TMI Blog2014 (8) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... available - It is made clear that any opinion in respect of exemption u/s 10(23C) is not expressed, and the AO shall consider it independently and decide – Decided in favour of Assessee. - I.T.A. No. 135 & 136/Coch/2014, S.P. Nos 23 & 24/Coch/2014 - - - Dated:- 25-7-2014 - Shri N. R. S. Ganesan (JM) And Shri Chandra Poojari (AM),JJ. For the Appellant : Shri R. Krishna Iyer For the Respondent : Shri M Anil Kumar, CIT-DR Smt. Latha V Kumar, Jr DR ORDER Per N.R.S. Ganesan (JM) Both the appeals of the assessee are directed against the respective orders of CIT(A) for the assessment years 2009-10 and 2010-11. 2. Shri R Krishna Iyer, the ld. representative for the assessee submitted that the assessee trust is running educational institutions. For the year under consideration, the assessee filed return of income claiming exemption u/s 11 of the Act. However, the assessing officer rejected the claim of the assessee for exemption u/s 11 on the ground that the assessee trust was not registered as charitable institution u/s 12AA of the Act. According to the ld.counsel, the registration of the trust was rejected by the Administrative Commissioner and this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC). The ld.DR further submitted that the trust which is running the educational institution has to be considered as an individual unit and the aggregate income of the trust shall be taken into consideration for the purpose of exemption. According to the ld.DR, the aggregate receipt of the assessee trust exceeds ₹ 1 crore, therefore, the assessee cannot get any exemption u/s 10(23C) of the Act unless the same is approved by the competent authority, viz. the Chief Commissioner of Income-tax. 4. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee was not registered u/s 12AA of the Act as charitable institution. The appeal is said to be pending before the High Court and the application for condonation of delay on filing application for registration is said to be pending before CBDT. 5. We have carefully gone through the judgment of the Apex Court in U.P. Forest Corporation Anr (supra). In the case before the Apex Court, the application of the assessee for registration u/s 12AA of the Act was rejected by the Commissioner of Income-tax and the appeal was pending before the Tribunal. Under these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as such. According to him, in this case, the assessee might be financing for running an educational institution, but it is not itself an educational institution. As noted earlier, the Tribunal held that the assessee was an institution existing for educational purposes and not for the purposes of earning any profit and the assessee itself could be termed as an educational institution coming within section 10(22) of the Act. The High Court has concurred with this view. The High Court has further held that the medium through which the assessee could effectuate its objects is the college and by employing this medium, the assessee imparts education and it cannot be stated that the assessee is only a financing body and does not, on the facts, come within the scope of other educational institution occurring in section 10(22) of the Act. Reliance was placed on the decision of the Allahabad High Court in Katra Education Society v. ITO [1978] 111 ITR 420, to hold that an educational society could be regarded as an educational institution if the society was running an educational institution. We are of the view that an educational society or a trust or other similar body running an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23C), the income on behalf of such educational institution received by the assessee society is exempted from the total income. The Karnataka High Court found that income from each educational institution, if they are not receiving any aid from the government wholly or substantially in respect of which the aggregate annual receipt do not exceed ₹ 1 crore received by the assessee is also not included while computing the annual total income. In fact, the Karnataka High Court has observed as follows at paragraph 17 of the judgment: 17. Rule 2BC of the Income Tax Rules prescribes the amount of annual receipts for the purposes of sub-clauses (iii)(ad) and (iii)(ae) of clause (23C) of section 10, which reads as under: 2BC(1) For the purposes of sub-clause (iii)(ad) of clause (23C) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of any university or other educational institution, existing solely for educational purposes and not for purposes of profit, shall be one crore rupees. (2) For the purposes of sub-clause (iii)(ae) of clause (230) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of any hospital or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come on behalf of such educational institution received by the assessee is exempted from being computed the total income of the assessee. If the assessee is running other educational institutions which are not wholly or substantially financed by the Government, then the benefit of that exemption is also extended to the income derived from such educational institutions and received by the assessee under sub-clause (iii)(ad) reading with sub-clause (iii)(ad) along with Rule 2BC. It was contended, the Legislature used the word aggregate annual receipt and amount of annual receipts and therefore, the provisions are not one and the same. The word aggregate has been defined in Chambers 21st Century Dictionary as under : aggregate noun = a collection of separate units brought together, a total taken altogether, bring together. In Wharton s Law Lexicon, it is defined as thus: a collocation of individuals, units or things in order to form a whole Similarly relying on the judgment of the Apex Court in the case of ADITNAR EDUCATIONAL INSTITUTION vs. ADDITIONAL COMMISSIONER OF INCOME-TAX, it was contended the word other educational institution refers to the assessee society and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of time, they have expanded their activity providing course in various subjects at various levels and for that purpose they have established more than one educational institution. Each educational institution is a separate entity controlled under various statutes for various purposes. May be the Management of these educational institutions would be in the hands of the Societies or the Trust, but for all other purposes they are different, independent entities. That is the reason why Section 10(23)(c) is worded as under: Any income received by any person on behalf of Here any person refers to the assessee and on behalf of refers to such institutions. It may be an University, it may be an educational institution, it may be a hospital or other institutions of similar nature. As all such institutions are independent entity and they generate income and when that income is received by the assessee, it becomes the income in the hand of the assessee and it is such income which is sought to be excluded while computing the total income of the assessee under Section 10. The test prescribed under the aforesaid provision is not the income of the educational education. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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