SHRI RAJENDRA SHARMA, Indore V. THE DCIT 1(1), Indore

ITA 508/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6241 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND; MOHD JAVED
• Assessee Lawyers: N D PATWA
• Keywords: Charitable institution
• Section: 143(3); 234B; 12A; 147; 148; 10; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER TAKSHILA SHIKSHA AVAM JAN KALYAN SAMITI, TAKSHILA PARISHAR, 23, RACHNA NAGAR, BHOPAL .. ./ PAN: AABTT2430L VS. DY. CIT, CIRCLE 1(1), BHOPAL / APPELLANT / RESPONDENT / APPELLANT BY SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADV. / RESPONDENT BY SHRI LALCHAND, CIT DR AND SHRI MOHD. JAVED, SR. DR DATE OF HEARING 22.11.2016 DATE OF PRONOUNCEMENT 29.11.2016 .. . / I.T.A. NOS. 508 & 509/IND/2015 #% % / ASSESSMENT YEARS: 2007-08 & 2008-09 I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 2 OF 22 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE CONSOLIDATED ORDER OF LD. COMMISSIONER OF INCOME-TA X (APPEALS)-I, BHOPAL [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 20.05.2014 AND PERTAINS TO ASSESSMENT YEARS 2007-08 & 2008-09 AS AGAINST APPEAL DECIDED IN ASSESSMENT OR DER PASSED U/S 147 R.W.S. 143(3) OF THE ACT DATED 18.03 .2013 OF DY. CIT, 1(1), BHOPAL, [HEREINAFTER REFERRED TO AS THE AO]. 2. SINCE THE FACTS AND GROUNDS ARE COMMON IN BOTH THES E APPEALS, WE HAVE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE, WE ARE DISPOSING OF THEM BY THIS CONSO LIDATED ORDER. 3. GROUND NO. 1 STATED THAT THE LD. CIT(A)-I, BHOPAL I S NOT JUSTIFIED IN HOLDING THAT THE ACTION U/S 147/148 IS JUSTIFIED. 4. THIS GROUND OF APPEAL IS NOT PRESSED DURING THE COU RSE OF HEARING BEFORE US. HENCE, THE SAME IS TREATED AS WITHDRAWN AND, ACCORDINGLY, DISMISSED. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 3 OF 22 5. GROUND NOS. 2 TO 4 STATED THAT THE INCOME OF THE ASSESSEE WAS NOT EXEMPT U/S 10(23C)(IIIAD) OF THE IN COME-TAX ACT, 1961, AND THEREBY GIVING THE FINDING THAT THE INCOME AMOUNTING TO RS. 20,78,800/- IS TAXABLE TO INCOME T AX FOR ASSESSMENT YEAR 2007-08 AND RS. 42,30,732/- FOR ASS ESSMENT YEAR 2008-09. 6. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY ENGAGED IN RUNNING A COLLEGE, NAMELY, TAKSHSHILA MAHAVIDYALAYA AND A SCHOOL, NAME LY, TAKSHSHILA PUBLIC SCHOOL AT BHOPAL. THE ASSESSEE HA D NOT FURNISHED ITS ORIGINAL RETURN OF INCOME FOR ASSESSM ENT YEAR 2007-08 AND 2008-09. THE AO OBTAINED THE INFORMATIO N THAT THE ASSESSEE SOCIETY HAD SURPLUS OF RS. 18,53,794/- IN ASSESSMENT YEAR 2007-08 AND RS. 17,83,889/- IN ASSE SSMENT YEAR 2008-09 AS PER INCOME & EXPENDITURE ACCOUNT OF THE RELEVANT PERIODS. HENCE, AFTER RECORDING REASONS IS SUED NOTICE U/S 148 ON 27.03.2012 FOR BOTH THE ASSESSMENT YEARS IN RESPONSE TO WHICH THE ASSESSEE HAS FILED THE RETURN S OF INCOME FOR BOTH THE YEARS ON 10.04.2012 DECLARING INCOME A T NIL AND I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 4 OF 22 CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. H OWEVER, THE AO NOTICED THAT THE ASSESSEE HAD MADE CLAIM OF EXEM PTION U/S 10(23C)(IIIAD) OF THE ACT FOR ASSESSMENT YEAR 2 007-08 AND 2008-09 ON THE GROUND THAT THE SOCIETY WAS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND ANNUAL RECEIPTS OF THE SOC IETY WAS NOT EXCEEDING RS. 1 CRORE AS THE TOTAL RECEIPTS FOR ASSESSMENT YEAR 2007-08 WERE OF RS. 67,98,712/- AND FOR ASSESS MENT YEAR 2008-09 WERE OF RS. 81,52,055/-. HOWEVER, ON EXAMI NATION OF THE BYE LAWS OF THE SOCIETY, IT WAS NOTICED THAT THER E WERE MULTIFARIOUS OBJECTS OF THE SOCIETY RANGING FROM ES TABLISHMENT OF EDUCATIONAL INSTITUTION, NATIONAL INTEGRATION, S OCIAL WELFARE, ORGANIZING VARIOUS CULTURAL ACTIVITIES, ENVIRONMENT , HEALTH, PANCHAYATI RAJ ETC. THE AO ALSO REPRODUCED SCANNED COPY OF THE OBJECTS OF THE SOCIETY IN HIS ORDER. THE AO ALS O NOTICED THAT THERE WAS NO CLAUSE IN BYE-LAWS OF THE SOCIETY TO RES TRAIN IT FROM APPLYING ITS RECEIPT TO ANY SUCH ACTIVITIES O THER THAN EDUCATION. THEREFORE, THE AO CONCLUDED THAT THE MAN DATORY CONDITION OF EXISTING SOLELY FOR EDUCATION WAS NOT F ULFILLED. THE AO ALSO SUPPORTED THE VIEW BY RELYING ON THE DECISIO N OF I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 5 OF 22 HON'BLE SUPREME COURT IN THE CASE OF DHARAPOSHANAM CO. VS. CIT, (1978) 114 ITR 463 (S.C.) AND, ACCORDINGLY, HE LD THAT THE ASSESSEE SOCIETY WAS NOT EXISTING SOLELY FOR EDUCATI ON PURPOSES AND, THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR E XEMPTION OF INCOME U/S 10(23C)(IIIAD) OF THE ACT. THEREFORE, TH E AO TREATED THE SURPLUS OF RS. 18,53,794/- IN ASSESSMENT YEAR 2 007-08 AND RS. 17,83,889/- IN ASSESSMENT YEAR 2008-09 AS T AXABLE INCOME AND, ACCORDINGLY, ASSESSED THE INCOME OF THE ASSESSEE. 7. BEING AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEFO RE THE LD. CIT(A). 8. BEFORE THE CIT(A), IT WAS CONTENDED THAT TOTAL ANNUA L RECEIPTS OF THE ASSESSEE SOCIETY WERE BELOW RS. 1 CRO RE FOR ASSESSMENT YEAR 2007-08 AND 2008-09 AND, THEREFORE, THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIA D) OF THE ACT. IT WAS ALSO CONTENDED THAT NONE OF THE OBJECT O F THE ASSESSEE SOCIETY WAS RELATED TO ANY COMMERCIAL OR BU SINESS ACTIVITY EXCEPT IMPARTING EDUCATION. THE OTHER OBJE CT DID NOT CHANGE THE NATURE OF THE ACTIVITIES OF THE ASSESSEE . SINCE THE ASSESSEE WAS PRIMARILY ENGAGED ITSELF IN EDUCATIONAL ACTIVITIES, I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 6 OF 22 THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 10(23C)( IIIAD) OF THE ACT. THE ASSESSEE HAS ALSO RELIED ON NUMBER OF CASE LAWS, WHICH WERE REPRODUCED BY THE LD. CIT(A) AT PAGE 4 O F HIS ORDER. HOWEVER, THE LD. CIT(A) HAS HELD THAT THE A SSESSEES OBJECTS WERE MULTIFARIOUS RANGING FROM EDUCATION TO NATIONAL INTEGRATION, SOCIAL WELFARE, PANCHAYATI RAJ, HEATH AND WATER RESOURCES ETC. THUS, IT CANNOT BE SAID THAT THE ASS ESSEE SOCIETY WAS EXISTING SOLELY FOR EDUCATIONAL PURPOSES. THE LD . CIT(A) HAS ALSO REFERRED THAT THE LD. CIT(A), BHOPAL VIDE ORDER DATED 30.03.2012, HAS REJECTED THE APPLICATION FILED BY T HE ASSESSEE FOR SEEKING GRANT OF EXEMPTION U/S 10(23C)(VI) OF T HE ACT ON THE GROUND THAT OBJECTS CLAUSE OF THE SOCIETY WERE MULTIFARIOUS. IN THE LIGHT OF THESE FACTS, THE LD. CIT(A) UPHELD THE FINDING OF THE AO. 9. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE INSTITUTION WAS ESTABLISHED IN THE YEAR 198 8 AND SINCE THEN IT IS RUNNING ONLY EDUCATIONAL INSTITUTI ON. NO I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 7 OF 22 ACTIVITY HAS BEEN UNDERTAKEN EXCEPT EDUCATIONAL ACT IVITIES. IT HAD NEVER BEEN DOUBTED THAT THE ASSESSEE WAS DOING EDUCATIONAL ACTIVITIES ONLY. THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT MERELY IF THE OBJECT PROVIDED FOR OT HER CHARITABLE ACTIVITIES, BUT NO ACTIVITIES, IN FACT, ARE CARRIED, THE ASSESSEE CANNOT DISENTITLE FOR EXEMPTION. IT WAS CON TENDED THAT THE SOCIETY HAS BEEN EXISTING SOLELY FOR EDUCA TIONAL PURPOSES AND THIS IS WELL ESTABLISHED FROM THE FACT THAT THE ASSESSEE HAS NOT DONE ANY ACTIVITY OTHER THAN EDUCA TIONAL DURING THE YEAR UNDER CONSIDERATION OR IN ANY OTHE R YEARS IN THE PAST. THIS CAN BE VERIFIED FROM THE BALANCE SHE ET FILED ALONGWITH RETURN. SECTION 10(23C)(IIIAD) OF THE ACT PROVIDES EXEMPTION TO ANY UNIVERSITY OR OTHER EDUCATIONAL IN STITUTIONS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R PURPOSE OF PROFIT. IF THE AGGREGATE ANNUAL RECEIPT DOES NOT EX CEED THE PRESCRIBED LIMIT, THE SECTION CONTEMPLATES THAT OBJ ECTS SHOULD BE EXCLUSIVELY AND SOLELY FOR THE PURPOSE OF EDUCAT ION, THE WORDS USED INSTITUTION EXISTING SOLELY FOR EDUCATIO NAL PURPOSES. THUS, SECTION 10(23C)(IIIAD) OF THE ACT I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 8 OF 22 CONTEMPLATES THAT THE ACTIVITY SHOULD BE SOLELY FOR THE PURPOSES OF EDUCATION. IN SUPPORT OF THIS PROPOSITI ON, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SURAT ART SILK MFG. ASSOCIATION, 121 ITR 1 ( S.C.) AND FEDERATION OF IN DIAN CHAMBERS AND COMMERCE INDUSTRIES, 130 ITR 186 ( S.C .) IN WHICH IT WAS HELD IF THE DOMINANT OR PRIMARY PURPOSE OF THE ASSOCIATION IS CHARITABLE, THE SUBSIDIARY OBJECT WOU LD NOT MITIGATE AGAINST THE CHARITABLE CHARACTER. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER PLACED RELIA NCE IN THE CASE OF HARF CHARITABLE TRUST, 63 TAXMANN.COM 53 (P &H), WHEREIN IT WAS HELD THAT MERELY BECAUSE ONE OF THE CL AUSES OF THE TRUST DEED OF THE ASSESSEE TRUST PROVIDE THAT T HE TRUST COULD CARRY ON OTHER BUSINESS AS DECIDED BY THE TR USTEES, IT WOULD NOT PER SE DIS-ENTITLE TRUST FROM BEING CONSID ERED FOR REGISTRATION U/S 10(23C)(VI). IN THE CASE OF ITO VS . SHRI BALAJI PREM ASHARAM, 64 TAXMANN.COM 112 (CHD), WHERE ASSESS EE- TRUST WAS CARRYING OUT ACTIVITY OF EDUCATION DURING RELEVANT YEAR AND ITS RECEIPT FROM SAID ACTIVITY WAS LESS THA N RS. ONE I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 