The ACIT, Bhopal v. M/s Vatsalya Senior Secondary School., Vidisha

ITA 353/IND/2009 | 2005-2006
Pronouncement Date: 31-03-2010 | Result: Dismissed

Appeal Details

RSA Number 35322714 RSA 2009
Bench Indore
Appeal Number ITA 353/IND/2009
Duration Of Justice 8 month(s) 21 day(s)
Appellant The ACIT, Bhopal
Respondent M/s Vatsalya Senior Secondary School., Vidisha
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-03-2010
Date Of Final Hearing 29-03-2010
Next Hearing Date 29-03-2010
Assessment Year 2005-2006
Appeal Filed On 10-07-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO.353/IND/2009 A.YS. 2005-06 ASSTT. COMMR. OF INCOME TAX 3(1) BHOPAL APPELLANT VS M/S VATSALYA SENIOR SECONDARY SCHOOL VIDISHA PAN AAALV-0142J RESPONDENT APPELLANT BY : SMT. APARNA KARAN SR. DR RESPONDENT BY : SHRI H.P. VERMA AND SHRI. ASHISH GOYAL O R D E R PER SHRI JOGINDER SINGH JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 16 TH FEBRUARY 2009 ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELL ATE AUTHORITY ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD THE LEARNED RESPECTIVE COUNSELS AND CONSIDERED THE ARGUMENTS AD VANCED BY THEM. 2 MRS. KARAN STRONGLY DEFENDED THE ASSESSMENT ORDER B Y CONTENDING THAT THE ASSESSEE SCHOOL RECEIVED FEES FROM STUDENTS AMO UNTING TO RS.30 76 275/- AND CLAIMED EXEMPTION U/S 10(23C)(II IAD) OF THE ACT WHEREAS AS PER THE PROVISIONS OF THE ACT THE EDUCA TIONAL INSTITUTION SHOULD EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PROFIT. THE LD. SR. DR LAID EMPHASIS TO DIFFERENTIATE SECTION 10(23 C)(IV) AND 10(23C)(IIIAD) OF THE ACT AND STRONGLY RELIED UPON THE DECISION FROM HONBLE UTTRAKHAND HIGH COURT IN CIT VS. QUEENS ED UCATION SOCIETY (2009); 177 TAXMAN 326 (UTTRAKHAND). ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT FIRS TLY THE INCOME WAS EMPLOYED BY THE ASSESSEE AS PER THE PROVISIONS OF T HE ACT IN THE CONSTRUCTION OF THE BUILDING AND SECONDLY THE AFORE SAID DECISION OF HONBLE UTTRAKHAND HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE CASE. RELIANCE WAS PLACED ON THE DECISION FROM HONBLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF PINEGROVE INTERNATIONAL C HARITABLE TRUST VS. UNION OF INDIA AND OTHERS (CWT NO. 6031 OF 2009) DA TED 29 TH JANUARY 2010. THE CRUX OF THE ARGUMENTS IS THAT THE ASSESS EE SCHOOL EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PROFIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON TH E FILE. BRIEF FACTS ARE THAT THE ASSESSEE SCHOOL DURING THE YEAR RECEIVED FEE FROM STUDENTS 3 AMOUNTING TO RS.30 76 275/- (BELOW THE LIMIT OF RS. ONE CRORE AS PROVIDED IN RULE 2BC). AS PER THE ASSESSEE NO APPR OVAL IS NEEDED UNDER THE PROVISIONS OF SEC. 10(23C)(IIIAD) OF THE ACT AND REGISTRATION U/S 12AA IS ONLY NEEDED WHEN EXEMPTION IS CLAIMED U/S 1 1 OF THE ACT. THE ASSESSEE SCHOOL GAVE RS.9 88 057/- TO RUCHI BAL SHI KSHA AVAM VIKAS SAMITI FOR CONSTRUCTION OF SCHOOL BUILDING. THE SAM ITI ALSO CONTRIBUTED SUBSTANTIAL AMOUNT IN CONSTRUCTION OF SCHOOL BUILDI NG OCCUPIED BY THE SCHOOL FREE OF CHARGE FOR EDUCATIONAL ACTIVITIES. T HE SAMITI IS ALSO REGISTERED WITH THE REGISTRAR OF SOCIETIES MADHYA PRADESH AND ALSO GOT REGISTERED U/S 12AA. THE ASSESSEE SCHOOL IS FOLLOWI NG CBSE SYLLABUS AND THE SCHOOL ACTIVITIES ARE OPENED TO ALL WITHOUT ANY CASTE AND RELIGION. ADMITTEDLY THE OBJECTS OF THE ASSESSEE SCHOOL ARE OF GENERAL PUBLIC UTILITY AND NOT SOLELY THE PURPOSE OF PROFIT AS NO PERSON IS DERIVING ANY BENEFIT/PROFIT FROM THE ACTIVITIES OF THE SCHOOL. B EFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER THE PROVIS IONS OF SEC. 10(23C) OF THE ACT: 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON ANY INCOME FALLING WITHIN ANY O F THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED . 30 [ 31 ( 23C ) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF ( I ) THE PRIME MINISTERS NATIONAL RELIEF FUND; OR 4 ( II ) THE PRIME MINISTERS FUND (PROMOTION OF FOLK ART); OR ( III ) THE PRIME MINISTERS AID TO STUDENTS FUND; 32 [OR] 33 [( IIIA ) THE NATIONAL FOUNDATION FOR COMMUNAL HARMONY; OR] 34 [( IIIAB ) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 35 EXISTING 35 SOLELY 35 FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT; OR ( IIIAC ) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM I LLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTION AND TR EATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUI RING MEDICAL ATTENTION OR REHABILITATION EXISTING