RAM SAHAI JAN KALYAN AND SHIKSHAN SANSTHAN, Alwar V. ITO, Alwar

ITA 628/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5338 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH CIT DHK
• Assessee Lawyers: M L BORAD
• Keywords: Valuation report
• Section: 12A; 12; 10; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH YFYR DQEKJ]] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: R.P. TOLANI, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO.628/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 S HRI RAM SAHAI JAN KALYAN AND SHIKSHAN SANSTHAN, LUHADERA, VILL.LUHADERA, TEHSIL TIZARA, ALWAR CUKE VS. INCOME TAX OFFICER, WARD 2(2), ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAAR 8662 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI M.L. BORAD (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02.03.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18 /03/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED THE ASSESSEE AGAINST THE OR DER OF CIT(A). ALWAR DATED 03.04.2013 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS OF APPEAL: (1) THE LD. CIT(A) ALWAR HAS NOT CONSIDERED THE FACT S OF THE CASE AND ILLEGALLY HELD THAT THE APPELLANT IS NOT ENTITLED T HE EXEMPTION OF SEC. 10(23C)(IIIAD) OF THE IT ACT, FOR CONTRIBUTION RECE IVED FOR RS. 22,68,900/- FOR EDUCATIONAL PURPOSE. HENCE THE SAME MAY KINDLY BE ALLOWED. (2) THAT THE LD. CIT(A) ALWAR SERIOUSLY ERRED IGNORING THE REQUIRED DETAILS OF DONOR U/S 115BBC WHILE THE AO HAS TAXED THE RECEIPT S OF RS. 22,68,900/- U/S 115 BBC AS ANONYMOUS DONATIONS AND TAXED THE SA ME BUT HOLD THE ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 2 TOTAL RECEIPT U/S 2(24)(IIIA) OF THE IT ACT IGNORIN G THE EXEMPTION AVAILABLE U/S 10(23C)(IIIAD) OF THE I.T. ACT. (3) THAT THE APPELLANT PRAY TO DECLARED THE SOCIETY AS EXISTING AND SOLELY FOR EDUCATIONAL PURPOSE CONSIDERING THE FACTS AND CIRCU MSTANCES PRODUCED BEFORE YOUR HONOUR AND THE AO AND ALLOWED THE TOTAL RECEIPTS FROM DONATION EXEMPT U/S 10(23C)(IIIAD) OF THE I.T. ACT. 2. THE ASSESSEE IS A TRUST REGISTERED UNDER RAJASTH AN SOCIETY REGISTRATION ACT, 1958 DATED 18.09.2008 FOR ESTABLISHMENT AND OPERATI ON OF SCHOOL, COLLEGE, TRAINING INSTITUTION, TECHNICAL INSTITUTION SUCH CO MPUTER ETC. IN THE URBAN AND RURAL AREAS, ESTABLISHMENT AND OPERATION OF LIBRARY, RES IDENTIAL SCHOOL, HOSTEL IN THE URBAN AND RURAL AREAS. DURING THE YEAR UNDER CONSID ERATION, IT HAS UTILIZED RS. 6,36,000/- FOR PURPOSES OF PURCHASE OF PLOT OF LAND , RS. 7,68,414/- WERE UTILIZED FOR CONSTRUCTION OF SCHOOL BUILDING AND DEPOSITS OF RS. 8,43,579/- WITH PLACED WITH VARIOUS GOVERNMENT AUTHORITIES TO GET THE REQUIRED AFFILIATION TO RUN ITS EDUCATIONAL INSTITUTION. AS PER THE ASSESSEE, GIVE N ITS STATED OBJECTIVES AND THE ACTIVITIES THAT TOOK PLACE DURING THE YEAR AND ITS GROSS RECEIPT BEING LESS THAN RS. 1.00 CRORE, IT IS ELIGIBLE FOR EXEMPTION UNDER SECT ION 10(23C)(IIIAD) OF THE ACT. AS PER THE AO, THE EXEMPTION UNDER PROVISION OF SEC TION 10(23C) (IIIAD) IS NOT ALLOWABLE TO THE ASSESSEE TRUST SINCE SUCH EXEMPTIO N IS ALLOWABLE TO SUCH UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION WHO ARE EXISTING SOLELY FOR EDUCATION PURPOSES AND NOT FOR PURPOSES OF PROFIT. IN THE IN STANT CASE, THE INSTITUTE HAS NOT COME INTO IN ITS PRESENT FORM UP TO END OF THE YEAR I.E. 31.03.2009. THERE WAS NO EXISTING EDUCATION INSTITUTE DURING END OF THE YEAR . THE TRUST WAS CREATED ON 18.09.2008 AND PURCHASED AN AGRICULTURE LAND OF RS. 6,36,000/- ON 13.10.2008 AND BUILDING WAS UNDER CONSTRUCTION DURING THE END OF T HE YEAR. IN THE PRESENT CASE, ADMITTEDLY, THE SOCIETY HAS NOT DONE ANY CHARITABLE WORK DURING THE RELEVANT PERIOD; ON THE OTHER HAND, THE ACTIVITIES WHICH THE Y HAVE CARRIED OUT ON DURING THE PERIOD WERE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS. AS PER THE LIST OF DONATION RECEIPTS SUBMITTED ALONGWI TH REPLY, THE TRUST HAS RECEIVED CASH DONATION OF RS, 22,68,900/- FROM VARIOUS PERSO NS DURING THE PERIOD. ALL THE DONATIONS ARE BELOW RS. 20,000/- AND CLAIM OF DONAT ION RECEIPT WITH SPECIFIC DIRECTION CANNOT VERIFIED IN ABSENCE OF DONATION RECEIPTS BOOKS. THE AO ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 3 CONSIDERED THE SAME AS VOLUNTARY CONTRIBUTION AS RE CEIPTS ARE BELOW RS. 20,000/-. THE ASSESSEE HAS NOT MAINTAINED PROPER RECORDS OF DONATION RECEIPTS SHOWN AT RS. 22,68,900/-. UNDER THESE FACTS, THE AO CONSIDE RED ANONYMOUS DONATION RECEIPTS OF RS. 22,68,900/- AS VOLUNTARY CONTRIBUTI ON AND INCOME OF ASSESSEE UNDER THE PROVISION OF SECTION 2(24)(IIA) READ WIT H SECTION 115BBC(3) OF THE ACT. THEREFORE, ADDITION OF RS. 22,68,000/- WAS BEING MA DE IN THE HANDS OF THE ASSESSEE TRUST. