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TMI Blog2016 (9) TMI 1680X X X X Extracts X X X X X X X X Extracts X X X X ..... - Bhagchand, Accountant Member For the Appellant : Surender Mehta. For the Respondent : Smt. Runi Pal. ORDER 1. Both these appeals have been filed by the assessee against two separate orders of the learned CIT(A)-2, Jodhpur dt. 1st Dec., 2015 for the asst. yrs. 2009-10 and 2011-12 respectively. 2. The assessee has raised following grounds in its appeal for the asst. yr. 2009-10 in ITA No. 110/Jodh/2016 : 1. That interest receipt from bank amounting to Rs. 16,05,233 was wrongly assessed by the AO and again confirmed by the learned CIT(A) ignoring the fact that the appellant's case is covered under s.10(23C)(iiiab) as the appellant's society is totally financed by the . Government and its object is not to earn profit. 2. That the first appellate authority has passed the order without considering the submission of the appellant that the reopening of assessment was illegal and without jurisdiction. 3. That the order passed by the learned CIT(A) is perverse and contrary to the existing facts. The learned CIT(A) has wrongly relied on certain case laws which have no relevancy. 4. That learned CIT(A) has wrongly observed in his order that registration under ss. 11 to 13 is neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eps for the establishment of the institution will not suffice for claiming exemption under s. 10(23C). In this view, claim of the assessee, claiming the exemption of interest income Rs. 16,05,233 is hereby disallowed and assessed under the head income from other sources. 2.3 In appellate proceedings, the learned CIT(A) has confirmed the action of the AO by observing as under : 6.1 I have gone through the facts of the case and submissions of the appellant and I find that the AO disallowed the claim of exemption of interest income of Rs. 16,05,233 by observing that the appellant was not granted registration under s. 12A nor the institution had carried out any activity of education during the year under consideration. The appellant has contested this action of the AO and stated that its income is fully exempt being society covered under s. 10(23C)(iiiad). I find that in the written submission filed before me, the appellant has diverted the attention towards the fact that it is a society/institution which is imparting education without any profit motive and further stressed that since the Institution is wholly and substantially financed by the Government it is eligible for exemption. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. I also find that during the year under consideration, the appellant has shown receipt of Rs. 16,05,233 being interest income. No other receipt has been shown by the appellant which, irrefutably buttresses the conclusion drawn by the AO that during the year under consideration, no educational activities were carried out. In fact, the appellant totally failed to demonstrate that it had engaged in any activity that would render him eligible for exemption under this provision viz. provided education by charging less fees in comparison to other commercial institute, free admission concession rate for economical weaker students, scholarship to the needy students, facility of providing books and other teaching material on lower rates, hostel facilities on concessional rates, special provisions for girls specially from weaker section, efforts to provide and spread education to rural areas, etc. 6.1.6 It may be noted that learned CIT-2, Jaipur had also found that the activities of the appellant society were not of educational nature and denied the grant of registration w.e.f. 1st June, 2007 after detailed discussion and reasons assigning for not accepting the application. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per memorandum of association and rules and regulations of the society. It is also noted from the records that the society is having no other fund except the grant by the Central Government and interest earned from that fund. The assessee also submitted it had neither received a single paise from any private entity nor in the form of donation. I have also taken intoconsideration the case laws relied on by the learned Authorised Representative of the assessee in which the Hon'ble High Courts and Tribunal have given their verdicts relating to the issue in question in favour of the assessee which are reproduced as under: (1) CIT v. National Law School of India University (IT Appeal No. 483 of 2009, dt. 18th July, 2016) (Karnataka H.C.). The Hon'ble Karnataka High Court in this case observed as under : 4. In that view of the matter, the findings of the Tribunal that the assessee is subsequently financed by the Government and therefore, the assessee is entitled to the benefit of exemption under s. 10(23C)(iiiab) of the IT Act, cannot be found fault with. Therefore, the substantial question of law is answered in favour of the assessee and against the Revenue. (2) Akali Baba P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial question of law which was framed is answered in favour of the assessee. (4) DIT (Exemptions) v. Dhamapakasha Rajakarya Prasakta B.M. Sreesnivasaiah Educational Trust [2015] 372 ITR 307. The Hon'ble High Court in this case observed as under : (5) Insofar as the claim of the assessee under s. 10(23C)(iiiab) of the Act is concerned, the material on record discloses that Government has financed the institutions and their share is roughly about 25 per cent. It is not in dispute that the assessee is carrying on its activities of imparting education. It is not existing for the sake of profit-making. When 25 per cent, of the finance to the assessee institutions flows from the Government it constitutes the substantial finance and, therefore, it has satisfied all the legal requirements provided under s. 10(23C)(iiiab) of the Act. In fact, this Court had an occasion to consider the said question in the case of CIT v. Indian Institute of Management [2015] 275 CTR (Kar) 424 : [2015] 115 DTR (Kar) 251 : [2015] 370 ITR 81 (Kar) and a finance to the extent of more than 10 per cent of the total finance would constitute substantial finance and, therefore, the finding recorded by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be permitted to blow hot and cold in the same breath (7) Senate of Serampore College v. Jt. CIT 2015] 67 SOT 89. In this case, Tribunal, Kolkata Bench observed as under : 7. As regards to the second issue, it was the contention of the learned counsel that the Serampore College exists solely for the purpose of education and not for the purpose of profit. Even if running of an institution leads to some surplus but the said profit is accumulated or ploughed back for the purpose and objects of the institution, it is deemed as existing not for the purpose of profit. He argued that the Serampore College fulfils wholly, both these requirements as existing solely for the purpose of education and not for the purpose of profit. According to him therefore, the College is covered and entitled to exemption under s. 10(23C)(iiiab) of the IT Act, 1961 as the provisions of s. 10(23C)(iiiab). provides that any university or other institution education existing solely for educational purpose and not for the purpose of profit, and which is wholly or substantially financed by the Government. We are of the view that the argument of learned counsel that 'The Serampore College will fall under the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucation Society v. ITO in ITA Nos. 2542 and 2543/Del/2011, dt. 19th July, 2013 and of Chennai 'B' Bench of this Tribunal in the case of Ganapathy Educational Trust v. Asstt. Director of IT (Exemption) in ITA No. 159/Mad/2013, dt. 25th June, 2013, wherein, in all orders, the meaning of 'substantially financed by the Government is discussed. The AO is directed to consider these case laws and also any other case law of Hon'ble Supreme Court or any High Court available at the point of decision, and decide the same, whether the assessee's case falls in the category of 'wholly or substantially financed by the Government'. In terms of the above, these two appeals of assessee are set aside to the file of the AO. Appeals of assessee are allowed for statistical purposes. 2.7 Considering the entirety of the facts and circumstances of the case, it is noted that the assessee institute is financed by the Central Government, and the amount granted by the Government is deposited in the nationalized bank. The interest so received by the institute from the bank is utilised for the purpose of institute as per memorandum of association and rules and regulation of the societ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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