M/s. A. Shama Rao Foundation, Mangalore V. The Chief Commissioner Of Income Tax, Panaji, Goa

ITA 628/BANG/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8673 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 08-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Gift; Depreciation; Charitable institution; TDS
• Section: 143(3); 12A; 201; 13; 22; 10(23C); 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO. 628/ BANG / 2020 ASSESSMENT YEAR: 2017 - 18 M/S. A. SHAMA RAO FOUNDATION, 13-2-116, HOTEL SRINIVAS BUILDING, G.H.S. ROAD, MANGALORE 575 001. PAN: AAATA 1629B VS. THE CHIEF COMMISSIONER OF INCOME TAX, PANAJI-GOA. APPELLANT RESPONDENT AP PELLANT BY : S HRI V. SRINIVASAN, ADVO CATE RESPONDENT BY : MS. NEERA MALHOTRA, CIT(DR), ITAT, B ENGALURU . DATE OF HEARING : 16 .0 6 .202 1 DATE OF PRONOUNCEMENT : 23 .0 7 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER U/S. 10(23C)(VI) OF THE INCOME-TAX ACT, 1961 [THE ACT] F OR THE ASSESSMENT YEAR 2017-18. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL:- 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR A S THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.628/BANG/2020 PAGE 2 OF 31 2. THE ORDER PASSED U/S 10(23C)(VI) OF THE ACT, DAT ED 04/05/2020, WITHDRAWING THE EXEMPTION GRANTED IS BA D IN LAW AND VOID AB-INITIO IN AS MUCH AS THE LEARNED CCIT, PANA JI WHO HAS PASSED THE IMPUGNED ORDER IS NOT THE PRESCRIBED AUT HORITY IN TERMS OF RULE 2CA OF THE I.T. RULES AND THUS, THE I MPUGNED ORDER PASSED BEING WITHOUT JURISDICTION, DESERVES TO BE Q UASHED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CCIT - PANAJI FAILED TO APPRECIATE THAT THE APPELLANT HAD NOT CLA IMED THE PAYMENTS MADE TO THE EXTENT OF RS. 3,57,83,690/- AS AN APPLICATION OF INCOME DURING THE ASSESSMENT YEAR 20 17-18 AND THUS THERE WAS NO VIOLATION OF THE CONDITIONS PRESC RIBED UNDER CLAUSE (A) OF THE UNNUMBERED 3RD PROVISO AND THUS, SUB CLAUSE A OF CLAUSE (I) OF UNNUMBERED 15TH PROVISO TO SECTION 10(23C) OF THE ACT, WAS NOT ATTRACTED UNDER THE FACTS AND IN T HE CIRCUMSTANCES OF THE APPELLANTS CASE. 4. THE LEARNED CCIT, PANAJI ERRED IN HOLDING THAT T HE APPELLANT HAD VIOLATED CONDITION 1 OF THE ORDER GRA NTING APPROVAL FOR EXEMPTION U/S 10(23C)(VI) OF THE ACT, BASED PUR ELY ON AN EXPENDITURE WHICH DID NOT EVEN FORM A PART OF APPLI CATION CLAIMED DURING THE ASSESSMENT YEAR 2017-18 AND HENC E, THERE WAS NO CASE TO HOLD THAT THE APPELLANT HAD VIOLATED SUB CLAUSE B OF CLAUSE (II) OF UNNUMBERED 15TH PROVISO TO SECTION 1 0(23C) OF THE ACT, UNDER THE FACTS AND IN THE CIRCUMSTANCES OF TH E APPELLANTS CASE. 5. THE LEARNED CCIT, PANAJI OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT IS RUNNING SEVERAL EDUCATIONAL INSTIT UTIONS WHICH EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR T HE PURPOSES OF PROFIT AND NO CASE WAS MADE OUT THAT THE ACTIVITIES OF THE APPELLANT TRUST WERE NOT GENUINE IN ORDER TO WITHDR AW THE APPROVAL GRANTED ESPECIALLY WHEN THE APPELLANT HAD NOT EARNED A SURPLUS IN SEVERAL YEARS AND HENCE DURING THESE YEA RS THERE WAS NO OCCASION TO CLAIM EXEMPTION U/S 10(23C)(VI) OF T HE ACT, WHICH IT WAS RIGHTFULLY ENTITLED TO. 6. THE LEARNED CCIT-PANAJI OUGHT TO HAVE APPRECIATE D THAT THERE WAS NO STATUTORY REQUIREMENT FOR THE APPELLAN T TO DEDUCT TDS ON EXPENDITURE INCURRED FOR THE ASSESSMENT YEAR 2017-18, WHICH REQUIREMENT CAME INTO EFFECT ONLY FROM 01/04/ 2019. ITA NO.628/BANG/2020 PAGE 3 OF 31 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST WAS CONSTITUTED UNDER THE DEED OF DECLARATION OF TRUST DATED 30/04/1988 WITH THE CHARITABLE OBJECT OF SUPPORTING AND PROMOTING E DUCATION AND THE ADVANCEMENT OF EDUCATIONAL ACTIVITIES IN ALL ITS BR ANCHES FOR THE LINGUISTIC MINORITY TULU COMMUNITY. THE APPELLANT TRUST IS P RESENTLY RUNNING THE FOLLOWING EDUCATIONAL INSTITUTIONS UNDER ITS UMBREL LA: SL.NO NAME OF THE INSTITUTION 1 SRINIVAS COLLEGE OF HOTEL MANAGEMENT TRUST 2 SRINIVAS COLLEGE OF PHYSIOTHERAPY & RESEARCH CENTRE 3 SRINIVAS COLLEGE OF P G MANAGEMENT TRUST 4 SRINIVAS COLLEGE OF EDUCATION 5 SRINIVAS INSTITUTE OF MEDICAL SCIENCE & RESEARCH CENTRE 6 SRINIVAS INSTITUTE OF TECHNOLOGY 7 SRINIVAS INSTITUTE OF HEALTH SCIENCE TRUST 8 SRINIVAS INSTITUTE OF DENTAL SCIENCE 9 SRINIVAS SCHOOL OF ENGINEERING 4. THE APPELLANT WAS GRANTED REGISTRATION U/S 12A V IDE NO. ACCTS/718/10A/VOL/B II/ S-290 DATED 14/06/1988 BY T HE THEN COMMISSIONER OF INCOME TAX -III, BANGALORE. THIS APPROVAL GRANTE D U/S. 12A OF THE ACT CONTINUES TO REMAIN IN FORCE. 5. WITH A VIEW TO EXPAND AND SPECIFICALLY SET OUT T HE OBJECTS OF THE APPELLANT TRUST IN THE FIELD OF EDUCATION, THE APPE LLANT TRUST, WITH THE PREVIOUS APPROVAL OF THE THEN COMMISSIONER OF INCOME TAX, MA NGALORE, HAD AMENDED THE OBJECTS OF THE TRUST ON 29/09/2009 TO I NCLUDE SPECIFIC ACTIVITIES ITA NO.628/BANG/2020 PAGE 4 OF 31 OF EDUCATION BESIDES, CHANGING SOME OF THE POWERS O F THE TRUSTEES. THE APPROVAL FOR THE AMENDMENT WAS GRANTED BY THE THEN CIT-MANGALORE VIDE ORDER DATED 31/12/2008 IN NO. S-37/AMENDMENT/CIT/MN G/08.09. THE OBJECTS OF THE APPELLANT TRUST AS PER THE AMENDED D EED DATED 29/09/2009 ARE AS FOLLOWS:- [I] TO SETUP A COLLEGE OF DENTAL SCIENCES WITH ALL ITS SPECIALTY AND SUPER-SPECIALITY BRANCHES, HOSPITALS INCLUDING RESEARCH. [II] TO SETUP A MEDICAL COLLEGE WITH ALL ITS BRANCH ES OR SPECIALITY AND SUPER-SPECIALITY COURSES, HOSPITALS INCLUDING RESEARCH. [III] TO SETUP A COLLEGE OF AGRICULTURAL SCIENCE, C OLLEGE OR FORESTS, BOTANICAL SCIENCE, VETERINARY SCIENCE ALL WITH ALL ITS BRANCHES OF SPECIALITY AND SUPER-SPECIALITY, RE SEARCH FACILITY. [IV] TO SETUP COLLEGE OF ARTS, FINE ARTS, DRAMATICS CINEMATOGRAPHY, FILM SHOOTING, CINE-ACTING, MUSIC INCLUDING INSTRUMENTAL MUSIC, YAKSHAGANA, FOLK AND ALL TYPES OF INDIAN DANCES AND CULTURAL ACTIVITIES, ENTERTAINMENTS, PARA-MEDICAL SCIENCE, ENGINEERING, BIO- TECHNOLOGY, NANO-TECHNOLOGY, SPORTS, GYMNASTICS WIT H RESEARCH FACILITIES. [V] TO SETUP COLLEGE OF STUDIES ON VEDAS, VEDANTHA, PHILOSOPHY, ASTROLOGY, SANSKRIT, AGAMA SHASTRA, PAUROHITHYA AND ANY OTHER SIMILAR BRANCHES OF KNOWL EDGE WHEREVER YOUTH CAN BE TRAINED AND EDUCATED. [VI] TO SETUP A COLLEGE OF ENGINEERING WITH ALL SPE CIALITY AND SUPER-SPECIALITY BRANCHES BOTH IN UNDER GRADUATE, P OST GRADUATE, RESEARCH AND DIPLOMA LEVELS. [VII] TO START TECHNICAL INSTITUTIONS CONDUCTING CO URSES, PROGRAMMES IN THE FIELD OF TECHNICAL EDUCATION, TRA INING AND RESEARCH IN ENGINEERING AND TECHNOLOGY INCLUDIN G MCA, MBA, ARCHITECTURE, TOWN PLANNING MANAGEMENT, ITA NO.628/BANG/2020 PAGE 5 OF 31 PHARMACY, HOTEL MANAGEMENT AND CATERING TECHNOLOGY, APPLIED ARTS AND CRAFTS, PG DIPLOMA IN BUSINESS MANAGEMENT/ADMINISTRATION AND SUCH OTHER PROGRAMMES AND AREA AT UNDER GRADUATE, POST GRADUATE, POLYTECH NIC, DIPLOMA AND POST DIPLOMA LEVELS. [VIII] TO START EDUCATIONAL INSTITUTION IN ANY TECH NICAL, NON- TECHNICAL, SCIENCE, ARTS AND RESEARCH STREAMS. [IX] TO START AND SETUP AN EDUCATIONAL INSTITUT IONS WHEREVER IT IS REFERRED IN THIS DEED SHALL ALSO MEAN AND INC LUDES TAKING OVER RUNNING AND/OR MAINTAINING AN EDUCATI ONAL INSTITUTIONS. 