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN MATTER BEFORE LD CIT(A) WHO HAS CONFIRMED THE FINDINGS OF THE AO THAT THE I NCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS CANNOT BE SAID TO BE EXEMPT U/S 10(23C)(IIIAD) OF THE ACT. AT THE SAME TIME, LD CIT(A) HAS HELD THAT THE PROVI SION OF SECTION115BBC ARE NOT APPLICABLE TO THE FACTS OF THIS CASE. THE RELEVANT FINDINGS OF LD CIT(A) ARE REPRODUCED AS UNDER: THE PROVISIONS OF SECTION 2(24)(IIA), READS AS UND ER: (24) INCOME INCLUDES- (IIA) VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST C REATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTI ON ESTABLISHED WHOLE OR PARTLY FOR SUCH PURPOSES, OR BY AN ASSOCIATION OR IN SITUATION REFERRED TO IN CLAUSE (21) OR CLAUSE (23), OR BY A FUND OR TRUST OR INSTITUTION R EFERRED TO IN SUB-CLAUSE (IV) OR SUB CLAUSE (V) OR BY ANY UNIVERSITY OR OTHER EDUCATION AL INSTITUTION REFERRED TO IN SUB CLAUSE(IIIAD) OR SUB CLAUSE (VI) OR BY ANY HOSPITA L OR OTHER INSTITUTION REFERRED TO IN SUCH CLAUSE(IIAE) OR SUB-CLAUSE (VIA) OF CLAUSE (2 3C) OF SECTION 10. EXPLANATION: FOR THE PURPOSES OF THIS SUB-CLAUSE T RUST INCLUDES ANY OTHER LEGAL OBLIGATION. FROM THE ABOVE PROVISION, IT IS CLEAR THAT THE AMO UNT OF RS.22,68,900/- WHICH IS ADMITTED TO BE DONATION RECEIVED DURING F. Y. 2008-09, IS IN THE NATURE OF VOLUNTARY CONTRIBUTIONS RECEIVED BY THE APPELLANT S OCIETY/INSTITUTION AND IS PART OF ITS INCOME U/S 2(24)(IIA) OF THE ACT. ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 4 IT IS FURTHER OBSERVED THAT THE INCOME IN THE FOR M OF VOLUNTARY CONTRIBUTIONS, MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, ARE NOT TO BE I NCLUDED IN TOTAL INCOME AS PER PROVISIONS OF SECTION 11)(1)(D) OF THE ACT. SIMILA RLY, INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES ARE NOT TO BE INCL UDED IN TOTAL INCOME IF SUCH INCOME IS APPLIED TO SUCH PURPOSES AS PER THE CONDI TIONS SPECIFIED IN SECTION 11 AND 12 OF THE ACT. HOWEVER, THE EXEMPTIONS AVAILAB LE ON INCOME OF TRUSTS OR INSTITUTIONS AS PER SECTION 11 AND 12 CAN BE AVAILE D ONLY IF THE TRUST OR INSTITUTION IS REGISTERED U/S 12A OF THE ACT. SINCE THE APPELLAN T IS NOT REGISTERED U/S 12A OF THE ACT EXCLUSION OF SUCH INCOME, IN THE FORM OF VOLUNT ARY CONTRIBUTIONS FROM ITS TOTAL INCOME IS NOT AVAILABLE. IN THE CASE OF THE APPELLANT, REGARDLESS OF THE FAC T THAT DONATION RECEIVED IS ANONYMOUS , THE SAID SUM WOULD BE TAXABLE AS INCOME UNDER SECTION 2(24)(IIA) OF THE ACT. THE AO HAS HELD THAT THE APPELLANTS CASE IS NOT C OVERED BY THE EXEMPTION GRANTED U/S 10(23C)(IIIAD) SINCE NO EDUCATIONAL INS TITUTION HAS COME INTO EXISTENCE. I AM DIRECTED TO AGREE WITH THE FINDING OF THE AO S INCE THE APPELLANT SOCIETY HAS INCLUDED A LARGE NUMBER OF CHARITABLE OBJECTS APART FROM THE OBJECT OF PROVIDING EDUCATION IN RURAL AND URBAN AREA, ESTABLISHING LIB RARY, HOSTELS ETC. THE VOLUNTARY CONTRIBUTIONS RECEIVED CANNOT BE SAID TO BE INCOME RECEIVED BY THE APPELLANT SOCIETY ON BEHALF OF ANY UNIVERSITY OR OTHER EDUCAT IONAL INSTITUTION, EXISTING SOCIETY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, SINCE NO EDUCATIONAL INSTITUTION HAS COME INTO EXISTENCE. ACCORDINGLY T HE INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS CANNOT BE SAID TO BE EXEMPT U/S 10(23C)(IIIAD) OF THE ACT. FURTHER, I AM OF THE CONSIDERED OPINION THAT THE P ROVISION OF SECTION115BBC IS NOT APPLICABLE TO THE FACTS OF THIS CASE SINCE THE APPE LLANT SOCIETY IS NOT A PERSON DESCRIBED IN SUB SECTION 1 TO THAT SECTION I.E. IT IS NOT A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVERSITY OR OTHER EDUCATI ONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAC) OR SUB CLAUSE (VI) OR ANY HOSPI TAL OF OTHER INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB CLAUSE (VIA) OR ANY F UND OR INSTITUTION REFERRED TO IN SUB- CLAUSE (IV) OR