THE DCIT, 2(1), Bhopal V. M/s. Ayushmati Education and Social Society, Bhopal

ITA 923/IND/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2796 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-10-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B J BORICHA
• Assessee Lawyers: AYUSH GUPTA; SUMIT NEEMA
• Keywords: Gift; Competent authority; Benefit of exemption
• Section: 143(3); 12AA

Judgement Text

AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 923 /IND/2016 ASSESSMENT YEAR 2004-05 REVENUE BY SHRI B.J BORICHA , SR. DR ASSESSEE BY S/ SHRI SUMIT NEEMA, SR.ADV & AYUSH GUPTA, ADV. DATE OF HEARING 2 5 . 10 .2018 DATE OF PRONOUNCEMENT 0 6 . 1 1 .2018 O R D E R PER SHRI MANISH BORAD,AM THIS APPEAL OF REVENUE PERTAINING TO A.Y. 2004-05 I S DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-31, NEW DELHI, CAMP BHOPAL (IN SHORT CIT(A)), DATED 2 9.06.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOM E TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 29. 12.2006 BY ACIT, 1(1), BHOPAL. DEPUTY COMMISSIONER OF INCOME TAX-2(1), BHOPAL VS. M/S. AYUSHMATI EDUCATION AND SOCIAL SOCIETY, 202 GANGA JAMNA COMPLEX, ZONE-1, BHOPAL (APPELLANT) (RESPONDENT ) PAN NO. AAAAA 3026D AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL; 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.90,31,280/ - MADE BY A.O ON ACCOUNT OF DISALLOWANCE OF EXCESS OF INCOME OVER EX PENDITURE.. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.90,31,280/ - EVE3N THOUGH APPROVAL 10(23C)(VI) WAS NOT GRANTED TO THE SOCIETY BY THE C OMPETENT AUTHORITY AND THEREBY IGNORING THE DECISION OF THE I.T.A.T. AMRIT SAR BENCH IN THE CASE OF (2014) 48 TAXMAN.COM 386 (AMRITSAR TRIB.) IN THE I. T.A.T. AMRITSAR BENCH INCOME TAX OFFICER V VIVEKANAND SOCIETY OF EDUCATIO N AND RESEARCH. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.90,31,280/ - EVEN IF NO TIME LIMIT FOR GRANTING APPROVAL U/S 10(23C)(VI) IS PRESCRIBED IN THE I.T.ACT. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A SOCIETY RUNNING EDUCATIONAL INSTITUTE S. THE RETURN OF INCOME WAS FILED ON 23.12.2004 IN WHICH INCOME OF RS.NIL WAS DECLARED. THE SOCIETY IS REGISTERED UNDER THE SOCI ETYS REGISTRATION ACT VIDE ORDER DATED 15.10.1999. THE ASSESSEE WAS ALSO GRANTED REGISTRATION U/S 12AA OF THE INCOME TAX ACT BY THE COMMISSIONER OF INCOME TAX, BHOPAL VIDE ORDER NO.56/04-05 DATED 24.05.2005 W.E.F. 01.04.2004. THE SOCIETY IS ENGAGED IN THE S OCIAL SERVICES AND EDUCATIONAL ACTIVITIES. THE CASE PICKED UP FOR SCRU TINY AND NECESSARY NOTICES U/S 143(2) AND 142 SUB SECTION (1 ) OF THE ACT AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 3 WERE DULY SERVED UPON THE ASSESSEE. THE LD.A.O WHI LE EXAMINING THE RECORDS OBSERVED THAT BHABHA ENGINEERING RESEAR CH INSTITUTE IS RUN BY THE ASSESSEE. IN THE RETURN OF INCOME THE A SSESSEE STATED THAT THE ENTIRE RECEIPT OF RS.1,08,73,530/- (AFTER DEDUCTING 15% OF GROSS RECEIPT) U/S 11(I) WERE EXEMPT. LD.A.O HOWEV ER WAS OF THE VIEW THAT THE REGISTRATION U/S 12AA OF THE ACT HAS BEEN GRANTED W.E.F. 1.4.2004 AND THE YEAR UNDER ASSESSMENT IS FI NANCIAL YEAR 2003-04 AND THEREFORE ASSESSEE IS NOT ENTITLED FOR CLAIMING THE EXEMPTION U/S 11 OF THE ACT FOR THE ASSESSMENT YEAR 2004-05. LD.A.O FURTHER NOTICED THAT THE AGGREGATE RECEIPT F OR THE YEAR AS DISCERNABLE FROM THE INCOME AND EXPENDITURE ACCOUNT OF BHABHA ENGINEERING RESEARCH INSTITUTE WORKED OUT TO RS.1,2 2,14,312/- AND THE SAME BEING MORE THAN RS. 1 CRORE, APPROVAL BY T HE PRESCRIBED AUTHORITY I.E. CCIT, BHOPAL WAS REQUIRED IN ORDER T O CLAIM EXEMPTION U/S 10(23C)(VI) OF THE ACT. IT WAS STATE D BY THE ASSESSEE THAT AN APPLICATION FOR GRANT OF APPROVAL HAS BEEN MADE ON 23.12.2004 AND THE APPROVAL IS STILL AWAITED. WITH THIS DISCUSSION THE LD.A.O COMPLETED THE ASSESSMENT DENYING THE BEN EFIT OF EXEMPTION U/S 11 AS WELL AS SECTION 10(23C)(VI) OF THE ACT AND ASSESSED INCOME AT RS.90,31,280/- WHICH COMPRISED O F INCOME AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 4 EARNED BY AYUSHMATI EDUCATIONAL & SOCIAL SOCIETY AT RS.5,70,882/- AND INCOME EARNED BY BHABHA ENGG. RESEARCH INSTITUT E AT RS.84,60,398/-. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD.CI T(A) WHO ALLOWED THE ASSESSEES APPEAL OBSERVING THAT AS THE APPLICATION OF THE ASSESSEE FOR APPROVAL U/S 10(23C)(VI) OF THE AC T HAS NEITHER BEEN APPROVED NOR DECLINED AFTER LAPSE OF SO MUCH T IME THEREFORE THE ASSESSEE SHALL BE DEEMED TO HAVE RECEIVED THE A PPROVAL U/S 10(23C)(VI) OF THE ACT, THEREFORE ELIGIBLE FOR EXEM PTION. THEREAFTER THE REVENUE FILED AN APPEAL BEFORE I.T.A.T, INDORE. THE TRIBUNAL VIDE ORDER DATED 21.4.11 (I.T.A. NO. 449/IND/2007) SET A SIDE/RESTORE THE MATTER BACK TO THE FILE OF LD.CIT(A) TO VERIFY THE FACTUAL POSITION WITH REGARD TO THE APPLICATION OF THE ASSESSEE PENDING F OR APPROVAL U/S 10(23C)(VI) OF THE ACT BEFORE CCIT, BHOPAL. 5. IN THE SET ASIDE PROCEEDINGS LD.CIT(A) ALLOWED A SSESSEES GROUND OBSERVING AS FOLLOWS; 4.3 IN ORDER TO COMPLY WITH THE DIRECTIONS OF HON' BLE ITAT AS REGARDS THE STATUS OF THE APPLICATION DATED 23.12.2004 FILED BY THE APPELLANT, THE MATTER WAS TAKEN UP WITH THE OFFICE OF THE PRO CCIT , BHOPAL. IT WAS CONVEYED VIDE LETTER DATED 06.06.16, FORWARDING THE REBY A LETTER DATED 02.06.16 OF THE CIT(EXEMPTION), BHOPAL THAT THE SAI D APPLICATION DATED AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 5 23.12.2004 IN FORM NO. 560 FOR APPROVAL U/S 10(23C) FOR AY 2004-05 HAS NOT BEEN DISPOSED OFF BY WAY OF ANY ORDER/ RECORD O F PROCEEDING THEREON. 4.4 I HAVE CAREFULLY CONSIDERED THE FINDINGS RECORD ED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE ORDER DATED 21.05.2007 OF THE CIT(A)-1, BHOPAL THE FACTS OF THE CASE ON RECORD AND THE SUBM ISSIONS MADE BY THE APPELLANT. IT IS NOW CONFIRMED THAT THE APPLICATION DATED 23.12.04 FILED BY THE APPELLANT FOR APPROVAL U/S 10(23C) HAS NOT B EEN DISPOSED OFF. THEREFORE, THE FACTS OF THE CASE ARE THE SAME ON WH ICH RELIEF WAS ALLOWED BY THE ID. CIT(A)-1, BHOPAL AFTER A DETAILED DISCUS SION IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS. RESPECTFULLY FOLLOWING THE ABOVE, I CONFIRM THE RELIEF ALLOWED BY ID. CIT(A)-I, BHOPAL AS THE FACTS AND CIRCUMSTANCES HAVE REMAINED THE SAME. ACCORDINGLY, THE GROUND NO.1, IS ALLOWED TO THE APPELLANT. 6. AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBUN AL IN THE SECOND ROUND. 7. LD. DEPARTMENTAL REPRESENTATIVE REFERRING TO THE DECISION OF THE CO-ORDINATE AMRITSAR BENCH IN THE CASE OF INCOM E TAX OFFICER V. VIVEKANAND SOCIETY OF EDUCATION AND RESEARCH (2014) 48 TAXMANN.COM 386 SUBMITTED THAT LD. CIT ERRED IN DEL ETING THE ADDITION OF RS.90,31,280/-EVEN WHEN NO APPROVAL WAS GRANTED U/S 10(23C)(VI) OF THE ACT BY THE COMPETENT AUTHORITY. 8. PER CONTRA LD. SENIOR COUNSEL FOR THE ASSESSEE W ITHOUT SUPPORTING THE FINDING OF LD.CIT(A) IN FAVOUR OF TH E ASSESSEE MADE FOLLOWING SUBMISSIONS. AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 6 IT IS HUMBLY SUBMITTED THAT THE A0 AS WELL AS CIT( A) HAVE DIRECTLY CONSIDERED SEC ION 10(23C)(VI) ON THE GROUND THAT T HE RECEIPTS OF THE SOCIETY EXCEED RS. 1 CRORE. HOWEVER IN THE PRESENT CASE FIRST THE APPLICABILITY OF SECTION 10(23C)(III)(AD) HAVE TO BE SEEN BEFORE CONSIDERING THE APPLICABILITY OF SECTION 10{23(C)(IV). THE SOCIETY IS RUNNING THE FOLLOWING COLLEGES WHICH HAVE THE FOLLOWING GROSS RECEIPTS: NAME OF COLLEGE GROSS RECEIPTS BHABHA ENGINEERING INSTITUTE REG.NO.01/01/MP/DEG/2003/005 74,32,264 BHABHA PHARMACY RESEARCH INSTITUTE REG. NO.01/01/MP/PHAR/2004/007 36,43,120 BHABHA ENGINEERING RESEARCH INSTITUTE (MCA) REG. NO.PG/MCA/MP/2003/08 1,47,72 0 BHABHA MANAGEMENT RESEARCH INSTITUTE REG. NO.PG/MBA/MP/2003/02 9,20,630 TOTAL 1,21,43,734 THUS IT IS EVIDENT THAT THE GROSS RECEIPTS OF EACH COLLEGE IS LESS THAN THE PRESCRIBED THRESHOLD LIMIT OF 1 CRORE AND THEREFOR E THERE THE INCOME OF EACH OF THE COLLAGE IS EXEMPT U/S 10(23)(C)(III)(AD ). CONSEQUENTIALLY THE INCOME OF THE SOCIETY IS ALSO E XEMPT. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: (2013) 358 ITR 373 (KARNATAKA) CIT VS. CHILDREN'S E DUCATION SOCIETY (PARA 22) THUS IN VIEW OF THE AFORESAID SUBMISSION THE INCOME OF THE ASSESSEE IS EXEMPT U/S 10(23)(C)(III)(AD) AS EACH COLLEGES GRO SS RECEIPTS LESS THAN 1 CRORE. AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 7 9. LD. SENIOR COUNSEL FOR THE ASSESSEE FURTHER ADDE D THAT BEFORE CONSIDERING THE APPLICABILITY OF SECTION 10(23C)(IV ) OF THE ACT IT IS FIRST TO BE EXAMINED WHETHER THE PROVISIONS OF SECT ION 10(23C)(IIIAD) ARE APPLICABLE OR NOT ON THE ASSESSEE. HE MAINLY FOCUSED THAT WHETHER THE WORDS UNIVERSITY OR OTHER EDUCATIONAL I NSTITUTION REFERRED IN THE PROVISION OF SECTION 10(23C)(IIIAD) ARE TO BE CONSIDERED AS INDIVIDUAL INSTITUTION OR THE GROUP O F SUCH INSTITUTIONS RUN BY A SOCIETY. REFERRING TO THE JU DGMENT OF HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. CHIL DRENS EDUCATION SOCIETY (SUPRA), WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IF AN ASSESSEE IS RUNNING SEVERAL EDUCATIONAL INSTITUTION S, IF ANY OF THEM IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNME NT THEN THE INCOME FROM WHICH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDED WHILE COMPUTING ITS TOTAL INCOME. SIMILARLY INCOME FROM EACH EDUCATIONAL INSTITUTION IF THEY ARE NOT R ECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESP ECT OF WHICH THE AGGREGATE ANNUAL RECEIPT IS NOT EXCEEDING RS. 1 CRO RE, IS ALSO NOT INCLUDED WHILE COMPUTING ANNUAL TOTAL INCOME OF THE ASSESSEE. REFERRING TO THE ABOVE JUDGMENT OF THE HON'BLE KARN ATAKA HIGH AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 8 COURT THE SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROSS INCOME FROM EACH OF THE FOUR INSTITUTIONS RUN BY TH E ASSESSEE ARE BELOW RS.1 CRORES AND THEREFORE THE ASSESSEE IS ELI GIBLE FOR THE EXEMPTION U/S 10(23C(IIIAD) OF THE ACT. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS REFERRED AND RELIED BY BOTH THE PARTIES. 11. THE ISSUE BEFORE US RAISED BY THE REVENUE IS AG AINST THE DELETION/ADDITION OF RS.90,31,280/- BY THE LD.CIT(A ) TAKING THE SAME VIEW AS TAKEN BY HIS PREDECESSOR IN THE FIRST GROUND OF THE APPELLATE PROCEEDINGS THEREBY CONFIRMING THE DECISI ON THAT THE ASSESSEE SHALL BE DEEMED TO HAVE RECEIVED THE APPRO VAL U/S 10(23C) OF THE ACT, AS THE APPLICATION MADE BY THE ASSESSEE ON 23.12.2004 HAS NEITHER BEEN APPROVED NOR REJECTED. THE LD. SE NIOR COUNSEL FOR ASSESSEE WITHOUT SUPPORTING THE FINDING OF LD.CIT(A ) GIVING DEEMED APPROVAL U/S 10(23C) OF THE ACT SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE AC T BECAUSE THE GROSS RECEIPT OF EACH INSTITUTION IS LESS THAN RS.1 CRORE AND FURTHER REFERRED TO THE JUDGMENT OF HON'BLE HIGH COURT OF KARNATAKA IN THE AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 9 CASE OF CIT VS. CHILDRENS EDUCATION SOCIETY (SUPRA ) FOR ITS CONTENTIONS. 12. IN ORDER TO ADJUDICATE THE ISSUE WE WOULD LIKE TO GO THROUGH THE RELEVANT PORTION OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. CHILDRENS EDUCAT ION SOCIETY (SUPRA) WHICH IS MENTIONED BELOW; 11. IN ORDER TO APPRECIATE THE AFORESAID CONTENTIO NS, IT IS NECESSARY TO HAVE A LOOK AT THE STATUTORY PROVISIONS. CHAPTER II I DEALS WITH INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. SECTION 10 DEALS WITH INCOME NOT INCLUDED IN TOTAL INCOME, WHICH READS AS UNDER: 'SECTION 1 0 - IN COMPUTING THE TOTAL INCOME OF A P REVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOW ING CLAUSE SHALL NOT BE INCLUDED.' 12. SUB-SECTION (22) BEFORE DELETION READ AS UNDER: 'ANY INCOME OF A UNIVERSITY OR OTHER EDUCATIONAL IN STITUTION, EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE S OF PROFIT.' 