9911796707
TMI Blog2012 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... - IT APPEAL NOS. 1099 & 1100/DELHI/2011 - - - Dated:- 29-2-2012 - Rajpal Yadav And B. C. Meena, JJ. G. N. Gupta for the Appellant S. Mohanthy for the Respondent ORDER Rajpal Yadav, Judicial Member The present two appeals are directed at the instance of assessee against the separate orders of even date i.e. 23.9.2010 passed by the Learned CIT(Appeals) on the appeals of assessee for assessment years 2003-04 and 2004-05. The issues agitated by the assessee in both the appeals are common, therefore, we heard them together and deem it appropriate to dispose of them by this common order. The grounds of appeals taken by the assessee are not in consonance with Rule 8 of the ITAT's Rules, they are descriptive and argumentative in nature. In brief, the grievance of assessee is that Learned First Appellate Authority has erred in confirming the addition of ₹ 33,94,100 and ₹ 8,85,600 in assessment years 2002-03 and 2003-04. 2. The brief facts are that assessee is a society registered with the Registrar of Societies, Meerut (UP) w.e.f. 18.12.2000. The society was formed with an aim and object of imparting education. It filed its return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the form of voluntary contribution subject to a specific direction then that will not form part of income of the trust or institution. Ld Assessing Officer thereafter made a reference to the decision of Madras High Court in the case of CIT v. Devi Educational Institution [1985] 153 ITR 571/[1984] 18 Taxman 221 and held that assessee has merely made part payment to Noida Authority for the purpose of taking allotment of land. It has not demonstrated the existence of an educational institution, therefore, it is not entitled for exemption of its income during these assessment years under sec. 10(23C)(iiiad) of the Income-tax Act, 1961. Accordingly, Assessing Officer made the additions in both the assessment years. 3. Appeal to the Learned CIT(Appeals) did not bring any relief to the assessee. 4. The learned counsel for the assessee while impugning the orders of Learned Revenue Authority below has submitted that registration under sec. 12AA of the Income-tax Act, 1961 has been granted to the assessee on 29th September 2009. The copy of such registration certificate is being placed on page 34 of the paper book. The assessee society has been accorded a provisional sanction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable on page 592. The learned counsel for the assessee thereafter made reference to the decision of Hon'ble Calcutta High Court in the case of CIT v. Doon Foundation [1985] 154 ITR 208/22 Taxman 9 and submitted that if the assessee had taken steps towards the running of a full-fledged teaching course then it would be construed that educational institution had been established and it will entitle for an exemption. He thereafter made reference to the decision of Hon'ble Kerala High Court in the case of CIT v. Sree Narayana Chandrika Trust [1995] 212 ITR 456/81 Taxman 199. In this case, the assessee laid down the foundation for the hospital run by the trust in the year 1973 though hospital was opened in the year 1978. The trust has become partner in three firms. The question which arose was whether the income of the assessee, prior to hospital becoming functional is exempt. It was held that income derived at the primary stage is entitled to exemption. The learned counsel for the assessee for buttressing his point further made a reference to the decision of Hon'ble Kerala High Court in the case of CIT v. St. George Forane Church [1988] 170 ITR 62/36 Taxman 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has rightly held that assessee has not commenced educational activities, therefore, it cannot be treated as solely existing for the purpose of education which can shower the benefit of sec. 10(23C)(iiiad) of the Act. 9. We have duly considered the rival contentions and gone through the record carefully. Before we consider the respective arguments raised by the learned representatives, it is imperative upon us to take note of the relevant statutory provisions which read as under: Sec. 2. In this Act, unless the context otherwise requires - ** ** ** (24) income includes - ** ** ** (iia) voluntary contribution received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) or by an university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or sub clause (23C) of Section 10 or by an electoral trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hool or it can be granted to the assessee during the construction period. The main emphasis of the learned counsel for the assessee is that expression existing employed in section 10(23C)(iiiad) of the Act does not convey the meaning of actual functioning of the institution. The assessee is a society. It is existing for educational purposes. It has applied for allotment of land which has been allotted to it. It has made part payment for the plot of land, site plan was sanctioned and it started construction of the school building. The school was ultimately became functional when an approval from the CBSE was granted. Thus, according to the learned counsel, the expression existing is associated with the society and not the functionality of the institution. On the other hand, the stress of the arguments of learned DR is that expression existing contemplates that unless an institution is active in the field of education, mere fact that it is in the process of establishing itself would not make such institution as eligible for benefit of sec. 10(23C(iiiad) of the Act. She emphasized that unless educational activities commenced, it cannot be said that the assessee society is existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ** ** ** Having regard to these facts, and in the light of prima facie view that the earlier judgment of this court requires reconsideration. We direct the Tribunal to refer the following question of law: 12. In view of the subsequent decisions, the preference to the view expressed earlier cannot be given. A Division Bench of Hon'ble Calcutta High Court in Doon Foundation's case ( supra ) has examined the question of an income of an educational institution existing solely for the educational purpose and not for profit. In this case, the assessee had just began its activities and in the relevant year, it was just started preparation of regular classes for teaching of Hindi and purchase some books. In a way, actually classes had not begun. The Hon'ble Court has observed as under: .The condition precedent for claiming exemption under Section 10(22) is, whether the educational institution exists solely for educational purposes and not for purposes of profit. There is no dispute nor can it be disputed that the assessee-society exists solely for educational purposes. The assessee has commenced activities connected with the imparting of education. For the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity is to be seen whether it exists solely for education and not to earn profit. Hon'ble Court has further observed that the purposes would not loose its character merely because some profit arise from the activity because it is practically not possible to carry on educational activity in such a way that the expenditure exactly balances the income and there is no resultant profit, for, to achieve the object. It would not only be difficult in practice but would also 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 under the Act to ascertain whether the balance of income is applied wholly and exclusively to the objects for which the trust or society is established. Thus, in a way, one has to determine genuineness of the activities of a society or institution by considering all the facts and circumstances and if it is established that pre-dominant object of the society exists solely for education and not to earn profit even though there is incidental profit, the institution would get benefit of the different provisions of the Income-tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