ANY TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE (23C) OF ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 5 SECTION 10 OR ANY TRUST OR INSTITUTION REFERRED TO SECTION 11. THEREFORE, EVEN THOUGH IT HAS BEEN ABLE TO PROVIDE 1D PROOFS AND ADDRESS OF 72 DONORS INVOLVING SUM OF RS. 21,60,900/-, NO RELIEF CAN BE PROVIDED S INCE IT HAS BEEN HELD IN FOREGOING PARAS THAT THE ENTIRE VOLUNTARY CONTRIBUT ION OF RS.22,68,900/- IS TAXABLE AS INCOME U/S 2(24)(IIA) OF THE ACT. 4. THE LD. AR SUBMITTED THAT THE ASSESSEE TRUST IS FULLY ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT AND RESPECTFULLY SUBM ITTED AS UNDER: (1). THAT IT IS THE VERY FIRST ASSESSMENT YEAR OF T HE ASSESSEE SOCIETY WHICH WAS CREATED IN FINANCIAL YEAR 2008-09 ITSELF AND GOT RE GISTERED UNDER RAJASTHAN SOCIETY REGISTRATION ACT. 1958 ON 18.09.2008 VIDE SERIAL NO . 101/2008-09. (2). CLAUSE 2 OF THE OBJECT OF SANGH VIDHAN PATRA ENUMERATES AS UNDER: ESTABLISHMENT AND RUNNING OF SCHOOL, COLLEGE, COACH ING INSTITUTION, TEACHERS TRAINING INSTITUTION, TECHNICAL INSTITUTION, COMPUT ER OPERATED EDUCATION. VEDASHRAM ETC. IN THE URBAN AND RURAL AREAS. ESTABL ISHMENT AND OPERATION OF LIBRARY, RESIDENTIAL SCHOOL, HOSTEL IN THE URBAN AN D RURAL AREAS. TO ESTABLISH AND RUNNING OF LIBRARY, VACHANALAYA (A PLACE WHERE MAGA ZINES AND NEWS PAPERS ARE KEPT FOR READING), RESIDENTIAL SCHOOL, STUDENT HOST EL ETC. IN RURAL AND URBAN AREAS. (3) FOR THE FULFILLMENT OF ABOVE MAIN OBJECT I.E. T O OPEN AND OPERATE AN EDUCATIONAL INSTITUTION, NAMELY, A SCHOOL THE APPEL LANT INITIALLY OBTAINED FROM LOCAL AND NEARBY RESIDENTS CONTRIBUTION OF RS. 22,6 8,900/-. OUT OF THESE CONTRIBUTION OF RS. 22,68,900/- THE ASSESSEE PURCHA SED A LAND OF RS.6,36,000/- ON 13.10.2008 FOR ESTABLISHING AN EDUCATIONAL INSTITU TION. IN RELEVANT PREVIOUS YEAR, ASSESSEE ALSO STARTED CONSTRUCTION OF SCHOOL BUILDI NG. A TOTAL AMOUNT OF RS.7,68,414/- WAS UTILIZED IN CONSTRUCTION OF SCHO OL BUILDING IN THE RELEVANT PREVIOUS YEAR. IN ADDITION TO IT, THE ASSESSEE INS TITUTION MADE DEPOSITS OF RS.8,40,000/- (DEPOSIT IN THE FORM OF FDR AT RS. 8 ,00,000/- PLUS DEPOSIT WITH RDNC OF RS. 40,000/-) WITH VARIOUS GOVERNMENT AUTHO RITIES TO GET THE REQUIRED AFFILIATION TO RUN ITS EDUCATIONAL INSTITUTION. ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 6 (4) IT IS RESPECTFULLY SUBMITTED THAT NO EDUCATION INSTITUTION COMES INTO EXISTENCE AND OPERATION IN A DAY OR TWO. IT TAKES A VERY LONG TIME TO GET READY THE NECESSARY INFRASTRUCTURE FOR REGULARLY AND EFFI CIENTLY RUNNING THE EDUCATION INSTITUTION, IN OTHER WORDS BEFORE STARTING NORMAL WORKING IN AN EDUCATIONAL INSTITUTION ONE HAS TO PURCHASE A LAND, CONSTRUCT A BUILDING, FURNISH IT WITH REQUISITE FURNITURE AND FIXTURES, OBTAIN REGISTRATI ON AND SANCTION FOR RUNNING THE INSTITUTION, OBTAIN VARIOUS NO OBJECTION CERTIFICAT ES FROM PANCHAYAT, NAGAPALIKA ETC. RECRUIT TEACHER AND STAFF OF THE SCHOOL. (5) IN THE PRESENT CASE AFTER GETTING CONTRIBUTION TOWARDS THE CORPUS OF THE SOCIETY, THE ASSESSEE PURCHASED LAND, CONSTRUCTED B UILDING AND FURNISHED IT WITH FURNITURE AND FIXTURES AND THEREAFTER APPLIED WITH NATIONAL COUNCIL FOR TEACHER EDUCATION JAIPUR FOR START CONDUCTING OF B.ED COURS E. HOWEVER ON ACCOUNT OF BAN OF STATE GOVERNMENT FOR THE YEAR 2009-10 I.E. IMMED IATELY SUCCEEDING YEAR AFTER THE COMPLETION OF SCHOOL BUILDING ITS REQUEST WAS N OT ACCEPTED. AFTER GETTING THE REJECTION ORDER FROM NATIONAL COUNCIL FOR TEACHER E DUCATION FOR OPENING SCHOOL FOR B.ED COURSE THE ASSESSEE APPLIED WITH DISTRICT EDUCATION OFFICER, MADYAMIK-II ALWAR FOR GRANTING PERMISSION TO OPEN A SECONDARY SCHOOL UNDER THE NAME, THE TRIGAT INTERNATIONAL SCHOOL IN THE VILLAGE LOHADE RA, TAZARA. THE DISTRICT EDUCATION OFFICER, PRARAMBIK SHIKSHA, ALWAR WAS GOO D ENOUGH TO GRANT PERMISSION FOR STARTING AN ENGLISH MEDIUM SCHOOL UNDER THE NAM E THE TRIGAT INTERNATIONAL SCHOOL, TIZARA VIDE HIS LETTER DATED 29.04.2010 A ND ACCORDINGLY THIS SCHOOL UNDER THE NAME, THE TRIGAT INTERNATIONAL SCHOOL, TIZARA WAS STARTED BY THE ASSESSEE. AUDITED FINAL ACCOUNTS OF THIS SCHOOL RIGHT FROM TH E BEGINNING ARE ENCLOSED FOR YOUR HONOURS KIND PERUSAL AND KIND CONSIDERATION. THIS SCHOOL IS BEING RUN REGULARLY RIGHT FROM THE DATE OF ITS START TILL TOD AY BY THE ASSESSEE