13. BY DELETING THE AFORESAID PROVISION, THE PROVIS IONS WHICH ARE NOW SUBSTITUTED ARE SUB-SECTION 23-C OF SECTION 10. SUB -SECTION 23-C READS AS UNDER: 'ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF (III)(A) THE NATIONAL FOUNDATION FOR COMMUNAL HARMO NY; OR (III)(AB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTI TUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT , AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT; OR (III)(AC) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTI VENESS OR FOR THE RECEPTION AND TREATMENT OF PERSONS DURING CONVALESC ENCE OR OF PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATION, EXIS TING SOLELY FOR AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 10 PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROF IT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT; OR (III)(AD) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTI TUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL I NSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRES CRIBED; OR (VI) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIO N EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT , OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (III)(AB) OR SUB-CLAUSE (II I)(AD) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY' 14. SECTION 10 GROUPS IN ONE PLACE VARIOUS INCOMES WHICH ARE EXEMPTED FROM TAX, WHICH INCLUDES CERTAIN TYPES OF INCOME FR OM THE AMBIT OF TOTAL INCOME, AS DEFINED UNDER THE ACT. THE INCOMES ENUME RATED IN THE SECTION ARE NOT ONLY EXCLUDED FROM THE TAXABLE INCO ME OF THE ASSESSEE, BUT ALSO FROM HIS TOTAL INCOME. THEY ARE NOT TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF DETERMINING EITHER THE TAXABLE INCOME OR RATE OF TAX. IF ANY INCOME FALLING WITHIN ANY OF TH ESE CLAUSES OF THE SECTION IS IN REALITY NOT THE INCOME OF THE ASSESSE E, BUT IS DEEMED TO BE HIS INCOME UNDER ANY PROVISION OF THIS ACT, THE EXE MPTION WOULD STILL BE AVAILABLE. A RECEIPT MAY NOT BE INCOME, AT ALL, WIT HIN THE PROPER CONCEPT OF THE TERM AND YET MAY COME WITHIN THE EXPRESSED E XEMPTION IN THIS SECTION DUE TO THE OVER ANXIETY OF THE TAXMANN TO M AKE THE NONTAXABLE CLEAR FROM POSSIBILITY OF DOUBT. IN OTHER WORDS FRO M THE FACT THAT SUCH A RECEIPT IS EXEMPTED UNDER THE SECTION WHICH MUST NO T BE ASSUMED THAT, BUT FOR THE EXEMPTION, IT WOULD NECESSARILY BE TAXA BLE. THE ONUS OF SHOWING THAT A PARTICULAR ITEM OF INCOME FALLS WITH IN ANY CLAUSE OF THE SECTION, IS ON THE ASSESSEE. THE OBJECT WITH WHICH SUBSECTION (22) OF SECTION 10 WAS DELETED IS FOUND IN THE BUDGET SPEEC H OF THE MINISTER OF FINANCE FOR 1998-99, WHERE IT IS STATED AS UNDER: 'MODERATE RATES AND LARGE CONCESSIONS DO NOT GO HAN D IN HAND. I HAVE, THEREFORE, CARRIED OUT A REVIEW OF THE VARIOUS CONC ESSIONS AND EXEMPTIONS UNDER THE INCOME- TAX ACT. I FIND THAT MANY OF THEM ARE NO LONGER NECESSARY AND SOME OF THEM ARE ALSO BEING USED FOR TAX AVOIDANCE. L. THEREFORE, PROPOSE TO WITHDRAW MANY OF THESE PROVIS IONS. THESE INCLUDE; EXEMPTION TO THE EXPORT IMPORT BANK OF INDIA AND EX EMPTION IN RESPECT OF CERTAIN PERQUISITES ON FOREIGNERS EMPLOYED IN IN DIA. THE BLANKET EXEMPTION IN RESPECT OF EDUCATIONAL AND MEDICAL INS TITUTIONS WHICH IS BEING MISUSED, IS PROPOSED TO BE WITHDRAWN, COMPELL ING SUCH INSTITUTIONS TO COME UNDER A DISCIPLINE. HOWEVER, S AFEGUARDS ARE BEING PROVIDED TO ENSURE THAT THE INSTITUTIONS GENUINELY SERVING THE SOCIAL CAUSE IN EITHER FIELD DO NOT LOSE THE EXISTING BENE FITS.' AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 11 15. THE APEX COURT HAD AN OCCASION TO CONSIDER THE SUB-SECTION (22) OF SECTION LO IN THE CASE OF ADITANAR EDUCATIONAL INST ITUTION V. ADDL. CIT [1997J 224 ITR 310/90 TAXMAN 528 (SC), HAS HELD AS UNDER: 'COUNSEL FOR THE REVENUE MAINLY STRESSED THE PLEA T HAT THE EXEMPTION UNDER SECTION 10(22) OF THE ACT WOULD APPLY ONLY TO EDUCATIONAL INSTITUTIONS AS SUCH. ACCORDING TO HIM, IN THIS CAS E, THE ASSESSEE MIGHT BE FINANCING FOR RUNNING AN EDUCATIONAL INSTITUTION , BUT IT IS NOT ITSELF AN EDUCATIONAL INSTITUTION. AS NOTED EARLIER, THE TRIB UNAL HELD THAT THE ASSESSEE WAS AN INSTITUTION EXISTING FOR EDUCATIONA L PURPOSES AND NOT FOR THE PURPOSES OF EARNING ANY PROFIT AND THE ASSESSEE ITSELF COULD BE TERMED AS AN 'EDUCATIONAL INSTITUTION' COMING WITHI N SECTION 10(22) OF THE ACT. THE HIGH COURT HAS CONCURRED WITH THIS VIE W. THE HIGH COURT HAS FURTHER HELD THAT THE MEDIUM THROUGH WHICH THE ASSESSEE COULD EFFECTUATE ITS OBJECTS IS THE COLLEGE AND BY EMPLOY ING