TMI Blog2006 (7) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 136 ITR 445 , learned CIT(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Societies Registration Act. During the year it has shown gross receipts at Rs. 96,49,062 (major receipts are from fee at Rs. 85,80,575 other receipts are on account of fuel charges, bank interest, donation, rent, breakage and fine 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 mainl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not brought on record any evidence to prove that the surplus generated by the appellant has either been diverted for purposes other than educational or the same has been used for private profit. In the light of above facts, there was no justification for the Assessing Officer s observation that the appellant society was not formed solely for educational purposes but to earn profit by running school and utilize the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Educational Institution [1979] 118 ITR 235 , the Apex Court further observed "any income which has a direct relation or is incidental to the running of the institution as such, would qualify for exemption." But the Assessing Officer has failed to consider this later portion of the Supreme Court judgment. The law is clear that any judgment or decision or legal pronouncement must be read word by word, clause by clause, and then 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 ). Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over expenditure in the year under appeal (and in earlier years) has enabled the appellant to acquire its own property, acquire computers, library books, sports equipments etc. for the benefit of the students. And more importantly the members of the society have not utilized any part of the surplus for their own benefit. The Assessing Officer wrongly interpreted the resultant surplus as the main objective of the assessee trust. As held above, 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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