M/s. Vinerini Sisters Educational Society, Bolangir V. CIT(Exemptions), Hyderabad

ITA 52/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4381 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.K.DASH
• Keywords: Charitable institution; Source of fund; Benefit of exemption; Set aside
• Section: 12A; 192; 10(23C)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 52 /CTK/2017 ( / ASSESSMENT YEAR : 2015 - 2016 ) M/S VINERINI SISTERS EDUCATIONAL SOC IETY, ST. ROSAS CONVENT, PO - RUGDIPARA, DIST - BALANGIR, ODISHA - 767001 VS. CIT(EXEMPTIONS), HYDERABAD ./ ./ PAN/GIR NO. : A A BTV 7684 G ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI P.K .MISHRA , AR /REVENUE BY : SHRI S.K. DASH , CIT DR / DATE OF HEARING : 04 / 01 /201 8 / DATE OF PRONOUNCEMENT 2 3 / 01 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AG AINST THE ORDER OF THE CIT( EXEMPTIONS), HYDERABAD DATED 17.11.2016 . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT THE CIT(E) WAS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSESSEE SEEKING APPROVAL U/S.10(23C)(VI) OF THE INCOME TAX AC T, 1961 . 3. BRIEF FACTS OF THE CASE AS EMERGING FROM THE ORDER OF THE CIT(E) ARE THAT THE ASSESSEE IS AN EDUCATIONAL SOCIETY, WHO FILED AN APPLICATION IN FORM NO. 56D ON 31.3.2016 SEEKING APPROVAL U/S.10(23C)(VI) OF THE ACT IN THE ASSESSMENT YEAR 2015 - 2016. THE CIT(E) OBSERVED THAT THE SAID APPLICATION SHOULD HAVE BEEN FILED BY THE ASSESSEE WITHIN SIX MONTHS FROM THE END OF THE PREVIOUS YEAR AS PER 14 TH PROVISO TO SECTION 10(23C) OF THE ACT. AS THE APPLICATION FILED BY THE ASSESSEE IS BEYOND THE TIME LIMIT ITA NO. 52 /17 2 P RESCRIBED IN THE ACT, THE APPLICATION OF THE ASSESSEE IS LIABLE TO BE REJECTED. FURTHER, HE ALSO HELD THAT THE THREE OBJECTS IN THE MEMORANDUM OF ASSOCIATION NAMELY, (I), (I I I) & (IV) SHOW THAT THE SOCIETY IS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND, THEREFORE, THE APPLICATION SEEKING APPROVAL U/S.10(23C)(VI) OF THE ACT FOR THE ASSESSMENT YEAR 2015 - 2016 CANNOT BE ENTERTAINED AND ACCORDINGLY STANDS REJECTED. 4. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(E), THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE SOCIETY APPLIED FOR REGISTRATION U/S.10(23C)(VI) OF THE ACT FOR ASSESSMENT YEAR 2015 - 2016 ON 31.3.2016. THE CI T(E) VIDE IMPUGNED ORDER DATED 17.11.2016 REFUSED THE GRANT OF REGISTRATION TO THE SOCIETY. THE CIT(E) OBSERVED THAT THE APPLICATION FOR THE ASSESSMENT YEAR 2015 - 2016 WAS MADE ON 31.3.2016 WHICH WAS BEYOND THE TIME PRESCRIBED IN THE 14 TH PROVISO TO SECTION 10(23C) OF THE ACT. THE CIT(E) FURTHER WENT ON TO OBSERVE THAT THOUGH ALL THE OBJECTS WERE FOR RUNNING EDUCATIONAL INSTITUTION BUT THE FOLLOWING THREE OBJECTS WERE NOT FOR THE PURPOSE OF EDUCATION : - (I) TO ESTABLISH AND RUN EDUCATIONAL AND CHARITABLE IN STITUTIONS UNDER THE NAME AND STYLE OF VENERINI SISTERS EDUCATIONAL SOCIETY. THE MEMBERS