUNT PRODUCED DURING THE COURSE OF HEARING, IT IS SEEN THAT THE FEES AND ADMIS SION INCOME SHOWN HAVE BEEN TRANSFERRED FROM THE ACCOUNT OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR (XIMB) AS DETAILED BELOW: DATE VOUCHER NO. NARRATION AMOUNT (DR.) 31.07.20 13 HO - X - FY1314 - 07 - 08(JR) FEES COLLECTION FROM STUDENTS IN XIMB BOOKS OF A/C IS TRANSFERRED 1,04,85,000/ - 21.08.20 13 HQ - X - FY1314 - 08 - 03(JR) FEES COLLECTION FROM STUDENTS IN XIMB BOOKS OF A/C IS TRANSFERRED 1,04,28,000/ - 23.11.20 13 HO - X - FY1314 - 11 - 04(JR) FEES COLLECTION FROM STUDENTS IN XIMB BOOKS OF A/C IS TRANSFERRED 1,04,25,000/ - 31.03.20 14 HO - X - FY1314 - 03 - 50(JR) ADMISSION RELATED INCOME TRANSFERRED FROM XIMB 50,69,467/ - 6. THE PR. C CIT OBSERVED THAT F ROM THE ABOVE, IT IS EVIDENT THAT THE APPLICANT UNIVERSITY DID NOT CARRY OUT ANY EDUCATIONAL ACTIVITY OF ITS OWN DURING THE RELEVANT FINANCIAL YEAR 2013 - 14. IT MERELY OWNED UP AND PROJECTED THE INCOME EARNED BY XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR B Y SHOWING JOURNAL ENTRIES THROUGH TRANSFER. SIMILARLY, AS 4 M/S. XAVIER UNIVERSITY, ODISHA REGARDS THE EXPENDITURE PART, THE ENTIRE EXPENDITURE PERTAINING TO XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR HAS BEEN REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT OF THE UNIVERSITY FOR THE FIN ANCIAL YEAR 2013 - 14. HE OBSERVED THAT WI THOUT CARRYING OUT ANY EDUCATIONAL/ACADEMIC ACTIVITIES OF ITS OWN DURING THE RELEVANT PERIOD, THE APPLICANT UNIVERSITY HAS MERELY PROJECTED THE ACTIVITIES AND THE RELATED INCOME AND EXPENDITURE OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR , WHICH IS THE SPONSORING BODY, AS ITS OWN IN ITS ACCOUNTS, WHEREAS XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR HAD ITS OWN INDEPENDENT AND SEPARATE EXISTENCE FROM THE EARLIER TIMES WITH THE CLAIM TO BE ENGAGED IN THE ACTIVITY OF IMPARTING MANAGEMENT RELATED EDUCATION. HE OBSERVED THAT I N ORDER TO DECIDE THE ELIGIBILITY OF AN INSTITUTION FOR EXEMPTION U/S.10(23C)(VI), THE TEST OF PREDOMINANT OBJECT AND ACTIVITY OF EDUCATION NEEDS TO BE APPLIED BY POSING THE QUESTION WHETHER IT EX ISTS 'SOLELY' FOR EDUCATION DURING THE RELEVANT PERIOD OR NOT. FROM THE FACTS AND CIRCUMSTANCES IN THE APPLICANT UNIVERSITY'S CASE, IT IS CRYSTAL CLEAR THAT IT DID NOT COMMENCE ANY EDUCATIONAL ACTIVITIES OF ITS OWN DURING THE RELEVANT PERIOD IN ORDER TO MA KE ITSELF ELIGIBLE FOR CLAIM OF EXEMPTION U/S.10(23C)(VI) OF THE ACT. A PERUSAL OF THE DETAILS OF THE ACCOUNT EXTRACTS FURNISHED DURING THE COURSE OF THE HEARING OF THE CASE, IT W AS SEEN THAT EACH AND EVERY PIECE OF DOCUMENT RELATING TO ADMISSION OF STUDEN TS, RECEIPT OF COURSE FEES, EXPENDITURE INVOLVING CAMPUS RECRUITMENT AND EVEN FIXED DEPOSIT RECEIPTS, PROMINENTLY BEAR THE NAME OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR , WHICH IS A SUFFICIENT INDICATOR AND EVIDENCE 5 M/S. XAVIER UNIVERSITY, ODISHA FOR THE FACT THAT ALL THE RECEIPTS AND EXPENDITURES WERE THAT OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR AND NOT OF THE APPLICANT UNIVERSITY, BUT THE SAME HAS BEEN DISHONESTLY PROJECTED TO BE THE RECEIPTS/INCOME AND PAYMENTS/EXPENDITURE OF THE APPLICANT UNIVERSITY BY BODILY LIFTING THE ACCOUNTS OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR INTO THE BOOKS OF THE APPLICANT UNIVERSITY WITHOUT ACTUALLY HAVING CARRIED OUT ANY EDUCATIONAL AND OTHER ALLIED ACTIVITIES. HE FURTHER OBSERVED THAT THE RETURN FILED BY THE APPLICANT UNIVERSITY FOR T HE ASSESSMENT YEAR 2014 - 15 EXHIBITING THE INCOME AND EXPENDITURE AND OTHER STATEMENT OF AFFAIRS OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR IS PATENTLY FALSE, AND EVEN THE AUDITOR'S REPORT ENDORSING THE SAME AS RELATING TO THE APPLICANT UNIVERSITY IS FA LSE AND MISLEADING, FOR WHICH THE APPLICANT UNIVERSITY AS WELL AS ITS AUDITOR ARE LIABLE FOR SUITABLE ACTION UNDER THE RELEVANT PROVISIONS OF THE ACT. 7. ON PERUSAL OF THE AUDITED BALANCE SHEET FOR THE YEAR ENDED 31.03.2014, IT IS NOTICED THAT A SUM OF RS. 12 CRORES WAS RECEIVED AS ENDOWMENTS FUND