M/s. Shree-e-Kashmir College of Educational, Jammu V. The Income-tax Officer, Jammu

ITA 555/ASR/2011

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8003 (ITAT-AMRITSAR)
• Duration Of Justice: 10 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL
• Keywords: Opportunity of being heard; Question of law; Set aside
• Section: 10; 11; 143(3); 234B; 13(2); 13; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. Nos. 555 to 558/Asr/2011 Assessment Years: 2005-06 to 2008-09 M/s Sher-e-Kashmir College of Education (Unit of) Pir Panchal Education Trust, Ajit Nagar, Gadi Garh, Jammu (J&K) [PAN: AAATP 5947R] Vs. The Income Tax Officer Ward-1 (3), Jammu (Appellant) (Respondent) Appellant by : Sh. P. N. Arora, Adv. Respondent by: Sh. Manpreet Singh Duggal, Sr. DR Date of Hearing: 10.05.2022 Date of Pronouncement: 13.06.2022 ORDER Per Dr. M. L. Meena, AM: These four appeals have been filed by the assessee against the impugned common order dated 17.09.2011 passed by the Ld. Commissioner of Income Tax (Appeals), Jammu, in respect of the Assessment Years 2005-06 to 2008-09. 2. There are common issues on identical facts of the case, have been raised by common ground of appeal in all the four appeals except ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 2 variation in quantum of addition and therefore, all these appeals are heard together and disposed of by this consolidated order for the sake of convenience and brevity. The facts are taken from the ITA No. I.T.A. Nos. 555/Asr/2011 in respect of Assessment Year 2005-06, as a lead case and grounds raised are hereunder: “1. That the orders of the Assessing Officer as well as of the Commissioner of Income-Tax (Appeals), Jammu," are both against the facts of the case & untenable in law. 2. That the Ld. CIT (Appeals) has not appreciated the facts of this case and has grossly erred in assessing the income at Rs. 21,72,081/-. The Ld. CIT (Appeals), did not appreciate that the Assessing Officer was not justified in rejecting the exemption claimed under section 10(23c) of the Income-Tax Act, 1961. 3. That the Ld. CIT (Appeals) did not appreciate that the Assessing Officer was not justified in invoking the provisions of section 13 of the Income-Tax Act, 1961. 4. That the Ld. CIT(Appeals) did not appreciate that the only object of the Institution is imparting of education and as such the income of the Society/Institution is exempt from Income-Tax and was not subject to Income-Tax. As such exemption under section 10(23cl of the Act, should have been allowed and there was no justification in assessing the income at Rs. 21,72,081/-. 5. That the Ld. CIT (Appeals) has further grossly erred in confirming the disallowance of interest amounting to Rs. 1,96,496/- without bringing any material on the record. That the disallowance of interest amounting to Rs. 1,96,496/- is not at all called for and the same is based on conjecture, surmises & supposition and the department has not been able to place any material on record and justification for disallowing the same and as such there was no justification in disallowing the interest. 6. That the authorities below did not appreciate that the Institution is not a taxable unit because the only purpose of the Institution is imparting ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 3 education and its income is totally exempt from Income-Tax and as such there was no justification in assessing the income. 7. Again, the Ld. CIT (Appeals) has grossly erred in confirming the charging of interest under section 234A, 234B & 234C of the Income-Tax Act, 1961. The Ld. CIT (Appeals) did not appreciate that no interest can be charged under section 234A, 234B & 234C of the Income-Tax Act, 1961, as no reasonable & proper opportunity of being heard was allowed before charging the interest. As such the interest charged under these sections of the Income-Tax Act, 1961, may be deleted. Alternatively, the interest charged under section 234A, 234B & 234C of the Income-Tax Act, 1961, is very high & excessive. 8. Any other ground of appeal that may be urged at the time of hearing of the appeal.” 3. Briefly, facts as per record are that the return of income was filed on 31.03.2006 declaring an income of NIL claiming the entire income of Rs. 19,75,585 as exempt u/s 10(23C) (iiiad) of the I.T. Act. The assessee is a trust and its main income is from tuition fees from the students undergoing B. Ed Course. During the scrutiny assessment, the AO being not satisfied with the reply of the assessee, made addition of an amount of Rs.19,75,6585/- being claimed as exempt in respect of the assessment year 2005-06 to its income and taxed accordingly. The observation and finding of the AO are reproduced hereunder: Assessment year 05-06: 2.2 During the assessment the A.O noticed that during the year the trust made advances of Rs 12 lacs each to Sh. Syed Ahmed Bukhari and Sh. Charanjeet Singh, totalling to Rs 24 lacs and both these person were 'settlor' and 'trustee' of the trust. The A.O found that The advance to the trustees was in violation of section 13 (1) (c) (ii) and sec. l3(d)(i) read with section 13(2) and sec. 13(3) of the I.T. Act, 1961. ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 4 According to the provisions of section 13(1)(c) (ii) and sec. 13(d)(i) exemption available u/s. 13(3) and sec.11(5) of the I.T. Act, 1961. The income of the trust is deemed to be utilized for the benefit of the specified persons if any part of the income or property of the Trust is or continues to be lent to any specified person for any period during the previous year without adequate security or interest or both. The assessee vide this office show cause notice dated 22.10.2007 was asked to explain and show cause as to why the amount of Rs.19,75,6585/- claimed as exempt may not be added to its income and taxed accordingly.” 4. In appeal, the CIT(A) has confirmed the addition by observing as under: “2.8. I have carefully considered the written submissions and the assessment order. The undisputed facts are that the assessee is a 'Trust' running an educational institution and claimed exemption u/s. 10(23c) (iiiad) of I.T. Act. It is also undisputed that during the assessment, year 2005-06 an amount of Rs.24.00 lacs were advanced to two persons who were trustees and settlers at Rs.12 lacs each. It is also undisputed that these amounts were advanced interest free. The fact that these advances were not out of any consideration is also undisputed in view of the fact that nothing of this effect has been brought on records. In view of the above a prima case of violation of provisions of section 13(1)©(ii), 13(d)(i) read with 13(2), 13(3] of I.T. Act, is made. It is undisputed that According to the provisions of section 13 (1)(c)(ii) and section 13(d)(i) exemption available u/s. 11 is denied if any property of the Trust is utilized by the persons referred in section 13(3) and if investment of the trust funds is made in the modes/ other than the modes specified under section 11(5) of the I.T. Act, 1961. 2.9. The argument of assessee is that in respect of exemption claimed u/s.10 (23c) of I.T. Act where the receipts are below one crore, the exemption may be allowed without any restriction and there are no application of provisions of section 11 to 13 of I.T. Act. (This is also not true. The circular No. 712 dated 25.07.1995 cited in support by assessee before the A.O. has been found to be withdrawn w.e.f. 1.4.1999 by the A.O. as per the assessment order. Proviso 3 to section 10(23cJ of the I.T. Act reads as: ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 5 "Provided also that the fund or trust or institution [or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub-clause (via)]applies its income, or accumulates it for application, wholly, and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per of its income shall in no case exceed five years; and] (a) does not invest or deposit its funds, other than - (i) any assets held by the fund, trust, or institution [or any university or other educational institution or any hospital or other medical institution] where such assets form part of the corpus of the fund trust or institution [or any university or other educational institution or any hospital or other medical institution] as on the 1st day of June 1973; [ia) any asset being equity shares of a public company held by any university or other educational institution or any hospital or other medial institution where such assets from part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June 1998;] v (ii) any assets (being debentures issued by or on behalf of any company or corporation) acquired by the fund, trust or institution [or any university or other educational institution or any hospital or other medical institution] before the 1st day of march 1983; (iii) any accretion to the shares forming part of the corpus mentioned in sub clause (i) [and sub-clause (ia) by way of bonus shares allotted to the fund trust or institution [or any university or other educational institution or any hospital or other medical institution] (iv) Voluntary contributions received and maintained in the form of jewellery furniture or any other article as the Board may by notification in the official Gazette, specify, for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub section (5) of section 11:]" ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 6 2.10. Further proviso 4 and 5_also are related to the mode of application and investments as per section 11(5) of I.T. Act. The circular no .722 dated 23.12.98 cited by assessee is also of no help to it nowhere states that exemption u/s 10 (23c) (iiiad) of IT Act is a blanket exemption. 4. In view of the above discussions the action of A.O. in denying the exemption to the extent of Rs.19,75,585/- is confirmed. The disallowance of interest at Rs.1,95,496/- amount of bank interest is also considered and found that in view of interest free advances made by violating the provisions of section 13, such disallowance also needs to be confirmed, hence the intention of A.O. on this count is also confirmed.” 