TMI Blog2014 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... UJJAL BHUYAN, JJ. JUDGEMENT Ujjal Bhuyan J.- This petition under article 226 of the Constitution of India challenges the legality and validity of the order dated October 12, 2011, passed by the Chief Commissioner of Income-tax, Shillong, rejecting the application of the petitioners seeking exemption under section 10(23C) (vi) of the Income-tax Act, 1961 ("the Act") and further seeks a declaration that petitioner No. 2 is entitled to exemption under the aforesaid provision. Facts of the case may be briefly noted. Petitioner No. 1 is a trust called "Sree Kanya Pathshala Trust". The main object of petitioner No. 1 is to carry out educational activities, particularly to impart education to girls. Petitioner No. 2 is one of the units of petitioner No. 1. Since petitioner No. 2 is an educational institution existing solely for educational purpose and not for the purpose of profit, it sought for exemption under section 10(23C)(vi) of the Act. However, the Assessing Officer, i.e., the Deputy Commissioner of Income-tax, Circle-Tinsukia, insisted on production of approval of the Chief Commissioner of Income-tax and in this connection, issued notice dated July 28, 2010. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l receipts as may be prescribed. As per sub-clause (vi), income of any university or other educational institution existing solely for educational purposes and not for the purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority, may be excluded from the total income for the purpose of income-tax. As per the relevant rule, the prescribed authority is the Chief Commissioner or the Director General, as the case may be. In Aditanar Educational Institution v. Addl. CIT reported in [1997] 224 ITR 310 (SC), the hon'ble Supreme Court examined the entitlement of an educational institution to exemption under the then section 10(22) of the Act, the provisions of which have since been re-enacted in section 10(23C) of the Act. The apex court considered the scope of section 10(22) of the Act. It was held that an educational society or a trust or other similar body running an educational institution solely for educational purposes and not for the purpose of profit could be regarded as "other educational institution". It was further observed that the applicability of section 10(22) should be evaluated or inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and maintain and run the same by enlarging and enhancing its scope and standard with suitable accommodation and provision for qualified teaching staff, getting recognition and aids from the Government, and strive for the allout improvement of the institution. (c) to provide for research work, and for the delivery and holding of lectures, demonstrations, exhibitions, public meetings, classes and conferences calculating directly or indirectly to propagate and advance the cause of religious teachings particularly of the ancient Hindu culture based on the old Hindu scriptures, including vedas shastras and puranas, Ramayan and Mahabharat, etc. (d) To provide for, establish and maintain and run libraries, museums societies, lecture halls, and other institutions and to furnish the same with books reviews magazines, newspapers and other publications. (e) To collect and preserve old classical manuscripts, writings and literature of all kinds and painting curies and sculptures. (f) To print, publish, distribute and sell, books, newspapers, magazines, pamphlets, leaflets, brochures, souvenirs and other publications having its objects teaching, propagation, promotion and development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paths, water ways, common grazing grounds, veterinary hospitals, institutions catering the general welfare of animal life, cremation grounds clubs and other public utility subjects for the use and benefit of the general public with the sole object of public charity and without any purpose to make gains. (o) To do all or such other lawful things as are incidental or conducive to the attainment of any one or more of the above or similar objects. (p) To collect raise and receive subscriptions, donations and gifts in cash or kind for all or any of the objects and to apply the same in accordance with the conditions, if any, presented by the donors and agreed to by the trustees not beyond the objects of this trust. (q) To take or otherwise acquire and hold shares in any company or corporation. (r) To borrow or raise money with or without security and on such terms and conditions as the trustees may think fit and proper. (s) To work for all or any other charitable purposes which may benefit the people in general provided always that and it is hereby declared that if any one or more of the objects specified above are held not to be for public charity, the trustees shall not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court held that availability of exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and not for purposes of profit. If after meeting the expenditure requirements, any surplus receipts are available incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes. The decisive or acid test as pointed out by the apex court is whether on an overall view taken, the object is to make profit. In evaluating or appraising the above aspect, the distinction between the corpus, the objects and the powers of the concerned entity should be borne in mind. Thus, an overall view has to be taken. Applying the above principle, we are of the view that the decision of the Chief Commissioner dated October 12, 2011, cannot be sustained. The same is accordingly set aside and quashed. The matter is remanded back to the Chief Commissioner of Income-tax, Shillong, for a fresh decision in accordance with law. Such decision shall be taken within a period of 4 (four) weeks from the date of receipt of a certified copy of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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