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2017 (6) TMI 10 - AT - Income TaxDenial of benefit u/s 11 and 12 - proof of charitable purposes - Held that:- On perusal of the order of the Hon’ble Delhi High Court in the assessee’s own case [2015 (10) TMI 600 - DELHI HIGH COURT] observed that the objects of the assessee society were solely for the purposes of education and not for the purposes of profit. Also that the distribution of surpluses was prohibited and further, in the event of dissolution of the assessee society, its assets would have to be transferred to another institution, carrying on similar activities and the same cannot be distributed to its members. The assessee has been running three schools that are affiliated to CBSE and admittedly, this would not have been permissible in case the assessee did not exist solely for educational purposes and/or if the assessee was found to be pursuing the profit motive. The surpluses generated by the assessee were necessarily to be applied towards its charitable objects and, therefore, in view of the aforesaid, exemption cannot be denied by the assessee only for the reason that it had been generating surpluses. The fact that certain advances had been made to Col. Satsangi and some of his family members who were also involved in running the school cannot be construed as diluting the predominant object of the assessee which was managing schools and the substratal purposes of its activities was education. The Hon'ble High Court held that the assessee would quality for exemption u/s 10(22)/10(23C) of the Act. Therefore, respectfully applying the ratio of the judgment of the Hon'ble High Court, we deem it fit to restore the assessment to the file of the Assessing Officer for re-examination and fresh assessment after duly considering the status of the assessee’s application for approval u/s 10 (23C) (vi) before the DGIT(E) and after giving proper opportunity to the assessee to present its case.Assessee’s appeal stands allowed for statistical purposes.
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