TMI Blog2017 (6) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee Trust is running an educational institution, the application to grant approval u/s 10(23C)(vi) cannot be denied merely because there are other objects in the original Trust Deed also. But, in the instant case, assessee has gone one step further even by amending the original Trust Deed which has been declared invalid by the ld. Pr. CCIT and rejected the application by ignoring the settled principle of law laid down by Hon’ble Apex Court in American Hotel and Lodging Association Educational Institute (2008 (5) TMI 17 - SUPREME COURT OF INDIA ) and Queen’s Educational Society (2015 (3) TMI 619 - SUPREME COURT ). So, we are of the considered view that impugned order is not sustainable, hence set aside and Pr.CCIT is directed to decide the application afresh in view of the observations made herein above. - Decided in favour of assessee. - ITA NO.433/CTK/2015 - - - Dated:- 29-5-2017 - SHRI N.S. SAINI, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri S.K. Tulsiyan, AR For The Revenue : Shri Kunal Singh, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : The Appellant, Roland Educational and Charitable Trust (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute of Computer Management Studies and Supriya Junior College. Apart from the educational objects, other non-educational objects of the Trust are as under :- (i) to contribute towards human resource development in the country; (ii) to establish, maintain or grant aid to homes for the aged, orphanages or other establishments for the relief and help to the poor, needy and destitute people, orphans, widows and aged persons; (iii) to charge tuition fees and other fees to coup expenditure incurred in the upkeep and maintenance of the institution established and to be established under the deed. 3. Earlier application moved by the assessee Trust for grant of approval u/s 10(23C)(vi) of the Act for FY 2009-10 was rejected on the ground that the assessee was not committed to pursue exclusive educational activities and subsequently, the assessee Trust moved application on the ground that it has since deleted the non-educational object as contained in the registered Trust Deed dated 19.11.1997 through a registered amended Trust Deed dated 26.03.2012. 4. Ld. Pr. CCIT declared the amended registered Trust Deed dated 26.03.2012 vide which certain objects, particularly the none ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether ld. Pr. CCIT has erred in denying the exemption u/s 10(23C)(vi) of the Act by declaring the amended registered Trust Deed dated 26.03.2012 deleting certain objects alleged to be noneducational as invalid? 9. Pr. CCIT primarily declared the amended Trust Deed dated 26.03.2012, whereby all the non-educational objects have been deleted, as invalid by relying upon Clause No.27 of the registered Trust Deed dated 19.11.1997. Pr. CCIT further relied upon the decision rendered by Hon ble Supreme Court in the case of CIT vs. Kamala Town Trust (1996) 217 ITR 699 wherein it is held that the Trust Deed could be rectified through a competent civil court under the relevant provisions of Specific Relief Act or by the settler himself by executing a supplementary Trust Deed. Clause 27 of the original Trust Deed dated 19.11.1997 reads as under :- 27. The Permanent Trustees shall have the power to add, alter, amend any of the clauses mentioned herein for the advantage / benefit of the Trust. 10. The ld. AR for the assessee challenging the impugned order firstly relied upon the CBDT Circular No.14/2015 dated 17.08.2015 in denying the exemption to the assessee Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it has been held that at the time of granting approval u/s 10(23C)(vi), the prescribed authority is to be satisfied that the institution existed during the relevant year solely for educational purposes and not for profit. Once the prescribed authority is satisfied about fulfillment of this criteria i.e. the threshold pre-condition of actual existence of an educational institution under section 10(23C)(vi), it would not be justifiable, in denying approval on other grounds, especially where [he compliance depends on events that have not taken place on the date on which the application for grant of approval has been made. 1.3 However, the prescribed authority is eligible to grant approval u/s 10(23C)(vi), subject to such terms and conditions as deemed necessary including those falling within the framework of various Provisos to the said clause of section 10. It has also been clarified in the said judgment that the compliance of prescribed conditions can be gauged while monitoring the case and in case of any breach thereof, the approval can be withdrawn. It is, therefore, clarified that the principle laid down by the Apex Court in American Hotels case (supra) must be follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and all those connected with the institutions so as to make them good citizens. (4) To establish and run boarding house and a residential institution for the students and those connected with the institution. (5) To invest, dispose of, transfer and otherwise deal with the subject matter of the Trust in such manner as the Trustees should deem fit so as to enable the institution to carry on the objectives of the Trust