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TMI Blog2015 (1) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... lege level. 2. To establish and manage educational institutions and to construct or acquire and run or manage hostels for boys and students of our college for furtherance of their education." The petitioner-assessee has applied for the Registration under Section 10(23C)(vi) of the Income Tax Act which is as under :- " ...any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause(iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority......" The CCIT has sought the report from the Commissioner of Income Tax (hereinafter referred as CIT) on 1.4.2008 and the same was received on 11.2.2009. On the basis of the report, the respondent no. 1 (CCIT) has refused the registration. Being aggrieved, the petitioner-assessee has filed the present writ petition. With this background Shri Rakesh Ranjan Agrawal, learned Senior Counsel assisted by Shri Suyash Agrawal, learned counsel submits that the petitioner-assessee is a Trust set up at Allahabad. The Trust Society is running an Educational Institution, which is not for the purpose of profit. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed some other social objects. Surplus income shown by the petitioner is increasing and using for activities which are aimed at enhancing the income of the institution. The fee charged from the students is on a higher side and, in each year, there is an element of profit. So, the petitioner is not existing solely for educational purpose and its main motive is to make the profit by charging higher fee from the students. To support his arguments, he relied upon the ration laid down in the following cases : 1."CCIT vs. Queen's Educational Society (2009) 319 ITR 160 SC; and 2. Karnataka CCIT vs. Sir M. Visveswaraya Educational Trust (2009) 319 ITR 425" We have heard both the parties at length and gone through the material available on record. From the record, it appears that the Society came into existence in the year 1910 and on the land, which was taken for 99 years lease, the petitioner has constructed a building for school. So, it is not correct to say that it is not providing education. Undoubtedly, the petitioner is an educational institution, who is providing education. No other activity was proved by the Department. Moreover, the CCIT has already granted exempted under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object was that it permitted acquisition of property whether movable or otherwise for the achievement of other objects for which the trust/society had been established. The trust in question had been established in terms of a memorandum. It was not the case of the Revenue that any one of the objects out of the 22 objects enumerated therein was not a charitable object. If that be so, clause (f) permitting acquisition of movable or immovable property for achievement of one of those purposes would necessarily imply that the property was acquired for one of the charitable purpose stipulated in the memorandum." In American Hotel & Lodging Association, Educational Institute vs. CBDT 2008 (301) ITR 86 SC, the Supreme Court analysed the provision and found that the second proviso lays down the powers and duties of the prescribed authority for vetting an application for approval and that the prescribed authority was empowered to call for the documents including annual accounts or information to check the genuineness of the activities of the institution. Under the third proviso, the prescribed authority, while judging the genuineness of the activities of the applicant was required to ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the activities of the applicant institution as to whether the applicant applies its income wholly and exclusively to the objects for which it is constituted/established. Under the twelfth proviso, the prescribed authority is required to examine cases where an applicant does not apply its income during the year of receipt and accumulates it but makes payment therefrom to any trust or institution registered under section 12AA or to any fund or trust or institution or university or other educational institution and to that extent the proviso states that such payment shall not be treated as application of income to the objects for which such trust or fund or educational institution is established. The idea underlying the twelfth proviso is to provide guidance to the prescribed authority as to the meaning of the words "application of income to the objects for which the institution is established". Therefore, the twelfth proviso is the matter of detail. The most relevant proviso for deciding this appeal is the thirteenth proviso. Under that proviso, the circumstances are given under which the prescribed authority is empowered to withdraw the approval earlier granted. Under that pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the predominant object of the activity is to earn profit and that it is not an educational activity. In order to ascertain whether the institute is carried on with the object of making profit or not it is the duty of the prescribed authority to ascertain whether balance of income has been applied wholly and exclusively to the object for which the institution is not established and in deciding the character of the recipient it was not necessary to look at the profits of each year but to consider the nature and the activities undertaken. The Supreme Court held that the threshold conditions are actual existence of an educational institution and approval of the prescribed authority for which every applicant has to move an application in the standardised form in terms of the first proviso. If the prerequisite conditions of actual existence of the educational institution is fulfilled then the question of compliance with the requirements as spelt out in the other provisos would arise. At this stage, such considerations are not required. From the record, it also appears that the facts were not analyzed by the authorities below in a proper manner. Before us the documents which were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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