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Assistant Commissioner of Income Tax, Circle-1, Alwar. Versus M/s Public Rose Shiksha Samiti,

2015 (9) TMI 129 - ITAT JAIPUR

Eligibility for exemption U/s 10(23C)(iiiad) - whether annual credit receipt is more than one crore is not eligible for exemption U/s 10(23C)(iiiad) ? - CIT(A) found that total receipts were less than Rs. One crore and allowed exemption - Held that:- On verification of the total receipt mentioned by the Assessing Officer there was a transaction of sale of land for ₹ 47,90,000/-. The Honíble Madras High Court has considered the issue of annual receipts as envisaged in Section 10(23C)(iiiad) .....

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rtís decision referred by the Assessing Officer has been considered by the Honíble Gujarat High Court in the case of Gujarat State Co-operative Union Vs. CIT [1992 (2) TMI 74 - GUJARAT High Court] wherein it has been held that word education was not used in a wide or extended sense so as to include addition to the knowledge of a visitor to a zoo or museum, the High Court held that the museum cannot be taken to be an educational institution existing solely for educational purposes. The object of .....

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filed by the revenue against the order dated 10/01/2013 passed by the learned CIT (A), Alwar for A.Y. 2009-10 The effective grounds of appeal are as under:- 1 Whether on the facts and circumstances of the case, ld CIT(A), Alwar was justified in holding that annual aggregate receipts of the assessee are less than ₹ 1 Cr. as against ₹ 1,46,81,760/- determined by the A.O. 2. Whether on the facts and circumstances of the case, the ld CIT(A), Alwar was justified in holding that the asses .....

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wherein the word solely has been defined. 2. All the grounds of the revenue s appeal are revolving around annual credit receipt is more than one crore is not eligible for exemption U/s 10(23C)(iiiad) Hon ble Rajasthan High Court decision in the case of Maharaja Singh Museum Trust 169 ITR 379 (Raj) and the decision of Hon ble Supreme Court of India in the case of Sole Trustee Lok Sikshan Trust Vs. CIT 101 ITR 234 (SC). The ld Assessing Officer observed that the assessee is an educational institu .....

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A.Y. 2006-07, 2007-08 and 2008-09 were also scrutinized U/s 143(3) wherein the claim of exemption U/s 10(23C)(iiiad) was denied by the A.O. for the detailed reasons given in the respective assessment orders. Therefore, the Assessing Officer gave reasonable opportunity of being heard on this issue on the basis of finding given from A.Y. 2006-07 to 2008-09. The assessee replied vide letter dated 07/10/2011, which was reproduced by the Assessing Officer on page No. 2 of the assessment order. After .....

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h the balance sheet, a profit on sale of land had been shown at ₹ 34,52,940/-. Further, the assessee has shown following receipts in the receipt and payment account but not declared in the income and expenditure account. Sale of land ₹ 4790000.00 Praveen Jain ₹ 25000.00 Scholarship ₹ 276800.00 Mulayam Singh ₹ 100000.00 Dr. R. K. Singh ₹ 180000.00 Vinod Gupta ₹ 20000.00 Suresh Kumar ₹ 30000.00 ADM Fee ₹ 8954200.00 Membership Fee ₹ 11016. .....

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ed U/s 10(23C)(vi) of the Act, the exemption U/s 10(23C)(vi) also cannot be allowed. The ld Assessing Officer has reproduced statutory provisions of Section 10(23C)(iiiad) of the Act on page 4-5 of the assessment order for exemption U/s 10(23C)(iiiad) or Section 10(23C)(vi) of the Act. It is necessary that samiti must exist for educational purposes and educational institution, it should not be existed for the purpose of profit. The receipt of the income must have the character of an educational .....