FROM ITS SPONSORING BODY, XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR HA S BEEN INVESTED IN FIXED DEPOSITS WITH VARIOUS BANKS, NAMELY, UCO BANK ( RS. 10 CRORES), THE KARUR VYSYA BANK ( RS. 1 CRORE) & KOTAK MAHINDRA BANK ( RS. 1 CRORE), WHICH EARNED THE APPLICANT UNIVERSITY AN INTEREST OF RS. 83,61,6137 - DURING THE RELEVANT PERIOD. HE FURTHER OBSERVED THAT A SSUMING, BUT NOT ACCEPTING THAT THE APPLICANT UNIVERSITY WAS ENGAGED IN EDUCATIONAL ACTIVITIES OF ITS OWN 6 M/S. XAVIER UNIVERSITY, ODISHA DURING THE RELEVANT YEAR, NO SUCH INTEREST, HOWEVER, HAS BEEN ACCOUNTED FOR BY THE APPLICANT UNIVERSITY IN ITS AUDITED INCOME AND EXPENDITURE ACCOUNT FOR THE RELEVANT YEAR 2013 - 14, FOR REASONS BEST KNOWN TO THE APPLICANT AND WELL INFERRED BY THE PERUSER OF SUCH ACCOUNTS. BY INCORPORATING SUCH INTEREST INCOME, THE NET RESULT WOULD BE A SURPLUS OF RS. 83,61,613/ - AS AGAINST THE DEFICIT SHOWN BY THE APPLICANT UNIVERSITY OF RS. 30,45,237/ - . INCOME CREDITED IN THE INCOME & EXPENDITURE A/C.: RS. 3,73,06,692/ - ADD: INTEREST ON FIXED DEPOSITS NOT ACCOUNTED FOR :RS. 83,61,613/ - TOTAL : RS. 4,56,68,305/ - LESS: TOTAL EXPENDITURE AS PER INCOME & EXPENDITURE A/C : RS. 3,73,06,692 / - NET SURPLUS OF INCOME OVER EXPENDITURE : RS. 83.61,613/ - 8. HE FURTHER OBSERVED THAT A S PER SUB - CLAUSE (A) OF THIRD PROVISO TO SECTION 10(23C)(VI), ANY UNIVERSITY, AS PRESCRIBED U/S.10(23C)(VI), SHALL HAVE TO APPLY ITS INCOME OR ACCUMULATE IT FOR ITS APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED, AND IN A CAS E WHERE MORE THAN 15% OF ITS INCOME IS ACCUMULATED ON OR AFTER 01.04.2002, THE PERIOD OF THE ACCUMULATION OF THE AMOUNT EXCEEDING 15% OF ITS INCOME, SHALL IN NO CASE EXCEED FIVE YEARS. IN THE INSTANT CASE, IT IS OBSERVED THAT THE APPLICANT UNIVERSITY HAS A PPLIED ONLY A SUM OF RS. 3,73,06,692/ - AGAINST ITS TOTAL INCOME OF RS. 4,56,68,305/ - , WHICH CONSTITUTES ONLY 81.69% OF ITS INCOME DURING THE YEAR. SINCE THE PERCENTAGE OF INCOME APPLIED FOR ITS OBJECT OF EDUCATION IS LESS THAN THE PRESCRIBED LIMIT OF 85%, TH E APPLICANT UNIVERSITY HAS FAILED TO FULFILL THE CONDITION PRESCRIBED UNDER THE THIRD PROVISO REFERRED TO EARLIER, AND AS SUCH, IT IS CLEARLY DISENTITLED FROM CLAIMING EXEMPTION U/S.10(23C)(VI) OF THE ACT. 7 M/S. XAVIER UNIVERSITY, ODISHA 9. THE PR. C CIT FURTHER OBSERVED THAT IT IS PERTINE NT TO MENTION THAT THE SPONSORING BODY I.E. XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR HAD BEEN DENIED THE BENEFIT OF EXEMPTION U/S.10(23C)(VI) ON THE GROUNDS THAT SUCH INSTITUTION DOES NOT EXIST 'SOLELY' FOR THE PURPOSE OF EDUCATION, AND THE NATURE OF AC TIVITIES UNDERTAKEN BY IT AMOUNTS TO CARRYING OUT BUSINESS. SUCH FINDING WAS UPHELD BY THE HON'BLE HIGH COURT OF ORISSA IN THE CASE OF XIMB VS. STATE OF ORISSA & ORS (2012) 247 CTR 0268. APPARENTLY, IT APPEARS THAT ON FAILING TO OBTAIN A CERTIFICATE OF EXEMPTION BY THE SPONSORING BODY I.E. XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR , A DESPERATE ATTEMPT HAS BEEN MADE TO FLOAT ANOTHER ENTITY BY THE NAME XAVIER UNIVERSITY FOR OBTAINING THE CERTIFICATE OF EXEMPTION U/S.10(23C)(VI). HOWEVER, THE ATTEMPT ON T HE PART OF THE APPLICANT UNIVERSITY IS PREPOSTEROUS INASMUCH AS THE APPLICANT UNIVERSITY IS STILL AT A RUDIMENTARY SET UP STAGE AND YET TO COMMENCE ITS OWN ACADEMIC AND EDUCATIONAL ACTIVITIES, AND THE SO - CALLED EDUCATIONAL ACTIVITIES PROJECTED TO BE ITS OW N IS AN EUPHEMISM FOR THE ACTIVITIES ALREADY RUN BY XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR . 10. THEREFORE, THE PR. C CIT HELD THAT I N VIEW OF THE ABOVE ANALYSIS AND DISCUSSION AND IN THE LIGHT OF THE RATIOS OF THE FOLLOWING CASE LAWS, IT CAN BE S AID THAT THE APPLICANT UNIVERSITY CANNOT BE SAID TO BE EXISTING FOR EDUCATIONAL PURPOSE, MUCH LESS 'SOLELY' FOR EDUCATIONAL PURPOSE, SINCE NO EDUCATIONAL ACTIVITIES HAVE COMMENCED HITHERTO, AND AS SUCH, IT IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(VI) OF TH E ACT. 8 M/S. XAVIER UNIVERSITY, ODISHA I ) CIT VS. SORABJI NUSSERWANJI PAREKH (1992) 107 CTR (GUJ) 72: (1993) 201 ITR 939 (GUJ). (II) ADITANAR EDUCATIONAL INSTITUTION VS. ADDL. CIT (1997) 139 CTR (SC) 7: (1997) 224 ITR 310 (SC). III) CIT VS. GURUKUL GHATKESWAR TRUST OF HYDERABAD (2011) 243 CTR (AP) 154: (2011) 58 DTR (AP) 122 - ED. (IV) CIT VS. MAHARAJA SAWAI MANSINGHJI MUSEUM TRUST (1987) 65 CTR (RAJ) 46: (1988) 169 ITR 379 (RAJ). (V) OXFORD UNIVERSITY PRESS VS. CIT (2001) 165 CTR (SC) 629: (2001) 247 ITR 658 (SC). (VI) VANITA VISHRAM TRUST VS. CIT (2010) 233 CTR (BOM) 90: (2010) 40 DTR (BOM) 225: (2010) 327 ITR 121 (BOM). 