6. PURSUANT THE AFORESAID AMENDMENT OF THE OBJECTS CLAUSE AND SINCE THE APPELLANT TRUST WAS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, WHICH EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PUR POSES OF PROFIT, THE APPELLANT TRUST MADE AN APPLICATION FOR RECOGNITION U/S 10(23C)(VI) BEFORE THE THEN PRESCRIBED AUTHORITY I.E., THE CCIT, PANAJ I. THE PRESCRIBED AUTHORITY GRANTED THE APPROVAL, WHICH HAS SINCE BEE N RENEWED VIDE ORDER NO. F. NO. CCIT/PNJ/136(10)/2010-11 DATED 15/04/201 0. THE APPROVAL GRANTED U/S 10(23C)(VI) WAS SUBJECT TO THE APPELLAN T ABIDING BY THE CONDITIONS SET OUT BELOW:- [1] THE ASSESSEE APPLIES ITS INCOME, OR ACCUMULATES ITS INCOME FOR THE APPLICATION, WHOLLY AND EXCLUSIVELY, FOR TH E OBJECTS FOR WHICH IT IS ESTABLISHED AND APPLICATION OF ITS INCOME MUST BE IN ACCORDANCE WITH THIRD PROVISO TO SECTION 10[23][VI]; [2] THE ASSESSEE WILL NOT INVEST OR DEPOSIT ITS FUN DS [OTHER THAN VOLUNTARY CONTRIBUTIONS RECEIVED AND MAINTAINED IN THE FORM OF JEWELLERY, FURNITURE, ETC] FOR ANY PERIOD D URING THE PREVIOUS YEARS RELEVANT TO THE ASSESSMENT YEARS MEN TIONED ABOVE OTHERWISE THAN IN ANY ONE OR MORE OF THE FORM S OR MODES SPECIFIED IN SUB-SECTION [5] OF SECTION 11 OF THE I T ACT, 1961; ITA NO.628/BANG/2020 PAGE 6 OF 31 [3] THIS APPROVAL WILL NOT APPLY IN RELATION TO ANY INCOME BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF T HE SOCIETY AND SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED IN RE SPECT OF SUCH BUSINESS. [4] THE ASSESSEE WILL REGULARLY FILE ITS RETURN OF INCOME BEFORE THE INCOME-TAX AUTHORITY IN ACCORDANCE WITH THE PRO VISIONS OF THE INCOME-TAX ACT, 1961; [5] THAT IN THE EVENT OF ITS DISSOLUTION, ITS SURPL US AND ASSETS WILL BE GIVEN TO AN ORGANIZATION WHICH EXISTS SOLEL Y FOR CHARITABLE PURPOSES AND NOT FOR PURPOSES OF PROFIT AND NO PART OF THE SAME WILL GO DIRECTLY OR INDIRECTLY TO ANY OF THE BENEFICIARIES OF THE SOCIETY OR ANYBODY SPECIFIED I N SECTION 13[3] OF THE INCOME-TAX ACT, 1961; [6] THE APPROVAL GRANTED SHALL BE SUBJECT TO THE PR OVISION OF PROVISO TO SECTION 143[3]; [7] THE APPROVAL SHALL BE VOID IF IT IS SUBSEQUENTL Y FOUND THAT IT HAS BEEN OBTAINED FRAUD OR MISAPPROPRIATION OF FACT ; [8] THE ABOVE APPROVAL IS GIVEN ONLY FOR THE PURPOS E OF SEC. 10[23][VI] OF THE INCOME-TAX ACT, 1961 AND NOT FOR ANY OTHER PURPOSE/S. 7. IT IS SUBMITTED THAT THE AFORESAID APPROVAL GRAN TED TO THE APPELLANT TRUST BY THE ORDER DATED 15/04/2010 CONTINUED TO RE MAIN IN FORCE AND THUS, THE APPELLANT WAS ENTITLED TO CLAIM EXEMPTION U/S. 10(23C)(VI) OF THE ACT. HOWEVER, SINCE THE APPELLANT WAS HAVING ONLY EXCESS OF APPLICATION OVER INCOME FOR SEVERAL YEARS, THERE WAS NO OCCASION FOR THE APPELLANT TO CLAIM ANY EXEMPTION U/S. 10(23C)(VI) OF THE ACT FOR ANY O F THE PREVIOUS ASSESSMENT YEARS, INCLUDING THE ASSESSMENT YEAR 201 7-18. ITA NO.628/BANG/2020 PAGE 7 OF 31 8. FOR THE AY 2017-18, THE APPELLANT TRUST HAD FILE D ITS RETURN OF INCOME ON FOR THE ASSESSMENT YEAR 2017-18 ON 29/10/2017 RE PORTING AN EXCESS APPLICATION OVER INCOME OF RS. 26,38,94,595/-. WHIL E ARRIVING AT THE SAID EXCESS APPLICATION, THE APPELLANT TRUST HAD EXCLUDE D CLAIMING APPLICATION IN RESPECT OF 2 ITEMS VIZ., [A] DEPRECIATION DEBITED T O INCOME & EXPENDITURE ACCOUNT OF RS. 13,47,71,387/-; AND [B] DONATION & C HARITY DEBITED TO INCOME & EXPENDITURE ACCOUNT OF RS. 12,24,78,046/-. 9. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO SOUGHT FOR VARIOUS DETAILS AND PARTICULARS, WHICH WERE FURNISHED. IT WAS NOTICED BY THE AO THAT THE APPELLANT HAD MADE A PAYMENT OF RS. 3,57,83,690 /- TO SEVERAL PERSONS THAT FORMED PART OF THE SUM OF RS. 12,24,78,046/- [ DONATIONS & CHARITY], WHICH WAS NOT CLAIMED AS APPLICATION. ON FURTHER E NQUIRY, THE AO ALSO NOTED THAT THE APPELLANT HAD MADE THESE PAYMENTS BO TH BY WAY OF CASH AS WELL AS CHEQUE AND THAT THE APPELLANT HAD SUBMITTED THAT IT DID NOT HAVE THE ORIGINAL VOUCHERS IN SUPPORT OF THESE PAYMENTS. AC CORDING TO THE AO, THE AFORESAID PAYMENTS MADE BY THE APPELLANT AMOUNTED T O THE VIOLATION OF THE CONDITIONS FOR GRANT OF APPROVAL U/S. 10(23C)(VI) O F THE ACT AND HENCE, IN TERMS OF THE PROVISO TO SECTION 143(3) OF THE ACT, THE AO MADE A REFERENCE TO THE PRESCRIBED AUTHORITY FOR WITHDRAWAL OF THE A PPROVAL GRANTED SINCE HE COULD NOT PASS ANY ORDER OF ASSESSMENT DENYING THE EXEMPTION CLAIMED WITHOUT WITHDRAWAL OF THE APPROVAL BY THE PRESCRIBE D AUTHORITY. 10. THE LD. AR SUBMITTED THAT THE A.O. TOOK THE VIE W THAT THE PRESCRIBED AUTHORITY WAS THE LEARNED CCIT, PANAJI, WHO HAD INI TIALLY GRANTED THE APPROVAL U/S 10(23C)(VI) OF THE ACT. IT HAS BEEN S TATED BY THE LEARNED CCIT, PANAJI IN THE IMPUGNED ORDER THAT THE A.O. HA D CONCLUDED AS UNDER:- [I] THAT, THE APPELLANT COULD NOT ESTABLISH THAT TH E PAYMENTS MADE WERE TOWARDS THE PURPOSE OF AUGMENTING THE OBJ ECTS OF THE APPELLANT TRUST AND THAT THE APPELLANT WAS N OT ABLE TO ITA NO.628/BANG/2020 PAGE 8 OF 31 IDENTIFY THE BENEFICIARIES AND PROVE THE RELEVANCE OF SUCH PAYMENTS TO THE OBJECTS OF THE APPELLANT TRUST. [II] THAT MERELY BECAUSE THE OBJECTS OF THE TRUST A RE BENEVOLENT AND CHARITABLE, THE TRUST DOES NOT GET REGISTRATION / APPROVAL IF ITS ACTIVITIES ARE OTHERWISE. [III] THAT, IN THIS SITUATION, WHERE MONEY WAS PAID OUT OF BOOKS FOR UNRELATED ACTIVITIES COULD ONLY BE INFERRED AS MISUSE OF FUNDS AND THAT THE ACT OF NOT CLAIMING THE EXPENDIT URE AS APPLICATION WOULD NOT ABSOLVE THE APPELLANT. THAT, IT APPEARS THAT THE MANAGEMENT HAD SIPHONED FUNDS AND THE BENEFITS WERE PASSED ON TO PERSONS U/S 13(3) OF THE ACT. 11. UPON REFERENCE BY THE A.O., THE LEARNED CCIT, P ANAJI WAS OF THE VIEW THAT THE UNNUMBERED 15TH PROVISO TO SECTION 10 (23C)(VI) WAS PRIMA FACIE ATTRACTED TO THE APPELLANTS CASE AND HENCE, HE ISSUED A SHOW CAUSE NOTICE ON THE APPELLANT DATED 18/02/2020 CALLING UP ON TO STATE AS TO WHY THE APPROVAL GRANTED SHOULD NOT BE WITHDRAWN. IN T HE SHOW CAUSE NOTICE DATED 18/02/2020, THE CCIT, PANAJI, IDENTIFIED THE FOLLOWING ISSUES THAT ARE PURPORTEDLY IN CONTRAVENTION TO THE REGULATIONS UND ER THE RELEVANT PROVISIONS OF THE ACT AND SOUGHT EXPLANATIONS REGARDING THE SA ME:- [I] THAT, DESPITE SPECIFIC REQUEST, THE APPELLANT C OULD NOT PROVIDE PURPOSE FOR PAYMENT TO SEVERAL INDIVIDUALS AND EXPLAIN ITS RELEVANCE TO THE OBJECTS OF THE TRUST A ND HAD FAILED TO FURNISH ORIGINAL VOUCHERS. [II] THAT THE APPELLANT HAD PAID SUMS OF MONEY IN C ASH TOWARDS SUNDRY PETTY ADVANCES AMOUNTING TO RS. 1.50 CRORE S AND WAS NOT IN POSSESSION OF ORIGINAL VOUCHERS FOR THE SAME AND ONLY PHOTOCOPIES OF VOUCHERS FOR A PART OF THE AMOUNTS PAID WERE PRODUCED. [III] THAT THE DONATIONS TO THE TUNE OF RS. 1,00,63 ,000/- WAS WITHOUT ANY CORRELATING VOUCHERS AND ONLY A LEDGER ACCOUNT WAS PRODUCED. ITA NO.628/BANG/2020 PAGE 9 OF 31 [IV] THAT THE PAYMENTS MADE TOWARDS BROKERAGE, ADV ANCE AND OTHER RELIGIOUS CHARITY PAID AS MENTIONED ABOVE HA D NOT BEEN SUBJECTED TO TDS. 12. THE CCIT, PANAJI FURTHER OBSERVED THAT ONCE A T RUST IS REGISTERED U/S 10(23C)(VI) OF THE ACT, ITS ACTIVITIES SHOULD BE FO R EDUCATIONAL PURPOSE ONLY AND THAT THE INCOME GENERATED BY THE APPELLANT HAS NOT BEEN APPLIED FOR THE PURPOSE OF EDUCATION IN ACCORDANCE WITH PROVISI ONS CONTAINED IN CLAUSE (A) OF THE 3 RD PROVISO AND THUS, HE GAVE AN OPPORTUNITY TO SHOW A S TO WHY THE APPROVAL U/S 10(23C)(VI) SHOULD NOT BE CANCELLE D/WITHDRAWN. 