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TMI Blog2011 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... t be any surplus, otherwise the institution society exists for profit and not charity i.e. education in the present case. – reasoning inscribed by the competent authority solely on the foundation that there has been some surplus profit is unjustified. - Writ petition are allowed - W.P.(C) 1254/2010, W.P.(C) 2463/2010 - - - Dated:- 4-2-2011 - THE CHIEF JUSTICE MR. JUSTICE SANJIV KHANNA, JJ. Through Mr. V.P. Gupta and Mr. Basant Kumar, Advocates. Through Mr. Sanjeev Sabharwal, Advocate Regard being had to the similitude of the issue involved in both the writ petitions, they were heard together and are being disposed of by a singular order. For the sake of clarity and convenience the facts in W.P.(C) 1254/2010 are adumbrated h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the aforesaid periods, it was clear that the assessee-society had shown surplus income of 3.35%, 7.40% and 2.06% respectively in its gross receipts after deducting all expenses including depreciation in the relevant assessment years. In case of the petitioner in W.P.(C) No.2463/2010, the Baptist Educational Society the surplus was 7.57%, 8.23% and 4.04% for the assessments years 2006-07, 2007-08 and 2008-09 respectively. The authority thereafter came to opine that the educational institutions run by the assessee-applicants were generating surplus out of their gross receipts year after year and it cannot be accepted that the surplus generated is merely incidental. An opinion was expressed that the surplus generated as above has been utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion rendered in Queens Educational Society (supra). Learned counsel also submitted that the decision in the case of Queens Educational Society (supra) has been distinguished by the Bombay High Court in Vanita Vishram Trust Vs. Chief Commissioner of Income-Tax and Another (2010) 327 ITR 121(Bom), Himachal Pradesh High Court in Maa Saraswati Trust Vs. Union of India (2010) 194 Taxman 84 (HP) and Punjab and Haryana High Court in Pinegrove International Charitable Trust Vs. Union of India and Others (2010) 327 ITR 73 (P H). 5. Mr. Sanjeev Sabharwal, learned counsel for Revenue supported the order passed by the competent authority. 6. In Aditanars Educational Institution (supra) the Apex Court while dealing with the factum of exemption ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not only be difficult of practical realization but would reflect unsound principles of management. In order to ascertain whether the institute is carried on with the object of making profit or not it is duty of the prescribed authority to ascertain whether the balance of income is applied wholly and exclusively to the objects for which the applicant is established. 7. In the case of Pinegrove International Charitable Trust(supra), the Punjab and Haryana High Court after referring to the decision in the field has expressed the following opinion:- (2) The provisions of Section 10(23C)(vi) of the Act are analogues to the erstwhile Section 10(22) of the Act, as has been laid down by Hon'ble the Supreme Court in the case of American ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions on which approval was given, have been violated or the circumstances mentioned in 13th proviso exists, then by following the procedure envisaged in 13th proviso, the prescribed authority can withdraw the approval. (3) The capital expenditure wholly and exclusively to the objects of education is entitled to exemption and would not constitute part of the total income. (4) The educational institutions, which are registered as a Society, would continue to retain their character as such and would be eligible to apply for exemption under Section 10(23C)(vi) of the Act. [See para 8.7 of the judgment - Aditanar Educational Institution case (supra)] (5) Where more than 15% of income of an educational institution is accumulated on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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