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TMI Blog2019 (8) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption u/s 10(22). Decisions of the Tribunal [ 2001 (2) TMI 1027 - ITAT MUMBAI] holding the assessee to be a educational institution existing solely for the purpose of education and allowing its claim of exemption under section 10(22) will certainly have a crucial bearing while deciding assessee s claim of exemption under section 10(23C)(vi). Therefore, learned Commissioner (Exemp.) cannot simply brush aside the decisions of the Tribunal by taking shelter behind the adage principle of res judicata will not apply to tax proceedings . As in M/S. QUEEN S EDUCATIONAL SOCIETY VERSUS COMMISSIONER OF INCOME TAX [ 2015 (3) TMI 619 - SUPREME COURT] held that if the surplus generated by an Education Institution is ploughed back for educational purpose, it has to be held that the institution exists solely for educational purpose and not for the purpose of profit. ADITANAR EDUCATIONAL INSTITUTION VERSUS ADDITIONAL COMMISSIONER OF INCOME-TAX [ 1997 (2) TMI 3 - SUPREME COURT] held that a trust or other similar body running an Educational Institution solely for educational purpose and not for the purpose of profit can be regarded as other Educational Institution coming within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To collect and circulate statistics and other information relating to the business of banking in India. (iv) To acquire by purchase, donation or otherwise and to maintain extend and improve a library consisting of works on banking, commerce, finance, political economy and kindred subjects. 3. The assessee claiming itself to be an educational institution existing solely for educational purpose and not for the purpose of profit had initially claimed exemption under section 10(22) of the Act. However, assessee s claim of exemption under section 10(22) of the Act in assessment years 1996 97 to 1998 99, was disallowed by the Department. The assessee challenged the disallowance of exemption under section 10(22) of the Act before the Tribunal. While deciding the issue in the assessment year 1996 97, the Tribunal in ITA no.6103/Mum./1999, dated 12th February 2001, allowed assessee s claim of exemption under section 10(22) of the Act. The same view was expressed by the Tribunal while deciding the appeals for the subsequent assessment years i.e., 1997 98 and 1998 99. However, section 10(22) of the Act was omitted from the statute by Finance (No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al activity. In this context, he referred to various judicial precedents. Further, looking at the financials of the assessee and the surplus generated, learned Commissioner (Exemp.) observed, it does not satisfy the condition of not existing for the purpose of earning profit . Thus, broadly on the aforesaid premises, he rejected assessee s application seeking exemption under section 10(23C)(vi) of the Act. Being aggrieved with the aforesaid decision of learned Commissioner (Exemp.), the assessee has filed the present appeal. Apart from the main grounds raised in the memorandum of appeal, the assessee has raised the following additional ground: 1. As per 9th proviso below section 10(23C)(vi) of the Act, the appellant s application dated 27th September 2015, for grant of approval ought to be regarded as allowed in the absence of an order rejecting the application. 4. Shri Nitesh Joshi, learned Counsel for the assessee opening his arguments on the additional ground submitted, that the assessee had applied for approval under section 10(23C)(vi) of the Act for the assessment year 2015 16, on 27th September 2015, before the competent authority. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be admitted, as the issue raised therein was not raised before learned Commissioner (Exemp.). Without prejudice to the aforesaid submission, the learned Departmental Representative submitted, merely because the competent authority has not passed any order rejecting the application for approval under section 10(23C)(vi) of the Act for the assessment year 2015 16, it cannot be said that the approval for the said assessment year is deemed to have been granted by the assessee. He submitted, the provision contained under the 9th proviso to section 10(23C)(vi) of the Act is directory and not mandatory. It cannot be considered to be a deeming provision. In support of such contention, the learned Departmental Representative relied upon the following decisions: i) CIT v/s Muzaffarnagar Development Authority, [2015] 372 ITR 209 (All.); ii) CIT v/s Sheela Christian Charitable Trust, [2013] 354 ITR 478 (Mad.); and iii) CIT v/s Karimangalam Onriya Pengal Semipu Amaipu Ltd., [2013] 354 ITR 482 (Mad.). 6. We have considered rival submissions and perused the material on record. We have also applied our mind to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in bringing the 9th proviso to section 10(23C)(vi) of the Act is to remove the difficulty faced by the applicants due to pendency of the applications for long period in the absence of any time limit for passing an order either approving or rejecting the application. There is nothing either in the statutory provision or even in the circular to even remotely suggest that non disposal of assessee s application under section 10(23C)(vi) of the Act either way would lead to deemed approval under section 10(23C)(vi) of the Act. Therefore, when the statutory provision or the circular explaining such provision does not provide for any such deemed approval, it cannot be read into the provision. It is relevant to observe, similar provision for grant or rejection of registration under section 12AA of the Act has been enacted under sub section (2) of section 12AA of the Act. However, while interpreting the said provision, different High Courts have held that absence of an order passed by the competent authority rejecting the application for registration within the stipulated period of six months would not lead to deemed grant of registration, as the said provision stipulating the time limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1996 97, 1997 98 and 1999 98, the Tribunal has clearly and categorically held that the assessee is an Educational Institution and existing for the purpose of education, therefore, allowed assessee s claim of exemption under section 10(22) of the Act. He submitted, when the Tribunal has held that the assessee is an Educational Institution existing solely for educational purpose and not for the purpose of profit, it is entitled to claim exemption under section 10(23C)(vi) of the Act. He submitted, even in the subsequent assessment years also, the Tribunal has held that the assessee is a Charitable Institution and its objects are for charitable purpose, hence, entitled to claim exemption under section 11 of the Act. In this context, he drew our attention to the orders passed by the Tribunal. He submitted, though, assessee s registration under section 12A of the Act was cancelled on the allegation that it is undertaking commercial activity with profit motive, however, the Tribunal not only restored the registration under section 12A of the Act, but also held that the assessee is a Charitable Institution. Thus, he submitted, in face of the orders passed by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Maritime Studies Trust, [2014] 369 ITR 645 (Bom.). 