9911796707
TMI Blog2013 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commissioner of Income-tax(Appeals)-IV, Hyderabad, dated 29.6.2012. 2. Revenue is aggrieved against the order of the Commissioner of Income-tax(Appeals) on account of the relief granted by the CIT(A) to the assessee, when the assessee failed to obtain the approval under S.10(23)(c)(via) of the Act, which, according to the Revenue, is mandatory. Effective grounds taken by the Revenue in this behalf read as follows- (1) (2) The learned CIT(A) erred in directing the Assessing Officer to consider the assessee as eligible for exemption under section 10(23)(V) though the society was not held by him solely for the purpose of education. (3) The learned CIT(A) ought to have appreciated the fact that the objects of the society includes non-educational purposes which will bar the assessee from claiming the exemption u/s. 10(23C)(iiiad) of the Act. (4) The learned CIT(A) failed to see that the assessee has likelihood and the capacity to engage in different activities other than solely for the purpose of education as empowered by the Aims and Objectives. (5) 3. At the very outset, the learned counsel for the assessee mentioned that the issue involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1980) 121 ITR 1 (SC). In this case the Honourable Supreme Court has noticed that the first and foremost object of the assessee is "to promote commerce and trade in art silk yarn, raw silk, cotton yarn, art silk cloth, silk cloth and cotton cloth". This has been noticed as the dominant or primary purpose of the assessee which is considered as charitable purpose. It is further held that what is necessary to be considered is whether having regard to all the facts and circumstances of the case, the dominant object of the activity is profit making or carrying out a charitable purpose. If it is the former the purpose would not be charitable purpose but if it is the latter the charitable character of the purpose could not be lost. If we apply this test in the present case it is clear that the activity of obtaining licences for import of foreign yarn and quotas for the purpose of indigenous yarn which was carried out by the assessee was not an activity for profit. The pre-dominant object of this activity was promotion of commerce and trade in art silk, raw silk, cotton yarn, art silk cloth, silk cloth and cotton cloth which was clearly was an object of general public utility and profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection with the fourth leg of Sec 2(15) of the Act dealing with "advancement of any other object of general public utility". However it may be seen that the norms laid down in the said three cases also hold good in respect of other three activities of charity i.e relief of the poor, education and medical relief. In the light of the rulings of the Hon ble Supreme Court in the above three cases if the objects of the appellant are scrutinized, it is evident that the first and foremost objective of the appellant was to serve in the field of education which is strengthened by the fifth objective. This objective of the appellant has to be treated as the primary or dominant purpose for which' the appellant was formed. It is to effectuate this objective the appellant has set up a pharmaceutical college after obtaining the necessary approvals from the concerned Government Departments. In the year of account under appeal the appellant has admitted the students selected by the Government for undergoing Pharmacy course. This is a four year course after which the students are allowed to take examination conducted by the Government for awarding a degree as a Pharmacist to the successful st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar was only of running an educational institution. In the light of above discussion it is submitted that the multiple objects of the appellant society shall not stand in the way of its being an educational institution. The Assessing Officer held that the objectives of the appellant society are not solely for educational purposes. As submitted earlier the appellant has no doubt has multiple objectives but the first and foremost objective is to serve in the filed of education. As ruled out by the Honourable Supreme Court in the aforesaid three cases the primary or the dominant objective of the appellant society is to carry on the educational activities. To carryout this object the appellant has set up a pharmaceutical college, acquired necessary infrastructure, admitted the students selected by the Government for admission into pharmaceutical course, conducted regular classes and laboratory experiments over a period of four years. In this manner the appellant has prepared the students for taking the examination conducted by the Government and get a degree as pharmacist. Apart from this the appellant has not done any other work in the year of account. In this connection reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t educational. At the outset it is submitted that in this case the Honourable Madras High Court was dealing with the matter pertaining to the claim of benefit under section 80G of the Act by the assessee and the facts of that case are totally different from the facts available in the appellant's case. With regard to the likelihood and the capacity of the trustees for spending the monies of the trust to other objectives which are not solely education in nature, it is submitted that in the. year of account the appellant has carried out the educational activities and utilized its funds for educational purposes exclusively. The surplus left out at the end of the accounting year was utilized for the acquisition of further infrastructure for the development of educational activities. Kindly refer to the annexure 5. Under circumstances the conclusion of the Assessing Officer with regard to the utilization of the funds of the appellant has no basis. For the reasons given above, the appellant may kindly be granted exemption. 4. On the other hand, the Learned Departmental Representative, relied on the order of the assessing officer. 5. We heard both the parties and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Hyd/2007 and 518/Hyd/29008 for the assessment years 2002-03 and 2004-05 and Sri Sai Sudhir Educational society, Hyderabad in ITA No.999/Hyd/2006 for the assessment year 2003-04. Therefore, we set aside the orders of the lower authorities and remit back the matter to the file of assessing officer with a direction to assessing officer that he shall reconsider the entire issue in the light of judgment of Supreme Court in the case of M/s. Islamic Academy of Education Another V/s. State of Karnataka and Another ((supra), and in the cased of T.M.A.Pai Foundation and Others V/s. State of Karnataka and Others (supra), and find out whether the assessee has received any money over and above the fees prescribed and thereafter decide the issue afresh in accordance with law after giving reasonable opportunity of hearing to the assessee. We make it clear that the assessee is not entitled for exemption either u/s. 11 or u/s. 10(23C) in case it collected any money by whatever name it is called i.e. donation, building fund, auditorium fund etc. etc., over and above the prescribed fee for admission of students. 4. In the result, Revenue s appeal is allowed for statistical purposes. Consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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