13. IT IS SUBMITTED THAT THE APPELLANT AVAILED THE AFORESAID OPPORTUNITY PROVIDED BY THE CCIT, PANAJI AND HAD FILED WRITTEN SUBMISSIONS CONTENDING THAT THERE WAS NO VIOLATION OF THE UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) AND THAT ALL THE EDUCATIONAL INSTITUTIONS W ERE BEING GENUINELY RUN, WHEREIN EVERY YEAR THE APPLICATION EXCEEDED THE GRO SS RECEIPTS EARNED, RESULTING IN THE APPELLANT INCURRING A DEFICIENCY O F FUNDS. THE APPELLANT ALSO CONTENDED THAT THE SUM OF RS. 3,57,83,690/- BASED O N WHICH THE A.O. HAD OPINED THAT THE WITHDRAWAL OF THE APPROVAL WAS REQU IRED, WAS LESS THAN 10% OF THE GROSS RECEIPTS EARNED DURING THE ASSESSMENT YEAR 2017-18. IT WAS ALSO CONTENDED THAT THE AFORESAID SUM WAS NOT CLAIM ED AS APPLICATION OF INCOME IN THE COMPUTATION OF TOTAL INCOME AT ALL AN D HENCE, THERE WAS NO JUSTIFICATION TO WITHDRAW THE APPROVAL GRANTED EARL IER AS THESE PAYMENTS ALONE CANNOT BE THE BASIS TO DETERMINE THE NATURE O F ACTIVITIES CARRIED ON. 14. HOWEVER, THE CCIT, PANAJI DID NOT ACCEPT THE AF ORESAID CONTENTIONS OR EXPLANATION OF THE APPELLANT. WHILE REJECTING T HE CONTENTIONS RAISED, THE CCIT TOOK THE VIEW THAT THE APPELLANT TRUST HAD VIO LATED THE PROVISIONS OF SECTION 10[23C][VI] OF THE ACT AND HENCE, HE PASSED THE IMPUGNED ORDER U/S ITA NO.628/BANG/2020 PAGE 10 OF 31 10(23C)(VI) OF THE ACT DATED 04/05/2020, WITHDRAWIN G THE EXEMPTION EARLIER GRANTED VIDE ORDER DATED 15/04/2010. HE HELD THAT : - [I] THAT THE APPELLANT HAD NOT APPLIED ITS INCOME I N ACCORDANCE WITH THE STIPULATIONS OF CLAUSE (A) OF T HE THIRD PROVISO/ THAT THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE CONDITIONS SUBJECT TO WHICH THE APPROVAL WAS GRANTED. [II] THAT THE FACT THAT THE APPELLANT DID NOT POSSE SS ORIGINAL RECEIPTS AS PAYMENTS WERE MADE THROUGH MIDDLE MEN W AS PROOF ENOUGH THAT THE AMOUNT OF RS. 3,57,83,690/- W AS NOT APPLIED TO THE OBJECTS OF THE TRUST, THUS ATTRACTIN G SUB CLAUSE A OF CLAUSE (I) OF UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) OF THE ACT. [III] THAT THERE WAS A VIOLATION OF CONDITION 1 OF THE RENEWAL GRANTED WHICH STATES THAT THE ASSESSEE APPLIES ITS INCOME, OR ACCUMULATES ITS INCOME FOR THE APPLICATION, WHOL LY AND EXCLUSIVELY, FOR THE OBJECTS FOR WHICH IT IS ESTABL ISHED AND APPLICATION OF ITS INCOME MUST BE IN ACCORDANCE WIT H THIRD PROVISO TO SECTION 10[23][VI] AND THIS VIOLATION W OULD BRING SUB CLAUSE B OF CLAUSE (II) OF UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) OF THE ACT INTO PLAY. [IV] THAT THE AFORESAID PAYMENTS MADE BY THE APPELL ANT TRUST APPEAR TO BE FOR THE RENEWAL OF THE RECOGNITION GRA NTED BY MCI AS THE APPELLANT HAD CLAIMED THAT THE RECOGNITI ON WAS WITHDRAWN AND LATER GRANTED AND IT APPEARED THAT TH ESE PAYMENTS MADE WERE OPPOSED TO PUBLIC POLICY. [V] THAT THE ACT OF ADDING BACK THE ENTIRE AMOUNT O F RS 3,57,83,690/- AND NOT CLAIMING THE SAME AS AN APPLI CATION OF INCOME FOR THE ASSESSMENT YEAR 2017-18 DOES NOT ABSOLVE THE APPELLANT FROM FOLLOWING THE STATUTORY PROVISIONS OF THE ACT. 15. FOR THE ABOVE REASONS, THE CCIT WITHDREW THE RE COGNITION GRANTED U/S. 10[23C][VI] OF THE ACT BY THE IMPUGNED ORDER D ATED 04/05/2020 AND HENCE, THE APPELLANT IS NOW IN APPEAL BEFORE US. ITA NO.628/BANG/2020 PAGE 11 OF 31 16. THE FIRST CONTENTION OF THE LD. AR IS THAT THE IMPUGNED ORDER DATED 04/05/2020 PASSED BY THE CCIT IS BAD IN LAW AND WIT HOUT REQUISITE JURISDICTION IN AS MUCH AS THE CCIT, PANAJI IS NOT THE PRESCRIBED AUTHORITY AND HENCE, THE ORDER PASSED IS VOID-AB-INITIO AND T HE SAME REQUIRES TO BE QUASHED. 17. IT IS SUBMITTED THAT AS PER THE PROVISIONS OF S ECTION 10(23C)(VI) OF THE ACT, READ WITH RULE 2CA OF THE I.T. RULES, 1962, [A S IT STOOD AT THE RELEVANT POINT OF TIME], THE PRESCRIBED AUTHORITY IS THE PRI NCIPAL COMMISSIONER OR COMMISSIONER OF INCOME TAX, WHO ALONE IS COMPETENT TO PASS THE ORDER WITHDRAWING EXEMPTION GRANTED UNDER SECTION 10(23C) (VI) OF THE ACT. THE PRESCRIBED AUTHORITY AT THE TIME OF GRANTING APPROV AL WAS IN NO DOUBT THE LEARNED CCIT, PANAJI IN THE YEAR 2010, HOWEVER THER EAFTER, THE RULES WERE AMENDED FROM TIME TO TIME. THE PRESCRIBED AUTHORIT Y REFERRED TO IN THE ACT IN SECTION 10[23C][VI] OR FOR THAT MATTER, IN THE P ROVISO TO SECTION 143[3] OF THE ACT, HAS TO BE EXAMINED IN LIGHT OF THE PRESCRI BED AUTHORITY THAT IS SPECIFIED UNDER THE RULES. RULE 2CA OF THE I.T.RUL ES [AS IT WAS AT THE RELEVANT POINT OF TIME] PROVIDES THAT ON AND WITH E FFECT FROM 15/11/2014, THE PRINCIPAL COMMISSIONER OR COMMISSIONER IS THE PRESC RIBED AUTHORITY. 18. IT IS SUBMITTED THAT THE A.O. IN TERMS OF THE P ROVISO TO SECTION 143(3) IS REQUIRED TO MAKE A REFERENCE TO THE PRESCRIBED AUTHORITY IN CASE OF CONTRAVENTION OF THE PROVISIONS OF SECTION 10(23C)( VI). THE TERM PRESCRIBED AUTHORITY UNDER THE ACT HAS TO BE INTERPRETED BASE D ON THE AUTHORITY WHO IS VESTED WITH THE POWER TO ACT AND GRANT APPROVAL AT THE RELEVANT POINT OF TIME. IT CANNOT BE UNDERSTOOD TO MEAN THAT THE PRE SCRIBED AUTHORITY IS THE AUTHORITY WHO HAD GRANTED APPROVAL U/S 10(23C)(VI) OF THE ACT SIMPLY BECAUSE SUCH AUTHORITY DOES NOT HAVE ANY POWER UNDE R THE ACT TO TAKE COGNIZANCE OF THE MATTER. ITA NO.628/BANG/2020 PAGE 12 OF 31 19. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE CCIT, PANAJI HAD NO AUTHORITY TO PASS THE ORDER WITHDRAWING EXEMPTION G RANTED, AND THUS THE IMPUGNED ORDER PASSED DATED 04/05/2020 IS WITHOUT T HE REQUISITE JURISDICTION AND IS BAD IN LAW AND DESERVES TO BE Q UASHED. IT IS PRAYED ACCORDINGLY. 20. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT IN THE GROUND OF APPEAL NO. 2, THE APPELLANT HAS CHALLENGED THE ASSU MPTION OF JURISDICTION BY THE CCIT, PANAJI AND THE SAME IS REPRODUCED BELO W FOR IMMEDIATE REFERENCE:- '2. THE ORDER PASSED U/S 10(23C)(VI) OF THE ACT, DA TED: 04/05/2020, WITHDRAWING THE EXEMPTION GRANTED IS BA D IN LAW AND VOID AB-INITO IN AS MUCH AS THE LEARNED CC_TT, PANA JI WHO HAS PASSED THE IMPUGNED ORDER IS NOT THE PRESCRIBED AUT HORITY IN TERMS 2CA OF THE .T. T. RULES AND THUS, THE IMPUGNE D ORDER PASSED BEING WITHOUT JURISDICTION, DESERVED TO BE Q UASHED.' 