SOCIETY AND SUPPORTING DOCUMENTS INCLUDING MAPS, PHOTO COPIES O F CLASS ROOMS FURNISHED WITH FURNITURE, SEPARATE WASHROOMS FOR BOYS AND GIRLS STRENGTH OF STUDENTS ETC. ARE ENCLOSED. THE SCHOOL IS SITUATED IN A VILLAGE NAME D LUHADERA, TEHSIL TIZARA DIST. ALWAR, RAJASTHAN AND STUDENTS IRRESPECTIVE OF THEIR CREED, CASTE AND COLOR ARE BEING BENEFITED FROM THIS SCHOOL AND IT IS RUNNING REGULARLY AS ON DATE RIGHT FROM THE BEGINNING. AS ON DATE IT HAS GOT COMPOSITE PRO VISIONAL AFFILIATION FOR ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 7 SECONDARY SCHOOL EXAMINATION OF CENTRAL BOARD OF SE CONDARY EDUCATION FOR A PERIOD OF THREE YEARS WITH EFFECT FROM 01.04.2015 T O 31.3.2018 COPY ENCLOSED. (6) THAT THE ASSESSEE CRAVES LEAVE TO REPRODUCE VER BATIM SECTION 10(23C)(IIIAD) WHICH IS AS UNDER: ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGR EGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. (7). THAT THE LANGUAGE OF THE SECTION IS VERY CLEAR AND IT SAYS THAT FOR GETTING EXEMPTION UNDER THIS SECTION, AN INSTITUTION HAS TO FULFILL THE FOLLOWING CONDITIONS: I) IT SHOULD BE A UNIVERSITY OR ANY OTHER EDUCATI ONAL INSTITUTION. IN THE PRESENT CASE THE ASSESEE IS AN EDUCATIONAL INSTITUTION AND THERE IS NO ADVERSE FINDING IN THIS REGARD AT THE LEVEL OF BOTH THE LOWER AUTHORIT IES. II) IT SHOULD EXIST SOLELY FOR EDUCATIONAL PURPOS ES. IN THE PRESENT CASE THE REGISTRATION UNDER SOCIETY WAS GOT DONE BY THE ASSE SSEE ON 18.09.2008 WITHIN A MONTH OF DATE OF REGISTRATION IT APPLIED WITH NCED TO RUN B.ED COURSE. III) IT SHOULD NOT BE FOR THE PURPOSES OF THE PRO FIT. IN THE PRESENT CASE THE ASSESSEE IS A SOCIETY CONSISTING OF THE RESIDENTS O F VILLAGE LUHADERA WHERE IT IS LOCATED. THE ASSESSEE IS ENCLOSING HEREWITH AUDITED FINAL ACCOUNTS FROM THE PERUSAL OF WHICH YOUR HONOUR WILL PLEASE FIND THAT THE INSTITUTE IS BEING RUN FOR THE BENEFIT OF THE RESIDENTS OF THE VILLAGE LUHADERA AN D ADJOINING AREAS AND NOT FOR THE PURPOSES OF PROFIT FOR ONE PERSON. IV) THE ANNUAL RECEIPTS SHOULD NOT EXCEED RS. 1 CRORE IN THE PRESENT CASE IT IS BELOW RS. 1 CRORE. (8) THAT YOUR HONOUR WILL KINDLY APPRECIATE THAT TH E INTENTION/OBJECT OF THE APPELLANT ASSESSEE TO CARRY OUT EDUCATIONAL ACTIVIT IES IS EVIDENCED BY THE FACTS THAT AFTER GETTING CONTRIBUTIONS OF RS. 22,68,900/- THE FIRST ACTIVITY DONE BY THE APPELLANT TOWARDS ESTABLISHMENT OF A SCHOOL FOR IMP ARTING EDUCATION WAS THAT IT ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 8 PURCHASED A LAND FOR STARTING SCHOOL FOR RS. 6,36,0 00/- (COST OF LAND 586500 + REGISTRATION EXP. RS. 49,500) VIDE A REGISTERED SAL E DEED ON 13.10.2008 FOR CONSTRUCTING A BUILDING OF SCHOOL THEREON. (9) AFTER PURCHASE OF THE LAND THE APPELLANT UTIL IZED A SUM OF RS. 7,68,414/- FOR CONSTRUCTION OF SCHOOL BUILDING (SUPPORTING DOCUMEN TS ENCLOSED) IN RELEVANT PREVIOUS YEAR. (10) THE APPELLANT DEPOSITED A SUM OF RS. 1000/- ON 23.09.2008 I.E. DURING PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-10 F OR OBTAINING APPLICATION FOR OPENING EDUCATIONAL INSTITUTION FOR CONDUCTING OF B .ED COURSE WITH THE NATIONAL COUNCIL FOR TEACHER EDUCATION, NORTHERN REGIONAL CO MMITTEE, A-46, SHANTI PATH, TILAK NAGAR, JAIPUR. (11) AFTER FILLING THE FORM APPELLANT FILED AN APPL ICATION WITH REGIONAL DIRECTOR, NATIONAL COUNCIL FOR TEACHER EDUCATION, JAIPUR ACCO MPANIED WITH MEMORANDUM AND BYELAWS OF THE INSTITUTION 2 FDRS ONE OF RS. 5 LAC AND THE OTHER FOR RS. 3 LAC AFFIDAVIT, REGISTERED SALE DEED FOR THE PURCHASE OF THE LAND, MAP OF THE LAND, DD OF RS. 40,000/- TOWARDS INITIAL FEES CHARGED BY THE NATIONAL COUNCIL FOR TEACHER EDUCATION AND NOC ISSUED BY GRAM PANCHAYAT TO RUN A SCHOOL FOR CONDUCT OF B.ED COURSE. (12) HOWEVER, THIS APPLICATION DID NOT FIND FAVOUR IN THE OFFICE OF NATIONAL COUNCIL FOR TEACHER EDUCATION AND THE SAME WAS RETU RNED VIDE LETTER BEARING NUMBER F.7.15/NRC/RETURNING OF APPLICATION/S.NO. 52 5./RAJASTHAN/2009/70840 DATED 09.03.2009 WITH A REMARK THAT BY FOLLOWING TH E DECISION ALREADY TAKEN BY NATIONAL COUNCIL FOR TEACHER EDUCATION NOT TO GRANT RECOGNIZATION FOR B.ED/STC/SHIKSHA SHASTRI COURSE TO ANY INSTITUTION IN THE STATE OF RAJASTHAN FOR THE ACADEMIC SESSION 2009-10 THE ABOVE NAMED NATION AL COUNCIL FOR TEACHER EDUCATION, JAIPUR RETURNED THE APPLICATION