SOLEL Y FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROF IT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT; OR ( IIIAD ) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 35 EXISTING 35 SOLELY 35 FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED 36 ; OR ( IIIAE ) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM I LLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTION AND TR EATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUI RING MEDICAL ATTENTION OR REHABILITATION EXISTING SOLEL Y FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROF IT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH HOSPITAL OR INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECE IPTS AS MAY BE PRESCRIBED 36 ; OR] 37 [( IV ) 38 ANY OTHER FUND OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES 39 [WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY 40 ] HAVING REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THROUGHO UT INDIA OR THROUGHOUT ANY STATE OR STATES; OR ( V ) 41 ANY TRUST (INCLUDING ANY OTHER LEGAL OBLIGATION) OR INSTITUTION WHOLLY FOR PUBLIC RELIGI OUS PURPOSES OR WHOLLY FOR PUBLIC RELIGIOUS AND CHARITA BLE 5 PURPOSES 42 [WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY 43 ] HAVING REGARD TO THE MANNER IN WHICH THE AFFAIRS OF THE TRUST OR INSTITUTION ARE ADMINISTERE D AND SUPERVISED FOR ENSURING THAT THE INCOME ACCRUING TH ERETO IS PROPERLY APPLIED FOR THE OBJECTS THEREOF; 44 [( VI ) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 45 EXISTING 45 SOLELY 45 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 46 BY THE PRESCRIBED AUTHORITY 47 ; OR ( VIA ) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM I LLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTION AND TR EATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUI RING MEDICAL ATTENTION OR REHABILITATION EXISTING SOLEL Y FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROF IT OTHER THAN THOSE MENTIONED IN SUB-CLAUSE ( IIIAC ) OR SUB- CLAUSE ( IIIAE ) AND WHICH MAY BE APPROVED 48 BY THE PRESCRIBED AUTHO-RITY 49 :] PROVIDED THAT THE FUND OR TRUST OR INSTITUTION 50 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIO N 51 OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) 50 [OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA )] SHALL MAKE AN APPLICATION IN THE PRESCRIBED FORM 52 AND MANNER TO THE PRESCRIBED AUTHORITY 53 FOR THE PURPOSE OF GRANT OF THE EXEMPTION OR CONTINUANCE THEREOF UNDER SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) 54 [OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA )] : 55 [ PROVIDED FURTHER THAT THE PRESCRIBED AUTHORITY BEFORE APPROVING ANY FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION UNDER SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) MAY CALL FOR SUCH DOCUMENTS (INCLUDING AUDITED ANNUAL ACCOUNTS) OR INFORMATION FROM THE FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION AS THE CASE MAY BE AS IT THINKS NECES SARY IN ORDER TO SATISFY ITSELF ABOUT THE GENUINENESS OF TH E ACTIVITIES OF SUCH FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL 6 OR OTHER MEDICAL INSTITUTION AS THE CASE MAY BE A ND THE PRESCRIBED AUTHORITY MAY ALSO MAKE SUCH INQUIRIES A S IT DEEMS NECESSARY IN THIS BEHALF:] PROVIDED ALSO THAT THE FUND OR TRUST OR INSTITUTION 56 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 57 OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) 56 [OR SUB- CLAUSE ( VI ) OR SUB-CLAUSE ( VIA )] 58 [( A ) APPLIES ITS INCOME OR ACCUMULATES IT FOR APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED AND IN A CASE WHERE MORE TH AN FIFTEEN PER CENT OF ITS INCOME IS ACCUMULATED ON OR AFTER THE 1ST DAY OF APRIL 2002 THE PERIOD OF THE ACCUM ULATION OF THE AMOUNT EXCEEDING FIFTEEN PER CENT OF ITS INC OME SHALL IN NO CASE EXCEED FIVE YEARS; AND] 59 [( B ) DOES NOT INVEST OR DEPOSIT ITS FUNDS OTHER THAN ( I ) ANY ASSETS HELD BY THE FUND TRUST OR INSTITUTION 60 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 61 OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] WHERE SUCH A SSETS FORM PART OF THE CORPUS OF THE FUND TRUST OR INSTI TUTION 62 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] AS ON THE 1S T DAY OF JUNE 1973; 63 [( IA ) ANY ASSET BEING EQUITY SHARES OF A PUBLIC COMPAN Y HELD BY ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITU TION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION WHERE SUC H ASSETS