OF WHICH SHALL BE THOSE BELONGING TO THE CONGREGATION OF RELIGIOUS TEACHERS OF BLESSED ROSA VENERINI, A CONGREGATION OF RELIGIOUS NUNS WITHIN THE ROMAN CATHOLIC CHURCH , WHICH CONGREGATION WAS STARTED IN INDIA IN 1974. (II) TO PROVIDE AND ENCOURAGE MEDICAL ASSISTANCE TO THE POOR AND NEEDY IRRESPECTIVE OF CASTE, CREED AND SOCIAL STATUS. ITA NO. 52 /17 3 (III) TO UNDERTAKE SOCIAL SERVICE ACTIVITIES FOR THE RELIEF OF THE POOR IRRESPECTIV E OF CASTE, CREED AND SOCIAL STATUS. 6. THE AR OF THE ASSESSEE SUBMITTED THAT THE CIT(E) AFTER OBSERVING THAT THE APPLICATION FOR THE ASSESSMENT YEAR 2015 - 2016 WAS BEYOND THE PRESCRIBED TIME AND PROCEDED TO DISPOSE OFF THE APPLICATION ON MERITS. THUS, TH E CIT(E) HAS CONDONED THE DELAY BY IMPLICATION AND AS THE CIT(E) CONSIDERED THE APPLICATION ON MERIT, THE DELAY IN FILING OF APPLICATION CANNOT BE A GROUND NOW FOR REJECTING THE GRANT OF APPROVAL. IN RESPECT OF OBJECT OF THE CIT(E) ON MERIT, HE SUBMITTED T HAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF YUVODAYA CHARITABLE TRUST VS. CIT(E), ITA NO. 389/CTK/2016 VIDE ORDER DATED 28.02.2017. 7. THE DR SUPPORTED THE ORDER OF CIT(E). 8. WE F IND MERIT IN THE CONTENTION OF THE ASSESSEE TO THE EXTENT THAT IF THE CIT(E) CONSIDERED THE APPLICATION AND BEYOND THE PRESCRIBED TIME THAT IS TIME BARRED THEN HE SHOULD NOT HAVE PROCEEDED TO DECIDE THE APPLICATION ON MERIT ALSO. HOWEVER, WE FIND THERE IS NO PROVISION IN THE ACT WHICH EMPOWERS THE CIT(E) TO CONDONE THE DELAY IN FILING THE APPLICATION AFTER EXPIRY OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR. THUS, IT CANNOT BE TAKEN THAT CIT(E) HAS CONDONED THE DELAY IN FILING THE APPLICATION FOR ASSESSM ENT YEAR 2015 - 2016. 9. HOWEVER, WE FIND THAT THE APPLICATION WAS DISPOSED OF ON 17.11.2016, WHICH IS AFTER 30.09.2016, THUS, BECAUSE OF THIS DISPOSAL OF THE APPLICATION, THE ASSESSEE WAS PREVENTED FOR MAKING FRESH APPLICATION FOR ASSESSMENT YEAR 2016 - 2017 WITHIN THE PRESCRIBED TIME OF 30.09.2016. ITA NO. 52 /17 4 IN THE ABOVE PECULIAR FACTS OF THE CASE, WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE VERY SAME APPLICATION SHOULD BE DEEMED AS APPLICATION FOR THE ASSESSMENT YEAR 2016 - 2017. 10. IN RESPECT OF OBJECTI ON TO THE OBJECT CLAUSE OF THE ASSESSEE SOCIETY, WE FIND THAT ON THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THIS BENCH OF THE TRIBUNAL IN THE CASE OF YUVODAYA CHARITABLE TRUST (SUPRA), HAS HELD AS UNDER : - THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD, DATED 29.7.2016, FOR THE ASSESSMENT YEAR 2016 - 17. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD COMMISSIONER OF INCOME TAX (EXEMPTIONS) ERRED IN HOLDING THAT THE ASSESSEE SOC IETY IS NOT SOLELY FOR EDUCATIONAL PURPOSE, AS SUCH IS NOT ENTITLED FOR GRANT OF EXEMPTION U/S.10(23C)(VI) OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CAS E, THE LD COMMISSIONER OF INCOME TAX (EXEMPTIONS) OBSERVED THAT ON VERIFICATION OF THE AIMS AND OBJECTS OF THE SOCIETY MENTIONED IN THE TRUST DEED SUBMITTED ALONG WITH ITS APPLICATION ARE FOUND TO INCLUDE THE FOLLOWING: I) TO CONSTRUCT COMMUNITY HA LLS AND REST HOUSES FOR PUBLIC UTILITY. II) TO START AND MANAGE CENTERS FOR TRAINING YOUTHS IN SELF - EMPLOYMENT AND JOB ORIENTED COURSES. III) TO CANVASS AND TO HAVE PROGRAMMES FOR AFFORESTATION AND ECOLOGICAL BALANCE. IV) TO HAVEPROGRAMMES FOR ALL ROUND DEVELOPMENT OF VILLAGES AND RURAL COMMUNITY..' 4. THUS, IT CAN BE SEEN THAT THE AIMS AND OBJECTS OF THE SOCIETY MENTIONED SUPRA ARE NOT 'SOLELY' FOR EDUCATIONAL PURPOSES. HE OBSERVED THAT IN THE COMMON ORDER DATED 16.11.2010 PRONOUNCE D BY HON'BLE HIGH COURT OF ANDHRA PRADESH HELD THAT 'INCLUSION OF NON - EDUCATIONAL OBJECTS IN THE MEMORANDUM OF ASSOCIATION/BYE - LAWS OF THE SOCIETY WOULD DISENTITLE THEM FROM CLAIMING THE BENEFIT OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. THE AFORE SAID OBJECTS CANNOT BE CHARACTERISED AS ANCILLARY OR INCIDENTAL TO, OR TO BE INTEGRALLY CONNECTED WITH, THE OBJECT OF IMPARTING EDUCATION. THE EXISTENCE OF THE ABOVE MENTIONED OBJECTS WHICH ARE NOT FOR EDUCATIONAL PURPOSE MAKES AMPLY ITA NO. 52 /17 5 CLEAR THE INTENTION OF THE TRUST THAT IT IS NOT EXISTING SOLELY AND EXCLUSIVELY FOR THE PURPOSES OF EDUCATION. THUS, THE ASSESSEE HAS NOT FULFILLED ONE OF THE PRE - REQUISITE CONDITIONS LAID DOWN UNDER SECTION 10(23C)(VI) OF THE I.T.ACT, 1961. THEREFORE, HE DENIED APPROVAL U/S.10(23C)(VI) OF THE I.T.ACT, 1961. 5. BEFORE US, LD A.R. OF THE ASSESSEE FILED AN ORDER OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF GEETANJALI EDUCATION SOCIETY VS THE ASSISTANT DIRECTOR OF INCOME TAX IN I.T.A. NOS.299 - 300/2013 ORDER DATED 24 TH FEBRUARY, 2014 AND SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE HIGH COURT HAS ALLOWED APPROVAL U/S.10(23C)(VI) OF THE ACT BY OBSERVING AS UNDER: 4. THE SOCIETY IS ENGAGED IN IMPARTING EDUCATION IN THE SCHOOL RUN BY THEM IS NOT IN DISPUTE. IT IS ALSO NOT IN DISPUTE THAT FROM THE ASSESSMENT YEAR 2008 - 09 ONWARDS, THE SOCIETY WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. THE OBJECTS OF THE SOCIETY ON THE BASIS OF WHICH, THE REVENUE CLAIM THAT THE SOCIETY DURING THE REL EVANT ASSESSMENT YEAR WAS NOT EXISTING SOLELY FOR EDUCATION PURPOSE, READ THUS: - CLAUSE 3(B): THE SOCIETY WILL EMPHASIS ON ESTABLISHMENT OF URNIC, RELIGIOUS AND SOCIAL INSTITUTIONS WITH JOB ORIENTED COURSES AND PARAMEDICAL INSTITUTIONS; AND CLAUSE 3(H): T O IMPLEMENT WOMEN AND CHILD WELFARE PROGRAMS. 5. IT IS ON THE BASIS OF THESE OBJECTS, IT APPEARS THE TRIBUNAL HELD THAT THE SOCIETY IS ENGAGED IN THE ACTIVITIES OTHER THAN EDUCATIONAL ACTIVITY AND HENCE, NOT ENTITLED TO CLAIM BENEFIT U/S.10(23C)(VI)(IIIAD ) OF THE ACT. SECTION 10(23C(IIIAD) OF THE ACT, READ THUS: 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHAL F OF (IIIAD) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS MAY BE PRESCRIBED. 