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uld not be entitled for approval U/s 10(23C)(vi) of the Act. The ld Assessing Officer further observed that if there are several objects of a society, some of which relate to education and others which do not, and the trustees or the managers in their discretion are entitled to apply the income or property to any of those objects, the institution would not be liable to be regarded as one existing solely for educational purposes, and no part of its income would be exempt from tax. In other words, .....

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r has held that except objective at serial NO. 2, the other objects are not covered under the purview of education, therefore, it cannot be completed that the samiti does not exist solely for the purpose of education. The ld Assessing Officer relied on the decisions in the case of Hon ble High Court in the case of Maharaja Singh Museum Trust (supra) and Supreme Court of India in the case of Sole Trustee Lok Sikshan Trust Vs. CIT (supra) wherein the word solely has been defined and interpreted. T .....

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d withdrawn funds to the tune of ₹ 7,57,781/- from the samiti accounts for personal purposes. The detail has been given by the Assessing Officer on page No. 6-7 of the assessment order. He also sought clarification from the assessee. After considering the assessee s reply, the ld Assessing Officer observed as under:- a) Voucher for payment to Sh. Rakesh Chauhan b) Receipts in the name of Sh. Abdul Hameed (A copy of voucher dated 30/09/2008 paid to Sh. Rakesh Chauhan and receipt dated 31/5/ .....

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Kumar Singh. 2. Security for Hostel Sai Dham Colony ₹ 1,00,000/-: Made to Smt. Sunita Singh. 3. Nirwan Charitable Trust ₹ 46,35,000/- & Rajasthan Dental College ₹ 45,63,807/-. From the above details of advances etc., it can be clearly noticed that a major part of Samiti s funds are in still in utilization for purposes other than purpose of education as well as the for purposes other than objects of the Samiti which authenticates disqualification for being institution exist .....

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bserving as under:- I have considered the assessment order, assessment record as well as submissions made by the appellant and the cases relied upon. The A.O. has aggregated the receipts of the Samiti as per receipt and payment account, income and expenditure account and the balance sheet to arrive at the total receipt of ₹ 14681760/-. This aggregate amount has been considered as the annual aggregate receipt of the Samiti and since it is more than one crore, claim of exemption U/s 10(23C)( .....

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appening or done once every year, (b) relating to a period of one year. In my considered opinion the term annual receipt in Rule 2BC and in section 10(23C)(iiiad) has been used to mean happening or done once every year since in Income Tax the receipts relating to a period of one year is considered for assessments even otherwise. In the case cited as 88 ITR 192 (SC) CIT Vs. Vegetable Products Ltd., Hon ble Apex Court has observed as under: There is no doubt that the acceptance of one or the other .....

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onstructions or a taxing provision are possible, that construction which favours the assessee must be adopted. This is a well accepted rule of construction recognized by this court in several of its decisions. Hence, all that we have to see is, what is the true effect of the language employed in section 271(1)(a)(i). If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favours the assessee, more particularly so because the .....

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or any such department to repay or distribute to students under any scheme like scholarship etc. (ii) any loan or debt, (iii) any advances received for sale of any land, sale consideration of any assets (iv) interest earned on any investment like FDR which has no nexus with activity of education. Accordingly, it is held that the annual receipts for the appellant would be ₹ 9036200/-, being the admission fee as per income and expenditure account. The A.O. was not correct in holding that th .....

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of Income Tax had rejected the application for granting approval on the ground that the objects included noneducational objects cannot be faulted. The appellant samiti had not conducted any other activity other than educational during the year and only object of the education was being pursued during the year. The appellant does not exist for the purpose of profits and there was no other business or any profit making activity. There is either no surplus or very small amount of surplus in earlie .....

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urpose of education and not for profit, had to be examined every year in the light of activities under taken by the society. The fact that it had other objects would not disentitle it to the exemption so long as the activity carried out by it in that assessment year was that of running an educational institution and nor for profit. He relied on the decision of Hon ble Bombay High Court in the case of Vanita Vishram Trust Vs. CCIT 327 ITR 121, CIT Vs. Vidya Vikas Vihar 256 ITR 489 (Bom). The misu .....