FORM PART OF THE CORPUS OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION AS ON THE 1ST DAY OF JUNE 1998;] ( II ) ANY ASSETS (BEING DEBENTURES ISSUED BY OR ON BEHALF OF ANY COMPANY OR CORPORATION) ACQUIRED BY THE FUND TRUST OR INSTITUTION 64 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION 65 OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] BEFORE THE 1ST DAY OF MARCH 1983; ( III ) ANY ACCRETION TO THE SHARES FORMING PART OF THE CORPUS MENTIONED IN SUB-CLAUSE ( I ) 66 [AND SUB-CLAUSE ( IA )] BY WAY OF BONUS SHARES ALLOTTED TO THE FUND TR UST OR INSTITUTION 64 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION] ; ( IV ) VOLUNTARY CONTRIBUTIONS RECEIVED AND MAINTAINED I N THE FORM OF JEWELLERY FURNITURE OR ANY OTHER ARTIC LE AS THE 7 BOARD MAY BY NOTIFICATION IN THE OFFICIAL GAZETTE SPECIFY FOR ANY PERIOD DURING THE PREVIOUS YEAR OTHERWISE THAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 :] PROVIDED ALSO THAT THE EXEMPTION UNDER SUB- CLAUSE ( IV ) OR SUB-CLAUSE ( V ) SHALL NOT BE DENIED IN RELATION TO ANY FUNDS INVESTED OR DEPOSITED BEFORE THE 1ST DAY OF APRIL 1989 OTHERWISE THAN IN ANY ONE OR MO RE OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 IF SUCH FUNDS DO NOT CONTINUE TO REMAIN SO INVESTE D OR DEPOSITED AFTER THE 30TH DAY OF MARCH 67 [1993] : 68 [ PROVIDED ALSO THAT THE EXEMPTION UNDER SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) SHALL NOT BE DENIED IN RELATION TO ANY FUNDS INVESTED OR DEPOSITED BEFORE THE 1ST DAY OF J UNE 1998 OTHERWISE THAN IN ANY ONE OR MORE OF THE FORM S OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 IF SUCH FUNDS DO NOT CONTINUE TO REMAIN SO INVESTED OR DEPO SITED AFTER THE 30TH DAY OF MARCH 2001 :] 69 [ PROVIDED ALSO THAT THE EXEMPTION UNDER SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) 68 [OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA )] SHALL NOT BE DENIED IN RELATION TO VOLUNTARY CONTRIBUTION OTHER THAN VOLUNTARY CONTRI BUTION IN CASH OR VOLUNTARY CONTRIBUTION OF THE NATURE REF ERRED TO IN CLAUSE ( B ) OF THE THIRD PROVISO TO THIS SUB-CLAUSE SUBJECT TO THE CONDITION THAT SUCH VOLUNTARY CONTRI BUTION IS NOT HELD BY THE TRUST OR INSTITUTION 70 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] OTHERWISE THAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE PREVIOUS YEAR IN WHICH SUCH ASSET IS ACQUIRED OR TH E 31ST DAY OF MARCH 1992 WHICHEVER IS LATER:] PROVIDED ALSO THAT NOTHING CONTAINED IN SUB- CLAUSE ( IV ) OR SUB-CLAUSE ( V ) 71 [OR SUB-CLAUSE ( VI ) OR SUB- CLAUSE ( VIA )] SHALL APPLY IN RELATION TO ANY INCOME OF THE FUND OR TRUST OR INSTITUTION 71 [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION] BEING PROFITS AND GAINS OF BUSINESS UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF ITS OBJECTIVES AND SEPARATE BOOKS OF ACCOUNT ARE MAINTA INED BY IT IN RESPECT OF SUCH BUSINESS: 8 PROVIDED ALSO THAT ANY 72 [NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT UNDER SUB-CLAUSE ( IV ) OR SUB- CLAUSE ( V ) BEFORE THE DATE ON WHICH THE TAXATION LAWS (AMENDMENT) BILL 2006 RECEIVES THE ASSENT OF THE PRESIDENT * SHALL AT ANY ONE TIME HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS NOT EXCEEDING THREE ASSES SMENT YEARS] (INCLUDING AN ASSESSMENT YEAR OR YEARS COMMENCING BEFORE THE DATE ON WHICH SUCH NOTIFICATI ON IS ISSUED) AS MAY BE SPECIFIED IN THE NOTIFICATION: ] 73 [ PROVIDED ALSO THAT WHERE AN APPLICATION UNDER THE FIRST PROVISO IS MADE ON OR AFTER THE DAT E ON WHICH THE TAXATION LAWS (AMENDMENT) BILL 2006 RECEIVES THE ASSENT OF THE PRESIDENT * EVERY NOTIFICATION UNDER SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) SHALL BE ISSUED OR APPROVAL UNDER 74 [SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR] SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) SHALL BE GRANTED OR AN ORDER REJECTING THE APPLICATION SHALL BE PASSED WIT HIN THE PERIOD OF TWELVE MONTHS FROM THE END OF THE MONTH I N WHICH SUCH APPLICATION WAS RECEIVED: PROVIDED ALSO THAT WHERE THE TOTAL INCOME OF THE FUND OR TRUST OR INSTITUTION OR ANY UNIVERSI TY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OT HER MEDICAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB- CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) WITHOUT GIVING EFFECT TO THE PROVISIONS OF THE SAID SUB-CLA USES EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX IN ANY PREVIOUS YEAR SUCH TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION SHALL