6. FROM BARE PERUSAL OF THIS PROVISION, IT IS CLEAR THAT ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF THE EDUCATIONAL INSTITUTION 'EXISTING' SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSES OF PROFIT AND IF ITS AGGREGATE ANNUAL RECEIPTS D O NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED, IT IS ENTITLED FOR EXEMPTION UNDER THIS PROVISION. THE AMOUNT OF ANNUAL RECEIPTS PRESCRIBED IS ADMITTEDLY RS.1 CRORE VIDE RULE 2BC OF THE INCOME TAX RULES, 1962. 7. IN THE PRESENT CASES, BEFO RE WE ADVERT TO THE SUBMISSIONS ADVANCED BY LEARNED COUNSEL FOR THE PARTIES AND RECORD OUR REASONS, IT WOULD BE ITA NO. 52 /17 6 ADVANTAGEOUS TO STATE FEW ADMITTED FACTS. THE APPELLANT - SOCIETY IS AN EDUCATIONAL INSTITUTION WHICH RUNS THE SCHOOL. THE AMOUNT OF ANNUAL RECEI PTS OF THE SOCIETY DID NOT EXCEED RS.1 CRORE DURING BOTH THE ASSESSMENT YEARS I.E., 2006 - 07 AND 2007 - 08. THE SOCIETY DID NOT HAVE ANY OTHER ACTIVITY EXCEPT RUNNING THE SCHOOL DURING BOTH THE ASSESSMENT YEARS. IN OTHER WORDS, IT IS NOT IN DISPUTE THAT EXCEP T FOR CONDUCTING THE SCHOOL, THE SOCIETY DID NOT CARRY ON ANY OTHER ACTIVITIES RIGHT FROM INCEPTION, IN PARTICULAR, DURING THE RELEVANT ASSESSMENT YEARS (2006 - 07 & 2007 - 08). EVEN IF IT IS ACCEPTED, THAT THE OBJECTS OF THE SOCIETY AS REFLECTED IN CLAUSE 3(B ) AND 3(H) OF THE MEMORANDUM OF ASSOCIATION ARE NOT RELATED TO EDUCATION, ADMITTEDLY, THE SOCIETY DID NOT/IS NOT INVOLVED IN THESE ACTIVITIES. IT IS AGAINST THESE ADMITTED FACTS, WE WOULD NOW PROCEEDED TO CONSIDER THE SUBMISSIONS ADVANCED ON BEHALF OF BOTH SIDES PLACING RELIANCE UPON THE JUDGMENTS OF THE SUPREME COURT AND OTHER HIGH COURTS. 8. AT THE OUTSET, WE WOULD LIKE TO CONSIDER THE JUDGMENT OF THE SUPREME COURT IN AMERICAN HOTEL AND LODGING ASSOCIATIO N EDUCATIONAL INSTITUTION V. CENTRAL BOARD OF DIRECT TAXES AND OTHERS [(2008) 301 ITR 86 (SC)], ON WHICH, MR.ARAVIND, LEARNED COUNSEL APPEARING FOR THE REVENUE PLACED HEAVY RELIANCE TO CONTEND THAT MERE EXISTENCE OF OBJECT/S IN THE MEMORANDUM OF ASSOCIATIO N NOT RELATED TO THE EDUCATION IS SUFFICIENT TO DENY EXEMPTION/BENEFIT UNDER THE PROVISIONS CONTAINED IN SECTION 10(23C) (IIIAD) OF THE ACT. IN AMERICAN HOTEL'S CASE, THE SUPREME COURT WAS DEALING WITH THE PROVISIONS CONTAINED IN SECTION 10(22) OF THE ACT AND THE QUESTION, FOR OUR PURPOSE, FELL FOR ITS CONSIDERATIONWAS, WHETHER THE ACTIVITIES OF THE APPELLANT - INSTITUTE CAME WITHIN THE DEFINITION OF 'INCOME OF EDUCATIONAL INSTITUTION'. THE FOLLOWING OBSERVATIONS WERE HEAVILY RELIED UPON BY MR.ARAVIND, LEARNED COUNSEL FOR THE REVENUE. 'UNDER SECTION 10(22) , ONE HAD TO CLOSELY ANALYSE THE ACTIVITIES OF THE INS TITUTE, THE OBJECTS OF THE INSTITUTE AND ITS SOURCE OF INCOME AND ITS UTILIZATION. EVEN IF ONE OF THE OBJECTS ENABLED THE INSTITUTE TO UNDERTAKE COMMERCIAL ACTIVITY, THE INSTITUTE WOULD NOT BE ENTITLED TO APPROVAL UNDER SECTION 10(22) . THE SAID SECTION, INTER ALIA, EXCLUDES THE INCOME OF THE EDUCATIONAL INSTITUTE FROM THE TOTAL INCOME'. 