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2014 (12) TMI 798 - AT - Income TaxNature of entity - ‘Senate of Serampore College’ is a taxable entity or not – Held that:- The Serampore College Act, 1918 was passed by Government of India as Bengal Act IV of 1918 to supplement and supersede the Royal Charter of Incorporation and the statutes and regulations of Serampore College for better governance and management - Its legal assessable entity is ‘The Serampore College’ and Senate of Serampore College is only a subordinate body under the Council with specified functions - the Serampore College is the assessable entity for the purpose of income tax and Senate of Serampore College is a constituent unit of the college whose accounts must be consolidated along with other units in the The Serampore College account - ‘The Serampore College’ – the entity, as per Serampore College Act 1918, exists for nearly two centuries as an educational institution catering to theological and general education - The college imparts formal education on different streams and subjects for public at large. Even religions or philosophical educations through formal systems of course, curricula, examination and awarding degrees is also education for the purpose of section 2(15) or 10(23C) - each unit maintains separate accounts of its receipts and payments and Income-Expenditure and is duly audited by Chartered Accountant - The Arts, Science and Commerce departments of the Serampore College is approved by the UGC and funded by Govt. like all other colleges under the University of Calcutta - accounts of these 4 units of “The Serampore College” are separately audited, and a consolidated financial statement is prepared and looked into for the purpose of taxation under the provisions of the Act considering ‘The Serampore College’ as one and sole taxable entity - “The Serampore College”, although this consists of 4 units but a single taxable entity, whether under the name of “The Serampore College” or “The Senate of Serampore”, both are one and the same - the AO is directed to treat the assessee as sole taxable unit/entity. Entitlement for exemption u/s 10(23C)(iiiab) – Held that:- Assessee contended that the Serampore College exists solely for the purpose of Education and not for the purpose of profit - Even if running of an institution leads to some surplus but the profit is accumulated or ploughed back for the purpose and objects of the institution, it is deemed as existing not for the purpose of profit - “The Serampore College” will fall under the category of ‘other educational institution’ u/s 10(23C) and will be exempt under clause (iiiab), since it exists solely for educational purpose and not for the purpose of profit, as no part of the profit or surplus is diverted for private gain. Whether the Serampore College is substantially financed by the Government or not – Held that:- In case the finding comes that the college is financed substantially, then it is covered by the section 10(23C) (iiiab) of Act and is eligible for exemption - CIT (A) as well as the AO has not examined the claim of the assessee as regards to the source of finance i.e. substantially financing by the Government or not, so as to eligibility of the claim of exemption u/s 10(23C)(iiiab) of the Act - mere rejection of application 10(23C)(via) of the Act cannot be reason to reject the claim of exemption u/s. 10(23C)(iiib) of the Act - assessee relied upon CIT V Parle Plastics Ltd. And Another [2010 (9) TMI 726 - BOMBAY HIGH COURT] - the AO is directed to consider the case laws relied upon by assessee and decide the issue, whether the assessee’s case falls in the category of ‘wholly or substantially financed by the Government’ – Decided in favour of assessee.
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