9911796707
TMI Blog2003 (1) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... rnatively under s. 11 of the said Act. 4. That on the facts and circumstances of the case, the AO as well as CIT(A) failed to consider the grant of exemption under s. 11 of the Act, alternatively and in doing so they also failed to follow the Board's circulars: (a) Circular No. 194/16-17-IT(AI) extracted from (1982) 132 ITR 445, 453-54(Cal) see p. 315 of the Pithisaria's Reprinted Circular Vol. I 1998 Edition. (b) Circular No. 14 (XI-35) of 1955 dt.11th April, 1955, p. 1434-35 of Pithisaria's & Chaturvedi, 1998 Edition, Vol. I; 5. That on the facts and circumstances of the case, the order of the CIT(A) is also vitiated for reason that he failed to adjudicate upon the alternative ground regarding claim of exemption under s. 11 of the Act raised before him as per written submissions. 6. That, on the facts and circumstances of the case, the AO as well as CIT(A) failed to give the opportunity to the appellant to support its case for exemption under s. 11 of the Act." 2. Though the assessee has raised various grounds of appeal but the entire controversy in this appeal revolves around three main issues: (i) Whether the assessee is entitled to exemption under s. 10(22) of the IT Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for purpose of profit within the meaning of s. 10(22) of the IT Act. , the assessee preferred an appeal before the CIT(A) challenging the assessment order on various grounds. The CIT(A) examined the various grounds raised before it but while giving a finding thereon, the CIT(A) did not give a specific finding on ground No. 3 which relates to the taxability of capital based grant received during the year at Rs. 6,43,175 for purchase of capital asset. With regard to alternative claim for exemption under s. 11 of the IT Act, the CIT(A) turned it down for the reasons that it was not made before the AO either in the return of income or during the course of assessment proceedings. The CIT(A) finally confirmed the AO's action of adding back alleged capital based grant, receipts of Rs. 6,43,175 and also an addition of Rs. 11,75,091 and Rs. 49,96,298 on account of surplus of project advance receipt over expenditure and surplus from HIVOS, respectively. Now, the assessee has preferred an appeal before the Tribunal and reiterated his contentions earlier raised before the lower authorities. 6. During the course of hearing, the learned counsel for the assessee has submitted that the tied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mr. Vajpayee has invited our attention to the objects of the assessee society with the submission that the key words in the primary object are promotion, development and dissemination of knowledge (pertaining to the women's welfare), the economic and social status, etc. Various methods were listed out for achieving their fulfilment. The primary activity of the assessee was to educate and train the women with the aid of knowledge acquired through different method. For this purpose, the beneficiaries at the grassroot were involved in the process of education in training in the various fields. He has also placed heavy reliance upon the written submissions filed before the lower authorities and contended that the assessee existed solely for educational purpose and in this connection, learned counsel for the assessee invited our attention to the meaning of words 'education' and 'knowledge' as given in Black's Law Dictionary and Law Lexicon by P. Ramanatha Aiyer. He further submitted that in the light of these definitions, the education and training programmes conducted by the assessee are fully covered within the meaning of term 'education'. Education is imparted by way of in-house tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as it is duly registered under s. 12A of the Act and the requisite conditions were also fulfilled. In support of his contention, the learned counsel for the assessee has relied upon the following judgments: (i) EducationalInstituteofAmericanHotel & Motel Assciation vs. CIT; (ii) Aditanar Educational Institution vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310 (SC); (iii) Aggarwal Siksha Samiti Trust vs. CIT (1987) 66 CTR (Raj) 95 : (1987) 168 ITR 751 (Raj); (iv) Nirmal Agricultural Society vs. ITO; (v) Siddhartha Publications (P) Ltd. vs. CIT; (vi) CIT vs.DoonFoundation (1986) 53 CTR (Cal) 440 : (1985) 154 ITR 208 (Cal); (vii) CIT vs. Mahalaksmi Textiles Mills Ltd. (1967) 66 ITR 710 (SC); (viii) Sole Trustee, Loka Shikshana Trust vs. CIT; (ix) Dy. CIT vs. Prajapita Brahmakumaris Ishwariya Vishwa Vidhyalaya (1999) 65 TTJ (Jp) 654 : (1999) 71 ITD 169 (Jp); and (x)GujaratStateCo-operativeUnionvs. CIT (1992) 103 CTR (Guj) 206 : (1992) 195 ITR 279 (Guj). 11. Learned counsel for the assessee further states that in denying the claim under s. 11 of the Act, the AO has failed to follow the Board's Circular No. 194/16-17 IT. It has been repeatedly held by the apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. At the most, assessee's case may fall within the definition of charitable trust because the charitable purpose includes relief of the poor, education, medical relief and advancement of any other job of general public utility. He has also invited our attention that the assessee is registered under s. 12A of the IT Act. 13. In support of his contention that the assessee does not exist solely for educational purpose but is involved in multifarious activity which may be called charitable, learned Departmental Representative invited our attention to a letter dt.27th April, 1992, appearing at p. No. 48 though which a grant was sought for the project advocacy and action for recogntion of early childhood care and education as basic service. In this matter, one of the objects was stated to create a data bank of individuals and agencies involved in child welfare and development activities. He also invited our attention to the details of project advance receipt and expenditure incurred during the assessment year in question with the submission that most of the grants were received for other than educational purpose like wasteland development through women's organization, creches for worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Saraswath Poor Students Fund (1985) 46 CTR (Kar) 107 : (1984) 150 ITR 142 (Kar); (viii) CIT vs. Nagpur Hotel Owners Association (2001) 165 CTR (SC) 1 : (2001) 247 ITR 201 (SC); (ix) CIT vs. U.P. Forest Corporation (1998) 145 CTR (SC) 402 : (1998) 230 ITR 945 (SC); (x) Mahila Sidh Nirman Yojna vs. IAC (1994) 50 TTJ (Del) 494 : (1994) 50 ITD 472 (Del); (xi) Smt. Tharulatha Shyam & Ors. vs. CIT 1977 CTR (SC) 275 : (1977) 108 ITR 345 (SC); (xii) CIT vs. Gwalior Rayon Silk Manufacturing Co. (1992) 104 CTR (SC) 243 : (1992) 196 ITR 149 (SC); (xiii) Bajaj Tempo Ltd. vs. CIT (1992) 104 CTR (SC) 116 : (1992) 196 ITR 188 (SC); and (xiv) CIT vs. Shaan Finance (P) Ltd. (1998) 146 CTR (SC) 110 : (1998) 231 ITR 308 (SC). 