THIS MEDIUM, THE ASSESSEE IMPARTS EDUCATION AND IT CANNOT BE STATED THAT THE ASSESSEE IS ONLY A FINANCING BODY AND DOES NOT, ON THE FACTS, C OME WITHIN THE SCOPE OF 'OTHER EDUCATIONAL INSTITUTION' OCCURRING IN SEC TION 10(22) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF THE ALLAHABA D HIGH COURT IN KATRA EDUCATION SOCIETY V. ITO [1978J III ITR 420, TO HOL D THAT AN EDUCATIONAL SOCIETY COULD BE REGARDED AS AN EDUCATIONAL INSTITU TION IF THE SOCIETY WAS RUNNING AN EDUCATIONAL INSTITUTION. WE ARE OF THE V IEW THAT AN EDUCATIONAL SOCIETY OR A TRUST OR OTHER SIMILAR BOD Y RUNNING AN EDUCATIONAL INSTITUTION SOLELY FOR EDUCATIONAL PURP OSES AND NOT FOR THE PURPOSE OF PROFIT COULD BE REGARDED AS 'OTHER EDUCA TIONAL INSTITUTION' COMING WITHIN SECTION 10(22) OF THE ACT. (SEE CIT V . DOON FOUNDATION [1985] 154 ITR 208 (CAL) AND AGARWAL SHIKSHA SAMITI TRUST V. CIT [1987] 168 ITR 751 (RAJ). IT WILL BE RATHER UNREAL AND HYP ERTECHNICED TO HOLD THAT THE ASSESSEE-SOCIETY IS ONLY A FINANCING BODY AND WILL NOT COME WITHIN THE SCOPE OF 'OTHER EDUCATIONAL INSTITUTION' AS SPECIFIED IN SECTION I 0(22) OF THE ACT. THE OBJECT OF THE SOCIETY IS TO ESTABLISH, RUN, MANAGE OR ASSIST COLLEGES OR SCHOOLS OR OTHER EDUCATIONAL INS TITUTIONS SOLELY FOR EDUCATIONAL PURPOSES AND IN THAT REGARD TO RAISE OR COLLECT FUNDS, DONATIONS, GIFTS, ETC. COLLEGES AND SCHOOLS ARE THE MEDIA THROUGH WHICH THE ASSESSEE IMPARTS EDUCATION AND EFFECTUATES ITS OBJECTS. IN SUBSTANCE AND REALITY, THE SOLE PURPOSE FOR WHICH THE ASSESSE E HAS COME INTO EXISTENCE IS TO IMPART EDUCATION AT THE LEVELS OF C OLLEGES AND SCHOOLS AND SO, SUCH AN EDUCATIONAL SOCIETY SHOULD BE REGARDED AS AN 'EDUCATIONAL INSTITUTION' COMING WITHIN SECTION 10(22) OF THE AC T. WE HOLD ACCORDINGLY. IN OUR VIEW, THE JUDGMENT OF THE HIGH COURT DOES NO T MERIT INTERFERENCE. THE PLEA OF THE REVENUE TO THE CONTRARY IS UNTENABL E AND WE REPEL THE SAME. ALL THE APPEALS FILED BY THE REVENUE SHALL ST AND DISMISSED, BUT THERE SHALL BE NO ORDER AS TO COSTS.' 16. THE AFORESAID PROVISION AS 'IT STOOD THEN AND T HE INTERPRETATION PLACED ON IT BY THE VARIOUS HIGH COURTS AS WELL AS THE APEX COURT GAVE AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 12 TOTAL EXEMPTION IN RESPECT OF THE INCOME DERIVED FR OM RUNNING SUCH EDUCATIONAL INSTITUTIONS. AS THE SAID PROVISION WAS ABUSED BY SOME PERSONS, THE SAID PROVISION WAS DELETED AND THUS NE W PROVISIONS HAVE BEEN INSERTED. HOWEVER, IT IS MADE CLEAR, THE INTEN TION OF SUCH AMENDMENTS WAS NOT TO DENY THE BENEFIT TO THE INSTI TUTIONS GENUINELY SERVING THE SOCIAL CAUSE AND TO DENY THE EXISTING B ENEFITS. THEREFORE, THE REAL TEST IS WHETHER THE ASSESSEE WHO CLAIMING THES E EXEMPTIONS IS RUNNING EDUCATIONAL INSTITUTIONS SOLELY FOR EDUCATI ON PURPOSES AND NOT FOR PURPOSE OF PROFIT. IF THE SAID FACT IS ESTABLIS HED, HE IS ENTITLED TO EXCLUDE THE INCOME FROM SUCH INSTITUTION UNDER SECT ION 10. HOWEVER, AS INTENTION OF THE DELETION OF SECTION 10(22) AND INT RODUCTION OF THESE PROVISIONS WAS TO COMPEL SUCH INSTITUTIONS TO COME UNDER A DISCIPLINE, THE STRESS NOW IS ON THE AGGREGATE OF THE ANNUAL RE CEIPTS RECEIVED BY SUCH INSTITUTIONS. BY THE AMENDED PROVISIONS WHAT I S INTENDED TO BE DONE IS, ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSES OF PROFIT, IF IT IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME OF SUCH EDUCATIONAL INSTITUTIONS IN THE HANDS OF THE ASSESS EE, IS NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THE REASON APPEAR S TO BE THAT IF THE GOVERNMENT IS FINANCING, THEV WOULD TAKE ALL PRECAU TIONS BEFORE PARTING _ FUNDS AND MAKE SURE THAT SUCH EDUCATIONAL INSTITUTI ON IS EXISTING FOR THE EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROF IT. THEREFORE, THE INCOME DERIVED ON SUCH INSTITUTIONS IS EXCLUDED FRO M THE TOTAL INCOME OF THE ASSESSEE. THE NEXT EXEMPTION IS CONTAINED IN SU B-CLAUSE (III)(AD). IF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXI STING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSES OF PRO FIT, IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL I NSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRES CRIBED. 