21. IN THIS REGARD, SHE SUBMITTED THAT COPY OF THE REPORT WAS CALLED FROM THE CIT (EXEMPTIONS), BANGALORE AND THE RELEVANT PA RT OF THE REPORT IS REPRODUCED HEREWITH :- 'THE CONTENTION OF THE ASSESSEE IS THAT THE CHIEF C OMMISSIONER OF INCOME TAX IS NOT THE AUTHORITY TO WITHDRAW THE REC OGNITION U/S 10(23C)(VI) BY RELYING ON THE PROVISO TO SUB RULE ( 1) OF RULE 2CA WHEREIN IT IS PRESCRIBED THAT THE PRINCIPAL COMMISS IONER OR THE COMMISSIONER SHALL BE THE PRESCRIBED AUTHORITY FOR THE PURPOSE OF RECOGNITION U/S 10(23C)(VI) ON OR AFTER THE SPECIFI ED DATE I.E., 15/11/2014. 22. THE LD. DR FURTHER SUBMITTED THAT THE CONTENTIO N OF THE ASSESSEE THAT THE CCIT, PANAJI HAD NO JURISDICTION TO DECIDE ON T HE WITHDRAWAL OF RECOGNITION U/S 10(23C)(VI) IS NOT ACCEPTABLE FOR T HE FOLLOWING REASONS:- ITA NO.628/BANG/2020 PAGE 13 OF 31 THE TRUST WAS GIVEN RECOGNITION U/S 10(23C)(VI) BY THE CHIEF COMMISSIONER OF INCOME TAX, PANAJI VIDE ORDER NO. F . NO. CCIT/PNJ/136(10)/2010-11 DATED 15/04/2010. AS PER THE JUDICIAL PROPRIETY ONLY THE AUTHORITY G RANTING THE EXEMPTION HAS THE AUTHORITY TO WITHDRAW THE RECOGNI TION GRANTED. IN THE INSTANT CASE THE RECOGNITION U/S 10(23C)(VI ) BY THE CHIEF COMMISSIONER OF INCOME TAX, PANAJI. HENCE THE CHIEF COMMISSIONER OF INCOME TAX, PANAJI RIGHTLY ASSUMED JURISDICTION TO WITHDRAW RECOGNITION U/S 10 (23C)(VI) WHICH WAS GRANTED BY HIM. JUDICIAL PROPRIETY ALSO DESIRES THAT WHEN THE ORDE R OF GRANTING RECOGNITION U/S 10(23C)(VI) IS PASSED BY AN AUTHORI TY OF RANK OF CHIEF COMMISSIONER OF INCOME TAX THE DECISION ON WITHDRAWING THE RECOGNITION U/S 10(23C)(VI) CANNOT BE TAKEN BY AN AUTHORITY LOWER THAN THE RANK OF CHIEF COMMISSIO NER OF INCOME TAX. HENCE THE CONTENTION OF THE ASSESSEE THAT THE CHIE F COMMISSIONER OF INCOME TAX WAS NOT THE COMPETENT AU THORITY TO DECIDE ON THE ISSUE OF WITHDRAWAL OF RECOGNITION U/S 10(23C)(VI) IS WITHOUT MERIT. MOREOVER AS EVIDENT FROM THE PROCEEDINGS BEFORE TH E CHIEF COMMISSIONER OF INCOME TAX, PANAJI THE ASSESSEE HAS APPEARED BEFORE THE CHIEF COMMISSIONER OF INCOME TA X AND FURNISHED THE DETAILS CALLED FOR. ITA NO.628/BANG/2020 PAGE 14 OF 31 IT IS ALSO EVIDENT FROM THE ORDER OF THE CHIEF COM MISSIONER OF INCOME TAX, PANAJI THAT THE ASSESSEE NEVER OBJECTED TO THE JURISDICTION OF THE CHIEF COMMISSIONER OF INCOME TA X, PANAJI IN HOLDING THE PROCEEDINGS TO WITHDRAW RECOGNITION U/S 10(23C)(VI). AS PER UN-NUMBERED 15TH PROVISO TO SEC. 10(23C), I F AN INSTITUTION IS APPROVED BY AN PRESCRIBED AUTHORITY AND 'THAT PRESCRIBED AUTHORITY' IS SATISFIED THAT THE CONDITI ONS IN SUB CLAUSE (I), (II) AND (III) OF SAID PROVISO ARE ATTR ACTED THEN 'THAT PRESCRIBED AUTHORITY' SHALL WITHDRAW THE RECOGNITIO N AFTER GIVING REASONABLE OPPORTUNITY. IT IS PERTINENT TO NOTE THAT THE WORD 'THAT PRESCR IBED AUTHORITY' IS USED IN THE LEGISLATION TO SPECIFICALLY REFER TO 'T HAT PRESCRIBED AUTHORITY' WHICH ORIGINALLY GRANTED THE REGISTRATIO N AND NOT THE PRESCRIBED AUTHORITY AS ON THE DATE OF WITHDRAWAL P ROCEEDINGS. IN THE INSTANT CASE THE RECOGNITION U/S 10(23C)(VI ) WAS GRANTED BY THE CHIEF COMMISSIONER OF INCOME TAX, PANAJI ON 15/04/2010 AND HENCE HE IS 'THAT PRESCRIBED AUTHORI TY' WHO IS VESTED WITH THE POWER TO WITHDRAW THE RECOGNITION U /S 10(23C)(VI) GRANTED BY HIM AS PER THE PROVISIONS OF THE ACT DISCUSSED ABOVE. 23. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEGAL OBJECTION OF THE ASSESSEE IS THAT THE CCIT WHO HAS WITHDRAWN THE APP ROVAL GRANTED TO THE ASSESSEE U/S. 10(23C)(VI) OF THE ACT IS HAVING NO J URISDICTION SINCE HE IS NOT THE PRESCRIBED AUTHORITY AS PER PROVISIONS OF THIS SECTION. THE POWER AND JURISDICTION TO WITHDRAW THE APPROVAL GRANTED U/S. 10(23C)(VI) OF THE ACT IS PROVIDED UNDER 13 TH PROVISO TO THE SAID SECTION WHICH READS AS UNDER:- ITA NO.628/BANG/2020 PAGE 15 OF 31 PROVIDED ALSO THAT WHERE THE FUND OR INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) IS NOTIFIED BY THE CENTRAL GOVERNMENT [OR IS APPROV ED BY THE PRESCRIBED AUTHORITY, AS THE CASE MAY BE, OR ANY UN IVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CL AUSE (VI) OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO I N SUB-CLAUSE (VIA), IS APPROVED BY THE PRESCRIBED AUTHORITY AND SUBSEQUENTLY THAT GOVERNMENT OR THE PRESCRIBED AUTHORITY IS SATI SFIED THAT (I) SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVER SITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION HAS NOT (A) APPLIED ITS INCOME IN ACCORDANCE WITH THE PROVI SIONS CONTAINED IN CA (A) OF THE THIRD PROVISO; OR (B) INVESTED OR DEPOSITED ITS FUNDS IN ACCORDANCE W ITH THE PROVISIONS CONTAINED IN CLAUSE (B) OF THE THIRD PRO VISO; OR (II) THE ACTIVITIES OF SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION (A) ARE NOT GENUINE; OR (B) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH IT WAS NOTIFIED OR APPR OVED, IT MAY, AT ANY TIME AFTER GIVING A REASONABLE OPPORTUN ITY OF SHOWING CAUSE AGAINST THE PROPOSED ACTION TO THE CO NCERNED FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR O THER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION, RESCIND THE NOTIFICATION OR, BY ORDER, WITHDRAW THE APPROVAL, AS THE CASE MAY BE, AND FORWARD A COPY OF THE ORDER RESCINDING THE NOTIFICATION OR WITHDRAWING THE APPR OVAL TO SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION AND TO THE ASSESSING OFFICER'. 24. THE 13TH PROVISO TO SECTION 10(23C)(VI) CONFERS THE POWER/JURISDICTION TO WITHDRAW THE APPROVAL TO THE GOVERNMENT OR THE PRESCRIBED AUTHORITY. IT FURTHER POSTULATES THAT TH E PRESCRIBED AUTHORITY, IF ITA NO.628/BANG/2020 PAGE 16 OF 31 SATISFIED THAT SUCH FUND OR INSTITUTION HAS NOT COM -PLIED WITH THE CONDITIONS AS PROVIDED THEREUNDER, CAN WITHDRAW THE APPROVAL. FOR INITIATION OF PROCEEDINGS TO WITHDRAW THE APPROVAL THE MANDATORY PRE-CONDITION IS THE SATISFACTION OF THE PRESCRIBED AUTHORITY. 