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TMI Blog2018 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that a reply was filed before Ld. CIT(E) vide letter dated 25.10.2016, a copy of which was placed at P.B. page 6. The Ld. AR submitted that assessee was imparting education and was not running the society for the profit motive. He submitted that the school was affiliated with CBSE and the assessee has to run the school within certain norms and if there is any surplus receipt from sale of bags and transportation fee it does not prove the profit element. The Ld. AR submitted that the assessee is running school in the District of Gurdaspur and students come from various villages and to get the students into school, the buses were provided and the only motive for buses was to carry the students from their homes to school and vise versa and the buses were not run on commercial buses and were only utilized for the purpose of society. As regards the second objection of Ld. CIT(E), the Ld. AR submitted that Ld. CIT(E) objected that there was no mention of running any school in the Memorandum of Association. In this connection it was submitted that the main objects of the society are to impart education and the objects of the society are very clear and as a consequence thereof the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Chandigarh vs. Shri Shirdi Sai Darbar Charitable Trust (Dharamshala), Barnala, in ITA No.38 of 2017, order dated 27/03/2017. 2. Decision of P&H High Court in the case of CIT vs. B.K.K. Memorial Trust reported in 29 Taxmann.Com 286. 3. Decision of P&H High Court in the case of CIT vs. Surya Educational & Charitable Trust reported in 15 Taxmann.Com 123. 4. Decision of ITAT, Amritsar Bench in the case of Divine Health Services vs. CIT-II, Amritsar in ITA No. 417(ASR)/2010, order dated 07/06/2012 relating to AY 2010-11. 5. Decision of ITAT, Amritsar Bench in the case of D.N. Memorial Trust vs. CIT in ITA No. 617(ASR)/2011, order dated 11/07/2012. 6. Decision of ITAT, Amritsar Bench in the case of Dream Land Educational Trust vs. CIT reported in 109 TTJ 850. 7. Decision of ITAT, Amritsar Bench, Amritsar in the case of The Managing Committee Arya High School, Mansa vs. CIT(E) Chandigarh in ITA No. 469(ASR)/2016, order dated 11/08/2017 relating to AY 2015-16. 8. Decision of ITAT Amritsar Bench Amritsar in the case of Sant Ishwar Shiksha Samiti vs. CIT(E) Chandigarh in ITA No. 670(ASR)/2015 order dated 30/08/2017 relating AY 2015-16. 9. Decision of Punjab & Haryana High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were various objects out of which some of them were not charitable in nature. However the assessee had filed amended Memorandum of Association which Ld. CIT(E) has taken note of in his order at para 2 but he mixed up the object clause of both Memorandum of Associations. The amended memorandum of association is placed at P.B. page 12 to 24 and objects stated in the MOA are reproduced as under: "(i) To establish, take over and manage educational, technical and medical institutions. (ii) To organize educational activities; (iii) To start and conduct educational publications, issue periodicals or literature pertaining to this specific field. (iv) To develop mind as well as physique of the children through games and extra-curricular activities and create personality and leadership traits in the children. (v) To start and run Primary and Secondary schools, kinder garden and Montessori or other kinds of schools, Training School for teachers, institutions for higher education and educational training schools. (vi) To affiliate with or amalgamate with educational institutions or societies with similar objects. (vii) To devise ways and means for the advancement of the youth in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital expenditure has to be deducted from the gross income of the educational institution in determining whether 85 per cent of the income has been applied for its objects-Words 'not for the purposes of profit' accompanying the words 'existing solely for educational purposes' have to be read and interpreted in view of the third proviso to s. 10(23C)(vi) which prescribes the methodology for the utilization and accumulation of income at the hands of the educational institutions-Even otherwise, unlike the provisions of ss. 36(l)(xii) and 37, the words 'not being in the nature of capital expenditure' do not find place in the third proviso to s. 10(23C)(vi) preceding the words 'wholly and exclusively' which clearly demonstrates that the capital expenditure is to be deducted whenever the institution applies its income for the achievement of its object-This view is further fortified by cl. 11 of Form No. 56D which specifies that the amount of income of an university or other educational institution which is to be deemed to be utilized wholly and exclusively for its objects shall have the meaning assigned to it in sub- ss. (1) and (1A) of s. 11-In every case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the said case the Hon'ble Apex Court reminded the conditions of principle laid down in Queen's Education Society vs. CIT [2015] 372 ITR 699 (SC) which for the sake of brevity and convenience are reproduced herein below. "11. Thus, the law common to section 10(23C)(iiiad) and (vi) may be summed up as follows. (1) Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied-the purpose of education should not be submerged by a profit making motive. (3) A distinction 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 profit, it becomes an activity for profit. (4) If after meeting the expenditure, a surplus arises incidentally from the activity carried only the educational institution, it will not; cease, to be one existing solely for educational purposes. (5) The u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T.A.T, Delhi Bench, in the present case also the above Matriculation School which is managed by Education Board and granted permission by the Director of School Education as early as 07.10.1997 is an "Institution" qualifying for exemption U/s. 10(23C)(vi) of the I.T. Act. Hence, the exemption sough for the above "Institution" is to be granted. Accordingly, we direct the CCIT to grant exemption U/s 10(23C) (vi) of the Act." Now, coming to the instant case, as it reflects from the details of four assessment years i.e. of 2012-13, 2013,14, 2014-15 & 2015-16, that the amount of receipt has been exceeded more than 1 Crore, therefore, the assessee preferred the registration u/s 10(23C)(iv) and in the previous year as it reflects from the balance sheet, the assessee utilized the amount for the purchase of land for further extension of the School Building etc. that certainly goes to prove that the same is being utilized for the educational purposes only because the Ld. CIT(E) failed to bring on record any contrary material to the fact. Further as discussed above, the assessee is also covered within the provisions of Sec.10(23C)(vi) of the Act for grant of registration because in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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