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TMI Blog2017 (11) TMI 1877X X X X Extracts X X X X X X X X Extracts X X X X ..... ly school buses to carry the children to and fro in the village where public transport for the said exercise is not easily available demonstrated that its claim has been rejected purely on biases and prejudices. The fact that it results in creating an asset is neither here nor there. The re-deployment of funds is found as per record purely for the purpose of education. The mere fact that the assessee is paying lesser salary to trained teachers does not necessarily demonstrate that the quality of the education necessarily suffers as it would depend upon the ratio of available teachers looking for jobs and the institutions looking for such people at the relevant point of time i.e. the availability of qualified teachers looking for jobs. Similarly the suspicions that the assessee was not imparting quality education, it is seen is also not borne out from the record. The decision of the Hon'ble Bombay High Court in the case of Yash Society [ 2015 (3) TMI 459 - BOMBAY HIGH COURT] operates as argued by the ld. AR entirely on different set of facts and circumstances and in the facts of the present case, has no role whatsoever. On consideration of the facts, circumstances and positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety with the aim to open a good school which has been done in the rural and also urban areas meant for children from all strata and make available all possible facilities and made a model school. This factual background, it was submitted, has been duly noted in the order. Despite this, our attention was invited to copy of Memorandum of Association at page 6 of the Paper Book and the Aims and Objects of the Society enumerated in detail were referred to. It was his submission that CIT (Exemptions) issued a Show Cause Notice requiring details on the activities, bank accounts, salary, fee structure, donations etc. enumerated in para 5 from S.No. (i) to (xvi) of his order. All these details, it was submitted, were made available. However, relief is denied to the assessee, it was submitted, on pure prejudices and biases questioning the sudden need of the assessee society to seek exemption u/s 12A and not 10(23C)(vi) when till date society had been found to be claiming exemption u/s 10(23C)(iiad). Specific attention was invited to the fact that the CIT (Exemptions) was aware that judicial precedent was available in support of the claim. However, the ld. CIT (Exemptions), it was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely to impart education with no emphasis on quality. 10 It is seen that no evidence has been provided vis- -vis land owned by the society except a reference made to the balance sheet. Since no papers w.r.t. land has been furnished the fact of possession of land with society remains unverifiable. 11. In light of the above it is clear that the society has undertaken several activities that are pointers towards a greater emphasis on generating surplus rather than on improving imparting quality education. The emphasis during the year is on adding to the number of vehicles even though transportation has never been stated as an object. In light of the above as also the finding that the applicant society is not covered within the mandate of section lO(23c)(vi) of I.T. Act, 1961. I have no option but to proceed on merits and deny the registration to the applicant u/s 12AA of Income Tax Act, 1961. 2.1. Addressing the said reasoning, it was his submission referring to pages 121 to 123 of the Paper Book that the fee structure of the school, Spring Dale Public School, Ismailabad under Markandeshwar Educational Society was very reasonable. It was his submission that in 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the creation of assets and not on re-deployment of funds towards education, it was submitted, is completely misconceived and prejudicial de horse fact. The objections that there is no evidence of land owned, it was submitted is also contrary to record. The land has been valued at ₹ 1 lac on which a school of about ₹ 60 lacs stands and since the existence of land demonstrated on the balance sheet was never questioned as no specific query was raised in regard thereto, the occasion of furnishing any papers in support of the said claim never arose. Thus, it was his submission that the assessee has addressed all the points as there is no surplus. In fact, the assessee is constantly endeavoring to ensure that the best possible education is available to the children. Accordingly, it was his prayer that registration u/s 12A may kindly be directed to be granted as it has been denied to the assessee on an incorrect appreciation of facts and law. Addressing the legal position, it was submitted, that the decision of the jurisdictional High Court in case of Pinegrove International Charitable Trust Vs. Union of India 327 ITR 73 (P H) had an occasion to consider near identical facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a trust or other similar body running an education institution solely for educational purposes and not for the purpose of profit could be regarded as other educational institution coming within section 10(22) - See CIT v. Doon Foundation [1985] 154 ITR 208 and Aggarwal Shiksha Samiti Trust[l987] 168 1TR 751 (Raj.). It will be rather unreal and hyper technical to hold that the assessee-society is only a financing body and will not come within the scope of other educational institution as specified in section 10(22). The object of the society is to establish, run, manage or assist