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TMI Blog2012 (12) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... le on record. Assessee has not complied with two essential conditions as stipulated in the Act, therefore, we find no infirmity in the conclusion drawn in the impugned order. It is upheld. Finally, all these appeals are dismissed. - IT Appeal Nos. 193 to 198 (Ind.) of 2012 - - - Dated:- 8-11-2012 - JOGINDER SINGH And R.C. SHARMA, JJ. ORDER Joginder Singh, Judicial Member - These are the appeals filed by the assessee against the consolidated order dated 25.1.2011 of the Commissioner of Income Tax (Appeals) for the assessment years 2003-04 to 2008-09. The sum and substance of the grounds taken by the assessee in these appeals is that the learned CIT(A) was not justified in confirming the additions of Rs. 3,22,16,158/- (A.Y. 2003-04), Rs. 5,76,88,324/- (A.Y. 2004-05), Rs. 5,04,87,654/- (A.Y. 2005-06), Rs. 5,04,87,653/- (A.Y. 2006-07), Rs. 8,66,69,966/- (A.Y. 2007-08) and Rs. 8,66,69,966/- (A.Y. 2008-09) to the total returned income of the assessee and further erred in taking a view that exemption u/s 10(23C)(iiiab) of the Act is not available to the assessee without considering the decisions in IIM, Bangalore v. CIT [2009] 121 TTJ (Bang.) 560 and Maharashtra Rajya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,65,49,479/-. The Assessing Officer found that the assessee did not file return of income for the A.Y. 2006-07, therefore, notice u/s 148 was issued. The assessee filed nil income for the A.Y. 2003-04 on 3.3.2009 after claiming exemption u/s 10(23C)(iab). During assessment proceedings, books of accounts were produced by the assessee. The sum and substance of the issue is that the claimed exemption was denied to the assessee on the ground that such exemption is only available to the University or other educational institution solely existing for educational purposes and not for the purpose of profit and, therefore, the required condition is not fulfilled by the assessee. The Assessing Officer opined that the assessee is systematically generating profit, therefore, it is not existing for the benefit of public at large, therefore, the claimed exemption was denied. On appeal, the learned CIT(A) affirmed the stand of the Assessing Officer which is under challenge before the Tribunal. 3.1 Before coming to any conclusion, we are reproducing hereunder the relevant portion from the order dated 4th February, 2011 passed by the Hon'ble Delhi High Court in the case of St. Lawrence Educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts 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 utilized by the educational institutions for making addition to building and purchase of furniture, electrical equipments etc. Thereafter, a reference was made to the decision in Aditanars Educational Institution v. Additional CIT [1997] 224 ITR 310. Further the authority referred to the decision in Municipal Corporation of Delhi v. Children Book Trust [1992] 3 SSC 390 and came to held as follows:- "To sum up, for the grant of approval to an educational institution seeking exemption u/s 10(23C)(vi), the basic requirement of sub-clause(vi) of clause (23C) of Section 10 is that the educational institution seeking exemption should be existing solely for the purpose of education and not for the purpose of profit. Here emphasis is laid on the word solely. Considering the facts of the present case in entirety as discussed above and respectfully following the ratio of the aforesaid judgment of the Hon'ble High Court of Uttrakhand, it cannot be said that the assessee-applicant society and the educational institutions run by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn profit. However, the purpose would not lose its character merely because some profit arises from the activity. That, it is 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 this, would 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 Hotel and Lodging Association (supra). To decide the entitlement of an institution for exemption under Section 10(23C)(vi) of the Act, the test of predominant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Educational Society (supra) and the connected matters, is not applicable to cases fall within the provisions of Section 10(23C)(vi) of the Act. There are various reasons, which have been discussed in para 8.8 of the judgment, and the judgment of Allahabad High Court rendered in the case of City Montessori School (supra) lays down the correct law." 8. In view of the aforesaid decisions, the opinion expressed by the respondent that the educational institutions seeking exemption should not generate any quantitative surplus is legally untanable and incorrect. The Chief Commissioner has erred in assuming that for exemption there should not be any surplus, otherwise the institution society exists for profit and not charity i.e. education in the present case. In view of the aforesaid judgments of the Supreme Court, Bombay High Court and Punjab and Haryana High Court, reasoning inscribed by the competent authority solely on the foundation that there has been some surplus profit is unjustified. 9. In the result, we allow the writ petition and set aside the order passed by the competent authority and remit the matter to the said authority for fresh adjudication in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trust exists solely for educational purposes, the fact that it has other objects would not disentitle it to exemption so long as the activities carried out by it in that assessment year were that of running an educational institution and not for profit. Only the application of income as required under the Act and the predominant objects have to be kept in mind while granting or refusing such exemption. 3.3 If the facts of the case of the assessee available on record are perused, the assessee is trying to bring its case within the ambit of sec. 10(23C)(iiiab) of the Act, therefore, we are reproducing the same hereunder: "10(23C)(iiiab): any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government;" 3.4 If the language used in sub-section is analysed, it speaks about any educational institution which is solely existing for educational purposes and not for profit and at the same time, which is wholly or substantially financed by the Government. We have asked the assessee to produce its purposes and financial position. The ld. Counsel for the assessee pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to section 10(23C)(iiiad) of the Act which is reproduced hereunder: "10(23C)(iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution does not exceed the amount of annual receipts as may be prescribed;" The language used speaks about existence of solely for educational purposes and not for the purposes of profit if the annual receipts do not exceed the prescribed limit. However, if the aforesaid chart/income is analysed, we find that a huge abnormal profit has been created/earned by the assessee and the amounts are definitely beyond the prescribed limit. Vide Rule 2BC, the amount prescribed is Rs. 1 crore whereas the surplus generated by the assessee is in crores. On questioning from the Bench regarding conducting of examination, it was canvassed by the assessee that various schools of the Govt. are used by the assessee as examination centers free of cost, therefore, it may be considered as a grant. We are not agreeing with this proposition also because these schools are already in existence and actually claimed expenses are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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