15. We have heard the rival submissions and carefully perused the orders of the authorities below and judgments referred to by the parties and material available on record. The moot question before us is to examine whether the assessee exists solely for educational purpose and not for the purpose of profit. If not, whether the tied up grants constitute corpus or income of the assessee. For deciding an issue whether the assessee exists solely for educational purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaged by the other society or trust to which assessee has given donation, it could not be said that the assessee did not fulfil the requirement of s. 10(22). 16. In the case of Aditanar Educational Institution vs. Addl. CIT, their lordships of the apex Court have held that the language of s. 10(22) of the Act is plain and clear and the availability of the exemption should be evaluated each year to find out whether institutions existed during the relevant year solely for educational purpose and not for purpose of profit. After making the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one, existing solely for educational purpose since the object is not one to make profit. The object of the society should be to establish, run, manage or assist college or schools or other educational institutions solely for educational purposes and in that regard, to raise or collect funds, donations, gifts, etc. and college and schools were the media through which the assessee imparted education and effectuated its object. In substance and reality, the sole purpose for which the assessee had come into exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IT Act, the assessee should be an educational institution or an establishment which primarily engages itself in educational activity. Though the words 'educational activity' are words of very wide amplitude, the element of imparting education to students or the element of normal schooling where there are teachers and taught must be present so as to fall within the sweep of s. 10(22). Institution may incidentally take other activities for the benefit of students or in furtherance of their education. It may invest its funds in any manner it likes or it may provide scholarship or other financial assistance which may be helpful to students in pursuing their studies. However, such incidental activities alone in the absence of actual activity of imparting education by normal schooling or normal conducting of class, would not be sufficient for the purpose of qualifying the institution to earn the benefit of s. 10(22). Simply by giving a scholarship or grant to the institution to enable them to pursue their educational activity without any control whatsoever of such students, an institution cannot be said to be an educational institution. 18. Turning to the case in hand, in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the assessee did not exist solely for educational purposes but was involved in multifarious activities though some of the activities are relatable to educational purpose. As such the assessee's case does not fall within the ambit of s. 10(22) and hence not entitled for exemption under the said section. 19. Now, the next question comes whether tied up grants are taxable in the hands of the assessee. In support of his claim learned counsel for the assessee has invited our attention to the judgments in the cases of Siddharth Publication Ltd. vs. CIT, Nirmal Agricultural Society vs. ITO and unreported judgment of the Tribunal of Delhi Benches in the case of Professional Assistance for Development Action vs. ITO in ITA No. 6207/Del/87, dt.25th Aug., 1989with the submission that the tied up grants can only be used as per the specific directions of the donor. In support of this contention, our attention was invited to various letters of grants appearing at page Nos. 36, 39, 44 and 45, 56, 58, 64, 71 to 88 and their respective accounts appearing at the compilation of the assessee. The learned counsel for the assessee has emphatically argued that whenever tied up grants were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as relied upon the following judgments: (i) Jayamal Jayanti Lal Thakare vs. Chief CIT (1998) 144 CTR (Guj) 384 : (1998) 230 ITR 142 (Guj); (ii) Chokshi Metal Refinery vs. CIT (1977) 107 ITR 63 (Guj); and (iii) CIT vs. Mahalaxmi Textile Mills Ltd. 22. On careful perusal of all these judgments, we find that as early as 1967, the apex Court in the case of CIT vs. Mahalaxmi Textile Mills has held that there is nothing in the IT Act which restricts the Tribunal to determination of questions raised before the Departmental authorities. All questions whether of law or of facts which relate to the assessment of the assessee may be raised before the Tribunal, if for reasons recorded by the Departmental authorities, in respect of contentions raised by the assessee, grant of relief to him on another ground is justified, it would be open to the Departmental authorities and Tribunal and indeed they would be under duty to grant that relief. The right of the assessee's relief is not restricted to the plea raised by him. 23. In the case of Choksi Metal Refinery vs. CIT following the judgment of the apex Court in the case of Navnit Lal C. Jaweri vs. K.K. Sen, AAC (1965) 56 ITR 198 (SC), their l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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