GET ITS ACCOUNTS AUDITED IN RESPECT OF THAT YEAR BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 AND FURNISH ALONG WITH THE RETURN OF INCOME FOR THE REL EVANT ASSESSMENT YEAR THE REPORT OF SUCH AUDIT IN THE PR ESCRIBED FORM 75 DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED :] 76 [ PROVIDED ALSO THAT ANY AMOUNT OF DONATION RECEIVED BY THE FUND OR INSTITUTION IN TER MS OF CLAUSE ( D ) OF SUB-SECTION (2) OF SECTION 80G 77 [IN RESPECT OF WHICH ACCOUNTS OF INCOME AND EXPENDITURE HAVE NO T BEEN RENDERED TO THE AUTHORITY PRESCRIBED UNDER CLA USE ( V ) OF SUB-SECTION (5C) OF THAT SECTION IN THE MANNER SPECIFIED IN THAT CLAUSE OR] WHICH HAS BEEN UTILIS ED FOR 9 PURPOSES OTHER THAN PROVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT OR WHICH REMAINS UNUTILISED I N TERMS OF SUB-SECTION (5C) OF SECTION 80G AND NOT TRANSFERRED TO THE PRIME MINISTERS NATIONAL RELIEF FUND ON OR BEFORE THE 31ST DAY OF MARCH 78 [2004] SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR AND SH ALL ACCORDINGLY BE CHARGED TO TAX:] 79 [***] 80 [ PROVIDED ALSO THAT WHERE THE FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATION AL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB- CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) DOES NOT APPLY ITS INCOME DURING THE YEAR OF RECEIPT AND ACCUMULATES IT ANY PAYMENT OR CREDIT OUT OF SUCH ACCUMULATION TO ANY T RUST OR INSTITUTION REGISTERED UNDER SECTION 12AA OR TO ANY FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR O THER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) SHALL NOT BE TREATED AS APPLICATION OF INCOME TO THE OBJECTS FOR WHICH S UCH FUND OR TRUST OR INSTITUTION OR UNIVERSITY OR EDUCA TIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICAL INSTITUTIO N AS THE CASE MAY BE IS ESTABLISHED : PROVIDED ALSO THAT WHERE THE FUND OR INSTITUTION REFERRED TO IN SUB-CLAUSE ( IV ) OR TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE ( V ) IS NOTIFIED BY THE CENTRAL GOVERNMENT 81 [OR IS APPROVED BY THE PRESCRIBED AUTHORITY AS THE CASE MAY BE ] OR ANY UNIVERSITY O R OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( VI ) OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( VIA ) IS APPROVED BY THE PRESCRIBED AUTHORITY AND SUBSEQUENTLY THAT GOVERNMENT OR THE PRESCRIBED AUTHORITY IS SATISFIED THAT ( I ) SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION HAS NOT ( A ) APPLIED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN CLAUSE ( A ) OF THE THIRD PROVISO; OR 10 ( B ) INVESTED OR DEPOSITED ITS FUNDS IN ACCORDANCE WI TH THE PROVISIONS CONTAINED IN CLAUSE ( B ) OF THE THIRD PROVISO; OR ( II ) THE ACTIVITIES OF SUCH FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION ( A ) ARE NOT GENUINE; OR ( B ) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH IT WAS NOTIF IED OR APPROVED IT MAY AT ANY TIME AFTER GIVING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST THE PROPOSED A CTION TO THE CONCERNED FUND OR INSTITUTION OR TRUST OR AN Y UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION RESCIND THE NOTIFICAT ION OR BY ORDER WITHDRAW THE APPROVAL AS THE CASE MAY BE AND FORWARD A COPY OF THE ORDER RESCINDING THE NOTIFICA TION OR WITHDRAWING THE APPROVAL TO SUCH FUND OR INSTITUTIO N OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION AND TO TH E ASSESSING OFFICER:] 82 [ PROVIDED ALSO THAT IN CASE THE FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDU CATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION REFERRED TO IN THE FIRST PROVISO MAKES AN APPLICATI ON ON OR AFTER THE 1ST DAY OF JUNE 2006 FOR THE PURPOSES OF GRANT OF EXEMPTION OR CONTINUANCE THEREOF SUCH APPLICATI ON SHALL BE 82A [ MADE ON OR BEFORE THE 30TH DAY OF SEPTEMBER OF THE RELEVANT ASSESSMENT YEAR ] FROM WHICH THE EXEMPTION IS SOUGHT :] 83 [ PROVIDED ALSO THAT ANY ANONYMOUS DONATION REFERRED TO IN SECTION 115BBC ON WHICH TAX IS PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF THE SA ID SECTION SHALL BE INCLUDED IN THE TOTAL INCOME :] 84 [ PROVIDED ALSO THAT ALL PENDING APPLICATIONS ON WHICH NO NOTIFICATION HAS BEEN ISS UED UNDER SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) BEFORE THE 1ST DAY OF JUNE 2007 SHALL STAND TRANSFERRED ON THAT DAY TO THE PRESCRIBED AUTHORITY AND THE PRESCRIBED AUTHORITY M AY PROCEED WITH SUCH APPLICATIONS UNDER THOSE SUB-CLAU SES FROM THE STAGE AT WHICH THEY WERE ON THAT DAY;] 11 4. A CUMULATIVE READING OF SUB-CLAUSE (IIIAD) AND ( VI) BOTH SPEAK ABOUT ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTI ON SOLELY EXISTING FOR EDUCATIONAL PURPOSES. SUB-CLAUSE (IIIA) SPEAKS ABOU T THE PRESCRIBED LIMIT OF ANNUAL RECEIPT WHEREAS SUB-CLAUSE (VI) SPEAKS AB OUT APPROVAL BY THE PRESCRIBED AUTHORITY ALONG WITH OTHER THAN THOSE ME NTIONED IN SUB-CLAUSE (IIIAB) OR SUB-CLAUSE (IIIAD). IN THE PRESENT APPEA L FIRSTLY THE INCOME IS BELOW PRESCRIBED LIMIT AND SECONDLY THE INCOME WAS APPLIED SOLELY FOR EDUCATIONAL PURPOSES I.E. CONSTRUCTION OF BUILDING. IT IS NOT THE CASE THAT HUGE SURPLUS FUNDS ARE AVAILABLE WITH THE ASSESSEE OR SUCH FUNDS WERE MISUSED BY ANY INDIVIDUAL FOR THEIR PERSONAL GAIN. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE SCHOOL WHEREAS THE PROVISO ITSELF DOES NOT INCLUDE PROVISIONS OF SEC. 10(23C)(IIIAD) IN TR EATING THE AMOUNT AS INCOME FROM BUSINESS ARE FROM PROFESSION. IT SEEMS THAT THE LD. ASSESSING OFFICER HAS WRONGLY INTERPRETED THE WORD NOT FOR THE PURPOSES OF PROFIT. BECAUSE THE INSTITUTION/SCHOOL IS PRIMA RILY ENGAGED IN EDUCATIONAL ACTIVITIES AND CONSTRUCTION OF BUILDING IS THE PRIME ACTIVITY TO ACHIEVE THE OBJECT OF EDUCATION. THE INCOME GENERAT ED FROM SCHOOL MUST BE UTILISED EXCLUSIVELY FOR EDUCATIONAL ACTIVI TIES AND NOT FOR THE PERSONAL GAIN AND IF THIS CONDITION IS FULFILLED/CO MPLIED WITH THEN THE INCOME OF THE ASSESSEE MUST BE TREATED AS EXEMPTED. SEC. 10(23C)(IIIAD) IS AN INDEPENDENT SECTION AND HAS NO DIRECT OR INDIRECT LINK WITH THE REGISTRATION U/S 12A BECAUSE REGISTRATION U/S 12AA IS ONLY 12 NEEDED WHEN EXEMPTION IS CLAIMED U/S 11 OF THE ACT. IT IS WORTH MENTIONING HERE THAT IN ITS RETURN THE ASSESSEE HA S CLAIMED EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. REGULAR CLASSES ARE CONDUCTED BY THE SCHOOL FROM CLASS-I TO 12 TH AND THE WHOLE INCOME INCLUDING SURPLUS IS APPLIED SOLELY FOR EDUCATIONAL PURPOSES. IF THE ASS ESSMENT ORDER AS WELL AS THE IMPUGNED ORDER ARE KEPT IN JUXTAPOSITION EV EN THERE IS NO WHISPER THAT EITHER THE FUNDS WERE MISUSED CONTRARY TO THE OBJECTS OF THE ASSESSEE SCHOOL OR BY ANY INDIVIDUAL FOR HIS PERSON AL GAIN. 5. THE THRUST OF ARGUMENTS ON BEHALF OF REVENUE IS ON RELIANCE UPON THE DECISION OF HONBLE UTTRAKHAND HIGH COURT IN TH E CASE OF QUEENS EDUCATION SOCIETY. THE HONBLE P & H HIGH COURT HAS DELIBERATED UPON THE ISSUE AT LENGTH AND IS OF THE VIEW THAT THE HON BLE UTTRAKHAND HIGH COURT HAS NOT DELIBERATED UPON IN THE RIGHT PERSPEC TIVE BECAUSE FIRSTLY THE SCOPE OF THE THIRD PROVISO WAS NOT UNDER CONSID ERATION INASMUCH IT PERTAINS TO SEC. 10(23C)(IIIAD) OF THE ACT SECONDL Y THE JUDGMENT RENDERED BY THE HONBLE UTTRAKHAND HIGH COURT RUNS CONTRARY TO THE PROVISO TO SEC. 10(23C)(VI) INCLUDING THE PROVISOS THEREUNDER AND THIRDLY THE RATIO OF THE JUDGMENT RENDERED BY THE HON'BLE S UPREME COURT IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTION (224 ITR 31 0)(SC) WAS NOT CORRECTLY APPRECIATED INCLUDING THE DECISION IN THE CASE OF CHILDREN BOOK TRUST AND LOST SIGHT OF THE AMENDMENT CARRIED OUT W .E.F. 1.4.99 LEADING TO THE INTRODUCTION OF THE PROVISIONS OF SEC. 10(23C) OF THE ACT AND LASTLY 13 THE VIEW IS NOT CONSISTENT WITH THE LAW LAID DOWN I N AMERICAN HOTEL & LODGING ASSOCIATION EDUCATIONAL INSTITUTE. HOWEVER WE ARE MAKING IT CLEAR THAT WE ARE NOT COMMENTING UPON THE CORRECTNE SS OF THE ANY DECISION BUT WITH ALL CERTAINTY IT CAN BE SAID THA T WHEN TWO VIEWS ARE POSSIBLE THE VIEW FAVOURS THE ASSESSEE MAY BE PREF ERRED AS WAS HELD BY THE HONBLE APEX COURT IN THE CASE OF VEGETABLE PRODUCTS LTD. (88 ITR 192) (SC) WHILE AFFIRMING THE DECISION OF HON BLE CALCUTTA HIGH COURT IN (1971) (80 ITR 14) M.M. ANNAIAH VS. CIT ( 76 ITR 582) (MAYSOR) WHICH HAS BEEN CONSISTENTLY FOLLOWED BY V ARIOUS HONBLE HIGH COURTS AND THE TRIBUNALS. HOWEVER IN THE CASE OF J YOTI PRABHA SOCIETY [2009] (177 TAXMAN 429) THE HONBLE UTTRAKHAND HIG H COURT VIDE ORDER DATED 29.8.2008 WHEREIN THE ASSESSEE FILED ITS RET URN FOR ASSESSMENT YEAR 1996-97 SHOWING NET DEFICIT OF RS.9 50 000/- A ND FOR ASSESSMENT YEAR 2001-2002 SHOWED NIL INCOME. THE ASSESSING OFF ICER TOOK THE VIEW THAT THE ASSESSEE IS NOT INVOLVED IN CHARITABLE ACT IVITY AND REOPENED THE CASE U/S 147 OF THE ACT AND WAS OF THE VIEW THAT TH E ACTIVITY OF LETTING OUT THE BUILDING TO OTHER SOCIETY TO RUN EDUCATIONAL IN STITUTION DOES NOT CONSTITUTE CHARITABLE PURPOSE. THE ASSESSEE PREFERR ED APPEAL BEFORE THE LD. CIT(A) WHO DECIDED IN FAVOUR OF THE ASSESSEE WH ICH WAS AFFIRMED BY THE TRIBUNAL. THE