1 1 . W E HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSES SEE IS FORMED IN PURSUANCE TO SPECIAL ACT OF THE LEGISLATIVE ASSEMBLY OF ODISHA. THE LEGISLATIVE ASSEMBLY OF ODISHA PASSED A SPECIAL ACT, NAMELY THE XAVIER UNIVERSITY, ODISHA ACT, 2013 BY WHICH THE ASSESSEE UNIVERSITY WAS CREATED. THE SAID SPECIAL ACT CAME INTO FORCE ON 13.5.2013 BY ISSUANCE OF A NOTIFICATION NO.890, CUTTACK, WHICH WAS PUBLISHED IN THE OFFICIAL GAZETTE ON 13.5.2013. THE OBJECT S OF THE ASSESSEE UNIVERSITY AS PER SECTION 5 OF THE SAID SPECIAL ACT ARE AS UNDER: 5. THE OBJECTIVES FOR WHICH THE UNIVERSITY IS ESTABLISHED ARE AS FOLLOWS: (A) TO DISSEMINATE ADVANCE KNOWLEDGE BY PROVIDING ACADEMIC AND RESEARCH FACILITIES IN SUCH BRANCHES OF LEARNING WHICH INCLUDES ENGINEERING AND TECHNOLOGY, HUMANITIES AND SOCIAL SCIENCE, MANAGEMENT, LAW, MEDICAL SCIENCE AND GENETICS, VOCATIONAL EDUCATION AND TRAINING, TRIBAL AND DEVELOPMENT STUDIES AND IN OTHER FIELDS AS IT MAY DEEM FIT; (B) TO OFFER CONTINUING AND DISTANCE EDUCATION PROGRAMMES AS PER NORMS OF THE DISTANCE EDUCATION COUNCIL OF THE GOVERNMENT OF INDIA OR ANY OTHER BODY CONSTITUTED BY THE STATE GOVERNMENT; (C) TO INSTITUTE DEGREES, DIPLOMAS, CHARTERS, DESIGNATIONS, CERTIFICATES AND OTHER ACADEMIC DISTINCTIONS ON THE BASIS OF EXAMINA TION OR ANY OTHER METHOD OF EVALUATION; 9 M/S. XAVIER UNIVERSITY, ODISHA (D) TO COLLABORATE WITH OTHER COLLEGES OR UNIVERSITIES, RESEARCH INSTITUTIONS, INDUSTRIAL ASSOCIATIONS, PROFESSIONAL ASSOCIATIONS OR ANY OTHER ORGANIZATION, IN INDIA OR ABROAD. (E) TO CONCEPTUALIZE, DESIGN AND DEVELOP SPECIFIC EDUCATIONAL AND RESEARCH PROGRAMMES, TRAINING PROGRAMMES AND EXCHANGE PROGRAMMES FOR STUDENTS, FACULTY MEMBERS AND OTHERS; (F) TO ESTABLISH THE FOLLOWING SCHOOLS OF THE UNIVERSITY, NAMELY: (I) SCHOOL OF MANAGEMENT, (II) SCHOOL OF NATURAL SCIENCES, (III) SCHOOL OF HUMANITIES AND SOCIAL SCIENCE, (IV) SCHOOL OF ENGINEERING AND TECHNOLOGY, (V) SCHOOL OF BANKING AND FINANCIAL SERVICES, (VI) SCHOOL OF VOCATIONAL EDUCATION - ARID TRAINING; (VII) SCHOOL OF TRIBAL AND DE VELOP MENT STUDIES, ( VIII) SCHOOL OF LAW, (IX) SCHOOL OF VOCATIONAL EDUCATION, AND (X) SUBJECT TO THE APPROVAL OF THE STATE GOVERNMENT, ANY OTHER SCHOOLS AS IT MAY DEEM FIT; (G) TO DISSEMINATE KNOWLEDGE THROUGH SEMINARS, CONFERENCES, EXECUTIVE EDUCATION PROGRAMMES, COMMUNITY DEVELOPMENT PROGRAMMES, PUBLICATIONS, AND TRAINING PROGRAMS (H) TO UNDERTAKE PROGRAMMES FOR THE TRAINING AND DEVELOPMENT OF THE FACULTY MEMBERS OF THE UNIVERSITY AND OTHER INSTITUTION'S IN INDIA OR ABROAD; (I) TO CREATE HIGHER LEVELS OF INTELLECTUAL ABILITIES; (J) TO PROVIDE CONSULTANCY TO INDUSTRY, GOVERNMENT AND PUBLIC ORGANIZATIONS; (K) TO ENSURE THAT THE STANDARDS OF THE DEGREES, DIPLOMAS, CHARTERS, CERTIFICATES AND OTHER ACADEMIC DISTINCTIONS ARE NOT LOWER THAN THOSE LAID DOWN BY UNIVERSITY GRA NTS COMMISSION AND OTHER REGULATORY BODIES, AS THE CASE MAY BE; (I) TO DO ALL THINGS NECESSARY OR EXPEDIENT TO PROMOTE THE ABOVE OBJECTIVES; AND (M) TO PURSUE ANY OTHER OBJECTIVE AS MAY BE APPROVED BY THE STATE GOVERNMENT. 