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2022 (5) TMI 774 - AT - Income TaxExemption u/s 11 - Approval u/s 80G(5)(vi) - denial of approval u/s. 80G(5)(vi) in the instant case is the earning of ‘huge’ profits, i.e., in excess of what may be deemed appropriate or reasonable by the competent authority - HELD THAT:- The assessee-society is registered as a charitable institution u/s. 12AA - Its’ object clauses (copy on record), which include that toward education, which it is presently solely undertaking and is per se charitable u/s. 2(15), i.e., independent and irrespective of the extent of profit that may arise in the course of carrying out the said charitable purpose. True, capital expenditure would only result in expansion of its’ activities and, consequently, further profit, but the said activities, being in the realm of education are, as aforesaid, charitable under the Act. We have, toward this, also gone through the rules and regulations of the assessee-society, including that per the latest amendment therein, i.e., on 28/12/2020 to find that there is no embargo in its’ charter on the earning of profits. None such is also observed either u/s. 80G(5) or the relevant rule, being r. 11AA. The same therefore does not serve as a valid ground for denial of approval. As perused each of the decisions cited by the Revenue, to find them as inapplicable. The same are, firstly, in respect of an Approval u/s. 10(23C)(vi), which provision clearly stipulates the condition of the educational institution as existing solely for the educational purpose and not for the purpose of profit, so that in the facts of a given case, it could be contended that the pre-dominant purpose for the existence of the said institution is the earning of profit. The other decisions are qua the residual clause of s. 2(15), i.e., ‘advancement of any object of general public utility’, to which commercial considerations apply, in contradistinction to the other charitable purposes, including ‘education’. As regards the ‘objection’ with reference to the ‘discrepancies’ in the assessee’s accounts in view of the ‘differences’ observed between the amount applied and amount accumulated as per the statement of computation of income (forming part of the return of income) and the audit report (in Form 10B), the same, to our mind, is a matter that may have a bearing on the quantum of exemption u/s. 11 of the Act and, thus, falls in the domain of the AO in the assessment proceedings. There is nothing on record to show that the assessee has been denied exemption u/s. 11 for that or any other reason Finally, while the ld. CIT(E) does state, at para 7 of his order, that he is taking steps to cancel the assessee’s registration u/s. 12AA, Shri Jain, the ld. counsel for the assessee, would, on asking, confirm the Bench during hearing to the assessee having not received any notice for cancellation of the said registration. In any case of the matter, where so, approval u/s. 80G(5)(vi) would stand to be withdrawn in consequence (s.293C). The said statement by the ld. CIT(E), not acted upon, is thus, to no consequence. Assessee appeal allowed.
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