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TMI Blog2018 (8) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... for purposes of profit, its claim u/s 11 that it is existing for “charitable purposes” within the scope of section 2(15) of the Act also fails both the ays. Thus, when the assessee is not entitled for the benefit u/s 11, all its other claims u/s 11 are not allowable and hence they become academic and hence not dealt with . X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Karnataka High Court's decision in the case of "Viswesvarayya Technological University v. ACIT (2014) 42 Taxmann.com 237" has laid down that institutions generating surplus of over 15-20% cannot be said to exist "not for profit" purpose. This was in the case of a government institution. In the case presented here, when the surplus is as high about 42% obviously the ratio of the decision of Karnataka High Court in the case of Viswesvarayya Technological University (supra) shall be applicable". 5.1 The relevant portion of the order of the Ld.CIT(A) is extracted as under : "I am not in agreement with the aforesaid contentions of the A.R praying for allowing exemption u/s 1O(23C)(vi) for the simple reason that for the instant years in appeal, the CCIT has not granted approval to the appellent's application for exemption u/s 10(23C)(vi) and just as no deemed registration can be granted u/s 12AA(2) as held in Anjuman-eKhyrkhah-e-Aam 200 Taxmann 27 there is no provision for deemed registration u/s 10(23C) either, in the absence of express approval by the CCIT as it is in this case, which would mean that the appellant did not enjoy the exemption u/s 10(23C)(vi) due to lack of regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the reason that the assessee is having a substantial percentage of surplus ranging from around 30% to 42% which prima facie points to the fact that the assessee is running a profitable venture. Thereafter, the A O denied exemptions relying on the same order and its ratio. The assessee challenged the same before the Ld. CIT(A) who confirmed denial of exemptions u/s 10(23C) (vi) , inter alia, for the reason that the assessee does not enjoy exemption for u/s 10(23C) (vi) for lack of registration . The assessee has not placed any material to say that the order passed by the prescribed authority ie the Chief Commissioner of Income Tax-III, Chennai is no more a good order and the orders of the Lower authorities are contrary to the facts and law on which they relied on their orders. Therefore, the corresponding grounds of the assessee are dismissed for both the ays. The Hon'ble SC in the cases of Aditanar Educational Institution vs Additional Commissioner Of Income-Tax and others in224 ITR 310 (SC) heldinter alia, that "the availability of the exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding as part of the college and therefore, cannot be considered as an investment and therefore, the provisions of Section 11, 12 & 13 were not violated. Further, Meenakshi College for Women cannot be considered as related person for the purpose of Section 11(1)(c) and 11(1)(d) rws 13(3). The loan given to another charitable Trusthavingsimilar objects for carrying out objects of such Trust could not be considered to have violated the provisions of Section 11(1)(c) and 11(1)(d) r.w.s 11(5), as contended by the A.O. The relevant portion of the order of the Ld. CIT (A) is extracted as under : "10.2. I have gone through the submissions made by the appellant on this issue along with the case laws relied on both by the A.O and by A.R and I find no substance in the submissions made by the A.R. It is quite clear that / the amount received as advance was repaid back by a higher amount ofRs.4,53,10,202/-, indicating that the differential excess amount of ₹ 70,25,780/- was loaned to the sister trust, Ganapathy Educational Trust without adequate security or adequate interest or both and therefore, it had clearly violated the provisions of Section 13(1)(c) r.w.s.11(5) and [13(2)(a)] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence not dealt with . I.T.A. Nos. 2244 & 2245/Chny/2016 Assessment Years : 2011-12 & 2012-13 Now, Let us examine the Revenue's appeals : 11. The Revenue filed these appeals with a delay of 3 days and sought condonation of delay. We heard the rival parties and on due consideration of the petition, condone the delay. 12. The Common grounds of the Revenue is extracted as under : "1. The order of the learned CIT (A) is contrary to the law and facts of the case. 2.1 The Id. CIT (A) erred in holding that there is no violation u/s. 13 (1) (c) of the l.T.Act. 2.2 The Id. CIT (A) failed to appreciate that as per Clause 40 of the Memorandum of Association only the outstanding amount payable to the Founder Trustee could have been paid to his wife Ms. Meenakshi Sundararajan. 2.3 The Id. CIT (A) failed to note that the payment made is not in consonance with any of the mandatory term of the trust. 2.4 The Id. CIT (A) failed to appreciate that the amount of ₹ 1 ,1190OI- paid to Ms. Meenakshi Sundararajan is in violation of Section 13 (1)(c). 2.5 The Id. CIT (A) ought to have appreciated that the amount was paid by way of honorarium without any services having been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled for honorarium in rendering services to the benefits of the assessee society. Therefore, as rightly argued by the learned counsel, the payment made to Ms.Meenakshi Sundararajan is covered by the said exemption. Therefore, we hold that the lower authorities have grossly erred in holding that theassesse is not entitled for exemption under sec. 11 of the Act." 15.1 The facts being almost identical and recurring for these assessment years too, following the ratio of the above ruling, payment of honorarium exgratia and medical expenses to the wife of the founder of the Trust, Smt. Meenakshi Sundararajan is held to be allowable . However, a question arises as to whether this expenditure is allowable when the exemption is denied u/s 11. We have considered. On denial of exemption, the income has to be assessed u/s 14 of the Act and when the purpose for which the assessee is existing is held as for purposes of profit, the impugned claim is allowable u/s 37. On this ground also, the Revenue's grounds fail and hence its appeals are dismissed. 16. In the result, the assessee's appeals in ITA nos2092& 2093/Chny/2016 are dismissed . The Revenue's appeals in I.T.A. Nos. 2244 & 2245/Chny/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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