HONBLE UTTRAKHAND HIGH COURT CON SIDERED VARIOUS DECISIONS AND AFFIRMED THE STAND OF THE TRIBUNAL. H OWEVER THE HONBLE UTTRAKHAND HIGH COURT VIDE ORDER DATED 24.9.2007 IN THE CASE OF CIT VS. 14 QUEENS EDUCATIONAL SOCIETY (177 TAXMAN 326) WHEREIN THE ASSESSEE INVESTED SURPLUS FUNDS IN FIXED ASSETS LIKE FURNITU RE AND BUILDING WITH A VIEW TO EXPAND INSTITUTION AND TO RUN MORE INCOME D ECIDED AGAINST THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS NOT ENTITL ED TO EXEMPTION U/S 10(23C)(IIIAD). THE HONBLE HIGH COURT OBSERVED . THE LAW IS WELL- SETTLED THAT IF THE PROFIT IS PROVED BY AN EDUCATIO NAL SOCIETY THEN THAT WILL BE THE INCOME OF THE SOCIETY AS THE SURPL US AMOUNT REMAINS IN THE ACCOUNTS BOOK OF THE SOCIETY AFTER M EETING ALL THE EXPENSES INCURRED TOWARDS IMPARTING THE EDUCATION THE HON'BLE HIGH COURT WHILE MAKING THE AFORESAID O BSERVATION CONSIDERED THE DECISION FROM HONBLE APEX COURT IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTION VS. ADDL. CIT (224 ITR 310) WHEREIN IT WAS OBSERVED AS UNDER: AFTER MEETING THE EXPENDITURE IF ANY SURPLUS RESUL T INCIDENTALLY FROM THE ACTIVITY LAWFULLY CARRIED ON BY THE EDUCATIONAL INSTITUTION IT WILL NOT CEASE TO B E ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES SINCE THE OBJECT IS NOT ONE TO MAKE PROFIT. THE DECISIVE OR ACID TEST IS WHETHER ON ANY OVERALL VIEW OF THE MATTER THE OBJECT IS TO MAKE PROFIT. IN EVALUATING OR APPRAISING THE ABOVE ONE SHOULD ALSO BEAR IN MIND THE DISTINCTION DIFFERENCE BETWEEN THE CORPUS THE OBJECTS AND POWERS OF THE CONCERNED ENTITY. IF ONE LOOKS AT THE OBJECTS THERE ARE OTHER NOBLE AND PIOUS OBJECTS BUT ASSESSEE SOCIETY HAS DONE NOTHING TO ACHIEVE THE OTHER OBJECTS EXCEPT PERUSING MAIN OBJECT OF PROVIDING EDUCATION AND EARNING PROFIT. FURTHER WITH PROFIT EARNED THE SOCIETY HAS STRENGTHENED OR ENHANCED ITS CAPACITY TO EARN MORE RATHER THAN 15 TO UNDERTAKE ANY OTHER ACTIVITIES TO FULFIL OTHER NOBLE OBJECTS FOR THE CAUSE OF POOR AND NEEDY PEOPLE OR ADVANCEMENT OF RELIGIOUS PURPOSE. 6. IF THE AFORESAID CONCLUSION/OBSERVATION FROM HON BLE APEX COURT COMMENTS/OBSERVATIONS OF HONBLE P & H HIGH COURT CONCLUSION DRAWN BY HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF QUE ENS EDUCATIONAL SOCIETY (SUPRA) AND THE FACTS OF THE PRESENT APPEA L BEFORE US ARE KEPT IN JUXTAPOSITION AND ANALYSED WITH ALL CERTAINTY IT C AN BE SAID THAT THE AFORESAID OBSERVATIONS OF THE HONBLE APEX COURT IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTION (SUPRA) CLEARLY SUPPORTS TH E CASE OF THE ASSESSEE AS IS EVIDENT FROM THE HIGHLIGHTED PORTION (SUPRA) BECAUSE THERE IS A CLEAR FINDING BY THE HONBLE APEX COURT THAT THE AS SESSEE THOUGHT HAVING NOBLE AND PIOUS OBJECTS BUT NOTHING WAS DONE TO ACHIEVE THE OBJECTS EXCEPT TO EARN PROFITS WHEREAS IN THE PRESE NT APPEAL THE INCOME WAS APPLIED FOR CONSTRUCTION OF THE BUILDING WHICH CAN BE SAID TO BE ONE OF THE ACTIVITIES TO ACHIEVE ITS OBJECTS FOR IMPART ING EDUCATION AS BUILDING IS THE PRIMARY NEED TO IMPART EDUCATION. IT IS NOT THE CASE THAT THE FUNDS WERE MISUSED IN ANY MANNER OR HUGE SURPLUS FUNDS WE RE CONVERTED INTO FDS TO EARN PROFITS AND THE PRESCRIBED LIMIT WAS NO T UTILISED TO ACHIEVE THE OBJECTS OF THE ASSESSEE SOCIETY. IN VIEW OF THE SE FACTS WITH ALL RESPECTS TO THE DECISION OF THE HONBLE UTTRAKHAND HIGH COURT WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO INFIRMITY I N THE STAND OF THE LD. 16 CIT(A). EVEN OTHERWISE FOR THE SAKE OF REPETITION WHEN TWO VIEWS ARE POSSIBLE (WE MEANS THAT WHEN TWO DECISIONS FROM HIG H COURTS ARE AVAILABLE) THEN WHICH FAVOURS THE ASSESSEE MAY BE F OLLOWED. 7. BEFORE ADVERTING TO VARIOUS DECISIONS WE ARE SU PPOSED TO ANALYSE THE CONDITIONS PRECEDENT FOR AVAILING EXEMPTION U/S 10(22) WHICH ARE AS UNDER: (A) THE EDUCATIONAL INSTITUTION MUST ACTUALLY EXIST AND MERE TAKING OF STEPS WOULD NOT BE SUFFICIENT. (B) THE EDUCATIONAL INSTITUTION NEED NOT BE AFFILIA TED TO ANY UNIVERSITY OR BOARD; IN FACT A SOCIETY NEED NOT ITS ELF BE IMPARTING EDUCATION AND IT IS ENOUGH IF IT RUNS SOM E SCHOOLS OR COLLEGES. (C) THE EDUCATIONAL INSTITUTION MUST EXIST SOLELY F OR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. BUT MERELY BECAUSE THERE IS A SURPLUS IT CANNOT BE SAID THAT THE EDUC ATIONAL INSTITUTION EXISTS FOR PROFIT. (D) IF AN EDUCATIONAL INSTITUTE MAKES PROFIT INCIDE NTALLY FOR EXAMPLE BY PUBLISHING AND SELLING TEXT BOOKS AND SUCH PROFITS ARE TO BE APPLIED ONLY FOR THE SPREAD OF ED UCATION IT IS ENTITLED TO EXEMPTION CIT V. DELHI KANNADA EDUCAT ION SOCIETY [2000] 246 ITR 731 (DELHI). 