TMI Blog2011 (7) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the petitioner was entitled to exemption under Section 11 of the Act - Therefore, remit the matter to the respondent for fresh adjudication in accordance with law - It will be also open to the respondent to incorporate conditions while passing the order and call upon the petitioner society to furnish an undertaking or affidavit that they would not breach any of those conditions - The writ petition is accordingly disposed of. - 7578/2008 - - - Dated:- 14-7-2011 - MR. JUSTICE DIPAK MISRA, MR. JUSTICE SANJIV KHANNA, JJ. For Appellant: Mr. Pankaj Jain and Mr. M.L. Choudhary, Advocates. (Exemptions) For Respondent :Ms Suruchi Aggarwal, Advocate. SANJIV KHANNA, J.: The petitioner, Palam Jain Educational and Welfare Society, has prayed for issue of writ in the nature of certiorari for quashing the order dated 26th September, 2008, dismissing the petitioner s application under Section 10(23C)(vi) of the Income Tax Act, 1961 (Act, for short). In the impugned order it has been held that (1) The petitioner has not been solely established for educational purposes, as two of its main objects are : (a) to establish, manage, administer hostels for students who c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Association and suitably delete non-educational clauses for considering their application for notification under Section 10(23C)(vi) of the Act for the assessment year 2002-03 to 2004-05. Thereafter, by letter dated 3rd June, 2004, the petitioner society informed the respondent that they had amended their object clause in their meeting on 19th December, 2003, which was confirmed on 2nd February, 2004. They also informed that they have removed the non-educational clauses from its aims objects. It has been emphasized and high-lighted that it is only after this letter that notification/order dated 8th June, 2004 was issued by Director General of Income Tax (Exemptions). It is submitted by the counsel for the petitioner that this aspect has been wholly ignored in the impugned order dated 26th September, 2008. The amendment of the object clause and the effect thereof has not been examined and gone into by the respondent. 5. This apart, the petitioner has rightly relied upon the decision of the Supreme Court in American Hotel Lodging Association Educational Institute Vs. Central Board of Direct Taxes Ors., (2008) 301 ITR 86 (SC). In the said decision, the Supreme Court consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is empowered to withdraw the approval earlier granted after complying with the procedure mentioned therein. Having analysed the provisos to Section 10(23C)(vi) one finds that there is a difference between stipulation of conditions and compliance therewith. The threshold conditions are actual existence of an educational institution and approval of the prescribed authority for which every applicant has to move an application in the standardized form in terms of the first proviso. It is only if the pre-requisite condition of actual existence of the educational institution is fulfilled that the question of compliance with the requirements in the provisos would arise. We find merit in the contention advanced on behalf of the appellant that the third proviso contains monitoring conditions/requirements like application, accumulation, deployment of income in specified assets whose compliance depends on events that have not taken place on the date of the application for initial approval. To make the section with the proviso workable we are of the view that the monitoring conditions in the third proviso like application/utilization of income, pattern of investments to be made, etc., coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Civil) No. 5311/2008, decided on 9th October, 2009, has held as under:- 11. It follows from the aforesaid judgment that when an application for exemption is to be moved by any trust, fund, university or other educational institution, the threshold conditions which are to be examined at that stage are actually existence of an educational institution and approval of the prescribed authority, for which every applicant has to move an application in the standardized form in terms of the first proviso. Insofar as newly added third proviso is concerned, which relates to application of funds, namely to see whether such institution etc. has not invested/deposited its funds, in accordance with the third proviso or that the activities of such institution, etc. are not genuine or that its activities are not being carried out in accordance with the conditions subject to which the approval is granted, would be a matter that would arise for consideration at a later stage as the third proviso contains mandatory conditions/ requirements. It is only in the event that such conditions are not fulfilled, after the grant of exemption, the prescribed authority is empowered to withdraw the approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y activity is education, namely, running of various schools and no other activity. It is not the allegation against the petitioner that it has deviated from its aforesaid object, namely, the education‟. The petitioner society had been granted exemption till assessment years 2001-02 and the application for and upto the assessment years 2007-08 were pending. The respondent has denied exemption to the petitioner society merely on suspicion that it may deviate from it in future. The income of the petitioner society had been assessed at NIL under Section 11 of the Act till the assessment year 2001-02. For the assessment year 2003-04 and 2004-05, the assessment has been completed under Section 143(3) of the Act vide assessment order dated 28.2.2006 and 24.11.2006 respectively and the total income has been assessed at NIL under Section 11 of the Act. Though for the assessment year 2002-03 the AO had passed orders dated 22.3.2005, denying exemption under Section 11 of the Act to the petitioner, this order was set aside by CIT(A) in appeal holding that the petitioner was entitled to exemption under Section 11 of the Act. The Revenue accepted that order. Since the CIT(A) had granted c ..... 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