TMI Blog2016 (12) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee - ITA.No.2913/Ahd/2015 - - - Dated:- 7-10-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Assessee : Shri Deepak R. Shah, AR For The Revenue : Shri Jagdish, CIT-DR ORDER PER RAJPAL YADAV, ACCOUNTANT MEMBER Assessee is in appeal before the Tribunal against the order of Chief Commissioner of Income-tax dated 29.9.2014. 2. Grievance of the assessee is that the ld.CCIT has erred in rejecting application moved by the assessee under section 10(23C)(vi) of the Income Tax Act for the Asstt.Year 2013-14. 3. Registry has pointed out that appeal is time barred by 311 days. In order to explain the delay, affidavit of Shri Haresh V. Patel, a trustee of appellant trust has been filed. In this affidavit, it has been deposed that ld.CIT has rejected application of the assessee vide order dated 29.9.2014 and appeal bearing ITA No.2930/Ahd/2014 was filed before the Tribunal on 10.10.2014. This appeal was dismissed by the Tribunal on 10.4.2015 being not maintainable. At that point of time, no appeal was provided against order passed under section 10(23)(c)(vi) of the Income Tax Act. Therefore, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her requisite conditions. Ld.CIT has made reference to object clause of the trust deed and observed that under clauses (b) and (c), the applicant trust is empowered to collect funds and accept funds and it can manage other institutions. Therefore, it cannot be construed that assessee solely existing for the educational purpose. This application of the applicant-trust has been rejected. The ld.counsel for the assessee while impugning the order of the CCIT contended that the ld.CCIT has made reference to the decision of the Hon ble Supreme Court in the case of Dharamposhanam, 114 ITR 463. The ld.CCIT has made reference to last paragraphs of this judgment, but failed to note complete paragraphs. He has just picked up few lines and drew inference contrary to proposition laid down in this decision. He further contended that the ld.CCIT noted that in the main object of the trust under clause (2)(c) of the Trust deed it has been provided that Trust can manage any public institution of village. But it is only ancillary object. It has never been acted upon by the assessee. The Hon ble Supreme Court in the case of Dharamposhanam (supra) has also observed that if there is an evidence, pointin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered that if the assessee has not undertaken other objects mentioned in the object clause of the trust-deed, and only working for education, then exemption under section 10(23C)(vi) will not be denied to the assessee. i) C.P. Vidya Niketan Inter College Shikshabn Society, 359 ITR 322 (All) ii) Hardayal Charitable Education Trust, 355 ITR 0534 (All) iii) Vanita Vishram Trust, 327 ITR 121 (Bom) iv) Geetanjali Education Society, 339 ITR 333 (Kar) 6. On the other hand, the ld.DR contended that present appeal is not maintainable before the Tribunal, because power to grant approval under section 10(23C)(vi) has been conferred upon the Commissioner w.e.f 15.11.2014. He made reference to Rule 2CA and Form No.56D of the Income Tax Rules,1962. Prior to this, CCIT was authorized to grant such approval. After conferment of the power upon the Commissioner, amendment has been made in section 253 of the Income Tax Act, whereby, clause (f) has been appended w.e.f. 1.6.2015. In the present case, impugned order was passed by CCIT and therefore, it is not amenable to appeal before the Tribunal. He made reference to the decision of the Hon ble High Court of Orissa in the case of Ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the applications. Admittedly, in the present case, no such fetter has been imposed upon the Tribunal. No doubt the order was passed by the CCIT and when he passed the order, appeal to the Tribunal was not provided. But Tribunal has power to condone the delay for entertaining any appeal and the power of the Tribunal has not been restricted against the impugned order. The ld.DR cannot draw any benefit from this decision, and the appeal is maintainable before the Tribunal. 10. As far as merit of the case is concerned, we find that following clause of the Trust-deed has been considered by the Prescribed Authority: (a) To spread amongst the people of Dharmaj primary, secondary, higher, commercial, industrial as well as agricultural education and to employ suitable means for the spread of intellectual, physical and moral education in the town. b) to collect funds, to accept Trust funds, to execute them, and to whatsoever is necessary for the accomplishment of the abovementioned aims. c) To manage any public Institution of the village. 