25. THE ORIGINAL NOTIFICATION ON THIS ISSUE WAS IS SUED ON 30.5.2007 WHICH READS AS FOLLOWS:- SECTION 10(23C)(VI)/(VIA) OF THE INCOME-TAX ACT, 1961 - EXEMPTION - UNIVERSITY/EDUCATIONAL INSTITUTIONS/HOSPITALS - PRESCRIBED AUTHORITY NOTIFICATION NO. SO 852(E) [F.NO. 153/41/2007-TPL], DATED 30-5-2007 [SUPERSEDED BY NOTIFICATION NO. 76/2014 (F.NO. 196/26/2014-ITA.I), DATED 1-12-2014] IN PURSUANCE OF THE PROVISIONS CONTAINED IN SUB-CLA USES (VI) AND (VIA) OF CLAUSE (23C) OF SECTION 10 OF THE INCOME-T AX ACT, 1961 (43 OF 1961) READ WITH SUB-RULE (3) OF RULE 2CA OF THE INCOME-TAX RULES, 1962, THE CENTRAL BOARD OF DIRECT TAXES HERE BY AUTHORISES THE FOLLOWING CHIEF COMMISSIONERS OR DIRECTORS GENE RAL TO ACT AS 'PRESCRIBED AUTHORITY' FOR THE PURPOSES OF SUB-CLAU SE (VI) AND SUB- CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10 IN RELAT ION TO ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION WITH EFFECT FROM THE 1ST DAY OF JUNE, 2007 NAMELY, (I) FOR CASES FALLING IN THE JURISDICTION OF DIRECT OR OF INCOME-TAX (EXEMPTION), AHMEDABAD, THE PRESCRIBED AUTHORITY SH ALL BE CHIEF COMMISSIONER OF INCOME-TAX, AHMEDABAD-IV, AHMEDABAD; (II) FOR CASES FALLING IN THE JURISDICTION OF DIREC TOR OF INCOME-TAX (EXEMPTIONS), BANGALORE, THE PRESCRIBED AUTHORITY S HALL BE CHIEF COMMISSIONER OF INCOME-TAX, BANGALORE-I, BANGALORE; ITA NO.628/BANG/2020 PAGE 17 OF 31 (III) FOR CASES FALLING IN THE JURISDICTION OF DIRE CTOR OF INCOME-TAX (EXEMPTIONS), CHENNAI, THE PRESCRIBED AUTHORITY SHA LL BE CHIEF COMMISSIONER OF INCOME-TAX, CHENNAI-III, CHEN NAI; (IV) FOR CASES FALLING IN THE JURISDICTION OF DIREC TOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD, THE PRESCRIBED AUTHORITY S HALL BE CHIEF COMMISSIONER OF INCOME-TAX, HYDERABAD-I, HYDERABAD; (V) FOR CASES FALLING IN THE JURISDICTION OF DIRECT OR OF INCOME-TAX (EXEMPTIONS), KOLKATA, THE PRESCRIBED AUTHORITY SHA LL BE CHIEF COMMISSIONER OF INCOME-TAX, KOLKATA-III, KOLK ATA; (VI) FOR CASES FALLING IN THE JURISDICTION OF DIREC TOR OF INCOME-TAX (EXEMPTIONS), MUMBAI, THE PRESCRIBED AUTHORITY SHAL L BE CHIEF COMMISSIONER OF INCOME-TAX, MUMBAI-I, MUMBAI; (VII) FOR CASES FALLING IN THE JURISDICTION OF DIRE CTOR OF INCOME-TAX (EXEMPTIONS), DELHI, THE PRESCRIBED AUTHORITY SHALL BE DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS), DELHI; (VIII) FOR CASES OTHER THAN THOSE MENTIONED AT (I) TO (VII) ABOVE, THE CHIEF COMMISSIONER OR DIRECTOR GENERAL TO WHOM THE ASSESSING OFFICER HAVING JURISDICTION TO ASSESS THE UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO IN SUB-CLAUSE (VI) AND SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10 OF T HE ACT IS SUBORDINATE. THE ABOVE NOTIFICATION WAS WITHDRAWN BY NOTIFICATIO N DATED 15.11.2014 BY THE CBDT WHICH READS AS FOLLOWS:- SECTION 10(23C)(VI)/(VIA) OF THE INCOME-TAX ACT, 1961 - EXEMPTIONS - UNIVERSITY/EDUCATIONAL INSTITUTIONS/HOSPITALS - PRESCRIBED AUTHORITY - SUPERSESSION OF NOTIFICATION NO. SO 852(E) [F.NO. 153/41/2007-TPL], DATED 30-5-2007 NOTIFICATION NO. 76/2014 (F.NO. 196/26/2014-ITA.I), DATED 1-12-2014 ITA NO.628/BANG/2020 PAGE 18 OF 31 SUPERSEDED BY NOTIFICATION NO. 20/2015 [F.NO. 196/26/2014-ITA.I]/SO 676(E), DATED 5-3-2015] IN PURSUANCE OF THE PROVISIONS CONTAINED IN SUB-CLA USES (VI) AND (VIA) OF CLAUSE (23C) OF SECTION 10 OF THE INCOME-T AX ACT, 1961 (43 OF 1961) READ WITH RULE 2CA OF THE INCOME-TAX R ULES, 1962, AND IN SUPERSESSION OF THE NOTIFICATION OF THE GOVE RNMENT OF INDIA IN THE MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXES DATED THE DATED 30TH MAY, 200 7 EXCEPT AS RESPECTS THINGS DONE OR OMITTED TO BE DONE BEFORE S UCH SUPERSESSION, THE CENTRAL BOARD OF DIRECT TAXES HER EBY AUTHORIZES THE COMMISSIONERS OF INCOME-TAX (EXEMPTI ONS), TO ACT AS PRESCRIBED AUTHORITY FOR THE PURPOSES OF SUB-C LAUSE (VI) AND SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10 WITH EFFECT FROM THE SPECIFIED DATE. 2. THE SPECIFIED DATE FOR THE PURPOSE OF THE AFO RESAID RULE 2CA SHALL BE THE 15 TH DAY OF NOVEMBER, 2014. 26. THUS IT IS CLEAR THAT AS PER RULE 2CA OF THE IN COME-TAX RULES W.E.F. 15.11.2014, THE PRINCIPAL COMMISSIONER OR COMMISSIO NER IS THE PRESCRIBED AUTHORITY AND IT IS NOT THE CHIEF COMMISSIONER OF I NCOME TAX [CCIT]. IN THE PRESENT CASE, THE WITHDRAWAL U/S. 10(23C)(VI) OF TH E ACT DATED 4.5.2020 WAS PASSED BY THE CCIT, PANAJI, GOA AND NOT BY PRINCIPA L COMMISSIONER OR COMMISSIONER. BEING SO, THE ORDER PASSED BY THE SA ID AUTHORITY IS NOT VALID AS IT IS WITHOUT JURISDICTION. HENCE, WE ARE OF TH E CONSIDERED OPINION THAT IT IS PASSED BY INAPPROPRIATE AUTHORITY AND HAS NO LEG S TO STAND. THE SAME IS ACCORDINGLY ANNULLED. 27. WITHOUT PREJUDICE TO THE ABOVE LEGAL ISSUE RAIS ED ON MERITS, THE SECOND CONTENTION OF THE LD. AR IS THAT THERE IS NO CASE FOR HOLDING THAT THE APPELLANT TRUST HAS COMMITTED ANY VIOLATION OF THE STATUTORY PROVISIONS OF THE ACT IN ORDER TO WITHDRAW THE APPROVAL GRANTED U/S. 10[23C][VI] OF THE ACT. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO REPRODUCE TH E PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT ALONG WITH UNNUMBERED 3 RD PROVISO AND THE UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) OF THE ACT THAT HAVE BE EN ITA NO.628/BANG/2020 PAGE 19 OF 31 INVOKED BY THE LEARNED CCIT, PANAJI TO WITHDRAW THE APPROVAL GRANTED TO THE APPELLANT TRUST AS UNDER:- 9.1 SECTION 10(23C)(VI) OF THE ACT PROVIDES THAT IN COME OF THE FOLLOWING EDUCATIONAL INSTITUTIONS SHALL BE EXEMPT: ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EX ISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PR OFIT, OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (IIIAB) OR SUB-CLAUSE (IIIAD) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY; 28. UNNUMBERED 3 RD PROVISO TO SECTION 10(23C) OF THE ACT SETS OUT CERTAIN CONDITIONS THAT ARE REQUIRED TO BE FOLLOWED BY THE EDUCATIONAL INSTITUTIONS GRANTED APPROVAL AS FOLLOWS:- PROVIDED ALSO THAT THE FUND OR TRUST OR INSTITUTIO N 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) (A) APPLIES ITS INCOME, OR ACCUMULATES IT FOR APPLI CATION, WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTA BLISHED 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 PE R CENT OF ITS INCOME SHALL IN NO CASE EXCEED FIVE YEARS; AND (B) DOES NOT INVEST OR DEPOSIT ITS FUNDS, OTHER THA N (I) ANY ASSETS HELD BY THE FUND, TRUST OR INSTITUTI ON 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 INSTIT UTION AS ON THE 1ST DAY OF JUNE, 1973; (IA) ANY ASSET, BEING EQUITY SHARES OF A PUBLIC COM PANY, HELD BY ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION WHERE SUCH ASSETS FORM PA RT OF THE CORPUS OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTI TUTION OR ANY ITA NO.628/BANG/2020 PAGE 20 OF 31 HOSPITAL OR OTHER MEDICAL INSTITUTION AS ON THE 1ST DAY OF JUNE, 1998; (II) ANY ASSETS (BEING DEBENTURES ISSUED BY, OR ON BEHALF OF, ANY COMPANY OR CORPORATION), ACQUIRED BY THE FUND, TRUS T 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 O R ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OT HER MEDICAL INSTITUTION ; (IV) VOLUNTARY CONTRIBUTIONS RECEIVED AND MAINTAINE D 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 T HAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-SECT ION (5) OF SECTION 11. 