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TMI Blog2017 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard. The matter relating to powers entrusted to the trustees and its relevance at the time of grant of approval has been discussed in the Central Board of Direct Taxes circular which should be taken into consideration. Regarding the matter relating to payment of remuneration, there are counter-claims without any basis to support the contentions of either of the parties. In the light of the above, as there is not enough material available on record to adjudicate on the matter and the fact that the guidelines laid down by the hon'ble Supreme Court in the case of American Hotel and Lodging Association [2008 (5) TMI 17 - SUPREME COURT OF INDIA] and the Central Board of Direct Taxes while granting the approval not been considered, we hereby set aside the matter to the file of the learned Principal Chief Commissioner of Income- tax to examine the same afresh - Assessee appeal allowed for statistical purposes. - I. T. A. No. 696/Jp/2015 - - - Dated:- 29-5-2017 - Kul Bharat (Judicial Member) And Vikram Singh Yadav (Accountant Member) For the Appellant : Rajeev Sogani, Chartered Accountant For the Respondent : B. K. Gupta ORDER Vikram Singh Yadav (Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulatory mechanisms are not to be analysed at the time of grant of approval. Compliance with these conditions has to be seen subsequent to grant of approval at the time of assessment on year-on-year basis. However, for grant of approval, the only threshold condition to be analysed is the fact of actual existence of institution for the sole purpose of education. The hon'ble Supreme Court at paragraph 34 of the order observed that if after the grant of approval it is brought to the notice of the prescribed authority that the registered/prescribed conditions are breached then the prescribed authority can withdraw the approval by following the procedure mentioned in that proviso. 3.1 It was further submitted that the Central Board of Direct Taxes has issued a clarification vide Circular No. 14 of 2015, dated August 17, 2015 (See [2015] 376 ITR (St.) 16), clarifying certain issues related to grant of approval under section 10(23C)(vi). At paragraph 1 of the said circular, the Central Board of Direct Taxes has clarified the scope of enquiry while granting approval. It has followed the guidelines prescribed by the hon'ble Supreme Court in the case of American Hotel and Lodgin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is B. H. M. S. and Mrs. Vidhushi Garg is M. Sc. (Microbiology). The learned Principal Chief Commissioner of Income-tax has wrongly referred to clause 14 of the trust deed dated November 14, 2003. The said clause of the trust deed prohibits trustees to draw any remuneration for their acting as trustees. It may be noted that the trustees can act in dual capacities i.e., one in the capacity as trustee and other in their own personal professional capacity. This remuneration is drawn by these two trustees in their capacity as any other employee of the trust rendering services to the trust. There is no prohibition in the trust deed in such situation, for the trustees to draw remuneration acting in individual professional capacity. It is brought to the notice that the same remuneration is not found violative of the provisions of the Act for the assessment year 2012-13 in the scrutiny assessment under section 143(3) dated March 20, 2015. Without prejudice to the above, it is submitted that reasonableness or otherwise of the remuneration is beyond the scope of enquiry at the stage of grant of approval. This is the regulatory requirement to be seen at the time of assessment on year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isos third and thirteen to section 10(23C)(vi) have been violated. The learned Principal Chief Commissioner of Income-tax has misdirected himself in referring to clause 6.22-Clause 6.3 in the amended trust deed reproduced in his order at as under : To invest the trust fund in the various financial gain projects/schemes for the purpose of raising funds of the trust to spend the same for the fulfilment of objects of the trust. The learned Principal Chief Commissioner of Income-tax has observed that the above clause is violative of the provisos third and thirteenth of section 10(23C)(vi). The third proviso provides for application of income to the extent of 85 per cent. and the thirteenth proviso provides for withdrawal of approval on certain conditions including non-compliance with the third proviso. Both the above provisos stipulate the regulatory mechanism. These are to be seen at the time of assessment and not at the time of grant of approval. Reference is made to the hon'ble Supreme Court decision in American Hotel and Lodging Association Educational Institute (supra) and the Central Board of Direct Taxes in its Circular dated August 17, 2015. The thirteent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-trust had amended its trust deed dated July 26, 2015 removing all the objects other than objects relating to education. What therefore, has to be examined is whether the amended objects clause satisfy the requirement of law or not. Further, where the assessee-trust is already in existence, at the time of seeking the approval, the Revenue can examine whether its activities are being carried out for education purposes or not. In this regard, the learned authorised representative has submitted that the assessee-trust is involved in educational activities and is running Jyoti Vidyapeeth Mahila Vishwavidyalya having more than 2200 students. However, there is a finding given by the learned Principal Chief Commissioner of Income-tax in this regard. The matter relating to powers entrusted to the trustees and its relevance at the time of grant of approval has been discussed in the Central Board of Direct Taxes circular which should be taken into consideration. Regarding the matter relating to payment of remuneration, there are counter-claims without any basis to support the contentions of either of the parties. 5.2 In the light of the above, as there is not enough material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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