9911796707
TMI Blog2023 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the assessee Trust was running the following colleges: i) Parul Institute of Engineering of Technology (Diploma Sudies)(PIETDS) ii) Parul Institute of Engineering of Technology (Diploma 2nd Shift) (PIET-D 2nd shift) iii) Parul Plyitechnic Institute (First Shift)(PPI) iv) Parul Plyitechnic Institute (Second Shift)(PPI) v) Shanti Sadan Hostel (SSH) vi) Student Welfare Association) (SWA) 3. The assessee Trust submitted that three Trusts namely (i) Parul Arogya Seva Mandal, Vadodara, (2) Parul Trust, Limda and (3) Hariom Arogya Seva Mandal, Vadodara got merged into the present Trust namely Parul Arogya Seva Mandal Trust which was approved by the Jt. Charity Commissioner, Vadodara vide order dated 31-07- 2014. Thus the objects of the Trust are medical treatment for poor people, undertake general activities related to public health, Organize Family Planning Centres, undertaking activities for education from pre-primary to higher education at university levels, to provide and take forward necessary help/assistance for development of educational activities in different branches/faculties of education. 4. The Ld. CIT(E) after going through the objects of the Trust, noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (in Rs. ) Total Receipts (in Rs. ) % of surplus to Income and Expenditure account Parul Arogya Seva Mandal(PASM)Consoli dated 2014-15 13,41,28,042 46,81,67,075 28.65 »do» 2015-16 6,34,48,968 36,44,79,232 17.41 »do- 2016-17 1,13,24,915 32,92,47,142 3.44 ; Parul Institute of Engg. And Technology (2nd Shift) 2014-15 71,90,357 6,88,48,200 18.44 Parul Institute of Engg. And Technology(me 2nd shift) 2014-15 24,70,143 1,42,16,350 17.38 Parul Institute of Technology (2nd Shift) 2014-15 59,17,491 4,46,86,275 13.24 Parul Institute of Technology (Me 1st Shift) 2014-15 6,08,915 90,96,800 6.69 Parul Institute of Technology -(Me 2nd Shift) 2014-15 11,89,205 67,01,900 17.74 Parul Institute of Engg. And Technology(MCA 2nd Shift) 2014-15 7,38,095 51,81,000 14.25 Parul Institute of Engg. And Technology(MCA Integrate) 2014-15 71,511 19,47,850 3.68 Parul Institute of Engg. And Technology(Diploma 2nd Shift) 2014-15 66,28,484 5,79,29,350 11.44 -do- 2015-16 98,32,945 4,70,70,130 20.89 -do 2017-18 15,14,382 1,57,53,745 9.61 Parul Polytechnic Institute 2017-18 42,61,944 5,90,20,714 7.22 Parul Polytechnic lnstitute(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in respect of upbringing and training for self-reliance to orphan and deserted women and children. iii. Parul Arogya Seva Mandal Trust, Vadodara. 1. Clause No, a, b, & c with respect to medical treatment. 2. Clause No. d with respect to public health 3. Clause No. h with respect to upbringing and training for self-reliance to orphan and deserted women and children. 9.3 Considering the above facts of the case, the applicant having multiple objects cannot be said to be existing solely for the purpose of education. It is open to the trustee to pursue all or other objects of the trust under the garb of education. Therefore, the condition of section 10(23C) (vi) ie the applicant existing solely for educational purposes is not fulfilled in the present case, In the case of Maharaja Sawai Mansingh ji Museum Trust 169 ITR 379, the Hon. Rajasthan High Court held that the educational institute must exist solely for educational purposes. "Solely" means exclusively and not primarily. The emphasis in section 10(23C) is on the word "solely". The Hon. Court stated as under: "It is amply clear from a bare reading of it that the educational institution must exist solely for educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life But that is not the sense in which the word 'education' is used in clause (15) of section 2 What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling" From the aforesaid judgment of the Hon'ble Supreme Court, the word "education" used in clause (15) of section 2 of the Act of 1961 means the process of training and developing the knowledge, skill, mind and character of the students by normal schooling. In our opinion, the aforesaid meaning of the word "education", the educational purposes mentioned in section 10(23C)(vi) of the Act of 1961 can be applied. The word education connotes the process of training and developing the knowledge, skill, mind and character of students by normal schooling. Therefore, it is clear that in clause (vi) of section 10(23C), the word "solely for education" has been used in very clear sense that it must exist exclusively for education and the education is also defined in very scholast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e " From the aforesaid judgment of the Hon'ble Supreme Court, it is settled law that the sole object of the applicant seeking approval u/s 10(23C)(vi) of the IT Act has to be a educational object. 11. Further, as per the provisions of section 10(23C)(vi) of the Act of 1961, it is obligatory on the part of the authority to examine the record and object of the society objectively and therefore taking into consideration the submission made by the applicant in detail, it is held that the objects particularly 3(c)(viii) of the Applicant Trust are contrary to the object of the educational purpose and therefore, it is concluded that the applicant does not exist solely for educational purpose. Besides, object 3(b) of the Memorandum is contrary to the definition of Charitable' as the activity is limited to the benefit of Particular class of society. Moreover the activities are run for the purpose of profits and not for charitable purposes as discussed in preceding paras. Since the applicant trust has other non-educational objects and non charitable purpose as per the trust deed mentioned above, the trust has not fulfilled the condition laid down to proviso of section 10(23C)(vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1. The assessee filed a submission on record which reads as under: "....7 Hence it is clear that appellant trust is existing solely for educational purpose and is eligible to get exemption under section 10(23C)(vi) of the Income Tax Act, 1961. 