29. FINALLY, THE UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) PROVIDES WITHDRAWAL OF THE APPROVAL GRANTED IN CERTAIN SITUA TIONS AND THE SAME READS AS UNDER:- PROVIDED ALSO THAT WHERE THE FUND OR INSTITUTION R EFERRED TO IN SUB-CLAUSE (IV) OR TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) IS NOTIFIED BY THE CENTRAL GOVERNMENT OR IS APPROVE D BY THE PRESCRIBED AUTHORITY, AS THE CASE MAY BE, OR ANY UN IVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CL AUSE (VI) OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO I N SUB-CLAUSE (VIA), IS APPROVED BY THE PRESCRIBED AUTHORITY AND SUBSEQUENTLY THAT GOVERNMENT OR THE PRESCRIBED AUTHORITY IS SATI SFIED THAT (I) SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVER SITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION HAS NOT (A) APPLIED ITS INCOME IN ACCORDANCE WITH THE PROVI SIONS CONTAINED IN CLAUSE (A) OF THE THIRD PROVISO; OR ITA NO.628/BANG/2020 PAGE 21 OF 31 (B) INVESTED OR DEPOSITED ITS FUNDS IN ACCORDANCE W ITH THE PROVISIONS CONTAINED IN CLAUSE (B) OF THE THIRD PRO VISO; OR [(II) THE ACTIVITIES OF SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION (A) ARE NOT GENUINE; OR (B) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH AL L OR ANY OF THE CONDITIONS SUBJECT TO WHICH IT WAS NOTIFIED OR APPR OVED; OR (III) SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIV ERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION HAS NOT COMPLIED WITH THE REQUIREMENT OF ANY OTHER LAW FOR THE TIME BEING IN FORCE, AND THE ORDER, DIRECTION OR DE CREE, BY WHATEVER NAME CALLED, HOLDING THAT SUCH NON-COMPLIA NCE HAS OCCURRED, HAS EITHER NOT BEEN DISPUTED OR HAS ATTAI NED FINALITY,] IT MAY, AT ANY TIME AFTER GIVING A REASONABLE OPPOR TUNITY OF SHOWING CAUSE AGAINST THE PROPOSED ACTION TO THE CO NCERNED FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION, RESCIND THE NOTIFICATION OR, BY ORDER, WITHDRAW THE APPROVAL, A S THE CASE MAY BE, AND FORWARD A COPY OF THE ORDER RESCINDING THE NOTIFICATION OR WITHDRAWING THE APPROVAL TO SUCH FUND OR INSTITUTIO N OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION AND TO THE ASSESSING OFFI CER 30. THE LD. AR FIRSTLY SUBMITTED THAT THE APPELLANT IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS WHICH EXIST SOLELY FOR EDU CATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT AND THERE IS NO DISPUTE ON THIS ASPECT OF THE MATTER. DURING THE RELEVANT FINANCIAL YEAR, THERE I S NO CHANGE IN THE NATURE OF ACTIVITIES UNDERTAKEN BY THE APPELLANT AND THE G ENUINENESS OF THE EDUCATIONAL ACTIVITIES CARRIED ON BY THE APPELLANT TRUST CANNOT BE CALLED INTO QUESTION. IN FACT, THE APPELLANT HAS NOT EARNED A S URPLUS FROM RUNNING OF EDUCATIONAL INSTITUTIONS AND THIS HAS BEEN THE POSI TION FROM MANY YEARS ITA NO.628/BANG/2020 PAGE 22 OF 31 NOW. HENCE, BY NO STRETCH OF IMAGINATION CAN IT BE ALLEGED THAT THE ACTIVITIES OF THE APPELLANT TRUST ARE NOT GENUINE. AT ANY RAT E, THE LEARNED CCIT, PANAJI ALSO HAS NOT DOUBTED THE GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE APPELLANT AND NO ADVERSE VIEW HAS BEEN TAKEN ON THIS SCORE FOR WITHDRAWAL OF THE RECOGNITION GRANTED. 31. SECONDLY, IT WAS POINTED OUT HERE THAT THE ALLE GATION OF THE LEARNED CCIT, PANAJI IS THAT THE APPELLANT TRUST HAS VIOLAT ED SUB-CLAUSE [A] OF CLAUSE [I] OF THE UNNUMBERED 15 TH PROVISO, WHICH IS THAT THE APPELLANT TRUST HAS NOT APPLIED ITS INCOME IN ACCORDANCE WITH THE P ROVISIONS CONTAINED IN CLAUSE [A] OF THE THIRD PROVISO. FURTHERMORE, THE LEARNED CCIT, PANAJI HAS ALLEGED THAT THE APPELLANT HAS VIOLATED SUB-CLAUSE [B] OF CLAUSE [II] OF THE UNNUMBERED 15 TH PROVISO, WHICH IS THAT THE ACTIVITIES ARE NOT BEIN G CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH THE APPELLANT WAS GRANTED APPROVAL. 32. THUS, IT IS ONLY ON THESE 2 COUNTS THAT THE APP ROVAL GRANTED EARLIER STANDS WITHDRAWN BY THE LEARNED CCIT, PANAJI, IN TH E IMPUGNED ORDER. 33. THE ENTIRE BASIS FOR ARRIVING AT THE AFORESAID CONCLUSIONS ARE ON ACCOUNT OF THE PAYMENTS MADE TO THE EXTENT OF RS. 3 ,57,83,690/- THAT WAS REPORTED BY THE LEARNED A.O. AS SET OUT IN THE EARL IER PART OF THESE SUBMISSIONS. THE BREAK-UP OF THESE PAYMENTS ARE SU MMARIZED AS UNDER:- PARTICULARS AMOUNT IN RS. REMARKS DENTAL CAMP EXPENSES 3,20,690/- NO ADVERSE COMMENTS EXCEPT THAT NO VOUCHERS PRODUCED ALTHOUGH A.O HELD THAT THESE AMOUNTS WERE PETTY EXPENSES THAT CAN BE RELATED TO THE ITA NO.628/BANG/2020 PAGE 23 OF 31 OBJECTS AMOUNTS GIVEN TO BROKER TOWARDS EXPENSES TO BE INCURRED FOR COMPLETING NECESSARY FORMALITIES 1,04,00,000/- AMOUNTS PAID THROUGH ACCOUNT PAYEE CHEQUES TO VARIOUS PERSONS FOR WHICH PAYEE DETAILS ARE NOT AVAILABLE AND ONLY PHOTOCOPY OF VOUCHERS PROVIDED. SUNDRY PETTY ADVANCES WRITTEN OFF 1,50,00,000/- AMOUNT PAID IN CASH AND WRITTEN OFF AND VOUCHERS PRODUCED ONLY FOR A PART OF THE PAYMENT. OTHER RELIGIOUS AND CHARITABLE DONATIONS 1,00,63,000/- ALL PAYMENTS MADE IN CASH AND ONLY A STATEMENT WAS GIVEN. 34. WITH REGARD TO THE AFORESAID OBSERVATIONS IN RE SPECT TO THE PAYMENT OF RS. 3,57,83,690/-, IT IS SUBMITTED AS UNDER:- [A] THAT, THE SUM OF RS. 3,20,690/- PAID BY THE AP PELLANT WAS TOWARDS DENTAL CAMP EXPENSES AND THAT THE APPELLANT IS RUNNING A DENTAL COLLEGE. HENCE, THE PAYMENT WAS IN CURRED FOR THE PURPOSES OF EDUCATION AND A STATEMENT OF EX PENSES IN THIS REGARD HAD ALSO BEEN FURNISHED DURING THE C OURSE OF PROCEEDINGS AND THESE PAYMENTS ARE NOT SERIOUSLY DO UBTED. [B] THAT, WITH REGARD TO THE PAYMENT OF BROKERAGE, THE APPELLANT HAD PAID THE ENTIRE BROKERAGE AMOUNT VIDE ACCOUNT PAYEE CHEQUES AND THAT THE DETAILS OF THE P AYMENTS MADE WERE ALSO PRODUCED BEFORE THE LEARNED A.O. FOR THE PURPOSE OF VERIFICATION. THE PAYMENTS WERE MADE FOR THE COMPLIANCE OF THE REQUIREMENTS TO THE CONSULTANT BR OKERS ITA NO.628/BANG/2020 PAGE 24 OF 31 TO MEET THE TECHNICAL REQUIREMENTS OF THE MCI REGUL ATIONS THEREBY AGAIN FOR THE PURPOSES OF EDUCATION. HOWEVE R, SINCE THE APPELLANT DID NOT HAVE THE ORIGINAL VOUCH ERS, IT CHOSE NOT TO CLAIM ANY APPLICATION OF INCOME ON THI S SCORE AND THE APPELLANT HAD ALSO PRODUCED COPIES OF THE V OUCHERS AND BANK STATEMENTS IN RESPECT OF THE BROKERAGE PAI D. [C] THAT, THE PETTY ADVANCES ALSO REPRESENTED AMOUN TS PAID IN CASH AND THE APPELLANT HAD FURNISHED A LEDGER OF TH E PETTY ADVANCES WRITTEN OFF AND HAD ALSO PRODUCED XEROX CO PIES OF VOUCHERS FOR SOME OF THE ADVANCES WRITTEN OFF AN D THE PURPOSE OF PAYMENT OF THE SAME COULD NOT BE DOUBTED ONLY ON THE BASIS THAT PAYMENTS WERE IN CASH. HERE AGAI N, THE SAME WAS NOT CLAIMED AS APPLICATION OF INCOME. [D] THAT THE APPELLANT HAD PRODUCED A LEDGER COPY O F THE RELIGIOUS AND CHARITABLE DONATIONS PAID AGGREGATING RS. 1,00,63,000/-, WHICH WERE DONATIONS WERE MADE TO TEMPLES, SPORTS CLUBS, AYYAPPA DEVOTEES AND DASARA SPONSORSHIPS AS WELL AS MARRIAGE GIFTS MADE TO EMPL OYEES AND STAFF, WHICH WERE ALL CONNECTED WITH THE RUNNIN G OF THE EDUCATIONAL INSTITUTIONS RUN BY THE APPELLANT. [E] THAT, THOUGH THE APPELLANT WAS NOT IN POSSESSI ON OF THE ORIGINAL VOUCHERS, THE