9911796707
TMI Blog2023 (5) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... d Writ Petition preferred by the respondent-assessee and has set aside the order passed by the Commissioner denying the exemption under Section 10(23C)(vi) of the Income Tax, Act, 1961 (for short "the Act"), the Revenue has preferred the present Appeal. 2. The dispute is with respect to the Assessment Year 2006-2007. The respondent-assessee was indulged in the activity of imparting the education. Therefore, the respondent-assessee claimed the exemption under Section 10(23C)(vi) of the Act by submitting an application before the Jurisdictional Commissioner. On appreciation of evidence and considering the material on record, it was found that the assessee has been earning systematic profits year after year and, in the year in question, earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 319 ITR 160. It is required to be noted that the decision of the Uttarakhand High Court in the case of Queen's Educational Society (supra) and in the case of Pinegrove International Charitable Trust (supra), as such, were the subject matter of Appeals before this Court and by a judgment and order dated 16.03.2015 in Queen's Educational Society vs. Commissioner of Income Tax, reported in (2015) 8 SCC 47, this Court has set aside the order passed by the Uttarakhand High Court in the case of Queen's Educational Society (supra) and also approved the decision of the Punjab & Haryana High Court in the case of Pinegrove International Charitable Trust (supra). Therefore, by the reported judgment, this Court approved the decision of the Punjab & Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be submerged by a profit making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on "for profit". No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na High Court in Pinegrove International (supra). By the same judgement, it also approved other judgements of High Courts which had followed Pinegrove and disagreed with the Uttarakhand High Court's judgement. 55. The basic provision granting exemption, thus enjoins that the institution should exist 'solely for educational purposes and not for purposes of profit'. This requirement is categorical. While construing this essential requirement, the proviso, which carves out the exception, so to say, to a limited extent, cannot be looked into. The expression 'solely' has been interpreted, as noticed previously, by other judgments as the 'dominant/predominant/primary/main' object. The plain and grammatical meaning of the term 'sole' or 'solely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t' object which had to be considered while judging the association's claim for exemption. The approach and reasoning applicable to charitable organizations set up for advancement of objects of general public utility are entirely different from charities set up or established for the object of imparting education. In the case of the latter, the basis of exemption is Section 10(23C) (iiiab), (iiiad) and (vi). In all these provisions,the positive condition 'solely for educational purposes' and the negative injunction' and not for purposes of profit' loom large as compulsive mandates, necessary for exemption. The expression 'solely' is therefore important. Thus, in the opinion of this court, a trust, university or other institution imparting ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the activity is for profits the assessee is not entitled to the exemption under Section 10(23C)(vi) of the Act. 6. Applying the law laid down by this Court in the case of New Noble Educational Society (supra) referred to hereinabove to the facts of the case on hand, the impugned judgment and order passed by the High Court is unsustainable. At this stage, it is required to be noted that taking into consideration the entire material on record, in fact, the Commissioner, while considering the application of the assessee for grant of exemption under Section 10(23C)(vi) specifically observed and held that the activity of the assessee cannot be said to be solely for imparting the education and that the assessee is indulging into the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
