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TMI Blog2011 (11) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ner can be considered to be an existing educational institution in the next A.Y. is wholly unwarranted. Chief CIT, Panchkula is directed to pass an order in terms of the observations made above. See Oxford University Press (2001 (1) TMI 79 - SUPREME COURT)- Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... was also asserted that the eligibility of an institution for exemption under Section 10(23C)(vi) of the Act, is determined by the objects of the institution and more specifically the dominant object of the institution. Once the petitioner satisfies such conditions, the petitioner is eligible for approval under the Act. It was also pointed out that the petitioner actually started educational activities such as Jindal Global Law School in September, 2009 with its first academic year. Such Law School has been granted recognition by Bar Council of India, Law School Admission Council of USA and International Society of law Schools, USA. The claim of the petitioner for approval was declined by the Chief Commissioner Income Tax, Panchkula when it was observed as under: "5. I have considered the above facts. The following are the conditions to be satisfied before an application can be given approval under Section 10(23C)(vi): (1) It must be an institution existing solely for the purpose of education. (2) If should not existing for the purpose of profit. (3) The receipts should exceed Rs.1 crore. 6. Whether a university is existing for the purpose of education will have to be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage of the establishment of the educational institution was held entitled to exemption. It is also pointed out that the correctness of Division Bench judgment of Madras High Court in Commissioner of Income Tax Vs. Devi Educational Institution and others 153 ITR 571 has been doubted by the later Division Bench judgment in Mr. Ar. Educational Society Vs. Commissioner of Income Tax 253 ITR 589. Therefore, the approval under Section 10(23C) of the Act is not in respect of an educational institutional, which is active in imparting education, but also to an institution, which is in the process of establishment. The expression 'existing solely for educational purposes' has to be interpreted accordingly. The said interpretation is the only interpretation keeping in view the express language of the statute and also the intention thereof. On the other hand, learned counsel for the Revenue has vehemently argued that in terms of the judgment of Madras High Court in Devi Educational Institution case (supra), that taking steps for establishment of an educational institution but not actually engaged in imparting education does not satisfy the parameters for approval under Section 10(23C) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub clause (iv) or sub clause (v) or sub clause (vi) or sub clause (via) shall make an application in the prescribed form and manner to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under sub clause (iv) or sub clause (v) or sub-clause (vi) or sub clause (via): Provided further that the prescribed authority, before approving any fund or trust or institution or any university or other educational institution or any hospital or other medical institution, under sub clause (iv) or sub clause (v) or sub clause (vi) or sub clause (via), may call for such documents including audited annual accounts or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institutions, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be non-charitable is a main or primary object of the trust or institution or it is ancillary or incidental to the dominant or primary object which is charitable." In view of the said judgment, the main and primary objects of a Trust or institution are relevant to determine the nature of such trust or institution. The petitioner is a University created under a statute, when the schedule in terms of Section 3 of the Haryana Act was amended so as to incorporate the petitioner - University as one of the University established under the Act. Such University has to satisfy the objective as delineated in Section 3 of the Haryana Act, which are undisputedly for the educational purposes. The said aspect has not been controverted by the authority in the order impugned or by the learned counsel for the Revenue during the course of arguments before this Court. Therefore, we have no hesitation to hold that the petitioner is a University established solely for educational purposes and not for the purposes of profit. But having found so, still the question; whether the petitioner has to actually work in the field of education before its request under Section 10(23C) (vi) considered, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acie view that the width of the provision is not required to be cut down by insisting that the educational activity must have been carried on in the relevant previous year, even though there is no doubt whatsoever that the society was engaged in taking the steps required to make the educational activity operative, the steps so taken being the construction of the buildings and other facilities in which the task of imparting the education was to be carried out. xxx xxx xxx Having regard to these facts, and in the light of our prima facie view that the earlier judgment of this court reuires reconsideration. We direct the Tribunal to refer the following question of law:" In M/s Oxford University Press case (supra), the assessee was a non-resident company. The assessee claimed its income as exempt from payment of income tax by virtue of provisions of Section 10(22) of the Act. The High Court answered the question against the assessee by holding that the assessee was Oxford University Press and not the University of Oxford nor it did carry on activities in India. The only activity carried on by the Oxford University Press in India was the activity of printing and publishing books a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinite public purpose and is meant to achieve a special object. xxx xxx xxx 32. I am of the view that the expression 'existing solely for the educational purpose and not for the purpose of profit' qualified a 'University or other educational institution'. In a case where a dispute is raised whether the claim of exemption from the tax by the assessee is admissible or not it is necessary for the assessee to establish that it is a part of a University which is engaged solely or at least primarily for educational purposes and not for purposes of profit and the income in respect of which the exemption is claimed is a part of the Income of the University….." In the judgment, it is further observed (Hon'ble Mr. Justice Y.K.Sabharwal), as under: "64. …..It is not the case of the assessee nor is there any such finding that the assessee is imparting any education or has any educational activity in India. In this view the assessee is not entitled to claim exemption. Any other interpretation would be absurd and manifestly unjust. The absence of word 'India' in this provision is inconsequential. It has to be read into Section 10(22). The literal construction would lead to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the preliminary stages of the establishment of the educational institutions concerned was held entitled to the exemption. In Doon Foundation's case (1985) 154 ITR 208 (Cal), the assessee had only taken the preliminary steps towards the running of a teaching course; and the income derived during this period was held to be that of an educational institution. In the other case, Secondary Board of Education's case (1972) 86 ITR 408 (Orissa) had a fund constituted under the Orissa Secondary Education Act, 1953. One of the sources of the income of the Board was the profit from compilation, publication and printing and sale of text books. The income was to be utilized towards development and expansion of educational purposes and the surplus, if any, was to form part of a sinking fund to be devoted to the cause of education as and when necessary. The income derived from the activities mentioned above was treated as that of an educational institution and exempted." The income of Rs.3,11,48,350/- during the assessment year 2008-09 consist of endowment of Rs.3 crores received by the petitioner in terms of the provisions of the Haryana Act and the remaining amount is interest income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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