17. RULE 2BC OF THE INCOME-TAX RULES PRESCRIBES THE AMOUNT OF ANNUAL RECEIPTS FOR THE PURPOSES OF SUB-CLAUSES (III)(AD) AND (III)(AE) OF CLAUSE (23C) OF SECTION 10, WHICH READS AS UNDER: '2BC (1) FOR THE PURPOSES OF SUB-CLAUSE (III)(AD) O F CLAUSE (23C) OF SECTION 10, THE AMOUNT OF ANNUAL RECEIPTS ON OR AFTER THE 1 ST DAY OF APRIL, 1998, OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION, EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT , SHALL BE ONE CRORE RUPEES. (2) FOR THE PURPOSES OF SUB-CLAUSE (III)(AE) OF CLA USE (23C) OF SECTION 10, THE AMOUNT OF ANNUAL RECEIPTS ON OR AFTER THE 1ST D AY OF APRIL, 1998, OF ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTIVEN ESS OR FOR THE RECEPTION AND TREATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATION, EXISTING SOLEL Y FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROFIT, SHALL BE O NE CRORE RUPEES.]' AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 13 18. THEREFORE, ONE CRORE OF RUPEES IS THE AGGREGATE ANNUAL RECEIPTS WHICH IS PRESCRIBED UNDER THE RULES. IN OTHER WORDS, IF T HE AGGREGATE ANNUAL RECEIPTS OF AN EDUCATIONAL INSTITUTION IS LESS THAN ONE CRORE, THE INCOME FROM SUCH EDUCATIONAL INSTITUTION IN THE HANDS OF T HE ASSESSEE, IS NOT TAKEN INTO CONSIDERATION IN COMPUTING THE TOTAL INC OME OF THE ASSESSEE. 19. SUB-CLAUSE (VI) PROVIDES THAT ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING FOR EDUCATIONAL PURPOSES AND N OT FOR THE PURPOSE OF PROFIT OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (II I)(AB) AND SUB-CLAUSE (III)(AD) AND WHICH MAY BE APPROVED THE PRESCRIBED AUTHORITY, THEY ARE ALSO ENTITLED TO THE SAID BENEFIT. IN OTHER WORDS, SUB-CLAUSE (III)(AB), SUB- CLAUSE (III)(AD) AND CLAUSE (VI) APPLIES TO THREE C ATEGORIES OF INSTITUTIONS. 20. NOW, WE ARE CONCERNED WITH THE MEANING TO BE AT TACHED TO THE WORD 'AGGREGATE ANNUAL RECEIPT'. THE ARGUMENT IS, OTHER EDUCATIONAL INSTITUTION REFERRED TO IN THE SAID SUB-CLAUSE REFE RS TO ALL EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE AND AGGREGATE ANNU AL RECEIPTS OF SUCH OTHER EDUCATIONAL INSTITUTIONS MEANS THE AGGREGATE OF ANNUAL RECEIPTS OF ALL SUCH EDUCATIONAL INSTITUTIONS PUT TOGETHER. OTH ERWISE, THE USE OF THE WORD 'AGGREGATE' LOSES ITS MEANING. WE FIND IT DIFF ICULT TO ACCEPT THE SAID ARGUMENT. 21. FIRSTLY, IF THE WORD 'AGGREGATE ANNUAL RECEIPTS ' OF OTHER EDUCATIONAL INSTITUTION IS TO BE UNDERSTOOD AS CLUBBING OF ANNU AL RECEIPTS OF ALL EDUCATIONAL INSTITUTIONS RUN BY AN ASSESSEE SOCIETY , THEN IT WILL ALSO INCLUDE THE ANNUAL RECEIPTS OF AN EDUCATIONAL INSTI TUTION WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. IF THA T WAS INTENTION OF THE LEGISLATURE, THEY WOULD NOT HAVE INTRODUCED SEPARAT E SUB-CLAUSES AS (III)(AB) AND (III)(AD). IF SUCH INTERPRETATION IS PLACED, SUB-CLAUSE (III)(AB) BECOMES OTIOSE. THEREFORE, IT IS NOT POSSIBLE TO PL ACE SUCH AN INTERPRETATION. IF AN ASSESSEE SOCIETY IS RUNNING S EVERAL EDUCATIONAL INSTITUTIONS, IF SOME OF THEM ARE WHOLLY OR SUBSTAN TIALLY FINANCED BY THE GOVERNMENT IN TERMS OF SUB-CLAUSE (III)(AB), THE IN COME ON BEHALF OF SUCH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS EXEMPTED FROM BEING COMPUTED THE TOTAL INCOME OF THE ASSESSEE. IF THE A SSESSEE IS RUNNING OTHER EDUCATIONAL INSTITUTIONS WHICH ARE NOT WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE BENEFIT OF THA T EXEMPTION IS ALSO EXTENDED TO THE INCOME DERIVED FROM SUCH EDUCATIONA L INSTITUTIONS AND RECEIVED BY THE ASSESSEE UNDER SUB-CLAUSE (III)(AD) READING WITH SUB- CLAUSE (III)(AD) ALONG WITH RULE 2BC. IT WAS CONTEN DED, THE LEGISLATURE USED THE WORD 'AGGREGATE ANNUAL RECEIPT' AND 'AMOUN T OF ANNUAL RECEIPTS' AND THEREFORE, THE PROVISIONS ARE NOT ONE AND THE SAME. THE WORD 'AGGREGATE' HAS BEEN DEFINED IN CHAMBERS 21ST CENTURY DICTIONARY AS UNDER: 'AGGREGATE - NOUN = A COLLECTION OF SEPARATE UNITS BROUGHT TOGETHER, A AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 14 TOTAL