9. IT WAS SUBMITTED THAT MERE EXISTENCE OF CLAUSE 3(B) AND 3(H) IN THE MEMORANDUM OF ASSOCIATION, WHICH ENABLED THE SOCIE TY TO UNDERTAKE OTHER ACTIVITIES, NOT RELATED TO THE EDUCATIONAL ACTIVITIES IS SUFFICIENT TO DENY EXEMPTION AS CLAIMED BY THEM FOR BOTH THE ASSESSMENT YEARS. THE INSTITUTION IN AMERICAN HOTEL, ACCORDING TO MEMORANDUM OF UNDERSTANDING, HAD SEVERAL OBJECTS A ND IT IS IN THIS BACKDROP, THE FOLLOWING OBSERVATIONS MADE BY THE SUPREME COURT ARE RELEVANT FOR OUR PURPOSE: - 'TO MAKE THE SECTION WITH THE PROVISO WORKABLE WE ARE OF THE VIEW THAT THE MONITORING CONDITIONS IN THE THIRD PROVISO LIKE APPLICATION/UTILIZATIO N OF INCOME, PATTERN OF INVESTMENTS TO BE MADE, ETC., COULD BE STIPULATED AS CONDITIONS BY THE PRESCRIBED AUTHORITY SUBJECT TO WHICH THE APPROVAL COULD BE GRANTED. FOR EXAMPLE, IN MARGINAL CASES LIKE THE PRESENT ITA NO. 52 /17 7 CASE, WHERE THE APPELLANT - INSTITUTE WAS GIVE N EXEMPTION UP TO THE FINANCIAL YEAR ENDING MARCH 31, 1998 (ASSESSMENT YEAR 1998 - 99) AND WHERE AN APPLICATION IS MADE ON APRIL 7, 1999, WITHIN SEVEN DAYS OF THE NEW DISPENSATION COMING INTO FORCE, THE PRESCRIBED AUTHORITY CAN GRANT APPROVAL SUBJECT TO SUCH TERMS AND CONDITIONS AS IT DEEMS FIT PROVIDED THEY ARE NOT IN CONFLICT WITH THE PROVISIONS OF THE 1961 ACT (INCLUDING THE ABOVEMENTIONED MONITORING CONDITIONS). WHILE IMPOSINGSTIPULATIONS SUBJECT O WHICH APPROVAL IS GRANTED, THE PRESCRIBED AUTHORITY MAY I NSIST ON CERTAIN PERCENTAGE OF ACCOUNTING INCOME TO BE UTILIZED/APPLIED FOR IMPARTING EDUCATION IN INDIA. WHILE MAKING SUCH STIPULATIONS, THE PRESCRIBED AUTHORITY HAS TO EXAMINE THE ACTIVITIES IN INDIA WHICH THE APPLICANT HAS UNDERTAKEN IN ITS CONSTITUTION , MEMORANDUM OF UNDERSTANDING AND AGREEMENT WITH THE GOVERNMENT OF INDIA/NATIONAL COUNCIL. IN THIS CASE, BROADLY THE ACTIVITIES UNDERTAKEN BY THE APPELLANT ARE CONDUCTING CLASSICAL EDUCATION BY PROVIDING COURSE MATERIALS, DESIGNING COURSES, CONDUCTING EXAM S, GRANTING DIPLOMAS, SUPERVISING EXAMS, ALL UNDER THE TERMS OF AN AGREEMENT ENTERED INTO WITH INSTITUTIONS OF THE GOVERNMENT OF INDIA. SIMILARLY, THE PRESCRIBED AUTHORITY MAY GRANT APPROVALS ON SUCH TERMS AND CONDITIONS AS IT DEEMS FIT IN CASE WHERE THE I NSTITUTE APPLIES FOR INITIAL APPROVAL FOR THE FIRST TIME. THE PRESCRIBED AUTHORITY MUST GIVE AN OPPORTUNITY TO THE APPLICANT - INSTITUTE TO COMPLY WITH THE MONITORING CONDITIONS WHICHHAVE BEEN STIPULATED FOR THE FIRST TIME BY THE THIRD PROVISO. THEREFORE, CA SES WHERE EARLIER THE APPLICANT HAS OBTAINED EXEMPTION(S), AS IN THIS CASE, NEED NOT BE REOPENED ON THE GROUND THAT THE THIRD PROVISO HAS NOT BEEN COMPLIED WITH. HOWEVER, AFTER GRANT OF APPROVAL, IF IT IS BROUGHT TO THE NOTICE OF THE PRESCRIBED AUTHORITY T HAT