17 THE AFORESAID DECISION FROM HONBLE DELHI HIGH COU RT CLEARLY SUPPORTS THE CASE OF THE ASSESSEE. THE BASIC REQUIR EMENT OF THIS SEC. IS THE EXISTENCE OF EDUCATION PURPOSE. ADMITTEDLY T HE HONBLE APEX COURT IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTIO N (SUPRA) WAS ALSO OF THE VIEW THAT THE AVAILABILITY OF EXEMPTION U/S 10( 22) SHOULD BE EVALUATED EACH YEAR TO FIND OUT WHETHER THE INSTITUTION EXIST ED DURING THE RELEVANT YEAR SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THE RATIO LAID DOWN IN FOLLOWING CASES FURTHER SUPP ORTS THE CASE OF THE ASSESSEE: SOLE TRUSTEE LOKA SHIKSHAN TRUST (101 ITR 234) (SC); CIT VS. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL (211 ITR 293) (GUJ); S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT (230 ITR 636) (SC); AGRAWAL SHIKSHA SAMITI TRUST VS. CIT (168 ITR 751) (RAJ); GOVERNING BODY OF RANGARAYA MEDICAL COLLEGE VS. ITO (117 ITR 284) (AP); ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (121 ITR 1 (SC); CITY MONTESSORY SCHOOL VS. UNION OF INDIA [2009] [225 CTR (ALL) 188]; RADHA SWAMI SATSANG VS. CIT [100 CTR (SC) 267]; CIT VS. SARASWAT POOR STUDENTS FUND [46 CTR (KAR) 107]; 18 THE HONBLE ALLAHABAD HIGH COURT HAS DELIBERATED UP ON THE ISSUE OF EXEMPTION U/S 10(23C)(VI) OF THE ACT WHEREIN IT WAS HELD AS UNDER: THE ASSESSEE IS NOT ONLY PROVIDING TRADITIONAL EDUCATION BUT ALSO PREPARING STUDENTS BY PROVIDING GUIDELINES TO GET ADMISSIONS IN PROFESSIONAL INSTITUTIONS TO PURSUE THEIR HIGHER STUDIES. THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN USED IN S. 2(15) IS THE SYSTEMATIC INSTRUCTION SCHOOLING OR TRAINING GIVEN TO THE YOUNG IN PREPARATION FOR THE WORK OF LIFE. SIMILARLY EXTEND ING FINANCIAL ASSISTANCE/SCHOLARSHIP ETC. TO STUDENTS FOR THEIR EDUCATIONAL PURPOSE WOULD SQUARELY FALL WITHIN THE CONNOTATION OF EDUCATION. THUS THE ASSESSEE IS ENGAGED IN EDUCATIONAL ACTIVITIES WHICH FALLS UNDER CHARITABLE PURPOSE. IT IS ALSO ADMITTED FACT THAT IN THE EARLIER ASSESSMENT YEAR THE ASSESSEE WAS ENJOYING THE EXEMPTION UNDER ERSTWHILE S. 10(22). THE PROVISO OF S. 10(23C) PERMITS THE INVESTMENT AND DEPOSITS OF ITS SURPLUS FUND. IT MEANS THAT THE INSTITUTION CAN MAKE SOME DEPOSITS AND THE SAME IS PERMISSIBLE FOR EARNING INTEREST INCOME. IN THE INSTANT CASE THE ASSESSEE PETITIONER IS UNDOUBTEDLY AN EDUCATIONAL INSTITUTIO N WHICH MIGHT HAVE SOME DEPOSITS WHICH ARE PERMISSIBLE AS PER THE PROVISO TO S. 10(23C). FROM THE AUDITED ACCOUNTS ONE CAN EASILY SEE WHETHER THE FUNDS WERE UTILISED FOR THE EXPANSION OF EDUCATIONAL INSTITUTION/ACTIVITY OR FOR PERSONAL PROFITS. THE OPPOSITE PARTIES HAVE NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE SURPLUS EARNED BY THE ASSESSEE PETITIONER WAS UTILISED FOR PERSONAL PROFIT/GAIN ON ANYONE INCLUDING THE FOUNDER MANAGER/DIRECTOR. WHATEVER FUND WAS ACQUIRED THE SAME WAS UTILISED FOR THE EXPANSION OF EDUCATIONAL ACTIVITIES OF INSTITUTION INITIALLY THERE WERE FIVE STUDENTS AND NOW THE INSTITUTION IS IMPARTING EDUCATION TO MORE THAN 34 000 STUDENTS AS POINTED OUT DURING THE COURSE OF ARGUMENTS. THUS THE ASSESSEE IS FULLY SATISFYING ALL THE STATUTORY REQUIREMENTS FOR GETTING EXEMPTION UNDER S. 10(23C)(VI). NO ADVERSE MATERIAL WAS BROUGHT 19 ON RECORD BY THE OPPOSITE PARTIES TO REJECT THE APPLICATION FOR SEEKING SAID EXEMPTION. IF THE AFORESAID CONCLUSION IS ANALYSED WITH THE FA CTS OF THE PRESENT APPEAL ADMITTEDLY IT IS NOT THE CASE THAT THE ASS ESSEE HAS ACCUMULATED HUGE PROFIT OR HAS MISUTILISED THE FUNDS IN ANY MAN NER AGAINST THE OBJECTS OF THE ASSESSEE AND THE PROVISIONS OF THE A CT RATHER THE PROFITS IF ANY WAS INVESTED IN THE BUILDING WHICH IS VERY MUC H NECESSARY TO ACHIEVE THE OBJECTS OF PROVIDING EDUCATION OR FOR T HE EXPANSION OF EDUCATIONAL ACTIVITIES OF INSTITUTION THEREFORE F ROM THIS ANGLE ALSO THE ASSESSEE IS HAVING STRONG CASE. 8. IF THIS ISSUE IS ANALYSED WITH THE ANGLE OF APPL ICATION OF INCOME AS PROVIDED U/S 11 OF THE ACT. IT CAN BE SAID THAT IT IS NOT THE TOTAL INCOME AS WOULD BE ASSESSED BY THE ITO THAT IS RELEVANT FO R THE PURPOSE OF INVESTMENT OF THE TRUST OR ASSESSING THE INCOME OF THE TRUST. TAKING INTO ACCOUNT THE PURPOSE FOR WHICH THE CONDITIONS OF SEC . 