8. Without prejudice to above, it is submitted that having multiple objectives along with educational object cannot be said that the institution/trust does not exist solely for educational purpose. In the decision of Hon. High Court of Delhi in case of Jaypee Institute of Information Technology Society Vs. Director General of Income-tax (Exemptions) [2009] 185 Taxman 110 (Delhi), Hon. High court has laid down that "If pure learning, which is one of the purposes of the universities, is to survive, it will have to be brought into relation with the life of the community as a whole, not only with the refined delights of a few gentlemen of leisure. Real education is one which makes a student socially relevant. For this purpose, his greater interface with the society is required. UGC perceives that this can be achieved through extra mural, extension and field action related programmes. These programmes may include NSS and NCC activities, ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than 85% of its total receipts in the A.Y. 2017-2018, details is as under: Detailed application of funds of the trust for A.Y. 2017-2018 towards educational purpose as per return of income is as under: Particulars Amount Rs. A.Y. 2016-2017 Amount Rs. A.Y. 2015-2016 Income of the trust 364506028 468465500 Educational Income including Fees and other educational receipts 566133867 1315531244 Total Income 930639895 1783996744 Application of Fund for Educational purpose Expenses incurred by educational institutions 324882247 1216273288 Expenses incurred by trust 131176064 102732683 Application of income for purchase of Capital Assets 617645516 774620375 Total Application of Income 1073703827 2093626345 (Deficit)/Surplus (143063929) (309629602) The above figures are as per computation of income and ITR filed which is also submitted along with application for approval. Therefore the figures of huge surplus stated in the order of rejection of approval for different educational institutions are not correct. 12. Details of surplus amount which is carried forward from earlier years in excess of 85% of income and its applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting solely for educational purpose and not for the purpose of profit motive, it has satisfied all the conditions laid down under the provision of section 10(23C(vi) of the I.T. Act, application for approval be granted to the applicant trust under section 10(23C) (vi) of the Income Tax Act, 1961. 17. Appellant trust is relied on following judicial pronouncements: a. Jaypee Institute of Information Technology Society V. Director General of Income-tax (Exemptions) [2009] 185 Taxman 110 (Delhi) b. Hon. Commissioner of Income Tax (II) Vs. Hardayal Charitable & Education Trust [2014] 46 taxmann.com16 (Allhabad) c. Little Angels Shiksha Samiti V. Union of India [2011] 11 taxmann.com 37 (Madhya Pradesh) d. Ronald Educational & Charitable Trust V. Principal Commissioner of Income-Tax [2017] 88 taxmann.com 790(Cutttack-Trib.) 18. On the basis of the above submission, appellant sincerely request to allow the appeal of the appellant." 7. Per contra, the Ld. CIT-DR Shri Akhilendra Pratap Yadaw appearing for the Revenue supported the order passed by the Ld. CIT(E) and denying exemption u/s. 10(23C)(vi) on account of the assessee not carrying out the activities solely for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant that what should be taken into consideration is the activity actually conducted by the assessee, and not what is open to it under the provisions of its memorandum of association. We do not agree. Whether a trust is for charitable purposes falls to be determined by reference to all the objects for which the trust has been brought into existence" 8.1. Considering the above facts of the case, the assessee Trust having multiple objects cannot be said to be existing "solely for the purpose of education". It is open to the trust to pursue all or any of the objects of the trust under the garb of education. Therefore in our considered view, the condition of section 10(23C)(vi) i.e the applicant existing "solely for educational purposes" is not fulfilled in the present case. The case laws relied by the assessee are all from Lower Forums and clearly distinguishable, however we hereby dealt with the judgments of the Hon'ble Apex Court only to arrive our conclusion. 9. The Hon'ble Supreme Court of India in the case of New Noble Educational Society examined term "solely" as provided in section 10(23C)(vi) and held as follows: "....It is evident, that in construing the term 'any un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the education or educational activity and nothing other than that is incidental to the attainment of its objectives (ie., the objectives of, or relating to, education). [Para 58] The interpretation adopted by the judgments in American Hotel and Lodging Association v. Central Board of Direct Taxes [2008] 170 Taxman 306/301 ITR 86 (SC)/[2008] 10 SCC 509 as well as Queens Education Society v. CIT [2015] 55 taxmann.com 255 (SC) as to the meaning of the expression 'solely' are erroneous. The trust or educational institution, which seeks approval or exemption, should solely be concerned with education, or education related activities. If, incidentally, while carrying on those objectives, the trust earns profits, it has to maintain separate books of account. It is only in those circumstances that "business' income can be permitted- provided, as stated earlier, that the activity is education, or relating to education. The judgment in American Hotel (supra) as well as Queens Education Society (supra) do not state the correct law, and are accordingly overruled. [Para 60]" 10. Thus the Hon'ble Supreme Court summarized the conclusion as follows: ".....(a) It is held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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