1 2 . FURTHER, SUB - SECTION(2) OF SECTION 41 OF THE SAID SPECIAL ACT READS AS UNDER: (2) THE AMOUNT CREDITED TO THE GENERAL FUND SHALL BE APPLIED TO MEET THE FOLLOWING PAYMENTS, NAMELY; (A) REPAYMENT OF DEBTS INCLUDING INTEREST CHARGES THERETO INCURRED BY THE UNIVERSITY FOR THE PUR POSES OF THIS ACT AND THE STATUTES, AND THE RULES MADE THEREUNDER, (B) UPKEEPING OF THE ASSETS OF THE UNIVERSITY; 10 M/S. XAVIER UNIVERSITY, ODISHA (C) PAYMENT OF THE COST OF AUDIT OF THE FUND CREATED UNDER THIS SECTION AND SECTION 42; (D) MEETING THE EXPENSES OF ANY SUIT OR PROCEEDINGS TO WHICH THE UNIVERSITY IS A PARTY; (E) PAYMENT OF SALARIES AND ALLOWANCES OF THE OFFICERS AND EMPLOYEES OF THE UNIVERSITY, MEMBERS OF THE TEACHING AND RESEARCH STAFF, AND PAYMENT OF ANY PROVIDENT FUND CONTRIBUTIONS, GRATUITY' AND OTHER BENEFIT S TO ANY SUCH OFFICERS, EMPLOYEES, MEMBERS OF THE TEACHING AND RESEARCH STAFF; 1 3 . SECTION 47 OF THE SAID SPECIAL ACT PROVIDES AS UNDER: 47. (1) IF THE SPONSORING BODY PROPOSES DISSOLUTION OF THE UNIVERSITY IN ACCORDANCE WITH THE LAW GOVERNING ITS CONSTITUTION OR INCORPORATION, IT SHALL GIVE AT LEAST THREE MONTHS NOTICE IN WRITING TO THE STATE GOVERNMENT. (2) ON IDENTIFICATION OF MISMANAGEMENT, MALADMINISTRATION, INDISCIPLINE, FAILURE IN THE ACCOMPLISHMENT OF THE OBJECTS OF THE UNIVERSITY AND ECONOM IC HARDSHIPS IN THE MANAGEMENT SYSTEMS OF THE UNIVERSITY, THE STATE GOVERNMENT SHALL, SUBJECT TO AND IN ACCORDANCE WITH RELEVANT LAW, IF ANY, FOR THE TIME BEING IN FORCE, ISSUE DIRECTIONS TO THE SPONSORING BODY OF THE UNIVERSITY AND IF THE DIRECTIONS ARE N OT FOLLOWED WITHIN SUCH TIME AS MAY BE PRESCRIBED, THE RIGHT TO TAKE DECISION, FOR DISSOLUTION OF THE UNIVERSITY, SHALL VEST IN THE STATE GOVERNMENT. (3) THE MANNER OF DISSOLUTION OF THE UNIVERSITY WOULD BE SUCH AS MAY BE PRESCRIBED BY THE STATE GOVERNMEN T IN THIS BEHALF. (4) IF THE' STATE GOVERNMENT CONSIDERS IT NECESSARY TO SUSPEND THE BOARD OF MANAGEMENT, IT SHALL, BY NOTIFICATION PUBLISHED IN THE OFFICIAL GAZETTE, ORDER SUSPENSION OF THE BOARD OF MANAGEMENT AND SHALL MAKE SUCH ARRANGEMENTS IN CONSULTA TION WITH THE SPONSORING BODY FOR THE ADMINISTRATION OF THE BUSINESS OF THE UNIVERSITY TILL THE COMPLETION OF INVESTIGATION AS IT MAY CONSIDER NECESSARY. PROVIDED THAT NO SUCH ACTION WILL BE INITIATED WITHOUT AFFORDING A REASONABLE OPPORTUNITY TO SHOW CAU SE TO THE SPONSORING BODY. (5) ON RECEIPT OF THE NOTICE REFERRED TO IN SUB - SECTION (1) OR ON A DECISION TO DI SSOLVE UNDER SUB - SECTION (2), THE STATE GOVERNMENT SHALL, IN CONSULTATION WITH THE ALL INDIA COUNCIL FOR TECHNICAL EDUCATION, UNIVERSITY GRANTS COMMISSION AND OTHER CONCERNED REGULATORY BODIES OF CENTRAL OR STATE GOVERNMENT MAKE SUCH ARRANGEMENTS FOR ADMINISTRATION OF THE UNIVERSITY FROM THE PROPOSED DATE OF DISSOLUTION OR WINDING UP OF THE UNIVERSITY UNTIL THE LAST BATCH OF STUDENTS IN REGULAR CO URSES OF STUDIES OF THE UNIVERSITY COMPLETE THEIR COURSES OF STUDIES IN SUCH MANNER AS MAY BE PRESCRIBED. 1 4 . SECTION 2(P) DEFINES SPONSORING BODY AS UNDER: SPONSORING BODY MEANS THE XAVIER INSTITUTE OF MANAGEMENT SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860. 11 M/S. XAVIER UNIVERSITY, ODISHA 1 5 . THUS, IT IS OBSERVED THAT THE ASSESSEE UNIVERSITY WAS FORMED BY THE SPECIAL ACT OF THE GOVERNMENT OF ODISHA AND IT WAS FORMED SOLELY FOR THE PURPOSE OF EDUCATION. THE STATE GOVERNMENT DOES NOT PERMIT THE ASSESSEE UN IVERSITY TO APPLY ITS FUNDS OR INCOME FOR THE BENEFIT OF ANY PRIVATE PERSON AND FOR THIS MATTER FOR ANY PURPOSE OTHER THAN EDUCATION. THE ASSESSEE UNIVERSITY VIDE ITS APPLICATION DATED 30.6.2014 IN FORM NO.56D APPLIED FOR APPROVAL UNDER SECTION 10(23C)(V I) OF THE ACT BEFORE THE PRESCRIBED AUTHORITY NAMELY, PR. CCIT, BHUBANESWAR. THE PR. CCIT, BHUBANESWAR VIDE THE IMPUGNED ORDER DATED 17.6.2015 REFUSED TO GRANT APPROVAL TO THE ASSESSEE UNIVERSITY. THE REFUSAL WAS MADE MAINLY ON TWO GROUNDS: - 16. FIRSTLY, T HE PR. CCIT ON EXAMINATION OF BOOKS OF ACCOUNT OF THE ASSESSEE UNIVERSITY FOR THE FINANCIAL YEAR 2013 - 14 FOUND THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED FEE OF RS.3,73,06,692/ - FROM THE STUDENTS AND CLAIMED TO HAVE INCURRED EXPENDITURE OF RS.4,03,51 ,929/ - ON IMPARTING EDUCATION TO THOSE STUDENTS. THE ENTIRE RECEIPT OF FEE AND RELATED EXPENDITURE WERE RECORDED IN THE BOOKS BY PASSING JOURNAL ENTRIES IN THE NAME OF XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR XIMB. THE SAID XIMB IS AN INDEPENDENT ED UCATIONAL INSTITUT E . FROM THE ABOVE, THE PR. CCIT INFERRED THAT NO EDUCATIONAL ACTIVITY WAS, IN FACT, CARRIED OUT BY THE ASSESSEE UNIVERSITY AND INCOME AND EXPENDITURE WHICH WAS ACTUALLY OF XIMB WAS DIVERTED IN THE ACCOUNT OF THE ASSESSEE UNIVERSITY. 