TAKEN ALTOGETHER, BRING TOGETHER.' IN WHARTON'S LAW LEXICON, IT IS DEFINED AS THUS: A COLLOCATION OF INDIVIDUALS, UNITS OR THINGS IN O RDER TO FORM A WHOLE' 22. SIMILARLY RELYING ON THE JUDGMENT OF THE APEX C OURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION (SUPRA) IT WAS CON TENDED THE WORD 'OTHER EDUCATIONAL INSTITUTION' REFERS TO THE ASSES SEE SOCIETY AND NOT TO THE INDIVIDUAL EDUCATIONAL INSTITUTION. IF THE INTE NTION OF THE LEGISLATURE WAS TO CLUB THE ANNUAL RECEIPTS OF ALL EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE SOCIETY, THEY COULD HAVE SAID SO IN CLEAR TERMS. ON CONTRARY WHAT IS STATED IN THE SAID SECTION IS THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR SUCH EDUCATIONAL INSTITUTION REF ERRING TO OTHER EDUCATIONAL INSTITUTION. OTHER EDUCATIONAL INSTITUT ION IS TO BE UNDERSTOOD WITH THE CONTEXT OF THE FIRST WORD I.E., THE UNIVER SITY. BOTH IN THE UNIVERSITY AND ANY EDUCATIONAL INSTITUTIONS, EDUCAT ION IS IMPARTED. THE UNIVERSITY IS A STATUTORY BODY. BUT THERE ARE A NUM BER OF EDUCATIONAL INSTITUTIONS WHICH ARE NOT RUN BY A STATUTORY AUTHO RITY WHICH ARE IMPARTING EDUCATION, THE WORD 'OTHER EDUCATIONAL IN STITUTION' HAS TO BE UNDERSTOOD IN THE CONTEXT OF OTHER THAN ANY UNIVERS ITY. IF SO UNDERSTOOD, ALL THAT IT MEANS IS EVERY EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROF IT, IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH EDUCATIONAL INSTITUTION EXC EEDS RS.1 CRORE, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIV ED BY THE ASSESSEE IS EXCLUDED FROM HIS TOTAL INCOME. IN AN EDUCATIONAL I NSTITUTION THE AMOUNT ARE CALCULATED PERIODICALLY. IT MAY BE CALCULATED U NDER DIFFERENT HEADS. ALL SUCH AMOUNT RECEIVED CONSTITUTED RECEIPTS AND T HOSE RECEIPTS MAY BE RECEIVED THROUGHOUT THE YEAR. THEREFORE, THE WORD ' ANNUAL' HAS BEEN INSERTED. BUT TO BE ELIGIBLE FOR EXEMPTION, AGGREGA TE OF ANNUAL RECEIPTS SHOULD NOT EXCEED RS.1 CRORE I.E. THE TOTAL ANNUAL RECEIPTS OF A YEAR IF IT DOES NOT EXCEED RS.I CRORE, THEN THE INCOME DERIVED FROM SUCH EDUCATIONAL INSTITUTION IN THE HANDS OF THE ASSESSE E CANNOT BE TAKEN INTO CONSIDERATION TO COMPUTE THE INCOME OF THE ASSESSEE . 23. NO DOUBT, EDUCATION HAS BECOME A BUSINESS, A VE RY PROFITABLE BUSINESS ALSO. BUT IT REQUIRES HUGE INVESTMENT. IT IS THE DUTY OF THE GOVERNMENT TO PROVIDE EDUCATION TO ALL ITS CITIZENS , JS THE GOVERNMENT IS NOT ABLE TO SHOULDER THE RESPONSIBILITY COMPLETELY. THEREFORE, THE FIELD OF EDUCATION IS NOW THROWN OPEN TO PRIVATE ORGANIZATIO NS. BUT FOR THROWING OPEN THE FIELD. TO THE PRIVATE OPERATORS, PROBABLY, THE COUNTRY WOULD NOT HAVE ACHIEVED IN THE FIELD OF EDUCATION WHAT IT HAS ACHIEVED. THEREFORE, LOT OF FUNDS ARE INVESTED IN RUNNING THESE EDUCATIO NAL INSTITUTIONS, EITHER BY CREATING A SOCIETY OR A TRUST. IN COURSE OF TIME , THEY HAVE EXPANDED THEIR ACTIVITY PROVIDING COURSE IN VARIOUS SUBJECTS AT VARIOUS LEVELS AND FOR THAT PURPOSE THEY HAVE ESTABLISHED MORE THAN ON E EDUCATIONAL AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 15 INSTITUTION. EACH EDUCATIONAL INSTITUTION IS A SEPA RATE ENTITY CONTROLLED UNDER VARIOUS STATUTES FOR VARIOUS PURPOSES. MAY BE THE MANAGEMENT OF THESE EDUCATIONAL INSTITUTIONS WOULD BE IN THE HAND S OF THE SOCIETIES OR THE TRUST, BUT FOR ALL OTHER PURPOSES THEY ARE DIFF ERENT, INDEPENDENT ENTITIES. THAT IS THE REASON WHY SECTION 10 (23)(C) IS WORDED AS UNDER: 'ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF. .. ' HERE 'ANY PERSON' REFERS TO THE ASSESSEE AND 'ON BE HALF OF' REFERS TO SUCH INSTITUTIONS. IT MAY BE AN UNIVERSITY, IT MAY BE AN EDUCATIONAL INSTITUTION, IT MAY BE A HOSPITAL OR OTHER INSTITUT IONS OF SIMILAR NATURE. AS ALL SUCH INSTITUTIONS ARE INDEPENDENT ENTITY AND TH EY GENERATE INCOME AND WHEN THAT INCOME IS RECEIVED BY THE ASSESSEE, I T BECOMES THE INCOME IN THE HAND OF THE ASSESSEE AND IT IS SUCH INCOME W HICH IS SOUGHT TO BE EXCLUDED WHILE COMPUTING THE TOTAL INCOME OF THE AS SESSEE UNDER SECTION 10. THE TEST PRESCRIBED UNDER THE AFORESAID PROVISI ON IS NOT THE INCOME OF THE