ALONGWIT H PROCESSING FEES AND DOCUMENT TO THE ASSESSEE INSTITUTION (COPY OF THIS REJECTION LETTER IS ENCLOSED). (13) AFTER GETTING THE REJECTION ORDER FROM THE NAT IONAL COUNCIL FOR TEACHER EDUCATION FOR OPENING SCHOOL FOR B.ED COURSE THE AS SESSEE DID NOT SIT IDLE AND THE APPELLANT APPLIED WITH DISTRICT EDUCATION OFFICER, MADHYAMIK-II, ALWAR FOR ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 9 GRANTING PERMISSION TO OPEN A SECONDARY SCHOOL UNDE R THE NAME. THE TRIGAT INTERNATIONAL SCHOOL, TIZARA IN THE VILLAGE TIZARA (COPY OF LETTER GRANTING PERMISSION TO OPEN A SECONDARY SCHOOL IS ENCLOSED) (14) THE DISTRICT EDUCATION OFFICER, PRARAMBHIK SHI KSHA, ALWAR WAS GOOD ENOUGH TO GRANT PERMISSION FOR STARTING ENGLISH MEDIUM SCH OOL UNDER THE NAME. THE TRIGAT INTERNATIONAL SCHOOL, TIZARA VIDE HIS LETTE R DATED 29.04.2010 AND ACCORDINGLY THIS SCHOOL UNDER THE NAME. THE TRIGA T INTERNATIONAL SCHOOL, TIZARA WAS STARTED BY THE ASSESSEE (COPY OF THIS LETTER GR ANTING PERMISSION FOR STARTING AN ENGLISH MEDIUM SCHOOL UNDER THE NAME THE TRIGAT IN TERNATIONAL SCHOOL, TIZARA IS ENCLOSED). (15) COPIES OF AUDITED FINAL ACCOUNTS OF THIS SCHO OL RIGHT FROM THE BEGINNING TILL THE END OF PREVIOUS YEAR 2013-14 I.E. UPTO 31.03.20 14 ARE ENCLOSED FOR YOUR HONOURS KIND PERUSAL AND KIND CONSIDERATION. THIS SCHOOL IS BEING RUN REGULARLY BY THE INSTITUTION AND SUPPORTING DOCUMENTS INCLUDI NG MAPS, ACCESSION, REGISTER. PHOTO COPIES OF CLASS ROOMS FURNISHED WITH FURNITUR E, SEPARATE WASHROOMS FOR BOYS AND GIRLS ARE ENCLOSED. (16) THAT THE ASSESSEE SOCIETY QUALIFIES FOR ALLOWI NG EXEMPTION U/S 10(23C)(IIIAD) BECAUSE ITS RECEIPTS IN THE RELEVANT PREVIOUS YEAR 22,68,900/- WHICH ARE MUCH BELOW THE THRESHOLD LIMIT OF RS. 1 CRORE. (17) THE ASSESSEE SOCIETY IS NOT WHOLLY AND SUBSTAN TIALLY FINANCED BY THE GOVERNMENT. (18) THAT EXEMPTION U/S 10(23C)(IIIAD) IS DENIED TO THE ASSESSEE SOCIETY BY THE LOWER AUTHORITIES ON THE GROUND THAT THE BUILDING O F THE SCHOOL WAS NOT READY FOR START OF THE ACADEMIC SESSION. IN THIS REGARD IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSEE SOCIETY GOT REGISTRATION ON 18.09.2008. IT OBTAINED DONATION OF RS.9,88,900/- DURING THE PERIOD 13.09.2008 TO 15. 10.2008. IMMEDIATELY AFTER RECEIPT OF THE DONATION THE SOCIETY PURCHASED LAND FOR THE SCHOOL AND STARTED CONSTRUCTION THEREON. IT IS A MATTER OF COMMON K NOWLEDGE THAT IT TAKE SUFFICIENT TIME TO APPROACH THE DONORS AND GET DONATION THERE FROM. AFTER GETTING THE DONATION IT TAKES MONTHS TO CONSTRUCT A BUILDING. THIS WAS THE SITUATION WITH THE ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 10 ASSESSEE SOCIETY AS NARRATED ABOVE IT WAS FORMED ON 13.09.2008, IT OBTAINED CONTRIBUTIONS TOWARDS CORPUS FUND, THEREAFTER PURCH ASES LAND AND STARTED CONSTRUCTION AND IMMEDIATELY APPLIED WITH GOVERNMEN T DEPARTMENT FOR GRANTING PERMISSION TO START EDUCATIONAL ACTIVITIES. ALL T HESE ACTIVITIES UNDOUBTEDLY ESTABLISH THAT THE ASSESSEE SOCIETY WAS EXISTING SO LELY FOR EDUCATIONAL PURPOSES. FURTHER THERE IS NOT AN IOTA OF EVIDENCE THAT THE A SSESSEE SOCIETY WORKED FOR THE PURPOSE OF PROFIT, NEITHER THE AO NOR THE LEARNED CIT(A) HAS GIVEN A SINGLE INSTANCE WHICH SHOWS THAT ANY OF THE MEMBERS OF THE SOCIETY UTILIZED THE FUNDS OF THE SOCIETY FOR THEIR PERSONAL PURPOSES AND EARNED PROFIT FROM THE SOCIETY. YOUR HONOUR WILL KINDLY APPRECIATE THAT CONTRIBUTIONS OF RS.9,88,900/- WERE RECEIVED BY THE ASSESSEE SOCIETY DURING THE PERIOD 13.09.2008 TO 14.10.2008 AND ON 13.10.2008 THE ASSESSEE SOCIETY PURCHASED PLOT OF L AND FOR SCHOOL BUILDING FOR A SUM OF RS.6,36,000/-. MOST OF THE FUNDS WERE RECEIV ED AFTER 14.10.2008. THESE FUNDS WERE UTILIZED IN CONSTRUCTION OF SCHOOL BUILD ING. THE SCHOOL BUILDING ALMOST COMPLETED ON 31.03.2010. A VALUATION REPORT OF DIS TRICT VALUATION OFFICER, INCOME TAX DEPARTMENT, JAIPUR CONFIRMING CONSTRUCTION OF S CHOOL BUILDING IN F.Y. 2008-09, 2009-10 AND 2010-11 IS ENCLOSED. (19) THAT WHILE NOT ADMITTING THE ASSESSEES CLAIM OF EXEMPTION U/S 10(23C)(IIIAD) OF THE IT ACT BOTH THE LOWER AUTHOR ITIES HAVE TAKEN SHELTER OF NOT HAVING REGISTRATION BY THE ASSESSEE U/S 12A OF THE IT ACT. IN THIS REGARD IT IS SUBMITTED THAT THERE IS NO REQUIREMENT OF REGISTRAT ION U/S 12A OF THE IT ACT CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE IT ACT . IN OTHER WORDS, REGISTRATION U/S 12A IS NOT A CONDITION PRECEDENT FOR THE ASSESS EE WHO CLAIMS EXEMPTION U/S 10(23C)(IIIAD) OF THE IT ACT. (20) AGAINST THE ADDITION OF RS.22,68,900/- UNDER 2(24)(IIA) READ WITH SECTION 115BBC OF THE IT ACT, IT IS RESPECTFULLY SUBMITTED AS UNDER: 1. THAT ADDITION U/S 2(24)(IIA) READ WITH SECTION 1 15BBC OF THE IT ACT IS MADE BY THE AO OBSERVING THAT THE ASSESSEE DOES NOT MAIN TAIN ANY RECORD OF IDENTITY INDICATING NAME AND ADDRESS OF THE PERSONS MAKING S UCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS PRESCRIBED FOR TRUST/INSTITUTE AND HAS NOT MAINTAINED PROPER RECORDS OF THE DONATION RECEIPTS SHOWN AT RS.22,68 ,900/-. THIS OBSERVATION OF ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 11 THE AO IS UNFOUNDED, HYPOTHETICAL AND NOT BASED ON EVIDENCE. IN THIS CONTEXT THE ASSESSEE CRAVES LEAVE TO SUBMIT THAT THE LD. CIT(A) HAS IN THE IMPUGNED ORDER OBSERVED MORE THAN ONCE THAT THE ASSESSEE FURNISHED COMPLETE ADDRESS OF 72 DONORS INVOLVING DONATION AMOUNT OF RS. 21,60,000/- OUT OF TOTAL 85 DONORS AND MEMBERS INVOLVING DONATION AMOUNT OF RS. 22,68,900/ -. BESIDES COMPLETE ADDRESSES, ASSESSEE HAS ALSO FILED ADDRESS PROOF AN D OTHER DETAILS OF DONORS AS REQUIRED BY THE AO. IN SOME CASES THE ASSESSEE EVE N FILED THE AFFIDAVITS OF THE DONORS. IN SUM AND SUBSTANCE THE ASSESSEE FURNISHE D IDENTITY, CREDITWORTHINESS AND GENUINENESS OF DONORS INVOLVING TOTAL AMOUNT OF DONATIONS OF RS. 21,60,900/- (THE TOTAL AMOUNT OF DONATION RECEIVED IN THE YEAR UNDER APPEAL IS RS. 22,68,900) 2. THE ADDITION OF RS. 22,68,900/- IS MADE UNDER 2( 24)(II) READ WITH SECTION 115BBC OF THE IT ACT ON THE GROUND THAT THE ADDITIO NS OF RS. 22,68,900/- ARE ANONYMOUS DONATIONS AS MENTIONED IN SECTION 115BBC OF THE IT ACT. IN THIS REGARD ASSESSEE CRAVES LEAVE TO REFER TO PAGES 6,7, 8,9 & 10 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). AT THE GLANCE OF THE IMP UGNED ORDER YOUR HONOURS WILL VERY KINDLY SEE THAT PAGE 6 CONTAINS A LIST OF 8 DO NORS WITH THEIR COMPLETE ADDRESS WHOSE AFFIDAVITS WERE FILED BY THE ASSESSEE , PAGE 7 AND 8 CONTAINS A LIST OF 48 DONORS WITH THEIR COMPLETE ADDRESS AND PAGE 9 & 10 CONTAINS A LIST OF 16 DONORS WHOSE ID PROOFS AS REQUIRED BY THE AO WERE F ILED BY THE ASESSEE. 5. THE LD DR RELIED HEAVILY ON THE ORDER OF LD CIT( A) AND SUBMITTED THAT IN THE CASE OF THE APPELLANT, REGARDLESS OF THE FACT THAT DONATION RECEIVED IS ANONYMOUS OR NOT, THE SAID SUM WOULD BE TAXABLE AS INCOME UND ER SECTION 2(24)(II) OF THE ACT. FURTHER, THE EXEMPTION UNDER SECTION 10(23C)(IIIAD) IS NOT AVAILABLE TO THE ASSESSEE AS IT FAILS TO FULFILL THE CONDITIONS AS P RESCRIBED THEREIN. THE LD DR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS NO EDUCATIONAL INSTITUTION WHICH WAS EXISTING AND CARRYING ON THE EDUCATIONAL ACTIVITIES AND EVEN THOUGH THE RECEIPTS ARE LESS THAN RS 1 CRORES, THE ASSESSEE TRUST WAS NOT ELIGIBLE FOR EXEMPTION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERSUED THE MATERIAL ON RECORD. AS IS CLEAR FROM FACTS AND CONTENTIONS NARRATED ABO VE, THE LIMITED ISSUE UNDER ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 12 CONSIDERATION IS WHETHER THE APPELLANT IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT WHICH READS AS UNDER: ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EX ISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGR EGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. THE HONBLE SUPREME COURT IN CASE OF QUEENS EDUCATIONAL SOCIETY 372 ITR 699 HAS LAID DOWN T HE PRINCIPLES GOVERNING EXEMPTION UNDER SECTION 10( 23C)(IIIAD) AS FOLLOWS: WHERE AN EDUCATIONAL INSTITUTION CARRIES ON THE ACT IVITY OF EDUCATION PRIMARILY FOR EDUCATING PERSONS, THE FACT THAT IT M AKES A SURPLUS DOES NOT LEAD TO THE CONCLUSION THAT IT CEASE S TO EXIST SOLELY FOR EDUCATIONAL PURPOSES AND BECOMES AN INSTITUTION FOR THE PURPOSE OF MAKING PR OFIT. THE PREDOMINANT OBJECT TEST MUST BE APPLIED - THE PURPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKING MOTIVE. A DISTINCTION MUST BE DRAWN BETWEEN THE MAKING OF A SURPLUS AND AN INSTITUTION BEING CARRIED ON 'FOR PROFIT'. NO INFER ENCE ARISES THAT MERELY BECAUSE IMPARTING EDUCATION RESULTS IN MAKING A PRO FIT, IT BECOMES AN ACTIVITY FOR PROFIT. IF