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profit during the A.Y. 2009-10. The annual receipt is also less than Rs. One crore, therefore, the Assessing Officer was directed to assess the total income for A.Y. 2009-10 at NIL. 4. Now the revenue is in appeal before us. The Ld. DR vehemently supported the order of the ld. Assessing Officer. At the outset, the ld AR of the assessee has supported the order of the ld CIT(A) and further submitted as under:- 1. The AO from the perusal of receipt & payment a/c of the assessee observed that i .....

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d every receipt which has been allegedly added by the AO in arriving at annual receipt of ₹ 1,46,81,760/-. The assessee also placed reliance in case of Param Hans Swami Uma Bharti Mission Vs. ACIT (2013) 140 ITD 429 (Del.) (Trib.) wherein it was held that income from interest on FDRs is an additional income of society and it cannot be considered to be part of annual receipts of the school and thus assessee is eligible for exemption u/s 10(23C)(iiiad) as annual school receipts did not excee .....

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from students. But it should not include (i) other receipts received from government or any such department to repay or distribute to students under any scheme like scholarship etc. (ii) any loan or debt (iii) any advance received for sale of any land, sales consideration of any assets (iv) interest earned on any investment like FDR which has no nexus with activity of education. Accordingly, it is held that annual receipts of the appellant would be ₹ 90,36,200/-, being the admission fee a .....

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in sec. 10(23C)(iiiad), the key emphasis is on the words annual receipts . The sale proceeds of land and bonds cannot be equated to annual receipts as stated u/s 10(23) of the Act. Therefore, the denial of benefit of sec. 10(23C) of the Act to the assessee by the AO was rightly interfered by the CIT(A) and confirmed by the Tribunal. In view of above, there is no error in the finding of CIT(A) and therefore the ground of the department be dismissed. Ld. A. R. further submitted that for the purpos .....

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l purposes and thus, not entitled to exemption u/s 10(23C)(iiiad). Apart from the cases relied before the Ld. CIT(A), reliance is further placed on following cases:- Saraswati Educational & Welfare Society (Regd.) (2015) 152 ITD 527 (Chand.) (Trib) - Geetanjali Education Society Vs. ADIT (2014) 101 DTR 337 (Kar.) (HC) - Neeraj Janhitkari Gramin Sewa Sansthan Vs. CCIT & Ors. (2014) 360 ITR 168 (All.) (HC) - Digember Jain Society For Child Welfare Vs. DGIT (2010) 329 ITR 0459 (Del.) (HC) T .....

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TR 279 in Para 7 as under:- It is seen from decision in case of Maharaja Singh Museum Trust 169 ITR 379 (Raj.) that the assessee was a public charitable trust having a museum in a portion of the City Palace, Jaipur for the benefit of the public. Some properties were settled on the trust and it was treated and accepted as a trust for charitable purposes within the meaning of s. 2(15) and had enjoyed the exemption from tax u/s 11 of the said Act. The assessee later on contended that it was an educ .....

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on, therefore, cannot held the Revenue since in the present case, we have found that assessee having regard to its objects and nature of its activities, is clearly an educational institution existing solely for educational purposes. In Ground No. 2, the department has challenged that the Ld. CIT(A) erred in holding that assessee is eligible for exemption u/s 10(23C)(iiiad) without considering the deficiencies pointed out by the AO. It may be noted that the Ld. CIT(A) in holding that assessee is .....

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our conditions of sec. 10(23C)(iiiad). In view of above, there is no error in the finding of CIT(A) and therefore the grounds of the department be dismissed. 5. We have heard the rival contentions of both the parties and perused the material available on the record. As per the Assessing Officer the total receipt of the samiti was at ₹ 1,46,81,760/-. However, the ld CIT(A) found that total receipts were less than Rs. One crore. On verification of the total receipt mentioned by the Assessing .....

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