2015 (4) TMI 297 - HC - Income Tax

Exemption/approval, filed under Section 10(23C)(vi) rejected - Held that - Whether the issue was correctly decided or not, is not relevant at this stage. The fact is that the order dated 23.03.2009 was set aside by the Division Bench vide order dated 29.01.2010, in its entirety. It is necessary, therefore, for the CCIT to decide the matter afresh including on the question of limitation. In the circumstances, the impugned order rejecting its application for exemption is set aside. We are informed that the matter is, now, to be decided by the Commissioner of Income Tax (Exemption), Chandigarh, afresh, in accordance with the judgment titled Kashatriya Sabha Maharana Partap Bhawan, Kurukshetra Vs. Union of India & another, 2010 (1) TMI 1151 - PUNJAB AND HARYANA HIGH COURT wherein held that earning profits is not a deciding factor to conclude that an educational institution exists for profit. We reiterate that all the issues including the issue of limitation shall be decided after keeping in mind the principles laid down by the Apex Court M/s Queen's Educational Society Vs. Commissioner of Income Tax, 2015 (3) TMI 619 - SUPREME COURT

Summary

Issues:
Challenge to order rejecting exemption application under Section 10(23C)(vi) of the Income Tax Act for assessment years 2005-06 to 2008-09, consideration of earning profits for educational institution, compliance with previous judgment, issue of limitation in applications.

Analysis:
The petitioner challenged the order rejecting its exemption application under Section 10(23C)(vi) of the Income Tax Act for assessment years 2005-06 to 2008-09. The Division Bench previously held that an educational institution's existence for profit is not determined solely by earning profits. It was also established that accumulation of income beyond 15% is permissible for a maximum of 5 years if applied exclusively for educational purposes. The authority can grant approval subject to statutory requirements and not conflicting with the Act.

The Division Bench directed the Chief Commissioner of Income Tax to decide cases independently in light of the judgment. However, subsequent assessment orders were completed without exemption, leading to pending appeals. The CCIT rejected the petitioner's application without a fresh consideration, contrary to the Division Bench's directive. The issue of limitation for assessment years 2005-06 to 2007-08 was raised, but the Division Bench's order set aside the original decision, necessitating a fresh determination by the CCIT.

The High Court set aside the impugned order and directed the Commissioner of Income Tax (Exemption) to decide the matter afresh, in accordance with the previous judgment. All issues, including the question of limitation, must be reconsidered based on principles laid down by the Apex Court in a specific case. The writ petitions were disposed of accordingly, emphasizing the need for a comprehensive review of all aspects in light of legal precedents.