CONDITIONS ON WHICH APPROVAL WAS GIVEN ARE BREACHED OR THAT THE CIRCUMSTANCES MENTIONED IN THE THIRTEENTH PROVISO EXISTS THEN THE PRESCRIBED AUTHORITY CAN WITHDRAW THE APPROVAL EARLIER GIVEN BY FOLLOWING THE PROCEDURE MENTIONED IN THAT PROVISO. THE VIE W WE HAVE TAKEN, NAMELY, THAT THE PRESCRIBED AUTHORITY CAN STIPULATE CONDITIONS SUBJECT TO WHICH APPROVAL MAY BE GRANTED FINDS SUPPORT FROM SUB - CLAUSE (II) (B) IN THE THIRTEENTH PROVISO'. 10. AFTER MAKING THESE OBSERVATIONS, THE SUPREME COURT SET ASIDE THE ORDER PASSED BY THE CENTRAL BOARD OF DIRECT TAXES AND REMITTED THE MATTER FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW AND WHILE DOING SO, CLARIFIED THAT, IN THAT CASE, THE APPELLANT HADFULFILLED, THE THRESHOLD PRE - CONDITION OF ACTUAL EXISTENCE OF AN ED UCATIONAL INSTITUTION UNDER SECTION 10(23C) (VI) AND THEREFORE, ON THAT COUNT, THE CENTRAL BOARD OF DIRECT TAXES, WOULD NOT REJECT THE APPROVAL APPLICATION MADE BY THE APPELLANT THEREIN. 11. FROM BARE PERUS AL OF THE OBSERVATIONS MADE BY THE SUPREME COURT IN AMERICAN HOTEL'S CASE, WHAT APPEARS TO US, IS THAT 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 COURT CONSIDERED ITS ACTIVITIES AS REFLECTED IN THE PARAGRAPH QUOTED ABOVE AND THEREFORE, WHILE REMANDING THE MATTER, MADE IT CLEAR THAT THE APPELLANT HAD FULFILLED THE THRESHOLD PRE - CONDITION OF ACTUAL EXISTENCE OF ITA NO. 52 /17 8 THE EDUCATIONAL INSTITUTION UNDER SECTION 10(23C) (VI) WITH FURTHER DIRECTION TO THE CENTRAL BOARD OF DIRECT TAXES NOT TO REJECT THE APPROVAL APPLICATION ON THAT GROUND. TWO OF THE OBJE CTS IN THAT CASE AS REFLECTED IN THE JUDGMENT WERE ALSO TO OFFER THE NATIONAL COUNCIL THE LOWEST POSSIBLE PRICES FOR THE PRODUCTS AND SERVICES SOLD TO OR UTILIZED BY THE SCHOOLS UNDER THE UMBRELLA OF THE GOVERNMENT OF INDIA AND SO ALSO TO UTILIZE INDIAN AU THORS WHENEVER POSSIBLE IN THE DEVELOPMENT OF CUSTOMIZED PROGRAMMES. THE SUPREME COURT, DESPITE THESE OBJECTS/ACTIVITIES, HELD THAT THE INSTITUTION IN AMERICAN HOTEL WAS INVOLVED ONLY IN EDUCATIONAL ACTIVITIES, PERHAPS ON THE GROUND THAT IT WAS NOT CARRYIN G ON THOSE ACTIVITIES. 12. SRI. SHANKAR, LEARNED COUNSEL APPEARING FOR THE APPELLANT AT THE OUTSET, INVITED OUR ATTENTION TO THE JUDGMENT OF ALLAHABAD HIGH COURT IN C P VIDYANIKETAN INTER COLLEGE SHIKSHAN SOCIETY - VS - UNION OF INDIA AND OTHERS (2013) 359 I TR 322 (ALL) (FOR SHORT C P VIDYANIKETAN') AND SUBMITTED THAT AFTER CONSIDERING THE JUDGMENT OF THE SUPREME COURT IN AMERICAN HOTEL, THE HIGH COURT HELD THAT WHERE IT IS NOT DISPUTED THAT A SOCIETY RUNS AN EDUCATIONAL INSTITUTION AND IS NOT FOR THE PURPOSE S 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 PURPOSE. THIS OBSERVATION WAS MADE BY THE HIGH COURT AFTER REFERRING TO THE JUDGMENTS IN C P VIDYA NIKETAN AND AMERICAN HOTEL. THE BOMBAY HIGH COURT IN VANITAVISHRAM TRUST - VS - CHIEF COMMISSIONER OF INCOME - TAX AND ANOTHER (2010) 327 