TMI Blog2015 (9) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon’ble 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 the samiti as mentioned by the Assessing Officer in his assessment order supports the assessee’s claim that it is an educational institution. The Coordinate Bench has allowed the assessee’s registration U/s 12AA of the Act in financial year 2000-01. - Decided in favour of assessee. - ITA No. 363/JP/2013 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Revenue : Shri Dilip Sharma (JCIT) For The Assessee : Shri P.C. Parwal (CA) ORDER PER: T. R. MEENA, A. M. This is an appeal 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 ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrent assessment year, the assessee had claimed excess of expenditure over income to the tune of ₹ 29,755.70. The assessee had shown gross income of ₹ 90,87,042/- and expenditure of ₹ 91,16,798/- in the income and expenditure account. However, on perusal of the balance sheet, the total receipt of the samiti are more than Rs. one crore. In the schedule annexed with 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yone of the objects must relate to education in order that the institution may be held entitled for the benefits U/s 10(23C)(vi) of the Act. The ld Assessing Officer relied on the decision in the case of Surat Art Silk Manufacturers Association. The ld Assessing Officer reproduced the objective given in Clause (3) of the constitution letter on page 4-5 of the assessment order, which is reproduced as under:- The ld Assessing Officer 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. The Hon ble Courts have observed that existing solely for the purpose of education means exclusively and not primarily meaning thereby that the sole objective of the institution must be education and if there are other objectives also whether cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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)(iiiad) has been denied. Rule 2BC(1) of the IT Rules provide as under: For the purpose of sub-clause (iiiad) of clause (23C) of Section 10, the amount of annual receipts on or after 1st day of April, 1998, of any University or other educational institutional, existing solely for educational purposes and not for the purpose of profit, shall be one crore rupees. The terms aggregate annual receipt has not been defined in the Act. As per Oxford Advanced Learners dictionary the term annual means (a) happening 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 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 1,2,3,4 5 are allowed. 3.1 The ld CIT(A) also decided the issue that the appellant did not exist solely for the purpose of education mis-utilization of funds by relying upon the order of the Hon ble Andhra Pradesh High Court in the case of RRM Educational Society Vs. CCIT 339 ITR 323 wherein Chief Commissioner 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 earlier years and the samiti is utilizing its fund exclusively for the purpose of its educational objective. In A.Y. 2007-08, the samiti also claimed exemption, which was allowed by the ld CIT(A) vide order dated 14/11/2011. He held that the appellant samiti is running a nursing institute and a B-ed college and no evidence of pursuing any activity relating to other non-educati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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 exceed ₹ 1 crores. After considering the same, the Ld. CIT(A) gave the following findings [Page 18-19 of the order, Para 4.3]:- In view of the decision of Apex Court in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192, I am inclined to agree with the appellant that the aggregate annual receipts should include receipts which are being received on annual basis and not occasionally or on some other counts. The receipts must be related to the activity of the institution like fee receipts received 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Rajasthan High Court decision in case of Maharaja Singh Museum Trust 169 ITR 379 has been distinguished by Gujarat High Court in case of Gujarat State Co-operative Union Vs. CIT 195 ITR 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 educational institution within the meaning of s.10(22) of the Act. It is in this context that drawing upon the observations of the Supreme Court in Lok Shikshana Trust's case in which the Supreme Court indicated that the 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 said decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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