AFTER MEETING EXPENDITURE, A SURPLUS ARISES INC IDENTALLY FROM THE ACTIVITY CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL NOT BE CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES. THE ULTIMATE TEST IS WHETHER ON AN OVERALL VIEW OF THE MATTER IN THE CONCERNED ASSESSMENT YEAR THE OBJECT IS TO MAKE PROFIT AS OPPOSED TO EDUCATING PERSONS. IN THE INSTANT CASE, THE STRESS OF THE ARGUMENTS OF LEARNED DR IS THAT EXPRESSION 'EXISTING' CONTEMPLATES THAT UNLESS AN INSTITUTION IS ACTIVE/OPERATIONAL IN THE FIELD ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 13 OF EDUCATION, MERE FACT THAT IT IS IN THE PROCESS O F ESTABLISHING ITSELF WOULD NOT MAKE SUCH INSTITUTION AS ELIGIBLE FOR BENEFIT OF SE C. 10(23C(IIIAD) OF THE ACT. SHE EMPHASIZED THAT UNLESS EDUCATIONAL ACTIVITIES COMME NCED, IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY IS EXISTING SOLELY FOR THE PUR POSE OF EDUCATION. ON THE OTHER HAND, THE CONTENTION OF THE LEARNED AR FOR THE ASSESSEE IS THAT EXPRESSION 'EXISTING' EMPLOYED IN SECTION 10(23C)(I IIAD) OF THE ACT DOES NOT CONVEY THE MEANING OF ACTUAL FUNCTIONING OF THE INS TITUTION. THE ASSESSEE IS A SOCIETY EXISTING FOR EDUCATIONAL PURPOSES AND HAS I TS OBJECT ESTABLISHMENT AND RUNNING OF SCHOOL, COLLEGE, COACHING INSTITUTION, T EACHERS TRAINING INSTITUTION, TECHNICAL INSTITUTION, COMPUTER OPERATED EDUCATION. VEDASHRAM ETC. IN THE URBAN AND RURAL AREAS. ESTABLISHMENT AND OPERATION OF LIB RARY, RESIDENTIAL SCHOOL, HOSTEL IN THE URBAN AND RURAL AREAS. DURING THE YEAR UNDE R CONSIDERATION, IT HAS COLLECTED CONTRIBUTIONS AND HAS PURCHASED LAND, AND THEREAFTER IT STARTED CONSTRUCTION OF THE SCHOOL BUILDING DURING THE FINA NCIAL YEAR ITSELF. EVEN THOUGH PERMISSION TO CONDUCT B.ED COURSE WAS NOT GRANTED A S PART OF THE OVERALL GENERAL POLICY OF THE GOVT, THE SCHOOL ULTIMATELY BECAME FU NCTIONAL WHEN AN APPROVAL FROM THE DISTRICT EDUCATION OFFICER, PRARAMBHIK SHI KSHA, ALWAR WAS GRANTED TO STARTING ENGLISH MEDIUM SECONDARY SCHOOL UNDER THE NAME. THE TRIGAT INTERNATIONAL SCHOOL, TIZARA VIDE LETTER DATED 29. 04.2010. THUS, ACCORDING TO THE LEARNED AR, THE EXPRESSION 'EXISTING' IS ASSOCIATED WITH THE SOCIETY AND NOT THE FUNCTIONALITY OF THE INSTITUTION. REFERENCE IS DRAWN TO THE OBSERVATIONS OF THE HON'B LE MADRAS HIGH COURT IN THE CASE OF MR. AR EDUCATIONAL SOCIETY 253 ITR 589 READS AS UNDER: 'THE WORD 'EXISTING' IS NOT THE SAME THING AS BEING FUNCTIONAL. THERE IS NO DOUBT AT ALL THAT THE EDUCATIONAL INSTITUTION EXISTS IN T HE SENSE THAT THE SOCIETY HAS BEEN FORMED, THE SOCIETY IS A LEGAL ENTITY, ITS OBJECTS ARE CLEARLY INTENDED TO BRING INTO EXISTENCE EDUCATIONAL INSTITUTION, FOR WHICH PRELIM INARY STEPS HAVE BEEN TAKEN, AND THE OBJECT OF THE INSTITUTION IS NOT PROFIT. WE ARE OF THE PRIMA FACIE VIEW THAT THE WIDTH OF THE PROVISION IS NOT REQUIRED TO BE CU T DOWN BY INSISTING THAT THE EDUCATIONAL ACTIVITY MUST HAVE BEEN CARRIED ON IN T HE RELEVANT PREVIOUS YEAR, EVEN THOUGH THERE IS NO DOUBT WHATSOEVER THAT THE SOCIET Y WAS ENGAGED IN TAKING THE ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 14 STEPS REQUIRED TO MAKE THE EDUCATIONAL ACTIVITY OPE RATIVE, THE STEPS SO TAKEN BEING THE CONSTRUCTION OF THE BUILDINGS AND OTHER FACILIT IES IN WHICH THE TASK OF IMPARTING THE EDUCATION WAS TO BE CARRIED OUT' A DIVISION BENCH OF HON'BLE CALCUTTA HIGH COURT IN DOON FOUNDATION 154 ITR 208 HAS EXAMINED THE QUESTION OF AN INCOME OF AN EDUCAT IONAL INSTITUTION EXISTING SOLELY FOR THE EDUCATIONAL PURPOSE AND NOT FOR PROF IT. IN THIS CASE, THE ASSESSEE HAD JUST BEGAN ITS ACTIVITIES AND IN THE RELEVANT Y EAR, IT WAS JUST STARTED PREPARATION OF REGULAR CLASSES FOR TEACHING OF HIND I AND PURCHASED SOME BOOKS. IN A WAY, ACTUALLY CLASSES HAD NOT BEGUN. THE HON'BLE COURT HAS OBSERVED AS UNDER: 'THE CONDITION PRECEDENT FOR CLAIMING EXEMPTION UND ER SECTION 10(22) IS, WHETHER THE EDUCATIONAL INSTITUTION EXISTS SOLELY FOR EDUCA TIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. THERE IS NO DISPUTE NOR CAN IT BE DISPUTED THAT THE ASSESSEE- SOCIETY EXISTS SOLELY FOR EDUCATIONAL PURPOSES. THE ASSESSEE HAS COMMENCED ACTIVITIES CONNECTED WITH THE IMPARTING OF EDUCATIO N. FOR THE PURPOSES OF HOLDING REGULAR CLASSES FOR TEACHING OF HINDI, THE ASSESSEE HAS TAKEN ALL