5. The Ld. AR submitted that in all the four appeals, the Ld. CIT (Appeals) has confirmed the additions made by the AO without applying his mind and without appreciating the facts of the case. He has file a brief synopsis to buttress its contentions. The relevant aprt is extracted here under: The Table of the additions made by the AO and confirmed by the Ld. CIT (Appeals) for Astt. Year 2005-2006 to 2008-2009 Details of Additions. Asstt. Year, 2005-2006. Asstt. Year 2006- 2007 Asstt. Year 2007-2008. Asstt. Year, 2008-2009. Disallowance of exemption u/s 10 (23C) (iiiad) by holding that surplus are being regularly diverted to Trustee without any consideration. 19,75,585/- 17,71,990/- 5,97,987/- 9,24,414/- Disallowance of Interest paid by the Trust on term loan by holding that the trust has made interest free advances to its Trustees. 1,96,496/- 6,89,994/- 3,53,381/- - Total additions made under section 143(3) of the I.T. Act, 21,72,081/- 24,61,984/- 9,51,368/- 9,24,414/- Income Returned. 19,75,585/- on 31/03/2006 . 17,71,990/- on 31/10/2006. 5,97,987/- on 31/10/2007 . 9,24,414/- on 31/11/2008 ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 7 Exemption claimed u/s 10(23C) (iiiad) 19,75,585/- 17,71,990/- 5,97,987/- 9,24,414/- Balance Income. Nil. Nil. Nil. Nil. Total Receipts 53,18,510/- [Refer Page No.48 of the paper- book] 58,93,074/- [Refer Page No.20 of the paper-book filed in connection with AY 2006- 07] 28,84,749/- [Refer Page No.18 of the paper-book filed in connection with AY 2007-08] 37,30,202/- [Refer Page No.24 of the paper-book filed in connection with AY 2008-09] It is relevant to point out that while completing the assessment, the AO disallowed the total exemption amounting to Rs. 19,75,585/- which was claimed as exempt u/s 10(23C)(iiiad) of the IT Act, 1961. Besides this, the AO disallowed interest to the tune of Rs. 1,96,496/- which should have been allowed as claimed. The brief history of the case is as under:- 1. The assessee is a unit of Pir Panchal Education Trust. The Trust has established a college for bachelor of education. The said college is duly recognized by the University of Jammu. All admissions are routed through the University and the fees is received by the University and they after deducting their own expenses on account of admission etc., pay the balance amount to the Institute. This goes to show that the University has accepted the assessee unit as an educational institute. In the instant case the educational institution are monitored by the University of Jammu an organization brought into existence by an enactment of the Legislative bodies of the state of J & K. 2. Section 10(23C) (iiiad) was brought in place of Section 10(22) of the Income-Tax Act,. The provisions of section 10(22) and the existing provisions are more or less similar. While bringing in the new provisions a Circular was issued explaining the rationale behind the said amendment and the clarification is given vide Circular No. 772, dated 23.12.1998 . Even in that Circular it has been clarified that income of the educational institution below rupees one crore I exempted without any conditions. In Circular No. 712 dated ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 8 25.7.,1995, the Board has clarified that Section 10(22) does not impose any restrictions to the investment. 3. In Circular No.772 dated 23/12/1998 to clarify Finance (No.2) Act, 1998. Para 8 deals with:- “Provisions relating to exempting the income of educational institutions, universities, hospitals and other medical institutions” 8.1. Under the provisions of clauses (22) and (22A) of section 10 of the Income-tax Act, before amendment, educational and medical institutions enjoyed a blanket exemption from income-tax if they existed solely for educational purposes and not for the purposes of profit. In the absence of any monitoring mechanism for checking the genuineness of their activities, these provisions have been misused. 8.2. The Act omits the aforesaid clauses (22) and (22A) from the statute. The exemption would, however, continue in respect of any university or other educational institution, hospital or other medical institution which is wholly or substantially financed by Government, under the new sub-clause (iiiab) and (iiiac) inserted in section 10(23C) of the Income-tax Act, by the Finance (No. 2) Act, 1998. 8.3. Further, under sub-clause (iiiad) and (iiiae) in section 10(23C), the income of other educational and medical institutions would also be exempt if their annual receipts are below a limit to be prescribed. The limit has since been prescribed at Rs. one crore vide Notification No. S.O. 897(E) dated 12th October, 1998 [(1998) 149 CTR (St) 48]. 