APPELLANT STRIVED TO PRODUCE THE COPIES OF THE VOUCHERS WHEREVER POSSIBLE. [F] THAT, THERE WAS NO REQUIREMENT FOR DEDUCTION O F TDS AT THE TIME AND THE LIABILITY FOR DEDUCTING TAX WAS BR OUGHT IN BY THE UNNUMBERED 13 TH PROVISO W.E.F 01/04/2019 ONLY. HENCE, THERE WAS NO VIOLATION ON THE PART OF THE AP PELLANT REGARDING DEDUCTION OF TDS AS THERE WAS NO STATUTOR Y REQUIREMENT EXISTING FOR THE SAME AT THAT TIME. 35. THE LD. AR SUBMITTED, UNDER THE AFORESAID FACTU AL MATRIX, THAT THERE IS NO VIOLATION OF THE STATUTORY PROVISIONS ON THE APPELLANTS PART AS HELD BY THE LEARNED CCIT, PANAJI ON BOTH THE COUNTS MENTION ED IN THE IMPUGNED ORDER. ITA NO.628/BANG/2020 PAGE 25 OF 31 36. A CLOSE EXAMINATION OF CLAUSE (A) OF THE UNNUMB ERED 3 RD PROVISO SHOWS THAT THE ONUS CAST UPON THE APPELLANT IS TO APPLY ITS INCOME, OR ACCUMULATE IT FOR APPLICATION, WHOLLY AND EXCLUSIVE LY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED. IN THE CASE OF THE APPELLANT, AS MENTIONED ABOVE, T HE IMPUGNED PAYMENTS TO THE EXTENT OF RS. 3,57,83,690/ - WAS NEVER CLAIMED AS AN APPLICATION OF INCOME IN ORDER TO HOLD THAT T HE APPELLANT HAS VIOLATED THE CONDITIONS IMPOSED UNDER THE SAID PROVISO. NOW COMING TO THE FAILURE OF THE APPELLANT TO PRODUCE ORIGINAL RECEIPTS FOR THE AFORESAID PAYMENTS, WHICH HAVE NOT EVEN BEEN CLAIMED AS APPLICATION FOR THE A SSESSMENT YEAR 2017- 18, IT IS SUBMITTED THAT THE MERE FAILURE TO GIVE T HE ORIGINAL RECEIPTS DOES NOT PROVE THAT THE INCOME OF THE TRUST HAS BEEN APPLIED FOR OTHER PURPOSES, WHICH IS NOT CONNECTED TO EDUCATIONAL PURPOSES. IN FACT CERTAIN PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE, WHICH HAD ALSO B EEN PRODUCED FOR THE PURPOSES OF VERIFICATION. IN OTHER WORDS, THERE IS NEITHER A CASE MADE OUT THAT THE APPELLANT HAS APPLIED THE INCOME FOR O THER PURPOSES NOR IS THERE ANY CLAIM FOR APPLICATION OF INCOME AT ALL IN THE FIRST PLACE. 37. SUB CLAUSE A OF CLAUSE (I) OF UNNUMBERED 15 TH PROVISO ALLOWS FOR WITHDRAWAL OF APPROVAL U/S 10(23C) WHEN THE TRUST H AS NOT APPLIED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN CLAUSE (A) OF THE THIRD PROVISO. AS ESTABLISHED ABOVE, THERE WAS NO V IOLATION OF THE THIRD PROVISO AS THE PAYMENT OF RS. 3,57,83,690/- HAD NOT BEEN CLAIMED AS AN APPLICATION OF INCOME AT ANY POINT. HENCE, THE WIT HDRAWAL OF THE APPROVAL ON THIS GROUND IS UNJUSTIFIED AND THE SAME DESERVES TO BE VACATED. 38. THAT APART, IT IS SUBMITTED THAT THE APPELLANT HAS NOT VIOLATED ANY OF THE CONDITIONS ON THE BASIS OF WHICH RENEWAL WAS GR ANTED AS APPLICATION OF INCOME HAS ONLY BEEN CLAIMED ON EXPENDITURE INCURRE D FOR THE PURPOSES OF EDUCATION AS HELD BY THE LEARNED CCIT, PANAJI IN TH E IMPUGNED ORDER IN ORDER TO INVOKE SUB-CLAUSE B OF CLAUSE [II] OF UNNU MBERED 15 TH PROVISO. IT ITA NO.628/BANG/2020 PAGE 26 OF 31 IS SUBMITTED THAT THE LEARNED CCIT, HAS CONCLUDED T HAT THE APPELLANT HAD VIOLATED CONDITION 1 OF THE RENEWAL GRANTED WHICH S TATES THAT THE ASSESSEE APPLIES ITS INCOME, OR ACCUMULATES ITS INCOME FOR T HE APPLICATION, WHOLLY AND EXCLUSIVELY, FOR THE OBJECTS FOR WHICH IT IS ES TABLISHED AND APPLICATION OF ITS INCOME MUST BE IN ACCORDANCE WITH THIRD PROVISO TO SECTION 10[23][VI]. THE LEARNED CCIT, PANAJI ALLEGED THAT THE APPELLANT HAD NOT APPLIED ITS INCOME WHOLLY AND EXCLUSIVELY FOR THE OBJECTS FOR W HICH IT WAS ESTABLISHED IN ACCORDANCE WITH THE THIRD PROVISO AND THIS VIOLATIO N WOULD BRING SUB CLAUSE B OF CLAUSE (II) OF UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) OF THE ACT INTO PLAY. IN SO FAR AS THIS ALLEGATION IS CONCERNE D, IT IS SUBMITTED THAT THE APPELLANT HAS ESTABLISHED THAT THE AFORESAID PAYMEN TS MADE WERE NEVER CLAIMED AS APPLICATION OF INCOME AT ALL AND THAT TH US THE CONDITIONS IMPOSED IN THE ORDER OF APPROVAL ARE NOT VIOLATED. FURTHERM ORE, THE APPELLANT HAD NOT EARNED A SURPLUS IN SEVERAL YEARS (SINCE AY 2005-06 ) AND THE NET DEFICIENCY FOR THE YEAR WAS RS. 26,38,94,595/- AFTE R DISALLOWING THE PAYMENT OF RS. 3,57,83,690/-. HENCE, THERE WAS A DE FICIENCY OF INCOME IN THE APPELLANT TRUST AND IT CANNOT BE SAID THAT ANY INCOME OF THE APPELLANT HAS BEEN APPLIED FOR NON-EDUCATIONAL PURPOSES. 39. HENCE, IT IS SUBMITTED THAT THE ACTIVITIES OF T HE TRUST ARE BEING CARRIED OUT IN ACCORDANCE WITH ALL OF THE CONDITIONS SUBJEC T TO WHICH IT WAS APPROVED. THUS, SUB CLAUSE B OF CLAUSE (II) OF THE UNNUMBERED 15 TH PROVISO TO SECTION 10(23C) OF THE ACT IS ALSO NOT ATTRACTED . THE APPELLANT IS RUNNING ITS EDUCATIONAL INSTITUTIONS WITH THE SOLE PURPOSE OF IMPARTING EDUCATION AND THERE IS NO CHANGE IN THE NATURE OF ACTIVITIES OF T HE APPELLANT TRUST. THE WITHDRAWAL OF THE APPROVAL ON THIS SCORE IS TOTALLY UNJUSTIFIED AND UNWARRANTED AND IT IS PRAYED THAT THE SAME MAY KIND LY BE VACATED. 40. IN LIGHT OF THE ABOVE, IT IS SUBMITTED THAT THE RE IS NO CASE TO HOLD THAT THE CONDITIONS SPECIFIED IN THE UNNUMBERED 15 TH PROVISO ARE ATTRACTED TO THE ITA NO.628/BANG/2020 PAGE 27 OF 31 APPELLANTS CASE AND HENCE, THERE IS NO VALID CASE MADE OUT FOR WITHDRAWAL OF THE EXEMPTION GRANTED U/S 10(23C)(VI) OF THE ACT , WHICH THE APPELLANT IS RIGHTFULLY ENTITLED. IT IS SUBMITTED THAT THE ORDER OF WITHDRAWAL OF EXEMPTION U/S 10(23C)(VI) OF THE ACT IS OPPOSED TO LAW AND IT IS PRAYED THAT THE SAME BE QUASHED. 41. REGARDING GROUND NOS. 3 TO 6, THE LD. DR SUBMIT TED THAT THE CCIT, PANAJI IN HIS ORDER DATED 04/05/2020 HAS PASSED A D ETAILED ORDER WHILE DECIDING ON THE ISSUE OF WITHDRAWAL OF RECOGNITION U/S 10(23C)(VI). ALL THE DOCUMENTS RELIED UPON BY HIM IS PART OF THE ORDER A ND ALL THE VOUCHERS, LEDGER EXTRACTS SUBMITTED BY THE ASSESSEE ARE ALREA DY PART OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE BEFORE THE ITAT. 42. SHE FURTHER SUBMITTED THAT THE CONTENTION OF TH E ASSESSEE IN GROUND NO. 4 WAS RAISED BEFORE THE CCIT DURING THE WITHDRA WAL PROCEEDINGS AND THE SAME HAS BEEN ADJUDICATED BY THE CCIT IN PARA 6 .4 AT PAGE NO. 13 AND 14 OF THE ORDER DATED 04/05/2020. ALL THE CONTENTI ONS OF THE ASSESSEE TRUST HAS BEEN ADJUDICATED BY THE CCIT IN PARA 6 TO 6.6 O F THE ORDER DATED 04/05/2020 AND SAME TO BE CONFIRMED. 43. WE HAVE HEARD BOTH THE PARTIES ON MERITS AND CO NSIDERED THE RIVAL SUBMISSIONS. THE REASON FOR WITHDRAWAL OF APPROVAL ISSUED U/S. 10(23C)(VI) OF THE ACT WAS THAT THE TRUST HAS NOT APPLIED ITS I NCOME IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN CLAUSE [A] OF THE THIRD PROVISO. FURTHERMORE, IT VIOLATED SUB-CLAUSE [B] OF CLAUSE [II] OF THE UNNUM BERED 15 TH PROVISO, WHICH IS THAT THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH THE APPELLANT WA S GRANTED APPROVAL. 