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B.S. Abdur Rahman Institute of Science & Technology Versus The Chief Commissioner of Income Tax-3, Chennai

2016 (3) TMI 760 - MADRAS HIGH COURT

Eligibility of exemption u/s Sec.10(23C)(vi) - Held that:- It is not in dispute that Clause-4 of the Memorandum and Articles of Association was deleted on 02.06.2014 and the effect of deletion of the said Clause will come into force only prospectively and it cannot be retrospective. As per Section 2(15) of the Act "Charitable purpose" means "charitable purpose includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wild life) and pr .....

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ment of Society as narrated in the said objective and hence, for the assessment year 2014-15, the petitioner had multiple objectives and therefore, did not exist solely for educational purpose. As already stated, the amendment made in the Memorandum and Articles of Association can only be prospective and in that case, it shall apply only for the assessment year 2015-16 and cannot be considered for the assessment year 2014-15. Considering all these aspects, the respondent had rightly rejected the .....

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5 on the file of the respondent and to quash the same and to direct the respondent to grant exemption sought for by the petitioner in terms of Sec.10(23C)(vi) of the Income Tax Act. 2. According to the petitioner, it is a Society constituted in terms of the provisions of the Indian Societies Act, 1975. According to the petitioner, the objectives for which the Institute is established are: i. To provide for instruction and training in such branches of learning as it may deem fit. ii. To promote e .....

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to secure the recognition of such institutes or bodies as deemed university u/s 3 of the UGC Act or the statutory amendments thereof. 3. According to the petitioner, the Institute was established for the purpose of dissemination of organized education and it has been engaged only in activity ever since inception. Further, the petitioner contended that it does not engage in other activity other than the purposes stated above. The petitioner has been granted Registration under Sections 12AA and 80 .....

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of environment (including watersheds, forests and wild life) and preservation of monuments or places or objects of artistic or historic interest] and the advancement of any other object of general public utility". The petitioner contended that they were advised to seek and obtain exemption in terms of Section 10(23C)(vi) of the Act that provides an exemption for an University or an educational institution solely for educational purposes and not for purposes of profit. The petitioner filed .....

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the basis of existence of the 4th objective in the original memorandum that has been deleted and it has never been acted upon. The show cause notice issued on 23.09.2015 to the petitioner calling upon certain clarification. 4. According to the petitioner, though the petitioner has been incorporated originally with 5 objectives, including an objective relating to the undertaking of various programmes for the development of the Society and though they form part of the original objectives, the obje .....

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es back to the inception of the petitioner Society and has been erroneously stated to be prospective. 5. Dr.Anita Sumanth, learned counsel appearing for the petitioner, in support of her contentions, relied upon the judgment reported in (2008) 301 ITR 86 (SC) [American Hotel and Lodging Association Educational Institute Vs. Central Board of Direct Taxes and others] wherein in paragraph-12, the Hon'ble Supreme Court observed as follows: "By its order dated October 12, 2004, the Central B .....

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r which the prescribed authority is empowered to withdraw the approval earlier granted. Under that proviso, if the prescribed authority is satisfied that the trust, fund, university or other educational institution, etc., has not applied its income in accordance with the third proviso or if it finds that such institution, trust or fund, etc., has not invested/deposited its funds in accordance with the third proviso or that the activities of such fund or institution or trust, etc., are not genuin .....

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f 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, deploym .....

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counsel submitted that since the amendment of the said clause was made from 02.06.2014, it shall only apply for the assessment year 2015-16 and cannot be considered for the assessment year 2014-15. 7. In support of his contentions, the learned standing counsel relied upon an unreported order of this Court made in W.P.No.28289 of 2010 dated 13.12.2010 wherein this Court held as follows: "The petitioner institution is governed by a Trust Deed executed on 13.12.2006. The main object of the tr .....

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der held and assistance to and/or implement any scheme for providing livelihood and upliftment of the poor. 15. To provide social services and of all kinds to uplift socially and economically backward and to create awareness among people to uphold the Constitution of India." 2. It is based on the said incidental objects, the impugned order came to be passed by the respondent in the application filed by the petitioner in Form No.56 D on 20.08.2009 for the purpose of exemption under Section 1 .....

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(vi) of the Income Tax Act." 8. On a careful consideration of the materials available on record and the submissions made by the learned counsel on either side and also taking into consideration the judgments relied upon by the learned counsel on either side, it could be seen that in Clause-4 of the objective mentioned in the Memorandum and Articles of Association, it has been stated that the objective is to sponsor or establish institutes or bodies which satisfy the requirements of the Univ .....

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tivity of education alone and therefore, they are entitled for exemption under Section 10(23C)(vi) of the Income Tax. When there is a specific Clause mentioned in the Memorandum and Articles of Association, the respondent can only go by the documentary proof available before him and he cannot go beyond that and give a finding contrary to the recitals found in the document. 9. It is not in dispute that Clause-4 of the Memorandum and Articles of Association was deleted on 02.06.2014 and the effect .....

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he objectives shall not come within the meaning of charitable purpose as defined under Section 2(15) of the Act. Therefore, the finding of the respondent that the 4th objective cannot be considered as being related to promotion of education as contained in Section 10(23C)(vi) of the Act is just and proper. 10. It is pertinent to extract Section 10(23C)(vi) of the Income Tax Act, which reads as follows: "Section 10(23C) (vi) any university or other educational institution existing solely for .....

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