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TMI Blog2017 (6) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant being a trust exists solely for educational purposes and not for the purpose of profit. 3. The Ld. Principal Chief Commissioner of Income-tax was not justified in denying exemption on the ground that the amended Trust Deed executed on 26.03.2012 deleting certain objects alleged to be non-educational, was not valid. 4. Assuming without admitting that the amended Trust Deed dated 26.03.2012 was not valid, the Ld. Principal Chief Commissioner of Income-tax was not justified in denying exemption as the alleged non-educational objects were not implemented or acted upon. 5. That the Ld. Principal Chief Commissioner of Income-tax was not justified in ignoring the clarification issued by the CBDT in Circular No. 14/2015 dated 17.08.2015 and in denying the exemption to the appellant trust u/s 10(23C)(vi) of the Act. 6. That the Ld. Principal Chief Commissioner of Income-tax has further erred in not following the principles laid down by the Hon'ble Supreme Court in American Hotel & Lodging Association Educational Institute CBDT (2008) 301 ITR 86(SC) and ignoring that appellant trust was an institution existing solely for education eligible for exemption u/s 10(23C)(vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the other aspects. So, Pr. CCIT held that the assessee Trust does not qualify for approval u/s 10(23C)(vi) of the Act and thereby rejected the application without going into the merits of the activities and maintenance of the accounts. 5. Feeling aggrieved with the impugned order passed by ld. Pr.CCIT, the assessee has come up before the Tribunal by filing the present appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. Undisputedly, earlier application moved by the assessee Trust for grant of approval u/s 10(23C)(vi) of the Act for FY 2009- 10 was rejected on the ground that the assessee is not engaged in exclusive educational activities. It is also not in dispute that noneducational objects, namely, to contribute towards human resource development in the country; to establish, maintain or grant aid to homes for the aged, orphanages or other establishments for the relief and help to the poor, needy and destitute people, orphans, widows and aged persons; and to charge tuition fees and other fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .w. rule 2BC). Thus, while granting approval to entities covered under subclause (vi), the prescribed authority has to ensure that the applicant institution must exist "solely for educational purposes and not for purposes of profit". There are several Provisos to clause (23C) of section 10 and prescribe, inter alia, various monitoring conditions subject to fulfillment of which only the exemption can be availed. These monitoring conditions include mode and manner of application of funds, maintenance and audit of books of accounts in certain situations etc. Some other Provisos prescribe the manner of making application u/s 10(23C)(vi) and the circumstances when an approval granted earlier can be withdrawn. Representations have been received seeking clarification on certain issues related to operation of section 10(23C)(vi). These have been examined by the Board and following clarifications are made- 1. Scope of enquiry while granting approval1.1 Clarification has been sought on (he score of enquiry that can be made by the prescribed authority while grunting approval u/s 10(23C)(vi), i.e., whether it would be sufficient for the prescribed authority to consider the nature, existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be gauged at the assessment stage. So, in other words, the actual existence of educational institutions is the precondition and thereafter the applicant can approach the prescribed authorities for approval in terms of section 10(23C)(vi) of the Act by making application in the prescribed form. 12. Even otherwise, as per para 1.3 of the CBDT Circular (supra), the prescribed authority is eligible to grant approval u/s 10(23C)(vi) of the Act subject to such terms and conditions as deemed necessary including those falling with the framework of various proviso to said clause of section 10, which can be gauged while monitoring the case and in case of any breach thereof, the approval can be withdrawn. It is clarified in unequivocal terms that application seeking approval for exemption u/s 10(23C)(vi) of the Act is to be disposed off in view of law laid down by Hon'ble Apex Court in American Hotel and Lodging Association Educational Institute (supra). 13. As per amended Trust Deed dated 26.03.2012, the assessee Trust is empowered to carry out following activities :- (1) To open, run, continue, educational and vocational institutions in healthy surroundings. (2) To engage, teacher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amation of such other Trust with this Trust." 