8.4. The income of the remaining educational and medical institutions would be exempt if they are approved by the prescribed authority on application made by them under sub-clauses (vi) and (via) of section 10(23C). This approval would be subject to their adherence of conditions similar to those specified for sub-sections (iv) and (v) of section 10(23C) regarding maintenance of accounts, expenditure and accumulation of funds and investment of funds in specified assets. The accumulated income is required to be invested in the modes specified in section 11(5). These institutions are given time upto 30th March, 2001 to transfer their investments to specified securities. The Rules and Forms in this regard have since been notified vide Notification No. S.O. 897(E) dated 12th October, 1998 [(1998) 149 CTR (St) 48]. By this notification the Central Board of Direct Taxes have been ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 9 designated as the Prescribed Authority for the purpose of approval under sub- clauses (vi) and (via) of section 10(23C). 8.5. These amendments will take effect from 1st April, 1999 and will, accordingly, apply in relation to assessment year 1999-2000 and subsequent years. In Para 8.2 above it is clearly mentioned that the provisions of Section 10 (23C) for hospitals and educational institutions continues albeit in a different format. 4. The conditions for granting of exemption U/s. 10(23C) for any educational Institution are; (a) Educational institution must exist in the relevant year (b) It need not be affiliated to any University etc., (c) The institution must exist solely for education purposes. 5. As long as the institution fulfills these conditions, it is entitled to exemption. In instant case the assessee is imparting education and has set up a College for Bachelor in Education and is duly recognized by the Jammu University. All its income is routed through the said University as the students are allotted by the said University. All the expenses have been incurred on the objects of the institution that is education and no part thereof has been expanded on any other object whatsoever. 6. It has been clarified that the surplus has been given to persons who happened to be the trustees but that is an investment which the Trust is allowed as per the provisions of Income-Tax, as long as its Gross receipts does not exceed rupees one crore. 7. Furthermore, In the case of Commissioner of Income-Tax Versus SEETHAKATHI TRUST reported in (2007) 295 ITR 520 (Mad), [Refer page No. 55 to 57 of the paper book and relevant page no. is 56 & 57] in which it was observed as under:- “Exemption-A O denied the assessee claim for exemption u/s 10(22) and the benefits of section 11 and 12 on the ground that assessee has violated the provisions of section 11(5) read with section 13(1)(d)-Held that assessee entitled for exemption.” ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 10 Further, in the body of the judgment the Hon’ble High Court has ordered as under in Para No. 4 and 5 of the said order:- 4. “That part, the Central Board of Direct Taxes, themselves, issued a circular bearing No. 712 dated July 25, 1995, to the effect that the educational institutions are entitled for exemption under section 10(22) of the Act and consequently, the benefit conferred under section 10(22) cannot be denied on the ground of violation of section 11(5) of the Act. The said circular reads as follows: “Circular No. 712, dated 25 th July, 1995 Subject: Investment of funds by educational institution covered under section 10(22) of the Income-Tax Act- Clarification regarding- Under section 10(22) of the Income-Tax act, any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit is exempt from tax, The Board have received representations from various institutions which fulfill the conditions laid down under section 10(22) of the Act, but are denied exemption because their funds are not invested in accordance with the provisions of section 11(5) of the Act. It is hereby clarified that since section 10(22) does not impose any restriction regarding mode of investment of funds, such institutions are not required to invest their funds in the modes specified under section 11(5) of the Income-Tax Act. This clarification will not apply to the institutions see kins exemption under section 11 of the Act. 5. Since the substantial questions of law raised in these appeals are centrifused on the point whether the assessee is entitled for the benefit of section 10(22) of the Act in view of the aliened violation of section 11(5) read with 13(l)(d) of the Act, in view of the above circular of the Central Board of Direct Taxes dated July 25, 1995, we do not see any substantial question of law that arises for our consideration. Accordingly, findins no substantial question of law arises for consideration, the appeals stand dismissed. ” ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 11 8. Now in the present case the Ld. Assessing Officer while rejecting the exemption claimed by the trust u/s 10(23C) (iiiad) has invoked the provisions of sections 13(1)(c), 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) of the Act. Now in this connection it is pertinent to point out that section 13 starts with the words, ‘Nothing contained in section 11 or section 12 shall operate as to........’