1 7 . T HE ASSESSEE POINTED OUT THAT THE SAID XIMB IS SPONSORING BODY OF THE ASSESSEE UNIVERSITY AS PER SECTION 2(P) OF THE SPECIAL ACT (QUOTED 12 M/S. XAVIER UNIVERSITY, ODISHA ABOV E. FURTHER, OUR ATTENTION WAS INVITED TO SUB - SECTION (2) OF SECTION 3 OF THE SPECIAL ACT, WHICH READS AS UNDER: ' 2 . THE SPONSORING BODY SHALL: (A) PROVIDE THIRTY - FIVE ACRES OF LAND IN INDUSTRIAL ESTATE KURKI, VIILAGE - NIJIGARDH, P.S : PIPLI IN THE DISTRICT OF PURI WHICH SHALL BE THE CAMPUS OF THE UNIVERSITY; (B) ASSIGN A MINIMUM BUILT - UP AREA OF TWENTY THOUSAND SQUARE METERS TO THE UNIVERSITY IN THE FORM OF BUILDINGS, AND ANCILLARY STRUCTURES FOR ADMINISTRATIVE AND ACADEMIC PURPOSES; WHICH SHALL NOT BE USED FOR ANY PURPOSE OTHER THAN THAT FOR WHICH THE SAME IS ASSIGNED. (C) PURCHASE BOOKS AND JOURNALS AT LEAST WORTH TE N LAKHS RUPEES OR AS PER THE NORMS OF THE REGULATORY BODIES, WHICHEVER IS HIGHER IN THE FIRST YEAR AND TO INVEST NOT LESS THAN FIFTY LAKHS RUPEES OR AS PER NORMS OF THE REGULATORY BODIES, WHICHEVER IS HIGHER, ON BOOKS, JOURNALS, COMPUTER NETWORKING AND OTH ER FACILITIES TO MAKE THE LIBRARY FACILITIES ADEQUATE FOR CONTEMPORARY TEACHING AND RESEARCH WITHIN THE FIRST THREE YEARS AND THE EXISTING LIBRARY BOOKS, JOURNALS, COMPUTER NETWORKING AND OTHER FACILITIES OF THE SOCIETY WHICH SHALL CONSTITUTE PART OF THE R EQUIRE MENT. D) PURCHASE EQUIPMENT , COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND INFRASTRUCTURE FACILITIES OTHER THAN BUILDINGS, REFERRED TO IN CLAUSE (B), WORTH TWENTY LAKHS RUPEES OR AS PER THE NORMS OF REGULATORY BODIES, WHICHEVER IS HIG HER, AND GIVE UNDERTAKING TO PROCURE WITHIN THE FIRST FIVE YEARS, EQUIPMENTS, COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND INFRASTRUCTURE FACILITIES OTHER THAN BUILDINGS REFERRED TO IN CLAUSE (B) WORTH NOT LESS THAN ONE C ROR E RUPEES OR AS P ER NORMS OF THE REGULATORY BODIES, WHICHEVER IS HIGHER AND THE EXISTING EQUIPMENTS, COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND INFRASTRUCTURE FACILITIES OTHER THAN BUILDINGS SHALL CONSTITUTE PART OF THE REQUIREMENT; (E) GIVE AN UNDERTAKING, (I) TO APPOINT AT LEAST ONE PROFESSOR, TWO ASSOCIATE PROFESSORS AND ADEQUATE NUMBER OF ASSISTANT PROFESSORS AND SENIOR LECTURERS ON FULL - TIME BASIS ALONG WITH NECESSARY SUPPORTING STAFF IN EACH SCHOOL OR DEPARTMENT OR DISCIPLINE OF THE UNIVERSITY PRIOR TO THE DATE SUCH SCHOOL OR DEPARTMENT OR DISCIPLINE IS STARTED; 13 M/S. XAVIER UNIVERSITY, ODISHA (II) TO TAKE UP CO - CURRICULAR ACTIVITIES TO FOSTER A PROPER ACADEMIC AND HEALTHY SOCIO - CULTURAL ENVIRONMENT, SUCH AS SEMINARS, DEBATES, QUIZ PROGRAMMES AND EXTRA CURR ICULAR ACTIVITIES LIKE GAMES, SPORTS, AND SUCH OTHER ACTIVITIES FOR THE BENEFIT OF THE STUDENTS AS PER THE NORMS LAID DOWN BY THE REGULATORY BODIES; (III) TO ESTABLISH WELFARE PROGRAMMES 1'OR THE EMPLOYEES OF THE UNIVERSITY; (IV) TO FULFIL SUCH OTHER CONDITIONS AND PROVIDE SUCH OTHER INFORMATIONS AS MAY BE PRESCRIBED BY THE REGULATORY BODIES, FROM TIME TO TIME; (V) THAT THE PROGRAMMES OF STUDY LEADING TO A DEGREE OR A POST - GRADUATE DEGREE OR DIPLOMA OFFERED BY THE UNIVERSITY SHALL CONFORM TO THE RELEVANT REGULATIONS OR NORMS OF TINE UGC AND THE CONCERNED REGULATORY BODY, AS AMENDED FROM TIME TO TIME; (VI) THAT THE ADMISSION PROCEDURE AND FIXATION OF FEES SHALL BE IN ACCORDANCE WITH THE NORMS OR GUIDELINES, IF ANY, PRESCRIBED B Y THE REGULATORY BODIES; (VII) THAT THE TEACHING STAFF OF THE U NIVERSITY SHALL HAVE AT LEAST THE MINIMUM QUALIFICATIONS PRESCRIBED BY THE UGC OR OTHER CONCERNED REGULATORY BODIES, AND BE PAID APPROPRIATE EMOLUMENTS; AND (VIII)TO FULFILL SUCH OTHER CONDITIONS AND PROVIDE SUCH OTHER INFORMATION AS MAY BE PRESCRIBED BY THE REGULATORY BODIES. 18 . IT WAS SUBMITTED THAT THE FEE WHICH WAS CREDITED IN THE ACCOUNT OF ASSESSEE UNIVERSITY WAS CHARGED FROM 60 STUDENTS OF THE ASSESSEE UNIVERSITY TO WHOM DEGREE WAS TO BE CONFERRED BY THE ASSESSEE UNIVERSITY AND NOT BY THE XIMB I.E. SPONSORING BODY. THE SPONSORING BODY, BEING RESPONSIBLE FOR THE COMMENCEMENT OF THE EDUCATIONAL ACTIVITY OF THE ASSESSEE SOCIETY MERELY HELP ED THE ASSESSEE UNIVERSITY BY COLLECTING F EE FROM THE STUDENTS OF THE ASSESSEE UNIVERSITY AND DISCHARGING THE ASSESSEE UNIVERSITY EXPENSES ON THE RELATED EDUCATION TILL THE OWN INFRASTRUCTURE OF THE ASSESSEE UNIVERSITY IS PUT INTO PLACE. 14 M/S. XAVIER UNIVERSITY, ODISHA 19 . THE PR. CCIT HAS NOT POINTED OUT ANY OF THE STUDENTS OF WHOSE FEE WAS CREDITED IN THE ASSESSEE UNIVERSITY ACCOUNT WAS CONFERRED DEGREE BY THE SAID XIMB. THE PR. CCIT FAILED TO APPRECIATE THE FACT IN THE PROPER PERSPECTIVE. IT WAS ALSO SUBMITTED THAT XIMB IS DULY REGISTERED U/S.12AA OF THE ACT AND ITS INCOME A LSO EXEMPTED U/S.11 & 12 OF THE ACT. THEREFORE, THERE COULD NOT HAVE BEEN ANY MOTIVE TO TRANSFER ACTUAL EDUCATIONAL INCOME AND EXPENSE OF THE SAID XIMB TO THE ACCOUNT OF THE ASSESSEE UNIVERSITY. THE LIST OF RELATED 60 STUDENTS IS ALSO FURNISHED. 2 0 . WE FIND THAT SAID XIMB IS A SPONSORING BODY OF THE ASSESSEE UNIVERSITY. AS THE INCOME OF THE XIMB IS ALSO EXEMPT FROM TAX U/S.11 & 12 OF THE ACT, NO FINANCIAL BENEFIT COULD HAVE BEEN DERIVED BY XIMB BY TRANSFERRING ITS OWN INCOME AND EXPENDITURE TO THE ACCOU NT OF ASSESSEE UNIVERSITY. 2 1 . MOREOVER, WE FIND THAT THE ASSESSMENT OF THE ASSESSEE UNIVERSITY FOR THE ASSESSMENT YEAR 2014 - 15 WAS COMPLETED U/S.143 ( 3) OF THE ACT VIDE ORDER OF ASSESSMENT DATED 29.7.2016, WHEREIN, THE FEES AND EXPENDITURE IN QUESTION WAS ACCEPTED TO BE THE ACTUAL INCOME AND EXPENDITURE OF THE ASSESSEE UNIVERSITY BY THE DEPARTMENT. 2 2 . THE NEXT REASON GIVEN BY THE PR. CCIT TO REFUSE TO GRANT APPROVAL U/S.10(23C)(VI) WAS AS UNDER: 4. ON PERUSAL OF THE AUDITED BALANCE SHEET FOR THE YEAR ENDED 31.3.2014, IT IS NOTICED THAT A SUM OF RS.12 CRORES THAT WAS RECEIVED AS ENDOWMENTS FUND FROM ITS SPONSORING BODY, XIMB, HAD 15 M/S. XAVIER UNIVERSITY, ODISHA BEEN INVESTED IN FIXED DEPOSITS WITH VARIOUS BANKS, NAMELY UCO BANK ( 10 CRORES), THE KARUR VYSYA BANK (R.1 CORRE) AND KOTAK MAHINDRA BANK (RS.1 CRORE) WHICH EARNED THE APPLICANT UNIVERSITY AN INTEREST OF RS.83,61,613/ - DURING THE RELEVANT PERIOD. ASSUMING, BUT NOT ACCEPTING THAT THE APPLICANT UNIVERSITY WAS ENGAGED IN EDUC ATIONAL ACTIVITIES OF ITS OWN DURING THE RELEVANT YEAR, NO SUCH INTEREST, HOWEVER, HAS BEEN ACCOUNTED FOR BY THE APPLICANT UNIVERSITY IN ITS AUDITED INCOME AND EXPENDITURE ACCOUNT FOR THE RELEVANT YEAR 2013 - 14, FOR REASONS BEST KNOWN TO THE APPLICANT AND WELL INFERRED BY THE PERUSER OF SUCH ACCOUNTS. BY INCORPORATING SUCH INTEREST INCOME, THE NET RESULT WOULD BE A SURPLUS OF RS. 83,61,613/ - AS AGAINST THE DEFICIT SHOWN BY THE APPLICANT UNIVERSITY OF RS. 30,45,237/ - . INCOME CREDITED IN THE INCOME & EXPENDITU RE A/C.: RS.3,73,06,692/ - ADD: INTEREST ON FIXED DEPOSITS NOT ACCOUNTED FOR :RS. 83,61,613/ - TOTAL : RS. 4,56,68,305/ - LESS: TOTAL EXPENDITURE AS PER INCOME & EXPENDITURE A/C : RS. 3,73,06,692 / - NET SURPLUS OF INCOME OVER EXPENDITURE : RS. 83.61,613/ - 4.1 A S PER SUB - CLAUSE (A) OF THIRD PROVISO TO SECTION 10(23C)(VI), ANY UNIVERSITY, AS PRESCRIBED U/S.10(23C)(VI), SHALL HAVE TO APPLY ITS INCOME OR ACCUMULATE IT FOR ITS APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED, AND IN A CAS E WHERE MORE THAN 15% OF ITS INCOME IS ACCUMULATED ON OR AFTER 01.04.2002, THE PERIOD OF THE ACCUMULATION OF THE AMOUNT EXCEEDING 15% OF ITS INCOME, SHALL IN NO CASE EXCEED FIVE YEARS. IN THE INSTANT CASE, IT IS OBSERVED THAT THE APPLICANT UNIVERSITY HAS A PPLIED ONLY A SUM OF RS. 3,73,06,692/ - AGAINST ITS TOTAL INCOME OF RS. 4,56,68,305/ - , WHICH CONSTITUTES ONLY 81.69% OF ITS INCOME DURING THE YEAR. SINCE THE PERCENTAGE OF INCOME APPLIED FOR ITS OBJECT OF EDUCATION IS LESS THAN THE PRESCRIBED LIMIT OF 85%, TH E APPLICANT UNIVERSITY HAS FAILED TO FULFILL THE CONDITION PRESCRIBED UNDER THE THIRD PROVISO REFERRED TO EARLIER, AND AS SUCH, IT IS CLEARLY DISENTITLED FROM CLAIMING EXEMPTION