14. Assessee Trust has established institutions / colleges to provide various courses, namely, BCA, +2 Science & +2 Commerce, B.Tech & MCA and +2 Science & +2 Commerce in the following educational institutions / colleges :- (i) Roland Institute of Computer and Management Studies providing Bachelor Degree in Computer Education-BCA Course (set up in 1998). (ii) Roland Supriya Junior College (set up in 1999). (iii) Roland Junior College (set up in 1999) (iv) Roland Institute of Technology (set up in 2001) started with providing MCA Course with 60 seats and in the year 2002, added an Engineering Course consisting of several engineering streams comprising of 4 years' and providing a 'B. Tech' degree. 15. Perusal of the amended Trust Deed dated 26.03.2012, available at pages 15 to 29 of the paper book, apparently goes to prove that post amendment, the assessee trust is engaged exclusively to carry out educational activities by amending the non-educational clauses existing in the original Trust Deed dated 19.11.1997. Furthermore, all the courses being imparted by the institution of the assessee Trust are affiliated to St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture account of the assessee for FY 2012-13 available at page 97 of the paper book and statement of income & expenditure account of the assessee for FY 2013-14 available at page 133 of the paper book, it is proved that the assessee Trust's expenditure was more than its income and as such, it is an educational institution existing solely for educational purpose and not for purposes of profit. 20. Moreover, vide order dated 15.01.2013, assessee Trust is registered as a charitable Trust u/s 12AA of the Societies Registration Act, copy of order available at page 43 of the paper book. This fact goes to prove that the assessee Trust is established not for profit motive. Furthermore, coordinate Bench of the Tribunal vide order dated 28.07.2015 passed in IT(SS) A.No.44/CTK/2004 in assessee's own case held the assessee Trust eligible for exemption u/s 11 of the Act for block assessment period 01.04.1989 to 22.12.1998, copy of order is available at pages 30 to 32 of the paper book. 21. Furthermore, details of fixed assets given by the assessee Trust for FYs 2011-12, 2012-13 and 2013-14, available at pages 71, 129 & 158 respectively, also go to prove that the assets include laboratory equip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the settler as, in the instant case, it can be amended without approaching the civil court provided all the conditions laid down by the settler are fulfilled. So, the ratio of the judgment is applicable to the facts and circumstances of the case. 26. We are of the considered view that Pr.CCIT by ignoring the basic law as enunciated in American Hotel and Lodging Association Educational Institute (supra) has exceeded his jurisdiction to decline the approval for exemption u/s 10(23C)(vi) of the Act which is not sustainable in the eyes of law. 27. Hon'ble Apex Court in judgment cited as Queen's Educational Society vs. CIT - (2015) 372 ITR 699 (SC) explained the provisions contained u/s 10(23C)(iiiad) & (vi) as under :- "11. Thus, the law common to Section 10(23C) (iiiad) and (vi) maybe summed up as follows: (1) Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied - the purpose of education should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was an educational institution, which was providing education. No other activity was proved by the Department. Moreover, the Chief Commissioner had already granted exemption under section 12A / 12AA with effect from April 1, 2007. Merely because there were other objects of the society, that did not mean that the educational institution did not exist solely for educational purpose. The emphasis of the word "solely" is in relation to the educational institution, which is running not for the purpose of making profit and is not in relation to the objects of the society." 30. Judgment rendered by Hon'ble Allahabad High Court in case cited as Young Men's Christian Association (supra) is applicable to the facts and circumstances of the case because, in the instant case, the assessee has also been granted exemption u/s 12AA of the Act vide order dated 15.01.2013 and the Trust is also found to be eligible for exemption u/s 11 of the Act for block assessment period 01.04.1989 to 22.12.1998 by the coordinate Bench of the Tribunal in assessee's own case in order dated 28.07.2015 (supra). Even perusal of the original Trust Deed shows that the predominant object was educational though no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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