. This shows and makes it clear that the provisions contained in section 13 govern section 11 and section 12 of the Act and not section 10. These provisions are contradictory to each other. Section 13(1)(c) applies to application of income and property to specified persons. Sections 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) govern the provisions of lending, property made available for use, any service is made available and if any income is diverted respectively. The Id. Assessing Officer has not come to any conclusion as to what particular clause has been violated and as to how the same has been violated. In the absence of any such conclusion by the Assessing Officer, withdrawing of exemption was not called for. Therefore, the conclusion arrived at by the Ld. AO is not in accordance with law.” 6. The Ld. DR stands by the orders of the authorities below. 7. We have heard both the sides, perused the material on records, and the CBDT Circular and judgments relied upon. Admittedly, appellant asseee is an educational institute recognized by University of Jammu where the education activities are monitored by the University of Jammu, an organization brought into existence by an enactment of the Legislative bodies of the state of J & K. 8. It is clarified that the amended new provisions of Section 10(23C) (iiiad) was brought in place of Section 10(22) of the Income-Tax Act, where it is noted that the provisions of section 10(22) and the existing provisions 10(23C) (iiiad) are more or less similar. In order of removal of ambiguity, in the new provisions, CBDT issued a Circular No. 772, dated 23.12.1998 explaining the rationale behind the said amendment, clarifying that income of the educational institution below rupees one crore is ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 12 exempted without any conditions. In Circular No. 712 dated 25.7.,1995, the Board has clarified that Section 10(22) does not impose any restrictions to the investment. In Circular No.772 dated 23/12/1998 to clarify Finance (No.2) Act, 1998, Para 8 deals with provisions relating to exempting the income of educational institutions, universities, hospitals and other medical institutions which reads as under: 8.1. Under the provisions of clauses (22) and (22A) of section 10 of the Income-tax Act, before amendment, educational and medical institutions enjoyed a blanket exemption from income-tax if they existed solely for educational purposes and not for the purposes of profit. In the absence of any monitoring mechanism for checking the genuineness of their activities, these provisions have been misused. 8.2. The Act omits the aforesaid clauses (22) and (22A) from the statute. The exemption would, however, continue in respect of any university or other educational institution, hospital or other medical institution which is wholly or substantially financed by Government, under the new sub-clause (iiiab) and (iiiac) inserted in section 10(23C) of the Income-tax Act, by the Finance (No. 2) Act, 1998. 8.3. Further, under sub-clause (iiiad) and (iiiae) in section 10(23C), the income of other educational and medical institutions would also be exempt if their annual receipts are below a limit to be prescribed. The limit has since been prescribed at Rs. one crore vide Notification No. S.O. 897(E) dated 12th October, 1998 [(1998) 149 CTR (St) 48]. 8.4. The income of the remaining educational and medical institutions would be exempt if they are approved by the prescribed authority on application made by them under sub-clauses (vi) and (via) of section 10(23C). This approval would be subject to their adherence of conditions similar to those specified for sub-sections (iv) and (v) of section 10(23C) regarding maintenance of accounts, ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 13 expenditure and accumulation of funds and investment of funds in specified assets. The accumulated income is required to be invested in the modes specified in section 11(5). These institutions are given time upto 30th March, 2001 to transfer their investments to specified securities. The Rules and Forms in this regard have since been notified vide Notification No. S.O. 897(E) dated 12th October, 1998 [(1998) 149 CTR (St) 48]. By this notification the Central Board of Direct Taxes have been designated as the Prescribed Authority for the purpose of approval under sub-clauses (vi) and (via) of section 10(23C). 8.5. These amendments will take effect from 1st April, 1999 and will, accordingly, apply in relation to assessment year 1999-2000 and subsequent years. 9. Thus. the conditions for granting of exemption U/s. 10(23C) for any educational Institution are; (a) Educational institution must exist in the relevant year (b) It need not be affiliated to any University etc., (c) The institution must exist solely for education purposes. 