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TMI Blog2006 (9) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon ground is against the observations of the CIT(A) that the issuance of notice under section 148 of the Income-tax Act, 1961 (the Act ) is weak in nature and is not sustainable in the eyes of law. 3. The assessee is a society registered under the Public Societies Registra-tion Act, and is assessed as an Association of Persons (AoP). The main object of the Society is to establish aid and administer educational and other institutions to impart education at all stages in all subjects including medicine, engineering, etc. for diffusion of knowledge. One of the projects undertaken by the society was to establish medical college at Khammam. For want of approval, the Society could not take up any activity other than construction of buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he society and there was no fresh information warranting the reopening of the assessment. However, the Assessing Officer did not agree with the contention of the assessee and proceeded with the assessment. The CIT(A) held that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, according to him, the initiation of the proceedings under section 147 was weak in nature and was not sustainable in the eyes of law. 4. No serious arguments were advanced on this issue by either side. From the perusal of the records, it is seen that for assessment year 1997-98 no return was filed at all and only the audited accounts were filed. Undoubtedly, under section 139(4A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... civil works, the assessee had not carried out any educational activity. There- fore, according to him, the income earned by the assessee was chargeable to tax. In response to the show-cause letter issued by the Assessing Officer, the assessee made elaborate submissions. The gist of the submissions is that the establishment of educational institutions involves creation of infrastructure and other ancillary and incidental facilities. During the two years, the society was engaged in the creation of necessary infrastructure for the Medical College. It was contended that creation infrastructure is a part and parcel of establishment of an educational institution. Several judgments were relied upon by the assessee in its submissions. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Trustees of Vanita Vishram v. CIT [2006] 280 ITR 345. 8. In the case of Devi Educational Institution ( supra ), the Court was construing the word existing appearing in section 10( 22 ) of the Act and held that the existence of the institution, such existence being construed as imparting of education during the relevant year, was an essential pre-condition for claiming benefit under that provision. The Court reconsid-ered this judgment in MR.AR. Educational Society s case ( supra ) and observed that the word existing is not the same thing as being functional. The prima facie view of the Court was that the width of the provision is not required to be cut down by insisting that the educational activity must ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lege. It is common knowledge that it takes considerable time to set up such an infrastructure. Since the activity of setting up the infrastructure was towards the fulfilment of the main object for which the Society was established, the assessee should not be denied the benefit of section 11. In fact, the Teaching Hospital of the Society had come into existence during the previous year 1996-97 itself. It is also not the allegation of the Department that the monies were utilised for purposes other than the object of the Society. Therefore, viewing the facts of the case in the light of the judgments referred to above, we are of the opinion that the CIT(A) was justified in granting exemption to the assessee under section 11 of the Act. 9. B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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