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TMI Blog2006 (7) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act and has been imparting education to children. The appellant society claimed exemption under section 10(23C)(iiiad ). The Assessing Officer observed that the exemption under section 10(23C)(iiiad ) is available to such other educational institutions which were akin to a university in stature, management, regulatory mechanism, standard of education etc. The Assessing Officer doubted whether a school run by the appellant society was eligible to be covered under section 10(23C)( iiiad) as an institution. Further, the Assessing Officer observed that the main object of the appellant society was to earn profit by running school and utilize excess of receipts over expenditure towards religious and charitable purposes and society had not done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) held that the assessee is entitled to exemption under section 10(23C)( iiiad) of the Act. Revenue is in further appeal before us. 4. The learned DR Dr. Balwan submitted that a close scrutiny of the facts and circumstances of the case indicates that assessee-society is engaged in running the institution/school on commercial lines and exists not solely for the educational purpose. This finds support from the following facts extracted from the Income and Expenditure Accounts of the assessee for the year under consideration : Heads Fee charged Expenses claimed Surplus Library 106485 60725 45760 Cultural 41350 21217 20133 Others 556105 56121 499484 CPMT Examination 28750 7950 20800 Laboratory 340630 80698 259932 Tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine etc.). The surplus of income over expenditure stood at Rs. 7,12,704. During the year there has been investment at Rs. 10,40,501 in fixed assets such as building, furniture and fixture and vehicle etc. If the above investment into fixed assets is also taken into expenditure, the total expenditure during the year exceeded the receipts by an amount of Rs. 3,27,797. A perusal of the balance sheet of the appellant society shows that the accumulated capital fund at Rs. 71,32,879 as on 31-3-2001 stood represented mainly in the fixed assets such as buildings (Rs. 45,98,650), furniture and fixture (Rs. 4,91,501), vehicle (Rs. 17,66,011), other assets (Rs. 87,035), generator (Rs. 16,000). It may be worthwhile to view the position of income/surplu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit for charitable and religious purposes. Again the Assessing Officer's observation "with the profit earned the society had strengthened or enhanced its capacity to earn more rather than to undertake any other activities to fulfil other noble objects for the cause of poor and needy people or advancement of religion" seems to be factually incorrect. Such noble objects for cause of poor and needy or advancement of religion do not find any mention in the object clauses of the appellant society. 7. As per section 10(23C)( iiiad) any income received by any university or educational institution existing solely for education purposes and not for the purpose of profit, is exempt. Merely because there is some surplus, it cannot be said that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a whole. The law does not permit choosing a portion of judgment which might be beneficial to one and the portions going to the advantage of the other should be excluded. The Assessing Officer has also referred to a Supreme Court decision in the case of Safdarjung Enclave Educational Society's case (supra). This decision of the Hon'ble Supreme Court is with reference to section 115(4) of Delhi Municipal Corporation Act dealing with property tax and does not have any relation with the provisions of the Income-tax Act. The ACIT in his assessment order has also tried to rely on another Supreme Court judgment in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172 but this decision is not relevant to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit is only incidental to the main object of spreading education. If there is no surplus out of the difference between the receipts and outgoings, the trust will not be able to achieve the objectives. Any educational institution cannot be run in rented premises for all times and without necessary equipment and without paying to the staff engaged in imparting education. The assessee is not getting any financial aid/assistance from the Government or other philanthropic agency and, therefore, to achieve the objectives, it has to raise its own funds. But such surplus would not come within the ambit of denying exemption under section 10(23C)( iiiad) of the Act. We accordingly, hold that the assessee trust is entitled to exemption under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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