11(1)(A) ARE IMPOSED IT WOULD BE CLEAR THAT INCOME TO BE CONS IDERED WILL BE THAT WHICH IS ARRIVED AT IN THE CONTEXT OF WHAT IS AVAIL ABLE IN THE HANDS OF THE ASSESSEE SUBJECT TO AN ADJUSTMENT OF ANY EXPENDITUR E EXTRANEOUS TO THE TRUST. WHETHER THE TRUST IS FOR CHARITABLE PURPOSE S IS TO BE DETERMINED BY REFERENCE TO ALL THE OBJECTS FOR WHICH THE TRUST HAS BEEN BROUGHT INTO EXISTENCE. THE PROPOSITION THAT WHAT SHOULD BE TAKE N INTO CONSIDERATION IS THE ACTIVITY ACTUALLY CONDUCTED BY THE ASSESSEE AND NOT WHAT IS 20 OPENED TO IT UNDER THE PROVISIONS OF ITS MEMORANDUM OF ASSOCIATION CANNOT BE AGREED TO. IT WOULD BE A DIFFERENT CASE W HERE ONE OR MORE OF THE STATED OBJECTS WERE NEVER INTENDED TO BE UNDERT AKEN. IF SEC. 11(1)(A) HAS BEEN FULLY EXPLOITED AND THERE IS STILL ACCUMUL ATED INCOME LEFT TO BE DEALT WITH SUB-SEC. (2) OF SEC. 11 CAN BE PRESSED IN SERVICE. THE WORD APPLIED NEED NOT BE EQUATED WITH SPENT BECAUSE IF THE LEGISLATURE INTENDS THAT THE AMOUNT SHOULD BE ACTUALLY SPENT TH ERE WAS NOTHING PREVENTED FROM USING THAT WORD. EVEN IF THE AMOUNT HAS BEEN EARMARKED FOR THE PURPOSE OF INSTITUTION AND ALLOCATED IT MA Y BE DEEMED TO HAVE BEEN APPLIED SUBJECT TO THE CONDITION THAT IT IS AC TUALLY APPLIED WITHIN THE PRESCRIBED TIME FOR WHICH IT WAS ALLOCATED. THE AC CUMULATION CONTEMPLATED U/S 11(1)(A) HAS TO BE A CONSCIOUS AC CUMULATION AND NOT JUST A MASS OF UNSPENT OR UNAPPLIED PROFIT. OUR VIE W FINDS SUPPORT FROM THE DECISIONS FROM THE HONBLE APEX COURT IN ADDL. CIT VS. ALN RAO CHARITABLE TRUST (216 ITR 697) (SC) CIT VS. RADHAS WAMI SATSANG SABHA (25 ITR 472) (ALL) AND CIT VS. STATE BANK OF INDIA (169 ITR 298) (BOM). 9. IF THE AFORESAID JUDICIAL PRONOUNCEMENTS AND THE FACTS OF THE PRESENT APPEAL ARE ANALYSED IT CAN BE SUMMED UP TH AT SEC. 10(23C)(IIIAD) SPEAKS ABOUT ANY UNIVERSITY OR ANY OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOS ES AND NOT FOR THE PURPOSE OF PROFIT. ALSO PRESCRIBES THAT AGGREGATE ANNUAL RECEIPT OF SUCH 21 INSTITUTION SHOULD NOT EXCEED RS.1 CRORE (RULE 2BC) LIKEWISE SUBCLAUSE (VI) TO SEC. 10(23C) IS ALSO HAVING SAME WORDINGS S UBJECT TO APPROVAL BY THE PRESCRIBED AUTHORITY THEREFORE IT CAN BE SAID THAT THE ISSUE INVOLVED IN SUB-CLAUSE (IIIAD) AND (VI) ARE COMMON THEREFOR E IT HAS TO BE SEEN WHETHER THERE IS ANY ACTIVITY OF PROFIT AND ALSO TH E APPLICATION OF INCOME. A ELABORATE DISCUSSION/OBSERVATION HAS BEEN MADE BY HONBLE P & H HIGH COURT IN THE CASE OF PINEGROVE INTERNATIONAL C HARITABLE TRUST (CWP 6031 OF 2009; (2010) (1 TAXMAN.COM 81) (P & H) WHER EIN BOTH THE ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE. IT CAN BE SAID THAT THE INSTITUTE WHICH HAVE MORE THAN RS.1CRORE OF AGG REGATE RECEIPT ARE HAVING HEAVIER FINANCIAL DEALINGS THEREFORE AS PE R THIRD PROVISO THEY ARE SUPPOSED TO APPLY 85% OF SUCH TOTAL RECEIPT AND ONLY 15% OF SUCH RECEIPT CAN BE RETAINED WHEREAS NO SUCH CONDITION IS IMPOSED UNDER SUB-CLAUSE (IIIAD) THEREFORE THE PROVISIONS OF SE C. 10(23C)(IIIAD) IS AN INDEPENDENT SECTION AND THERE IS NO CONDITION PRECE DENT THAT NECESSARILY REGISTRATION HAS TO BE SOUGHT U/S 12A WHICH MAY BE A CONDITION FOR GETTING EXEMPTION U/S 11 OF THE ACT. IT IS POINTED OUT THAT THE ASSESSEE IN ITS RETURN HAS CLAIMED EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. SINCE RUCHI BAL SHIKSHA AVAM SHIKSHA SAMITI ALSO CONTRIBU TED SUBSTANTIAL AMOUNT IN CONSTRUCTION OF SCHOOL BUILDING OF THE AS SESSEE THAT TOO FREE OF CHARGE FOR EDUCATIONAL ACTIVITIES THEREFORE T HE AMOUNT OF RS.9 88 057/- IS ALSO APPLICATION OF INCOME SPECIAL LY WHEN THE ASSESSEE 22 SCHOOL RUNS ACTIVITIES UNDER THE SUPERVISION OF SAI D SAMITI. THE SAMITI IS REGISTERED WITH THE REGISTRAR OF SOCIETIES MADHYA PRADESH AND ALSO GOT REGISTRATION U/S 12A OF THE ACT. IN SUCH A SITUATIO N THE DECISION FROM HONBLE KERLA HIGH COURT IN CIT VS. PULIKKAL MEDICA L FOUNDATION P. LTD. (210 ITR 229) SUPPORTS THE CASE OF THE ASSESSEE CO NSEQUENTLY THERE IS NO INFIRMITY IN THE IMPUGNED ORDER. BEFORE PARTING WE MAY ADD THAT IN THE CASE OF ACI T V. KINDER GARTEN MANAGEMENT SOCIETY BHOPAL THIS BENCH FOLL OWING THE DECISION OF THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE O F QUEENS EDUCATION SOCIETY (SUPRA) HAD TAKEN A VIEW AGAINST THE ASSES SEE. HOWEVER IN THE BACKGROUND OF SUBSEQUENT DEVELOPMENTS AND THE FACTS AND LEGAL POSITION STATED IN THE PRECEDING PARAGRAPHS WE MO ST RESPECTFULLY PREFER TO FOLLOW THE VIEW2 OF THE HONBLE PUNJAB & HARYANA HIGH COURT. RESULTANTLY THIS APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MARCH 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MARCH 31.03.2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE