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2015 (11) TMI 413 - HC - Income TaxRegistration under Section 10 (23C)(vi) denied - as per revenue the petitioner has several objects and was not running the institute solely for educational purposes - Held that:- A categorical assertion has been made that the petitioner is only running an educational institution and is not carrying on any other activity. This fact has not been denied by the respondents in their counter affidavit. The finding given by the Commissioner that the petitioner-society does not exist solely for educational purposes is based on no reasoning. No finding has been given on this aspect. In our opinion, this finding is perverse. Mere fact that the petitioner is making profit does not indicate that it is carrying on the activity solely for the purpose of making a profit and that it ceases to be for an educational purpose. In our opinion, the predominant test as given by the Supreme Court in American Hotel (2008 (5) TMI 17 - SUPREME COURT OF INDIA) and Queen's Educational Society (2015 (3) TMI 619 - SUPREME COURT ) has to be considered. Further, we find that the Commissioner has considered the profit before applying the depreciation, which is incorrect. The authority is required to consider the profit after allowing depreciation and is also further required to consider the investment made by the petitioner in the creation of fixed assets. These investments of capital nature are required to be considered while calculating the money spent by them in the educational activity. Further, the fact that the petitioner is generating profit or is carrying on commercial activity and is making a huge expenditure in advertisement is a fact, which is not required to be considered at the stage of considering the application for grant of registration. These factors would come into play under the 3rd and 13th proviso at the stage of considering the return and making the assessment. Further, expenditure on advertisement made does not necessarily means that the activity of the petitioner is commercial in nature or is being done with the intention to earn more profit. Such finding given by the authority is patently erroneous. - Decided in favour of assessee.
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