9 OF 22 CRORE, ASSESSEES CLAIM FOR EXEMPTION U/S 10(23C)(I IIAD) OF THE ACT COULD NOT BE REJECTED ON GROUND THAT IT HAD MEN TIONED OTHER OBJECTS ALSO IN TRUST DEED. THE LD. AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE FURTHER RELIED IN TH E CASE OF ALLAHABAD YOUNG MENS CHRISTIAN ASSOCIATION, 371 IT R 23 ( ALL), WHEREIN IT WAS HELD THAT MERELY BECAUSE THERE A RE OTHER OBJECTS OF SOCIETY DOES NOT MEAN THAT EDUCATIONAL I NSTITUTION IS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSE. SAME V IEW WAS ALSO HELD IN THE CASE OF NEERAJ JANHITKARI GRAMIN S EWA SANSTHAN V. CHIEF COMMISSIONER OF INCOME-TAX, (2014 ) 49 TAXMANN.COM 535 (ALLD.) AND C.P. VIDYA NIKETAN VIDY A SHIKSHAN SANSTHAN, 359 ITR 322 (ALLD). THE LD. AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER CONTENDED TH AT THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT IS AVAILABL E TO INSTITUTION AND NOT TO ASSESSEE. THE SOCIETY RUNNIN G A HOSPITAL AND ALSO MEDICAL COLLEGE WOULD BE APPLICABLE U/S 10 (23C)(IIIAD) AS WELL AS U/S 10(23C)(IIIAE) OF THE ACT AS EACH IN STITUTION IS TO BE SEEN SEPARATELY. IN THE PRESENT CASE, THE ASSESS EE IS RUNNING TWO INSTITUTIONS ONE COLLEGE AND ANOTHER WAS SCHOOL. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 10 OF 22 BOTH THE INSTITUTIONS WERE HAVING EDUCATIONAL PURPO SES. THERE MAY BE VARIOUS OTHER PURPOSES IN THE OBJECTS, BUT T HE SPECIFIC PURPOSE FOR WHICH THESE INSTITUTIONS ARE ONLY EDUCA TIONAL PURPOSES. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER CITED A DECISION IN THE CASE OF CIT VS. CHI LDRENS EDUCATIONAL SOCIETY, (2013) 34 TAXMAN.COM 285 (KARN ATAKA), WHEREIN IT WAS HELD THAT IF AN ASSESSEE IS RUNNING S EVERAL EDUCATIONAL INSTITUTIONS AND IF ANY OF THEM IS WHOL LY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIVED BY THE A SSESSEE IS NOT INCLUDED WHILE COMPUTING ITS TOTAL INCOME. SIMI LARLY, INCOME FROM EACH EDUCATIONAL INSTITUTION IF THEY AR E NOT RECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUBS TANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DOE S NOT EXCEED RS. 1 CRORE IS ALSO NOT INCLUDED WHILE COMPUT ING ANNUAL TOTAL INCOME OF THE ASSESSEE.(PARA 23). THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER S UPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF JAT EDUC ATION SOCIETY VS. DY. CIT, (2011) 47 SOT 35 (DEL), CIT VS . CHILDRENS I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 11 OF 22 EDUCATION SOCIETY,(2013) 358 ITR 373 (KARNATAKA), U .P. FOREST CORPN. VS. DY. CIT, (2008) 297 ITR 1 ( S.C.), BIRLA VIDYA VIHAR TRUST, 135 ITR 144. THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE FURTHER SUBMITTED THAT THE USE OF THE PHRA SE SOLELY QUALIFIES THE WORDS NOT FOR THE PURPOSE OF PROFIT. A S PER SECTION, THE INSTITUTION SHALL BE FOR EDUCATIONAL P URPOSES AND NOT FOR THE PURPOSE OF PROFIT. USING THE WORDS NOT FOR THE PURPOSE OF PROFIT IS AN IMPORTANT PHRASE. IT WAS FU RTHER EXPLAINED THAT WHEN ANY SOCIETY IS CREATED, THE BYE- LAWS ARE ALWAYS PROVIDED IN THE WIDEST SENSE. THE REASON IS TH AT THE INSTITUTION WANTS TO ASSURE THAT ALL THE INTENDED AC TIVITIES ARE CARRIED ON, WHICH MAY PROMOTE THE BASE OBJECTIVE. 11. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT CASE LAWS RELIED UPON BY THE LD. CIT(A) ARE DISTINGUISHABLE ON FACTS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN TH E CASE OF DELHI STOCK EXCHANGE ASSOCIATION, 225 ITR 235 ( S. C.), THE ASSESSEE WAS RUNNING A STOCK EXCHANGE AND DID NOT HA D A CLAUSE THAT THE PROFITS SHALL BE USED FOR CHARITABL E PURPOSES. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 12 OF 22 BUT THE PROFITS COULD BE DISTRIBUTED TO SHAREHOLDER S. IN THAT BACKGROUND, IT WAS HELD THAT THERE MUST BE AN OBLIGA TION TO SPEND THE MONEY EXCLUSIVELY AND ESSENTIALLY ON CHAR ITY. IN THE PRESENT CASE, THERE WAS NO SUCH OBLIGATION, MORE SO, PROFIT COULD BE DISTRIBUTED BY WAY OF DIVIDENDS. DISTRIBUTI ON OF PROFITS, IS A VERY DIFFERENT THING FROM HAVING OTHE R CHARITABLE OBJECTS. IN THE CASE OF DHARMAPOSHANAM CO., 114 ITR 463 ( S. C.), THE TRUST WAS PARTLY A CHARITABLE TRUST AND PAR TLY FOR PROFIT PURPOSES. IT WAS DOING CERTAIN BUSINESS LIKE MANUFAC TURING OF KURIS AND MONEY LENDING AS A COMMERCIAL ACTIVITIES. IT WAS, THEREFORE, HELD THAT SUCH OBJECTS ARE NOT CHARITABL E PURPOSES BUT FOR THE PURPOSE OF PROFIT. IN THE PRESENT CASE, THE OTHER OBJECTS ARE ALSO CHARITABLE AND IT CANNOT BE SAID T HAT THE OBJECTS ARE FOR PROFIT MAKING. IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHANA TRUST, 101 ITR 234 ( S. C.), THE WORD EDU CATION HAS BEEN DISCUSSED. IT IS STATED THAT EVERY ADVANCE MENT OF KNOWLEDGE IS NOT EDUCATION, WHEREAS THE ASSESSEE IS R UNNING A SCHOOL AND A COLLEGE. RUNNING AN EDUCATIONAL INSTIT UTION OF THIS SORT, DEFINITELY PREPARES PEOPLE FOR THE WORK O F LIFE. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 13 OF 22 12. THE LD. CIT DR RELIED ON THE ORDERS OF AO AS WELL A S LD. CIT(A) AND SUBMITTED THAT THE OBJECTS OF THE SOCIET Y WERE MULTIFARIOUS. HENCE, THE SAME CANNOT BE TREATED AS SOLELY OBJECTIVE FOR THE PURPOSE OF EDUCATION. THEREFORE, THE LD. CIT(A) WAS RIGHT IN UPHOLDING THE FINDINGS OF THE AO. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDIS PUTED FACT OF THE CASE ARE THAT THE ASSESSEE SOCIETY DOES NOT POSSESSS REGISTRATION U/S 12A OF THE ACT FOR THE YEAR UNDER CONSIDERATION . HOWEVER, IT CAN CLAIM EXEMPTION U/ S 10(23C)(IIIAD) OF THE ACT, IF THE CONDITION ENUMERA TED THEREIN ARE SATISFIED. WE FIND THAT AGGREGATE ANNUAL RECEIP T OF THE SOCIETY DOES NOT EXCEED THE AMOUNT OF RS. 1 CRORE F OR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. THEREFORE, TH E ONLY ISSUE REMAINS TO BE ANALYZED WHETHER THE ASSESSEE IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PUR POSE OF PROFIT. FROM THE PERUSAL OF THE BALANCE SHEET AND I NCOME AND EXPENDITURE ACCOUNT PLACED IN THE PAPER BOOK, IT IS NOTICED THAT THE ONLY ACTIVITY CARRIED OUT BY THE ASSESSEE DURING THE I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 14 OF 22 YEAR IS RELATING TO EDUCATION ONLY. IT IS ALSO NOT THE CASE OF THE AO THAT THE ASSESSEE HAS CARRIED OUT ANY OTHER ACTI VITY OTHER THAN EDUCATIONAL DURING THE YEAR UNDER CONSIDERATIO N. THE ASSESSEE MAY BE HAVING MANY OTHER OBJECTS IN TRUST DEED, BUT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS NOT CARRIED OUT ANY OTHER ACTIVITIES OTHER THAN EDUCATI ON. THERE IS NO ALLEGATION BY THE AO THAT THE ASSESSEE HAS DEVIA TED FROM ITS OBJECTS AND THE ASSESSEE IS CARRYING ON OTHER ACTIV ITIES OTHER THAN EDUCATION. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IMPARTING OF EDUCATIONAL NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE HAS NOT BEEN DOUBTED BY THE AO. THE PR OVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT READS AS UNDER :- (IIIAD) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED; OR I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 15 OF 22 14. THE PERUSAL OF THE ABOVE PROVISION SHOWS THAT THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT IS AVAILABL E TO AN INSTITUTION, WHICH IS SOLELY EXISTS FOR EDUCATIONAL PURPOSES. THEREFORE, THE PHRASE USED AS SOLELY MEANS THAT N OT FOR THE PURPOSES OF PROFIT. THEREFORE, PLAIN READING OF THE SAID SECTION MEANS THAT AN EDUCATIONAL INSTITUTION, WHICH IS ENGA GED SOLELY FOR THE PURPOSE OF IMPARTING EDUCATION IS SOLELY FO R THE PURPOSE OF IMPARTING EDUCATION IS QUALIFIES FOR THE EXEMPTION U/S 10(23C)(IIIAD). THE SOLELY WORDS USED THEREIN MEANS THAT THE ASSESSEE INSTITUTION IS NOT CARRYING OUT OTHER ACTIVITIES OF EARNING OF PROFIT. WE HAVE GONE THROUGH THE CASE LA WS RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE. WE FIND THAT IN THE CASE OF CIT VS. CHILDRENS EDUCATI ONAL SOCIETY, (2013) 34 TAXMAN.COM 285 (KARNATAKA), WHEREIN IT WAS HELD THAT IF AN ASSESSEE IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS AND IF ANY OF THEM IS WHOLLY OR SUBSTANTIALLY FINANC ED BY THE GOVERNMENT, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDE D WHILE COMPUTING ITS TOTAL INCOME. SIMILARLY, INCOME FROM EACH I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 16 OF 22 EDUCATIONAL INSTITUTION IF THEY ARE NOT RECEIVING A NY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DOES NOT EXCEED RS. 1 CROR E IS ALSO NOT INCLUDED WHILE COMPUTING ANNUAL TOTAL INCOME OF THE ASSESSEE. SIMILARLY, IN THE CASE OF NEERAJ JANHITKA RI GRAMIN SEWA SANSTHAN, (2014) 49 TAXMNN.COM 535 (ALL), IT WA S HELD THAT MERE PRESENCE OF OBJECTS IN MEMORANDUM PROVIDI NG FOR OTHER CHARITABLE ACTIVITIES WOULD NOT DISENTITLE A S OCIETY TO CLAIM APPROVAL U/S 10(23C)(VI), WHERE IT IS ESTABLIS HED THAT INSTITUTION IS, IN FACT, CARRYING ON ONLY EDUCATION AL ACTIVITIES. SIMILARLY, IN THE CASE OF HARF CHARITABLE TRUST, 63 TAXMANN.COM 53 (P&H), WHEREIN IT WAS HELD THAT