11. The ld.prescribed authority was of the opinion that under clause (b) and (c), the assessee could entertain any other obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... College at Kaimganj, Distt. Farrukhabad imparts education to students from Class VI to XII, in the absence of any allegation or material, the object clause providing for other charitable activities, would not disentitle the society from approval under Section 10 (23C) (vi) of exemption. The proviso added to Section 10 (23C) (vi), specially Proviso 2, 3, 12 and 13, give sufficient powers to check the abuse of the exemption. The mere possibility, therefore, that the society may in future pursue activities, which are not charitable, or closely connected with education for making profit, would not constitute the grounds to reject the approval under Section 10 (23C) (vi). 25. On the question of satisfaction of the Prescribed Authority of the conditions of the Second Proviso to Section 10 (23C) (vi), we are of the view that the Chief Commissioner of Income Tax did not give sufficient opportunity to the petitioner, to place documents relevant to the enquiry before rejecting the application. The contents of paragraph 9 of the writ petition that the hearing proceeded on the same day on 27.5.2011, when the petitioner was required to produce the audit report under Rule 16CC in Form 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had carried on no other activity save and except conducting education. This principle had been laid down in a judgment of the Bombay High Court in VanitaVishram Trust v. Chief CIT [2010] 327 ITR 121/192 Taxman 389 (Bom.). This view has been followed by a Division Bench of this Court in C.P. VidyaNiketan Inter College Shikshan Society v. Union of India [2013] 359 ITR 322/213 Taxman 139/40 taxmann.com 76 (All.) and Neeraj Janhitkari Gramin Sewa Sansthan (supra). 8. In the present case, it has never been the contention of the revenue either before the CIT(A) or before the Tribunal that the assessee had carried on any activity other than education. The Assessing Officer, it may be noted, relied on the prospectus of the assessee which made a reference to the business carried on by a Private Limited Company in the same group as the assessee. These observations which are extracted in the order of the Assessing Officer are from the order passed by the CIT-II, Agra on 23 August 2011 rejecting the request of the assessee for registration under section 12AA. This view was, however, as noted earlier, reversed in a judgment of Division Bench of this Court dated 15 March 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also to offer the National Council the lowest possible prices for the products and services sold to or utilized by the schools under the umbrella of the Government of India and so also to utilize Indian Authors whenever possible in the development of customized programmes. The Supreme Court, despite these objects/activities, held that the institution in American Hotel was involved only in educational activities, perhaps on the ground that it was not carrying on those activities. 12. Sri. Shankar, learned counsel appearing for the appellant at the outset, invited our attention to the judgment of Allahabad High Court in C P Vidya Niketan Inter College Shikshan Society -vs- Union of India and others (2013) 359 ITR 322 (All) (for short C P Vidyaniketan') and submitted that after considering the judgment of the Supreme Court in American Hotel, the High Court held that where it is not disputed that a society runs an educational institution and is not for the purposes of making profit, merely because the object of the Society is also to serve the church and the nation would not mean that the educational institution not existing solely for educational purpose. This observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 10(23C)(iiiad). In the circumstances, we answer both the substantial questions of law in favour of the assessee and against the revenue. 14. In the light of the above, if we examine the facts of the present case, then it would reveal that the assessee trust came to existence in 1954. It is running educational institutions. It has been registered under Section 12AA of the Act since 25.8.1998. It is also enjoying the exemption under section 80G. Thus, the department has never doubted about the genuineness of the activities of the trust and purpose of its existence. While rejecting the application of the Trust under section 10(23C), the ld.CCIT has not pointed out any specific aspect. He only harboured a belief that assessee might have some ancillary activities not associated with education. This is only a hypothetical observation. In all these decisions, it has been propounded that if the assessee has not taken other objections mentioned in the trust deed, and exclusively carried out activities of education, then approval under section 10(23C) will not be denied. Respectfully following these decisions, we allow the appeal of the assessee and direct the prescribed auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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