U/S.10(23C)(VI) OF THE ACT. 23. IN RESPECT OF ABOVE, THE ASSESSEE CONTENDED THAT THE FINDINGS OF THE LD PR. CCIT THAT THE ASSESSEE HAS APPLIED ONLY 81.69% FOR EDUCATIONAL PURPOSES IS FACTUALLY INCORRECT. FURTHER, IT WAS POINTED OUT THAT THE ENTIRE INTEREST INCOME OF RS.83,61,613/ - WAS D ULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BY CREDITING RS.70,22,466/ - UNDER THE HEAD UNIVERSITY ENDOWMENT FUND ACCOUNT AND RS.13,39,147/ - UNDER THE HEAD UNIVERSITY O THER A SSET F UND A CCOUNT. IT WAS CLARIFIED THAT THE 16 M/S. XAVIER UNIVERSITY, ODISHA AFORESAID INTEREST INCOME OF R S.83,61,613/ - WAS EARNED OUT OF FUND OF RS.12 CR O RES RECEIVED FROM SPONSOR ING BODY. OUR ATTENTION WAS INVITED TO SECTION 40 OF THE SPECIAL ACT, WHICH READS AS UNDER: 40(1) THE SPONSORING BODY SHALL ESTABLISH AN ENDOWMENT FUND OF TEN CRORES RUPEES. (2) THE AMOUNT OF ENDOWMENT FUND SHALL BE INVESTED AND KEPT INVESTED, UNTIL THE DISSOLUTION OF THE UNIVERSITY, IN LONG TERM SECURITIES ISSUED OR GUARANTEED BY THE STATE GOVERNMENT. (3) THE UNIVERSITY MAY TRANSFER ANY AMOUNT FROM THE GENERAL FUND OR THE DEVELOPMENT FUND TO THE ENDOWMENT FUND. (4) EXCEPTING IN THE DISSOLUTION OF THE UNIVERSITY, NO MONEY CAN BE TRANSFERRED FROM THE ENDOWMENT FUND UNDER ANY CIRCUMSTANCES FOR PURPOSES OTHER THAN THAT OF THE UNIVERSITY. (5) OUT OF THE INCOMES RECEIVED FRO M THE ENDOWMENT FUND, AN AMOUNT NOT EXCEEDING SEVENTY FIVE PERCENTUM SHALL BE USED FOR THE PURPOSES OF DEVELOPMENT WORKS OF THE UNIVERSITY AND THE REMAINING TWENTY FIVE PERCENTUM SHALL BE REINVESTED IN THE ENDOWMENT FUND. 24. OUR ATTENTION WAS INVESTED TO SECTION 3(2) OF THE SPECIAL ACT, WHICH READS ASUNDER: (2) THE SPONSORING BODY SHALL, (A) PROVIDE THIRTY - FIVE ACRES OF LAND IN INDUSTRIAL ESTATE KURKI, VI L AGE - NIJIGARDH, P.S : PIPLI IN THE DISTRICT OF PURI WHICH SHALL BE THE CAMPUS OF THE UNIVERSITY; (B) ASSIGN A MINIMUM BUILT - UP AREA OF TWENTY THOUSAND SQUARE METERS TO THE UNIVERSITY IN THE FORM OF BUILDINGS, AND ANCILLARY STRUCTURES FOR ADMINISTRATIVE AND ACADEMIC PURPOSES; WHICH SHALL NOT BE USED FOR AN Y PURPOSE OTHER THAN THAT FOR WHICH THE SAME IS ASSIGNED; (C) PURCHASE BOOKS AND JOURNALS AT LEAST WORTH TEN LAKHS RUPEES OR AS PER THE NORMS OF THE REGULATORY BODIES, WHICHEVER IS HIGHER IN THE FIRST YEAR AND TO INVEST NOT LESS THAN FIFTY LAKHS RUPEES OR AS PER NORMS OF THE REGULATORY BODIES. WHICHEVER IS HIGHER, ON BOOKS, JOURNALS, COMPUTER NETWORKING AND OTHER FACILITIES TO MAKE THE LIBRARY FACILITIES ADEQUATE FOR CONTEMPORARY TEACHING AND RESEARCH WITHIN THE FIRST THREE YEARS AND THE EXISTING LIBRARY B OOKS, JOURNALS, 17 M/S. XAVIER UNIVERSITY, ODISHA COMPUTER NETWORKING AND OTHER FACILITIES OF THE SOCIETY WHICH SHALL CONSTITUTE PART OF THE REQUIRE MENT. (D) PURCHASE EQUIPMENT, COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND INFRASTRUCTURE FACILITIES OTHER THAN BUILDINGS, REFERRED TO IN CLAUSE (B), WORTH TWENTY LAKHS RUPEES OR AS PER THE NORMS OF REGULATORY BODIES, WHICHEVER IS HIGHER, AND GIVE UNDERTAKING TO PROCURE WITHIN THE FIRST FIVE YEARS, EQUIPMENT, COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND INFRAST RUCTURE FACILITIES OTHER THAN BUILDINGS REFERRED TO IN CLAUSE (B) WORTH NOT LESS THAN ONE CRORE RUPEES OR AS PER NORMS OF THE REGULATORY BODIES, WHICHEVER IS HIGHER AND THE EXISTING EQUIPMENT, COMPUTERS, FURNITURE, OTHER MOVABLE AND IMMOVABLE ASSETS AND IN FRASTRUCTURE FACILITIES OTHER THAN BUILDINGS SHALL CONSTITUTE PART OF THE REQUIREMENT (E) GIVE AN UNDERTAKING, (I) TO APPOINT AT LEAST ONE PROFESSOR, TWO ASSOCIATE PROFESSORS AND ADEQUATE NUMBER OF ASSISTANT PROFESSORS AND SENIOR LECTURERS ON FULL - TI ME BASIS ALONG WITH NECESSARY SUPPORTING STAFF IN EACH SCHOOL OR DEPARTMENT OR DISCIPLINE OF THE UNIVERSITY PRIOR TO THE DATE SUCH SCHOOL OR DEPARTMENT OR DISCIPLINE IS STARTED; (II) TO TAKE UP CO - CURRICULAR ACTIVITIES TO FOSTER A PROPER ACADEMIC AND HEA LTHY SOCIO - CULTURAL ENVIRONMENT, SUCH AS SEMINARS, DEBATES, QUIZ PROGRAMMES AND EXTRA CURRICULAR ACTIVITIES LIKE GAMES, SPORTS, AND SUCH OTHER ACTIVITIES FOR THE