MERELY BECAUSE ONE OF THE CLAUSES OF THE TRUST DEED OF THE ASSESSEE TRUST PROVIDE THAT THE TRUST COULD CARRY ON OTHER B USINESS ACTIVITY AS DECIDED BY THE TRUSTEES, IT WOULD NOT P ER SE DIS- ENTITLE TRUST FROM BEING CONSIDERED FOR REGISTRATIO N U/S 10(23C)(VI) OF THE ACT. SIMILARLY, HON'BLE SUPREME COURT IN THE CASES OF SURAT ART SILK MFG. ASSOCIATION, 121 ITR 1 ( S.C.) AND FEDERATION OF INDIAN CHAMBERS AND COMMERCE INDUSTRI ES, 130 I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 17 OF 22 ITR 186 ( S.C.) IN WHICH IT WAS HELD IF THE DOMAIN O R PRIMARY PURPOSE OF THE ASSOCIATION IS CHARITABLE, THE SUBSI DIARY OBJECT WOULD NOT MITIGATE AGAINST THE CHARITABLE CHARACTER. THUS, WE ARE OF THE OPINION THAT THE SOCIETY HAS NOT CARRIED OUT ANY OTHER ACTIVITIES OTHER THAN EDUCATION DURING THE YE AR UNDER CONSIDERATION , THEN IT IS ELIGIBLE FOR EXEMPTION U NDER SECTION 10(23C)(IIIAD) OF THE ACT. IN THE CASE OF THE ASSES SEE, WE FIND THAT THE ASSESSEE SOCIETY HAS NOT CARRIED OUT ANY O THER ACTIVITY OTHER THAN EDUCATION, THEREFORE, THE ASSESSEE IS EL IGIBLE FOR DEDUCTION U/S 10(23C)(IIIAD) OF THE ACT. SIMILARLY, IN GEETANJALI EDUCATION SOCIETY VS. ASSISTANT DIRECTOR OF INCOME- TAX (EXEMPTION), (2014) 101 DTR 337 (KAR), HON'BLE KA RNATAKA HIGH COURT HAS HELD AS UNDER :- (HEAD NOTE) EXEMPTIONS INCOMES OF CERTAIN TRUSTS OF NATIONAL IMPORTANCE, UNIVERSITIES, EDUCATIONAL INSTITUTIONS, HOSPITALS, ETC. ALLOWABILITY ASSESSEE SOCIETY FILED ITS RETURN OF INCOME DECLARING IT NIL, CLAIMING EXEMP TION U/S 10(23C)(IIIAD) AO IN REOPENING PROCEEDIGNS DETER MINED I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 18 OF 22 TOTAL INCOME OF SOCIETY AT RS. 23,90,710 FOR ASSESS MENT YEAR 2006-07 AND RS. 37,72,420/- FOR ASSESSMENT YEA R 2007-08 DECLARING THEIR INCOME EXCESS OVER EXPENDIT URE HOLDING THAT SOCIETY WAS NOT EXISTING SOLELY FOR ED UCATIONAL PURPOSE, SINCE IT INCLUDED CERTAIN OBJECTS IN ITS MEMORANDUM NOT CONNECTED WITH EDUCATION AND WAS, THEREFORE, NOT ENTITLED FOR EXEMPTION U/S 10(23C)(I IIAD) ASSESSEE FILED APPEAL BEFORE COMMISSIONER (APPEALS) WHO ALLOWED APPEAL FOR BOTH ASSESSMENT YEARS HOLDING TH AT SOCIETY HAD NOT CARRIED ON ANY ACTIVITY OTHER THAN EDUCATIONAL ACTIVITY AND GRANTED EXEMPTION REVENUE FILED APPEAL BEFORE TRIBUNAL TRIBUNAL ALLOWED APPEAL HO LDING THAT SOCIETY INCLUDED CERTAIN OBJECTS, NOT CONNECTE D WITH EDUCATION IN ITS MEMORANDUM OF OBJECTS AND, THEREFO RE, IT CANNOT BE REGARDED AS EXISTING SOLELY FOR PURPOSES OF EDUCATION HELD, IN ABSENCE OF ANY ALLEGATION OR M ATERIAL AGAINST SOCIETY SHOWING THAT THEY ARE INVOLVED IN A NY OTHER ACTIVITIES THAN EDUCATIONAL ACTIVITIES, IT CA NNOT BE I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 19 OF 22 DENIED EXEMPTION U/S 10(23C(IIIAD) VIEW TAKEN BY TRIBUNAL IS NOT CORRECT. 15. THIS VIEW IS ALSO SUPPORTED BY THE DECISION IN THE CASE OF RAMPYARI DEVI CHARITABLE TRUST VS. DGIT, (DEL) I N W.P.NO.4725/2012 AND C.M. NO. 9795/2012 DATED 24 TH SEPTEMBER, 2015, WHEREIN THE HON'BLE SUPREME COURT H AS HELD AS UNDER :- WE FIND THAT IT IS AN ADMITTED FACT IN THE PRESENT CASE THAT THE ONLY ACTIVITY OF THE PETITIONER IS TH AT OF RUNNING OF A SCHOOL AND THAT THE PETITIONER IS NOT INDULGING IN ANY ACTIVITY FOR THE PURPOSES OF PROFI T AND THESE ARE THE ONLY REQUIREMENTS FOR GRANT OF APPROVAL AND, THEREFORE, IN THE SAME MANNER IN THE CASE OF DIGAMBAR JAIN SOCIETY, WE ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENTS TO GRANT APPROVAL TO THE PETITIONER UNDER SECTION 10(23C)(VI ) OF THE ACT FOR THE ASSESSMENT YEAR 2011-12 ONWARDS. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 20 OF 22 SIMILARLY, IN PARA 10 & 11 OF THE SAID DECISION, TH E HON'BLE HIGH COURT HELD AS UNDER :- 10. IT IS NOT DENIED BY THE REVENUE THAT THE ONLY ACTIVITY THAT THE PETITIONER IS INDULGING IN IS EDUCATION NAMELY RUNNING OF A SCHOOL AND NO OTHER ACTIVITY. 11. THE REQUIREMENTS OF SECTION 10(23C)(VI) AS LAID DOWN BY THE SUPREME COURT ARE : (I) EXISTENCE OF AN EDUCATIONAL INSTITUTION AND (II) APPROVAL OF THE PRESCRIBED AUTHORITY FOR THE PURPOSES OF GRANT OF EXEMPTION FOR WHICH AN APPLICATION IN THE PRESCRIBED FORM HAS BEEN FILED. IN THE PRESENT CASE, THE PETITIONER SATISFIES BOTH THE TESTS. THERE IS ADMITTEDLY AN EDUCATIONAL INSTITUTION IN EXISTENCE AND THE PETITIONER HAS ALSO MOVED AN APPLICATION IN THE PRESCRIBED FORM. 16. IN THE LIGHT OF ABOVE, WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE ABOVE DEC ISION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E LOWER AUTHORITIES WERE NOT JUSTIFIED IN NOT ALLOWING THE D EDUCTION TO I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 21 OF 22 THE ASSESSEE U/S 10(23C)(IIIAD) OF THE INCOME-TAX A CT, 1961. ACCORDINGLY, THE AO IS DIRECTED TO TREAT THE SOCIET Y AS COVERED BY SECTION 10(23C)(IIIAD) OF THE ACT AND ALLOW THE RELIEF ACCORDINGLY. ACCORDINGLY, GROUND NOS.2 TO 4 ARE ALL OWED. 17. GROUND NO. 5 RELATES TO ADDITION OF RS. 2,25,000/- U/S 68 OF THE INCOME-TAX ACT, 1961. 18. SINCE WE HAVE HELD IN RESPECT OF GROUND NOS. 2 TO 4 THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10 (23C)(IIIAD), HENCE THIS GROUND HAS BECOME CONSEQUENTIAL IN NATUR E AND, ACCORDINGLY, THE ADDITION MADE U/S 68 DOES NOT REMA IN AND HENCE DELETED. WE ORDER ACCORDINGLY. 19. GROUND NO. 6 FOR BOTH THE ASSESSMENT YEARS RELATES TO CHARGING OF INTEREST U/S 234B AND 234C, WHICH ARE CONSEQUENTIAL IN NATURE. 20. GROUND NO. 7 FOR BOTH THE ASSESSMENT YEARS IS AGAIN ST THE INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT, WHICH IS ALSO OF CONSEQUENTIAL NATURE. I.T.A.NOS. 508 & 509/IND/2014 A.YS. 2007-08 & 2008-09 TAKSHILA SHIKSHA AVAM JAIN KALYAN SAMITI,BHOPAL PAGE 22 OF 22 21. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLO WED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 29 TH NOVEMBER, 2016. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 29 TH NOVEMBER, 2016. CPU* 23.24