ITR 121 (BOM) AFTER CONSIDERING THE PR OVISION CONTAINED IN SECTION 10(23C)(VI) OF THE ACT OBSERVED THAT THOUGH THE OBJECTS CLAUSE CONTAINED VARIED OBJECTS INCLUDING THE MANAGEMENT AND DEVELOPMENT OF MOVEABLE AND IMMOVEABLE PROPERTIES, THE STATE MENT OF FACT BEFORE THE COURT, WHICH WAS NOT DISPUTED, WAS THATTHE ONLY ACTIVITY CARRIED OUT BY THE TRUST EVER SINCE ITS INCEPTION WAS THE CONDUCT OF EDUCATIONAL INSTITUTIONS. THE INSTITUTION, IN THAT CASE, HAD A HISTORY OF OVER 80 YEARS DURING THE COURSE OF WHICH 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 OTHER ACTIVITIES SINCE THEN. WITHOUT EXPRESSING ANY OPINION WHETHER THE OBJECT, AS REFLECTED IN CLAUSE 3(B) AND 3(H) OF THE MEMORANDUM OF ASSOCIATION, ARE RELATED TO EDUCATION, I T IS CLEAR THAT SAVE AND EXCEPT EDUCATIONAL 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 ACTIVITIES AS REFLECTED IN CLAUSE 3(B) AND 3(H), MAY CONSTITUTE THE PURPOSE, OTHER THAN THE EDUCATIONAL PURPOSE, BUT, DURING THE RELEVANT ASSESSMENT YEAR, IT IS NOT THE CASE OF THE REVENUE NOR IS THERE ANY MATERIAL TO SHOW, THAT THE SOCIETY WAS RUNNING ANY ACTIVITIES OTHER THAN THE EDUCATIONAL ACTIVITY. IN THIS VIEW OF THE MATTER, WE AR E OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS NOT CORRECT AND DESERVES TO BE SET ASIDE. THERE ARE ADEQUATE SAFEGUARDS THAT IF THE ACTIVITIES OTHER THAN EDUCATIONAL ACTIVITIES ARE UNDERTAKEN BY THE ITA NO. 52 /17 9 SOCIETY, EXEMPTION GRANTED CAN BE WITH DRAWN. MERELY, BECAUSE THERE EXISTS OBJECT, WHICH IS NOT RELATED TO EDUCATIONAL ACTIVITIES, IN OUR OPINION, IS NOT SUFFICIENT TO DENY THE EXEMPTION/BENEFIT OF SECTION 10(23C)(IIIAD) OF THE ACT. IN SHORT, IN THE ABSENCE OF ANY ALLEGATION OR MATERIAL AGAINST THE SOCIETY SHOWING THAT THEY ARE INVOLVED IN ANY OTHER ACTIVITIES THAN THE EDUCATIONAL ACTIVITIES, IN OUR OPINION, IT CANNOT BE DENIED EXEMPTION UNDER SECTI ON 10(23C)(IIIAD) . IN THE CIRCUMSTANCES, WE ANSWERBOTH THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 6. LD D.R. COULD NOT CONTROVERT THE SUBMISSION OF LD A.R. OF THE ASSESSEE. 7. WE FIND THAT THE CIT(A) HAS RELIED O N THE DECISION OF HONBLE A.P.HIGH COURT IN THE CASE OF NEW NOBLE EDUCATIONAL SOCIETY & ORS. VS. CHIEF COMMISSIONER OF INCOME TAX & ANR., 334 ITR 303 (AP), WHERE, THE HONBLE HIGH COURT HAS HELD THAT IN ORDER TO BE ELIGIBLE FOR EXEMPTION, UNDER S. 10(23C) (VI) OF THE ACT, IT IS NECESSARY THAT THERE MUST EXIST AN EDUCATIONAL INSTITUTION. SECONDLY, SUCH INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES AND, THIRDLY, THE INSTITUTION SHOULD NOT EXIST FOR THE PURPOSE OF PROFIT. IF THERE ARE SEVERAL OBJECTS OF A SOCIETY SOME OF WHICH RELATE TO 'EDUCATION', AND OTHERS WHICH DO NOT, AND THE TRUSTEES OR THE MANAGERS, IN THEIR DISCRETION, ARE ENTITLED TO APPLY THE INCOME OR PROPERTY TO ANY OF THOSE OBJECTS, THE INSTITUTION WOULD NOT BE ELIGIBLE TO BE REGARDED AS ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES, AND NO PART OF ITS INCOME WOULD BE EXEMPT FROM TAX. IN OTHER WORDS, WHERE THE MAIN OBJECTS ARE DISTRIBUTIVE, EACH AND EVERYONE OF THEM MUST RELATE TO 'EDUCATION' IN ORDER THAT THE INSTITUTION MAY BE HELD ENTITL ED FOR THE BENEFITS UNDER S. 10(23C)(VI) OF THE ACT. BUT IF THE PRIMARY OR DOMINANT PURPOSE OF AN INSTITUTION IS 'EDUCATIONAL', ANOTHER OBJECT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT DISENTITLE THE INSTITUTION F ROM THE BENEFIT. 8. WE FIND THAT THE CIT(EXEMPTIONS) AFTER EXAMINING THE OBJECTS OF THE SOCIETY HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE OTHER OBJECTS INCLUDED IN THE TRUST DEED ARE NOT ANCILLARY OR INCIDENTAL OBJECTS TO THE PRIMARY OR DOM INANT PURPOSE AND THAT THE OTHER OBJECTS ARE PRIMARY OBJECTS OF THE INSTITUTION. THEREFORE, THE INFERENCE DRAWN BY THE CIT(EXEMPTIONS) THAT SINCE TRUST DEED OF THE SOCIETY CONTAINS OTHER OBJECTS ALSO AND, THEREFORE, THE SOCIETY IS NOT ELIGIBLE FOR EXEMP TION U/S.10(23C)(VI) OF THE ACT BY RELYING ON THE DECISION OF HONBLE A.P.HIGH COURT IN THE CASE OF NEW NOBLE EDUCATIONAL SOCIETY (SUPRA) IS NOT CORRECT. 9. WE FURTHER FIND THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF GEETANJALI EDUCATION SOCIETY (SUPRA) HAS HELD THAT EVEN THOUGH THE OBJECTS OF THE SOCIETY CONTAINED OTHER OBJECTS WHICH CONSTITUTE PURPOSE OTHER THAN EDUCATIONAL PURPOSE BUT AS THERE IS NO DISPUTE TO THE FACT THAT THE SOCIETY CARRIED ON THE OBJECT OF CONDUCTING SCHOOL ONLY, IT CANNOT BE DENIED EXEMPTION U/S.10(23C)(IIIAD) OF THE ACT. IN THE CASE OF THE ASSESSEE AT HAND ALSO, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS CARRYING ON OBJECTS WHICH CONSTITUTE PURPOSE OTHER THAN EDUCATIONAL PURPOSES, THEREFORE, RESPECTFULLY ITA NO. 52 /17 10 FOLL OWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF GEETANJALI EDUCATION SOCIETY (SUPRA), WE ARE OF THE VIEW THAT EXEMPTION U/S.10(23C) CANNOT BE DENIED TO THE ASSESSEE SOCIETY. 10. EVEN OTHERWISE, WHERE THERE ARE CONTRARY DECISIONS OF H ONBLE HIGH COURTS ON AN ISSUE AND NONE OF WHICH IS HONBLE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS.VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC). 11. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF GEETAJALI EDUCATION SOCIETY (SUPRA), WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) AND DIRECT HIM TO ALLOW EXEMPTION U/S.10 (23C) OF THE ACT TO THE ASSESSEE SOCIETY. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 11. WE, THEREFORE, FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, DIRECT THE CIT(E) TO GRA NT APPROVAL TO THE ASSESSEE SOCIETY U/S.10(23C)(VI) OF THE ACT FOR THE ASSESSMENT YEAR 2016 - 2017. THUS, THIS APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 3 / 01 /201 8 . SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 2 3 /01/2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD F ILE. //TRUE COPY//