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TMI Blog2009 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. Ms. Prem Lata Bansal, Advocate, for the respondent. JUDGMENT The judgment of the court was delivered by A. K. SIKRI, J. - This petition is filed by Digember Jain Society for Child Welfare (Regd.), with the following prayers :- "(i) Writ of Certiorari or Writ, Order of direction in the nature of Certiorari or any other appropriate Writ order or direction under Articles 226/227 of the Constitution of India quashing the impugned order dated 28.4.2008; (ii) Writ of Certiorari or Writ, Order or direction in the nature of Certiorari or any other appropriate Writ order or direction under Articles 226/227 of the Constitution of India declaring the order dated 28.4.2008 as illegal and directing the stay of operation of the order dated 28.4.2008 and all consequential proceedings arising out of the aforesaid order; (iii) Writ of Certiorari or Writ, Order of direction in the nature of Certiorari or any other appropriate Writ order of Direction under Articles 226/227 of the Constitution of India directing the respondent to allow exemption u/s 10(23C)(vi) of the Act to the petitioner society; (iv) Writ of Mandamus directing the respondent to allow exemption u/s 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 10(23C)(vi) read with Rules 2BC and 2CA of the Income Tax Rules, 1962 were introduced, whereunder necessary approval of the educational institution had to be taken from the prescribed authority, namely, the Chief Commissioner or the Director General. The petitioner had filed an application for continuation of exemption for the assessment years 2002-03 to 2004-05 before the Director General of Income Tax (Exemptions), Kolkata, who was the prescribed authority at the relevant time. The aforesaid application was forwarded by the Director General, Kolkata to the Central Board of Direct Taxes on 26.12.2003. However, in view of the amendment, the application was transferred to the Director General. The petitioner filed an application for renewal of exemption under Section 10(23C)(vi) of the Act for the assessment years 2005-06 to 2007-08 on 18.1.2005 before the Director General (Exemptions), New Delhi. The petitioner, however, is not aware about the fate of the aforesaid applications as no order till date, either allowing renewal of exemption or refusing to grant continuation of exemption, had been served upon the petitioner. The petitioner, having failed to get any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (No.2) Act, 1998. Before the insertion of Section 10(23C)(vi), such cases were covered by Section 10(22) and that provision was couched in the following language :- "Sec. 10(22) - any income of an university or other educational institution, existing solely for educational purposes and not for purposes of profit." 7. The provision, as amended, reads as under :- "Sec. 10(23C) (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; or .." 8. It is not in dispute that even with the insertion of Section 10(23C)(vi), position remained the same, which existed under Section 10(22) of the Act. Thus, effect of the insertion of the 3rd proviso is to be examined, which is to the following effect: "Provided also that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) - or sub-clause (vi) or sub-clause (via) - (a) Applies its income, or accumulates it for appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dardized form as mentioned in the first proviso to that section. That condition of obtaining approval from the prescribed authority came to be inserted because section 10(22) was abused by some educational institutions/universities. This proviso was inserted along with other provisos because there was no monitoring mechanism to check abuse of the exemption provision. With the insertion of the first proviso, the prescribed authority is required to vet the application." 10. The Supreme Court has also clarified that the amended provisions of Section 10(23C)(vi) are analogous to Section 10(22) of the Act. The extent, scope and effect of the proviso added by amendment is explained by the Supreme Court in the following words :- "The most relevant proviso for deciding this appeal is the thirteenth proviso. Under that proviso, the circumstances are given under which the prescribed authority is empowered to withdraw the approval earlier granted. Under that proviso, if the prescribed authority is satisfied that the trust, fund, university or other educational institution, etc. has not applied its income in accordance with the third proviso or if it finds that such institution, trust or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine the activities in India which the applicant has undertaken in its constitution, memoranda of understanding and agreement with the Government of India/National Council. In this case, broadly the activities undertaken by the appellant are conducting classical education by providing course materials, designing courses, conducting exams, granting diplomas, supervising exams, all under the terms of an agreement entered into with institutions of the Government of India. Similarly, the prescribed authority may grant approvals on such terms and conditions as it deems fit in case where the institute applies for initial approval for the first time. The prescribed authority must give an opportunity to the applicant institute to comply with the monitoring conditions which have been stipulated for the first time by the third proviso. Therefore, cases where earlier the applicant has obtained exemptions(s), as in this case, need not be reopened on the ground that the third proviso has not been complied with. However, after grant of approval, if it is brought to the notice of the prescribed authority that conditions on which approval was given are breached or that the circumstances mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such terms and conditions as it deems fit. In respect of cases falling in the the latter category, the Supreme Court categorically observed that those cases where exemption had already been obtained need not be reopened on the ground that the third proviso had not been complied with. After grant of approval, if it is brought to the notice of the prescribed authority that conditions on which approval is given are breached or that the circumstances mentioned in the third proviso exist, the prescribed authority could withdraw the approval given earlier by following the procedure mentioned in the proviso. 14. The Supreme Court in Aditanar Educational Foundation v. Additional Commissioner of Income Tax, 224 ITR 310, has held that a society or a trust or other similar body running educational institutions solely for educational purposes and having the overall object of not to make any profit can be regarded as 'other educational institution' even if some surplus arises from its activities. 15. When we apply the principles laid down by the Apex Court in the aforesaid judgments, it becomes clear that the petitioner society has mainly been formed with the objective of carrying o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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