BENEFIT OF THE STUDENTS AS PER THE NORMS LAID DOWN BY THE REGULATORY BODIES; (III) TO ESTABLI SH WELFARE PROGRAMMES FOR THE EMPLOYEES OF THE UNIVERSITY; (IV) TO FULFIL SUCH OTHER CONDITIONS AND PROVIDE SUCH OTHER INFORMATIONS AS MAY BE PRESCRIBED BY THE REGULATORY BODIES, FROM TIME TO TIME; (V) THAT THE PROGRAMMES OF STUDY LEADING TO A DEGREE OR A POST - GRADUATE DEGREE OR DIPLOMA OFFERED BY THE UNIVERSITY SHALL CONFORM TO THE RELEVANT REGULATIONS OR NORMS OF THE UGC AND THE CONCERNED REGULATORY BODY, AS AMENDED FROM TIME TO TIME; (VI) THAT THE ADMISSION PROCEDURE AN D FIXATION OF FEES SHALL BE IN ACCORDANCE WITH THE NORMS OR GUIDELINES, IF ANY, PRESCRIBED BY THE REGULATORY BODIES; (VII) THAT THE TEACHING STAFF OF THE UNIVERSITY SHALL HAVE AT LEAST THE MINIMUM QUALIFICATIONS PRESCRIBED BY THE UGC OR 18 M/S. XAVIER UNIVERSITY, ODISHA OTHER CONCERNED REG ULATORY BODIES, AND BE PAID APPROPRIATE EMOLUMENTS; AND (VIII)TO FULFILL SUCH OTHER CONDITIONS AND PROVIDE SUCH OTHER INFORMATION AS MAY BE PRESCRIBED BY THE REGULATORY BODIES. 25. IT WAS SUBMITTED THAT IN PURSUANCE TO THE ABOVE STATUTORY REQUIREMENT, THE SPONSORING BODY, THE XIMB ESTABLISHED ENDOWMENT FUND OF RS.10 CRORES AND OTHER ASSET FUND OF RS.2 CRORES, WHICH WAS INVESTED IN FIXED DEPOSITS WITH BANKS. AS THE INTEREST WAS EARNED ON SPECIFIC FUND, THEY WERE CREDITED IN THE RESPECTIVE FUND ACCOUNT. 26 . WE FIND THAT HONBLE SUPREME COURT IN THE CASE OF CIT(EXEMPTION), KOCHI VS MATA AMRITHANANDAMAYI MATH, AMRITAPURI, (2018) 94 TAXMANN.COM 82 (SC) HAS APPROVED THE VIEW OF THE HONBLE KERALA HIGH COURT, WHEREIN, IT HAS BEEN HELD THAT WHERE ASSESSEE TRUST R ECEIVED CORPUS DONATION ON WHICH IT EARNED INTEREST, IN VIEW OF SPECIFIC DIRECTION OF DONORS THAT SAID INTEREST WOULD ALSO FORM PART OF CORPUS, ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 11 ( 1)(D) IN RESPECT OF INTEREST SO EARNED WAS TO BE ALLOWED. 27. FROM THE BALANCE SHEET, IT WAS POINTED OUT THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2014 - 15, THE ASSESSEE UNIVERSITY INCURRED CAPITAL EXPENDITURE OF RS.24,73,09,298/ - UNDER THE HEAD CAPITAL WORK - IN - PROGRESS FOR DEVELOPMENT OF BUILDING FO R UNIVERSITY. THE SAID EXPENDITURE WAS INCURRED TOWARDS THE OBJECTS OF THE ASSESSEE UNIVERSITY. THE PR. CCIT IGNORED THE ABOVE CAPITAL EXPENDITURE AND ONLY CONSIDERED THE REVENUE EXPENDITURE FOR COLLECTING PERCENTAGE OF INCOME APPLIED TOWARDS THE OBJECT OF THE ASSESSEE UNIVERSITY. 19 M/S. XAVIER UNIVERSITY, ODISHA 28. IT IS A SETTLED POSITION THAT WHILE COLLECTING THE AMOUNT APPLIED TOWARDS OBJECTS UNDER THIRD PROVISO TO SECTION 10(23C)(VI), BOTH THE REVENUE APPLICATION AS WELL AS APPLICATION IN CAPITAL FIELD ARE TO BE TAKEN INTO CONSIDER ATION. ONCE THE ENTIRE AMOUNT APPLIED DURING THE YEAR IS TAKEN INTO CONSIDERATION, IT CANNOT BE HELD BY ANY STRETCH OF IMAGINATION THAT THE APPLICATION FOR EDUCATIONAL PURPOSES DURING THE YEA R UNDER CONSIDERATION WAS LESS THAN 85% OF INCOME. WE AGREE THA T THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF THIRD PROVISO TO SECTION 10(23C)(VI) OF THE ACT. 29. THUS, WE FIND THAT APART FROM SURMISES, CONJECTURES AND ERRONEOUS INFERENCE OF FACT, NO POSITIVE REASON COULD BE CITED BY THE LEARNED PR. CCIT TO DENY TH E APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT TO THE ASSESSEE UNIVERSITY, WHICH WAS CREATED BY THE SPECIAL ACT OF THE LEGISLATURE SOLELY FOR THE PURPOSE OF EDUCATION. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND DIRECT THE LEARNED PR. CCIT TO GRANT A PPROVAL U/S.10(23C)(VI) OF THE ACT TO THE ASSESSEE UNIVERSITY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 30. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 10 /0 8 /2018. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 10 /0 8 /2018 B.K.PARIDA, SPS 20 M/S. XAVIER UNIVERSITY, ODISHA COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. XAVIER UNIVERSITY, ODISHA, PLOT NO.12(A), NIJIGADA KURKI, HARIRAJPUR - 752050, PURI. 2. THE RESPONDENT. PR. C CIT, ODISHA, BHUBANESWAR 3 . DR, ITAT, CUTTACK 4 . GUARD FILE. //TRUE COPY//