efficiently. (6) To accept donations, grants, presentations and other offerings and to deal with the same for the purpose of the Trust. (7) To bring out, encourage and develop the inventive and research facilities to the students and teachers and to provide an opportunity for research work in Arts, Science, Industry and other fields. (8) To sell, dispose off, alienate or otherwise deal with any property comprising the Trust fund. (9) To let out, demise any immovable property comprised in the trust fund for such period and at such rent and on such terms and conditions as the Trustees in their discretion may think fit. (10) To make, vary, alter or modify schemes, rules and regulations for carrying out the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es like BPUT (Biju Patnaik University Of Technology), Orissa, Berhampur University,Orissa, Director of Higher Education, Govt. of Orissa, Recognition Director of Higher Education, Govt. of Orissa, Council of Higher Education, Orissa, Bhubaneswar. 16. Ld. Pr.CCIT declined the approval to the assessee Trust u/s 10(23C)(vi) of the Act primarily by declaring the amended Trust Deed as invalid on the ground that for granting approval u/s 10(23C)(vi), only original Trust Deed is to be looked into which contains non-educational objectives. However, we are of the considered view that in the original Trust Deed dated 19.11.1997, though the assessee Trust has undertaken both educational and non-educational objectives but predominant objectives were for promotion and imparting education as discussed in the succeeding paras. 17. In order to decide the issue in controversy, the provisions contained u/s 10(23C)(vi) of the Act are required to be perused which are as under :- 10 In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- (vi) any university or other educational institution exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities of an educational institution. 22. This fact is also clear from the individual balance sheet of Roland Institute of Computer and Management Studies, Roland Supriya Junior College, Roland Junior College and Roland Institute of Technology for the FY 2013-14, available at pages 159, 155, 148 140 of the paper book respectively showing assets as Xerox machine, DVD Writer, Scanner, EEE Purchases (Electrical Electronics Engineering Purchases), Mechanical Purchases, Civil Department Purchases, Licensed Software, library books magazines, projectors printers, computers, white boards, notice boards, fax machine, library, lab equipments, which can be used for carrying out educational activities only. 23. So, merely declining the approval u/s 10(23C)(vi) of the Act by ld. Pr.CCIT on the premise that amended Trust Deed dated 26.03.2012, to prove the assessee s existence, is invalid document being not in conformity with provisions contained u/s 12A of Societies Registration Act, 1860 is not sustainable in the eyes of law. Rather Pr.CCIT has travelled beyond his power by determining the issue as a civil court. 24. Hon ble Supreme Court in case cited as CIT vs. Kamla Town T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be drawn between the making of a surplus and an institution being carried on for profit . No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes. (5) The ultimate test is whether on an overall view of the matter in the concerned assessment year the object is to make profit as opposed to educating persons. 28. Hon ble Apex Court in Queen s Educational Society (supra) held that to determine whether an educational institution exists solely for educational purposes and not for purposes of profit, three Supreme Court judgments, namely , Addl.CIT vs. Surat Art Silk Cloth Manufactures Association (1980) 121 ITR 1, Aditanar Educational Institution vs. Addl. CIT (1997) 224 ITR 310 (SC) and American Hotel and Lodging Association Educational Institute vs. CBDT (2008) 301 ITR 86 (SC) would apply. Hon ble Apex Court further held that 13th Proviso to section 10(23C) is of great importance in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were also there. So, merely because of the fact that there were other objects of the Trust, the educational institution did not exist solely for educational purpose. But, in the instant case, the assessee Trust has gone one step further by amending the original Trust Deed vide registered amended Trust Deed dated 26.03.2012 deleting all the non-educational objectives. So, the impugned order passed by ld. Pr. CCIT is not sustainable. 31. In view of what has been discussed above, when it is proved on record that the assessee Trust is running an educational institution, the application to grant approval u/s 10(23C)(vi) of the Act cannot be denied merely because there are other objects in the original Trust Deed also. But, in the instant case, assessee has gone one step further even by amending the original Trust Deed which has been declared invalid by the ld. Pr. CCIT and rejected the application by ignoring the settled principle of law laid down by Hon ble Apex Court in American Hotel and Lodging Association Educational Institute (supra) and Queen s Educational Society (supra). So, we are of the considered view that impugned order is not sustainable, hence set aside and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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