PRELIMINARY STEPS INCLUDING PURCHASE OF BOOKS AND PERIODICALS. SUCH A CTIVITIES ARE THE STEPS TOWARDS RUNNING OF A FULL-FLEDGED TEACHING COURSE. WE ARE, THEREFORE, UNABLE TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE ASSESSEE DID NOT START RUNNING ANY EDUCATIONAL INSTITUTION DURING THE PREVIOUS YEAR IN QUESTION.' SIMILARLY, HON'BLE KERALA HIGH COURT HAS CONSIDERED THIS ASPECT IN THE CASE OF SREE NARAYANA CHANDRIKA TRUST 212 ITR 456 . IN THIS CASE, THE FOUNDATION OF THE HOSPITAL WAS LAID DOWN IN THE YEAR 1973 THOUGH THE HOSPITAL STARTED ITS OPERATION IN 1978. THE HON'BLE KERALA HIGH COURT HAS HELD THA T INCOME DERIVED AT THE PRIMARY STAGE IS ENTITLED FOR EXEMPTION AND THE REL EVANT OBSERVATIONS OF THE HON'BLE COURT READ AS UNDER: 'THE QUESTION, THEREFORE, ARISES WHETHER THE INCOME OF THE ASSESSEE-TRUST DURING THESE YEARS IS EXEMPT, AS THERE WAS NO HOSPITAL AS SUCH IN EXISTENCE DURING THAT PERIOD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DE CISIONS IN DOON FOUNDATION'S CASE [1985] 154 ITR 208 (CAL.) AND SECONDARY BOARD OF EDUCATION V. ITO [1972] 86 ITR 408 (ORISSA). IN BOTH THESE CASES, THE INCOME D ERIVED AT THE PRELIMINARY STAGES ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 15 OF THE ESTABLISHMENT OF THE EDUCATIONAL INSTITUTION S CONCERNED WAS HELD ENTITLED TO THE EXEMPTION. IN DOON FOUNDATION'S CASE [1985] 154 ITR 208 (CAL.), THE ASSESSEE HAD ONLY TAKEN THE PRELIMINARY STEPS TOWARDS THE RU NNING OF A TEACHING COURSE; AND THE INCOME DERIVED DURING THIS PERIOD WAS HELD TO BE THAT OF AN EDUCATIONAL INSTITUTION. IN THE OTHER CASE, SECONDARY BOARD OF EDUCATION'S CASE [1972] 86 ITR 408 (ORISSA) HAD A FUND CONSTITUTED UNDER THE ORISS A SECONDARY EDUCATION ACT, 1953. ONE OF THE SOURCES OF THE INCOME OF THE BOARD WAS THE PROFIT FROM COMPILATION, PUBLICATION AND PRINTING AND SALE OF T EXT BOOKS. THE INCOME WAS TO BE UTILIZED TOWARDS DEVELOPMENT AND EXPANSION OF EDUCA TIONAL PURPOSES AND THE SURPLUS, IF ANY, WAS TO FORM PART OF A SINKING FUND TO BE DEVOTED TO THE CAUSE OF EDUCATION AS AND WHEN NECESSARY. THE INCOME DERIVED FROM THE ACTIVITIES MENTIONED ABOVE WAS TREATED AS THAT OF AN EDUCATION AL INSTITUTION AND EXEMPTED.' IN THE PRESENT CASE, IT IS NOT DISPUTED THAT THE AP PELLANT TRUST HAS BEEN SET UP AND EXISTED FOR EDUCATION PURPOSES. IT HAS PURCHASED L AND AND STARTED CONSTRUCTION ACTIVITY FOR BUILDING THE SCHOOL PREMISES. FURTHER , NECESSARY STEPS WERE TAKEN TO SEEK APPROVALS AND PERMISSIONS TO START THE SECONDA RY SCHOOL. THE SCHOOL ULTIMATELY BECAME FUNCTIONAL IN APRIL 2010 WHEN AN APPROVAL FROM THE DISTRICT EDUCATION OFFICER, PRARAMBHIK SHIKSHA, ALWAR WAS GR ANTED TO STARTING ENGLISH MEDIUM SECONDARY SCHOOL UNDER THE NAME. THE TRIGAT INTERNATIONAL SCHOOL, TIZARA. DURING THE YEAR, THE APPELLANT TRUST HAD COLLECTED DONATIONS TO THE TUNE OF RS 22.68 LACS AND OUT OF THAT, RS 6.36 LACS WAS SPENT FOR PURCHASE OF LAND, RS 7.68 LACS FOR CONSTRUCTION ACTIVITIES AND ANOTHER R S 8 LACS TOWARDS DEPOSITS FOR SEEKING NECESSARY PERMISSIONS. GIVEN ALL THESE FACT S AND CIRCUMSTANCES OF THE CASE AND EVEN THOUGH ACTUAL EDUCATIONAL ACTIVITY HAD NOT BEEN UNDERTAKEN DURING THE YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE HO N'BLE KERALA HIGH COURT AS WELL AS HON'BLE CALCUTTA HIGH COURT, WE BELIEVE THAT THE REQUIREMENTS OF SECTION 10(23C)(IIIAD) THAT (A) THE EDUCATIONAL INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES (B) IT SHOULD NOT BE FOR PURPOSES OF PROFI T AND (C) THE AGGREGATE ANNUAL RECEIPTS OF SUCH INSTITUTION SHOULD NOT EXCEED THE THRESHOLD OF RS 1 CRORES ARE SATISFIED IN THE INSTANT CASE FOR THE YEAR UNDER CO NSIDERATION. HENCE, THE ASSESSEE SOCIETY IS HELD ELIGIBLE FOR SECTION 10(23C)(IIIAD) FOR THE YEAR UNDER CONSIDERATION. ITA NO. 628/JP/13 RAM SAHAI JAN KALYAN SHIKSHAN, ALWAR VS. ITO, WARD 2(2), ALWAR 16 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 18/03 /2016. SD/- SD/- ( R.P. TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 18 / 03 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- RAM SAHAI JAN KALYAN SHIKSHAN SANSTHAN, ALWAR 2. THE RESPONDENT- ITO, WARD 2(2), JAIPUR 3. THE CIT(A) ALWAR 4. THE CIT ALWAR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 628/JP/13) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.