colleges or schools or other educational institutions solely for educational purposes and in that regard to raise or collect funds, donations, gifts etc. Colleges and schools are media through which the assessee imparts education and effectuates its objects. In substance and reality, the sole purpose for which the assessee has come into existence is to impart education at the levels of colleges and schools and so, such an educational society should be regarded as an educational institution coming within section 10(22). We hold accordingly. [Emphasis supplied] 2.5 Specific attention was also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 which is again in the context of assessee society running educational institution. Reference was also placed upon decision of the Pune Bench in the case of Bharati Vidyapeeeth Medical Foundation Vs ACIT 144 ITD 510 (Pune-Trib) dated 31.12.2012, copy placed at pages 61 to 76. Attention was invited to the fact that in the facts of the said case, exemption u/s 11 was denied on the ground that depreciation claimed is exempt u/s 10(23C). Attention was also invited to CIT, Faridabad Vs IILM Foundation Academy (2016) 389 ITR 140 (P H) where registration u/s 12A had been denied on reading its ancillary object which has not been approved by the Hon'ble Court. 2.9 Thus, it was his submission that the law as it stands is that at the stage of Registration u/s 12A, it is only the Aims and Objects which need to be seen. In the facts of the present case, not only the Aims and Objects but even the active functioning of the school, the society has demonstrated that it is engaged solely in a charitable activity. While considering the application for grant of Registration u/s 12A, the CIT (Exemptions) at the threshold level was required to address only the aims and objects of the society. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eached that the buildings are principally used for charitable purpose. Further, an amount of approximately ₹ 26,00,000 of the expenses are towards social work and / charities as per the income and expenditure accounts provided, whereas free medical aid is around ₹ 60,00,000 for the year 2004-2005. It is not clearly mentioned that social work and charities is. Furthermore, an exemption is provided for that area in which free medical aid is provided by the appellant Hospital. The appellant has not produced cogent material evidence before the competent authority or the State Government or before the High Court to show that the entire building has been used for charitable purpose by rendering free medical aid to the needy poor people of society. The fact is that the details furnished in the documents produced would go to show that the appellant Hospital is earning money by charging from patients and therefore the claim of the appellant that the entire area taxed is used for charitable purpose is not reflected in the documents produced. Hence, we are not inclined to interfere with the impugned orders. The High Court has correctly interpreted the Explanation clause to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n come to school and be dropped back to their homes from the school. Teachers have been employed and infrastructure has been made available. None of these facts, it was submitted, have been negatively commented upon. 5. We have heard the submissions and perused the material available on record. We find that in the peculiar facts and circumstances of the case, registration u/s 12A of the Income Tax Act has wrongly been denied to the assessee. The assessee society is stated to be in a village area and has been running for the last few years. We note from the fee structure of the classes that from class-X the assessee society has also added another class XI to its school and as per the list made available to the tax authorities, the assessee society has adequate staff by way of qualified teachers and despite the fact that complete details which we proceed to enumerate from para 5, have been made available, nothing adverse or contrary except the relevant portions extracted in the earlier part of this order have been referred to by the CIT(Exemptions). As per the show cause notice, assessee was required to make the following details/clarifications available : (i) Details of prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto consideration the relevant pages of the Paper Book to which our attention has been invited by the parties. We have also taken note of the judicial precedent relied upon before us by the parties and we note that apart from the decision of the Bombay High Court in the case of a Society running a medical hospital relied upon by the ld. DR, the decisions relied upon by the ld. AR have not been upset by the Revenue. On our consideration of the entire factual matrix and legal position thereon, we find that the conclusion drawn in para 7.4, 8, 9, 10 11 by the CIT(Exemptions) are incorrect and not supported by any evidence on record. The suspicions raised where the criticism is posed on the grounds that the assessee is adding to the fleet of vehicles when considered in the factual matrix that the fleet of vehicles are actually school buses to carry the children to and fro in the village where public transport for the said exercise is not easily available demonstrated that its claim has been rejected purely on biases and prejudices. The fact that it results in creating an asset is neither here nor there. The re-deployment of funds is found as per record purely for the purpose of edu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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