10. In our view, as long as the institution fulfills these conditions, it is entitled to exemption. In instant case the assessee is imparting education and has set up a College for Bachelor in Education and is duly recognized by the Jammu University. All its income is routed through the said University where the students are allotted by the said University. All the expenses have been incurred on the objects of the institution for education and no part thereof has been incurred on any other object whatsoever. ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 14 11. The Ld. AR argued that the surplus has been given to persons who happened to be the trustees, as an investment as per the provisions of Income-Tax, and as long as its Gross receipts does not exceed rupees one crore, the appellant Trust was entitle for exemption u/s 10(23C) of the Act. 12. In the case of “Commissioner of Income-Tax Versus SEETHAKATHI TRUST”, supra (APB, Pg. 55 to 57) it was observed that- “Exemption-A O denied the assessee claim for exemption u/s 10(22) and the benefits of section 11 and 12 on the ground that assessee has violated the provisions of section 11(5) read with section 13(1)(d)-Held that assessee entitled for exemption.” “4. That part, the Central Board of Direct Taxes, themselves, issued a circular bearing No. 712 dated July 25, 1995, to the effect that the educational institutions are entitled for exemption under section 10(22) of the Act and consequently, the benefit conferred under section 10(22) cannot be denied on the ground of violation of section 11(5) of the Act. The said circular reads as follows: “Circular No. 712, dated 25th July, 1995 Subject: Investment of funds by educational institution covered under section 10(22) of the Income-Tax Act-Clarification regarding- Under section 10(22) of the Income-Tax act, any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit is exempt from tax, ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 15 The Board have received representations from various institutions which fulfill the conditions laid down under section 10(22) of the Act, but are denied exemption because their funds are not invested in accordance with the provisions of section 11(5) of the Act. It is hereby clarified that since section 10(22) does not impose any restriction regarding mode of investment of funds, such institutions are not required to invest their funds in the modes specified under section 11(5) of the Income-Tax Act. This clarification will not apply to the institutions see kins exemption under section 11 of the Act. 5. Since the substantial questions of law raised in these appeals are centrifused on the point whether the assessee is entitled for the benefit of section 10(22) of the Act in view of the aliened violation of section 11(5) read with 13(l)(d) of the Act, in view of the above circular of the Central Board of Direct Taxes dated July 25, 1995, we do not see any substantial question of law that arises for our consideration. Accordingly, findins no substantial question of law arises for consideration, the appeals stand dismissed.” 13. In the present case, the AO while rejecting the exemption claimed by the trust u/s 10(23C) (iiiad) has invoked the provisions of sections 13(1)(c), 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) of the Act. In this connection it is pertinent mention that section 13 starts with the words, ‘Nothing contained in section 11 or section 12 shall operate as to........’. This shows and makes it clear that the provisions contained in section 13 govern section 11 and section 12 of the Act and not section 10. These provisions are contradictory to each other. Section 13(1)(c) applies to application of income and property to specified persons. Sections 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) govern the provisions of lending, ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 16 property made available for use, any service is made available and if any income is diverted respectively. The AO and the Ld. CIT(A) has not come to any conclusive finding as to what particular clause has been violated and as to how the same has been violated. In the absence of any such findings by the AO, the withdrawing of exemption was not in accordance with law. 14. In the above view, we hold that the Ld. CIT (Appeals), was not justified, in confirming the finding of the AO against law, regarding rejecting the exemption claimed of the Assessee Trust under section u/s 10(23C) (iiiad) of the Income-Tax Act, 1961. Accordingly, the order of the CIT (A) is set aside and consequently, the additions made in in I.T.A. Nos. 555 to 558/Asr/2011 in respect of the Assessment Years: 2005-06 to 2008-09 are hereby deleted. 15. In the result, the captioned four appeals of the Assessee Trust are allowed. Order pronounced in the open court on 13.06.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 13.06.2022 *GP/Sr.PS* ITA Nos. 555 to 558/Asr/2011 Sher-e- Kashmir College of Educational v. ITO 17 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order