EDUCATIONAL EDUCATION. IT IS THE AGGREGATE ANNU AL RECEIPTS OF SUCH EDUCATIONAL INSTITUTION THAT IS PRESCRIBED AT RS.1 CRORE. THEREFORE, IRRESPECTIVE OF THE EXPENDITURE INCURRED BY THOSE I NSTITUTIONS, THE EXEMPTION IS BASED ON THE TOTAL RECEIPTS. EVEN IF T HE WORD 'AGGREGATE' HAS TO BE UNDERSTOOD AS SUGGESTED BY THE REVENUE AS THE ANNUAL RECEIPTS OF SUCH EDUCATIONAL INSTITUTIONS PUT TOGETHER, PROBABL Y, THE SAID PROVISION REGARDING EXEMPTION WOULD BE OF NO USE AT ALL. ESPE CIALLY, IF THE SOCIETY IS RUNNING A MEDIAL COLLEGE OR ANY ENGINEERING COLLEGE OR OTHER PROFESSIONAL COURSES, THEN THE ANNUAL RECEIPT OF EACH INSTITUTIO N WOULD RUN TO FEW CRORES AND THEREFORE, THE VERY OBJECT OF GRANTING E XEMPTION TO SUCH GENUINE INSTITUTION WOULD BE LOST. THEREFORE, THE W ORD 'AGGREGATE ANNUAL RECEIPT' HAS TO BE UNDERSTOOD WITH THE CONTEXT IN W HICH IT IS USED AND THE PURPOSE FOR WHICH THE SAID PROVISION WAS INSERTED, KEEPING IN MIND, THE SCHEME OF THE ACT. THEREFORE, IF AN ASSESSEE IS RUN NING SEVERAL EDUCATIONAL INSTITUTIONS, IF ANY OF THEM IS WHOLLY 01 SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME FROM SU CH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDE D WHILE COMPUTING HIS TOTAL INCOME. SIMILARLY, INCOME FROM EACH EDUCATION AL INSTITUTION IF THEY ARE NOT RECEIVING ANY AID FROM THE GOVERNMENT WHOLL Y OR SUBSTANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DO NO T EXCEED RS.L CRORE RECEIVED BY THE ASSESSEE, IS ALSO NOT INCLUDED WHIL E COMPUTING ANNUAL TOTAL INCOME OF THE ASSESSEE. 24. CLAUSE (VI) MAKES IT CLEAR THAT IF EDUCATIONAL INSTITUTION DO NOT FALL UNDER EITHER OF THOSE TWO CATEGORIES AND STILL SUCH EDUCATIONAL INSTITUTIONS ARE ALSO ENTITLED TO THE EXEMPTION, PR OVIDED SUCH INSTITUTIONS ARE APPROVED BY THE PRESCRIBED AUTHORITY. THEREFORE ALL THESE THREE PROVISIONS APPLY UNDER THREE DIFFERED SPHERES. OTHE RWISE, THERE WAS NO NECESSITY FOR THE LEGISLATURE TO INTRODUCE THESE TH REE PROVISIONS. IN THAT VIEW OF THE MATTER, THE FINDING RECORDED BY THE TRI BUNAL THAT AGGREGATE AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 16 ANNUAL RECEIPT OF OTHER EDUCATIONAL INSTITUTION MEA NS, TOTAL ANNUAL RECEIPT OF EACH EDUCATIONAL INSTITUTION, IS CORRECT AND IT DOES NOT CALL FOR ANY INTERFERENCE. THEREFORE THE SUBSTANTIAL QUESTIO NS OF LAW NOS. 2 AND 3 IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE. 13. THE ABOVE JUDGMENT OF HON'BLE HIGH COURT OF KAR NATAKA IN THE CASE OF CIT VS. CHILDRENS EDUCATION SOCIETY (S UPRA) CLEARLY HOLDS THAT THE GROSS RECEIPT OF EACH OF THE INSTITU TE/UNIVERSITY/ EDUCATIONAL INSTITUTION WHICH SOLELY EXISTING FOR E DUCATIONAL PURPOSE IF LESS THAN THE PRESCRIBED LIMIT )WHICH IN THIS CASE IS RS.1 CRORE) THERE IS NO NEED FOR GETTING THE APPROVAL FR OM THE COMPETENT AUTHORITY AND THE INCOME OF SUCH INSTITUTION IS EXE MPT U/S 10(23C)(IIIAD) OF THE ACT. WE THEREFORE RESPECTFUL LY FOLLOWING THE ABOVE JUDGMENT AND IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF V ERIFICATION OF GROSS RECEIPTS OF VARIOUS INSTITUTIONS RUN BY THE ASSES SEE SOCIETY NEEDS TO BE VERIFIED AT THE END OF THE LD.A.O IN THE LIGH T OF THE JUDGMENT OF HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CI T VS. CHILDRENS EDUCATION SOCIETY (SUPRA) AND IF THE CONTENTIONS O F THE ASSESSEE ARE FOUND TO BE CORRECT AS SUBMITTED BEFORE US AND THE LD.A.O IS ALSO SATISFIED THAT ALL THE INSTITUTIONS RUN BY THE ASSE SSEE ARE EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PUR POSE OF PROFIT AYUSHMATI EDUCATION AND SOCIAL SOCIETY I.T.A.NO.923/IND/2016 17 COUPLED WITH THE FACT THAT THE AGGREGATE RECEIPT OF SUCH INSTITUTION IS LESS THAN RS.1 CRORE THEN THE LEARNED ASSESSING OFFICER MAY CONSIDER TO GRANT THE BENEFIT OF EXEMPTION U/S 10(2 3C)(IIIAD) OF THE ACT. NEEDLESS TO MENTION THAT REASONABLE OPPORTUNI TY OF BEING HEARD SHOULD BE PROVIDED TO THE ASSESSEE. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 06.11.2 018. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 06.11.2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSTT. REGISTRAR