10. The learned Departmental Representative submitted, in course of proceedings before learned Commissioner (Exemp.), the assessee failed to furnish plausible explanation to various queries raised by him, such as, increase in examination fees, increase in surplus, nature and character of the institution etc. Drawing our attention to certain factual details, he submitted, examination fee received by the assessee is very high compared to expenditure incurred by the assessee for holding examinations. Thus, he submitted, the aforesaid facts clearly reveal that the assessee is having profit motive. He submitted, merely because assessee s claim of exemption under section 10(22) of the Act was allowed by the Tribunal in assessment year 1996 97 to 1998 99 or its claim of exemption under section 11 of the Act was allowed in the some of the past assessment years, that does not automatically entitle the assessee for exemption under section 10(23C)(vi) of the Act, as, the conditions of the said provision has to be satisfied by the assessee in each assessment year. He submitted, the principle of res judicata does not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s juncture, it would be worthwhile to examine the provisions of section 10(22) of the Act (now omitted) and section 10(23C)(vi) which are relevant for our purpose. Section 10(22) (22) any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit; Section 10(23C)(vi) (vi) 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; 12. A conjoint reading of the aforesaid provisions would make it clear that the basic condition enshrined in both the provisions remain same. The first condition which has to be satisfied is, the person claiming exemption must be a University or other Educational Institution. The second condition is, such University or Educational Institution must exist solely for educational purpose and not for the purpose of profit and the third condition is the educational institution must be approved by the prescribed authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years simply on the reasoning that principle of res judicata does not apply, in our view, is improper without properly examining the factual context in which such decisions have been rendered. It is relevant to observe, even in assessment years 2008 09 and 2009 10, assessee s claim of exemption under section 11 of the Act have been allowed by the Tribunal accepting the assessee as a Charitable Institution. The impact/applicability of the aforesaid decisions of the Tribunal certainly have to be examined/evaluated while deciding assessee s claim of exemption under section 10(23C)(vi) of the Act, since, the core issue which has to be seen is whether the assessee is an Educational Institution existing solely for the purpose of education and not for the purpose of profit. From the materials placed before us, we find that the assessee is running the following courses: 14. Flagship Courses JAIIB CAIIB CAIIB Electives Diploma in Banking and Finance (DB F) 15. Specialized Diploma Courses Diploma in Banking Technology Diploma in Trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of the Banks. 19. Though, learned Commissioner (Exemp.) has mentioned in his order that only in six courses the assessee has issued login I.D. and password to the candidates for availing e learning, web class and mock test. However, on what basis he has recorded such finding is not transparent. Further, it is not forthcoming whether the assessee was given sufficient opportunity to furnish all documentary evidences and material to demonstrate that it has imparted training/education in respect of the courses offered. Therefore, without conducting in depth enquiry/verification and examining the relevant materials, it cannot be concluded that the assessee is not a Educational Institution existing solely for the purpose of education and not for the purpose of profit. Such enquiry and examination by the competent authority is all the more relevant and necessary considering the fact that while allowing assessee s claim of exemption under section 10(22) of the Act, the Tribunal has held that the assessee is an Educational Institution existing solely for the purpose of education and not for the purpose of profit. In our considered opinion and which is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve a crucial bearing while deciding the issue whether the assessee is an Educational Institution existing solely for the purpose of education as per section 10(23C)(vi) of the Act. On a perusal of the impugned order of learned Commissioner (Exemp.), we find that he has not examined the applicability of the ratio laid down in the aforesaid decisions to the facts of the assessee s case. Therefore, on overall consideration of the facts and material on record, we are of the view that the entire issue relating to assessee s application seeking approval under section 10(23C)(vi) of the Act needs to be restored back to the file of learned Commissioner (Exemp.) for de novo adjudication after properly examining assessee s claim keeping in view all the materials on record as well as the ratio laid down in the judicial precedents referred to above or which may be cited by the assessee in course of the proceedings. Accordingly, we restore the issue to the file of the learned Commissioner (Exemp.) for de novo adjudication after providing reasonable opportunity of being heard to the assessee. These grounds are allowed for statistical purposes. 22. In the result, ass ..... 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