44. IT WAS EXPLAINED BEFORE US BY THE LD. AR THAT E VEN THE AMOUNT OF RS.3,57,83,690 WAS NEVER CLAIMED AS APPLICATION OF INCOME SO AS TO HOLD THAT ASSESSEE HAS VIOLATED THE CONDITION IMPOSED UN DER SUB-CLAUSE [B] OF ITA NO.628/BANG/2020 PAGE 28 OF 31 CLAUSE [II] OF THE UNNUMBERED 15 TH PROVISO OF S. 10(23C)(VI) OF THE ACT. THE ALLEGATION OF THE CCIT IS THAT THE ASSESSEE FAILED TO GIVE ORIGINAL RECEIPT OF PROOF AND THAT INCOME HAS BEEN APPLIED FOR OTHER PU RPOSE WHICH IS NOT CONNECTED TO THE EDUCATION PURPOSE. 45. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NO T CLAIMED THE ABOVE EXPENDITURE AS APPLICATION OF INCOME WHILE CLAIMING EXEMPTION U/S. 10(23C)(VI) OF THE ACT AND HENCE WITHDRAWAL OF APPR OVAL GRANTED U/S. 10(23C)(VI) OF THE ACT ON THIS COUNT IS NOT POSSIBL E. UNDER THE 15 TH PROVISO TO S. 10(23C)(VI) OF THE ACT, THE PRESCRIBED AUTHOR ITY HAS TO SATISFY HIMSELF ABOUT THE EXISTENCE OF DEFAULT/VIOLATION COMMITTED BY THE ASSESSEE AS CONTEMPLATED UNDER SUB-CLAUSE (D) OF CLAUSE (II) OF UN-NUMBERED 15 TH PROVISO WHICH IS THAT THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ANY OF THE CONDITIONS SUBJECT TO WHICH ASSESSE E WAS GRANTED APPROVAL. IN THE PRESENT CASE, THE ASSESSEE WAS SOLELY EXISTI NG TO SUPPORT AND PROMOTE ADVANCEMENT OF EDUCATIONAL IN ALL ITS BRANC HES AS FOLLOWS:- (A) TO SUPPORT AND.TO PROMOTE THE ADVANCEMENT O F EDUCATIONAL ACTIVITIES IN ALL ITS BRANCHES AND ASPECTS SUCH AS KINDERGARDEN PRIMARY AND HIGH SCHOOLS AND COLLEGES, LEADING UP TO THE TEACHING DEGREE, POST-GRADUATE AN D DOCTORATE COURSE IN ARTS, COMMERCE, MEDICINE, PHARM ACY, NURSING, MANAGEMENT. INCLUDING HOTEL MANAGEMENT AND CATERING TECHNOLOGY, HOSPITAL, MANAGEMENT AND FINE ARTS, ARCHITECTURES, VOCATIONAL COURSES;. PHYSICAL EDUCAT ION, SPORTS AND SUCH OTHER SUBJECTS AS THE TRUSTEES MAY DEEM FIT FOR THE BENEFIT OF THE STUDENTS SPEAKING AND/OR KNO WING TULU LANGUAGE AND STUDENTS OF ALL CASTES, COLOUR, C REED AND COMMUNITY BOTH OF INDIA AND FROM OTHER COUNTRIES. (B) TO PROMOTE THE TULU LANGUAGE AND THE KNOWLEDG E OF TULU SPEAKING PEOPLE IN GENERAL AND THAT OF STUDENTS SPE AKING TULU IN THE AFORESAID INSTITUTIONS IN PARTICULAR. (C) TO ESTABLISH NEW OR BY TAKE OVER PROVIDE, END OW, EQUIP, FURNISH, MAINTAIN, DEVELOP, CONTROL, MANAGE AND CON DUCT ITA NO.628/BANG/2020 PAGE 29 OF 31 ALL EDUCATIONAL INSTITUTIONS OF THE KIND DESCRIBED IN CLAUSE (A) ABOVE. (D) TO ESTABLISH NEW OR BY TAKE OVER, PROVIDE, END OW, FURNISH, MAINTAIN, DEVELOP, CONTROL, MANAGE AND CONDUCT HOSP ITALS, LABORATORIES, RESEARCH CENTRES IN ALL OR ANY OF THE IR DEPARTMENTS AND SECTIONS FOR PROVIDING MEDICAL, SUR GICAL AND NURSING CARE OR TREATMENT, FOR INDOOR AND OUTDO OR PATIENTS AND SUCH OTHER INSTITUTIONS AS THE BOARD O F TRUSTEES MAY DEEM NECESSARY OR CONVENIENT FOR ANY OF ITS PUR POSES WHICH ARE CHARITABLE AND NOT AN ACTIVITY FOR PROFIT . (E) TO BRING OUT, ENCOURAGE AND DEVELOP THE INTUI TIVE AND RESEARCH FACULTIES OF THE PUPILS AND DOCTORS AND TO AFFORD FOR RESEARCH WORK IN ALL SCIENCES. (F) TO INSTITUTE SCHOLARSHIPS AND AWARD FOR PERSO NS WHO HAVE ACHIEVED OUTSTANDING EXCELLENCE IN THE FIELD OF LEA RNING, EDUCATION, SCIENCE OR SOCIAL WORK OR ANY OTHER SIMI LAR FIELD. (G) TO ACCEPT, HOLD OR ADMINISTER ANY GIFT, DONATI ON OR CONTRIBUTION IN KIND OR MONEY THAT ARE GIVEN UPON T RUST OR NOT AND TO MAKE, UNDERTAKE AND EXECUTE ANY TRUST WH ICH MAY BE DEEMED CONDUCIVE TO ANY OF THE OBJECTS OF TH E TRUST. (H) TO MAKE, ENACT, ORDER, MAINTAIN, REFRAME, RE-E NACT AND ENFORCE RULES AND REGULATIONS FROM TIME TO TIME IN THE MANAGEMENT AND CONDUCT OF THE WORK, BUSINESS AND IN RESPECT OF THE ACTIVITIES OF INSTITUTIONS RUN BY IT , TO CONDUCT FUNCTIONS, DUTIES, REMUNERATIONS, AND PRIVILEGES OF ITS OFFICERS AND STAFF, PERSONNEL, STUDENTS, VISITORS A ND OTHER CONNECTED WITH THE TRUST OR IN ITS WORK, ACTIVITIES OR FUNCTIONS. (I) TO TAKE SUCH STEPS BY PERSONAL OR WRITTEN APPE ALS OR BY ADVERTISEMENT OR OTHERWISE AS MAY BE DEEMED EXPEDIE NT FOR THE PURPOSE OF ESTABLISHING THE FUNCTIONS AND A CTIVITIES OF THE TRUST OR TO SECURE CONTRIBUTION TO THE FUNDS OF THE TRUST IN THE SHAPE OF DONATIONS, SUBSCRIPTIONS OR O THERWISE. ITA NO.628/BANG/2020 PAGE 30 OF 31 (J) TO NEGOTIATE AND ENTER INTO ANY AGREEMENT WIT H ANY GOVERNMENT OR ITS DEPARTMENT, UNIVERSITY, MUNICIPAL ITY OR ANY OTHER PUBLIC OR PRIVATE AUTHORITIES WHICH MAY B E CONDUCIVE TO FINANCING ANY OF THE OBJECTS OF THE TR UST OR TO BE INTENDED TO ENHANCE, IMPROVE OR RESEARCH FOR EFF ICIENCY OR SUPERIOR WORK OR ACTIVITY OF THE TRUST. (K) TO PURCHASE, TAKEN ON LEASE OR EXCHANGE OR OTH ERWISE SECURE ANY MOVABLE OR IMMOVABLE PROPERTY WHICH MAY DEEM NECESSARY OR EXPEDIENT OR DESIRABLE FOR ANY OF THE OBJECTS OF THE TRUST. (L) TO BORROW MONEY OR RECEIVE MONEY ON DEPOSIT AN D ASSETS UPON SUCH TERMS, CONDITIONS AS THE BOARD OF TRUSTEE S SHALL DEEM NECESSARY OR EXPEDIENT IN THE BEST INTEREST OF THE TRUST. (M) TO ENTER INTO AND CARRY OUT ARRANGEMENTS TO JO IN, CO-OPERATE OR AMALGAMATE THIS TRUST WITH ANY OTHER ASSOCIATION , SOCIETY, INSTITUTION OR TRUST OF ALLIED OBJECTS UPO N SUCH TERMS AND CONDITIONS AS THE TRUSTEES MAY THINK FIT. 46. FURTHER IT WAS AMENDED ON 29.09.2009 WHEREIN FU RTHER OBJECTS WERE AS FOLLOWS:- 4(O) (I) TO SETUP A COLLEGE OF ENGINEERING WITH ALL SPECIALITY AND SUPER-SPECIALITY BRANCHES BOTH IN UNDER GRADUATE, P OST GRADUATE, RESEARCH AND DIPLOMA LEVELS. (II) TO START TECHNICAL INSTITUTIONS CONDUCTING COU RSES, PROGRAMMES IN THE FIELD OF TECHNICAL EDUCATION, TRA INING AND RESEARCH IN ENGINEERING AND TECHNOLOGY INCLUDIN G MCA, MBA, ARCHITECTURE, TOWN PLANNING MANAGEMENT, PHARMACY, HOTEL MANAGEMENT AND CATERING TECHNOLOGY, APPLIED ARTS AND CRAFTS, PG DIPLOMA IN BUSINESS MANAGEMENT/ADMINISTRATION AND SUCH OTHER PROGRAMMES AND AREA AT UNDER GRADUATE, POST GRADUATE, POLYTECH NIC, DIPLOMA AND POST DIPLOMA LEVELS. (4(P) TO START EDUCATIONAL INSTITUTION IN ANY TECHN ICAL, NON- TECHNICAL, SCIENCE, ARTS AND RESEARCH STREAMS. ITA NO.628/BANG/2020 PAGE 31 OF 31 [III] TO START AND SETUP AN EDUCATIONAL INSTITU TIONS WHEREVER IT IS REFERRED IN THIS DEED SHALL ALSO MEAN AND INC LUDES TAKING OVER RUNNING AND/OR MAINTAINING AN EDUCATI ONAL INSTITUTIONS. 47. BEING SO, THE ASSESSEE WHOLLY AND EXCLUSIVELY C ARRIED OUT ITS OBJECTS FOR WHICH IT WAS ESTABLISHED AND EVEN IF THERE IS A VIOLATION AS SUGGESTED BY CCIT, IT WAS NOT CLAIMED FOR THE PURPOSE OF APPLICA TION OF INCOME. FURTHER, THERE IS NO ALLEGATION BY THE CCIT THAT ASSESSEE HA S NOT CARRIED OUT THE OBJECTS FOR WHICH IT WAS ESTABLISHED AND EXAMINATIO N OF THE ACCOUNTS OF THE ASSESSEE SHOWS THAT ASSESSEE DULY CARRIED OUT ITS A CTIVITIES SO AS TO ATTAIN ITS OBJECTS MENTIONED IN THE TRUST DEED. THERE WAS NO ACTIVITIES CARRIED OUT IN VIOLATION OF ITS OBJECT CLAUSE SO AS TO DENY EXE MPTION U/S. 10(23C)(VI) OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALSO ALLOWED. 48. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD JULY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.