TMI Blog2017 (5) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to accepted. Therefore, the first question, we answering in favour of the assessee that it is an income entitled for exemption under Section 10(23C)(iiiad) of the Act - Decided in favour of assessee - D.B. Income Tax Appeal No. 708/2008, 107/2009, 67/2010, 68/2010, 70/2010, 126/2011, 118/2012, 235/2012, 101/2014 And, 115/2014 - - - Dated:- 23-5-2017 - Mr. K.S. Jhaveri And Dr. Virendra Kumar Mathur JJ. For the Appellant(s) : Mr. R.B. Mathur with Mr. K.D. Mathur For the Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana JUDGMENT 1. In all these appeals identical questions of law and facts are involved, hence these appeals are decided by this common judgment. 2. By way of these appeals, the appellant has challenged the judgment of the Tribunal whereby the Tribunal has dismissed the appeals of the Department. 2.1 While admitting the appeal, this Court framed the following substantial question of law: 1. Appeal No. 708/2008 (i) Whether in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in allowing the benefit of section 11(1) as charitable trust to the assessee despite of the fact that the huge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred u/s 13(3) of the I.T. Act. (ii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where the same had already been claimed as application of income in the previous years. (iii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of the Act despite of the fact that the assessee failed to prove the justification of these expenses. (iv) Whether, in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in deleting the addition of disallowance of interest u/s. 36(1)(iii) despite of the fact that assessee failed to discharge its onus of furnishing the evidence of use of the assets. (4) Appeal No. 68/2010 (i) Whether in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in allowing the benefit of section 11(1) as charitable trust to the assessee despite of the fact that the huge surpluses earned was withdrawn by way of payments to the persons referred u/s 13(3) of the I.T. Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where the same had already been claimed as application of income in the previous years. (iii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of the Act despite of the fact that the assessee failed to prove the justification of these expenses. (iv) Whether, in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in deleting the addition of disallowance of interest u/s. 36(1)(iii) despite of the fact that assessee failed to discharge its onus of furnishing the evidence of use of the assets. (7) Appeal No. 118/2012 (i) Whether in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in allowing the benefit of section 11(1) as charitable trust to the assessee despite of the fact that the huge surpluses earned was withdrawn by way of payments to the persons referred u/s 13(3) of the I.T. Act. (ii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities of the society as charitable despite of the fact that the society is controlled and managed by one family and the motive is to earn profit which cannot be held to be charitable as defined u/s.2(15) of the Act. (10) Appeal No. 115/2014 (i) Whether in the facts and circumstances of the case the Tribunal was justified in law and has acted perversely in allowing the benefit of section 11(1) as charitable trust to the assessee despite of the fact that the huge surpluses earned was withdrawn by way of payments to the persons referred u/s 13(3) of the I.T. Act. (ii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where the same had already been claimed as application of income in the previous years. (iii) Whether, in the facts and circumstances of the case the Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of the Act despite of the fact that the assessee failed to prove the justification of these expenses. 3. The issues if read in tabular form reads as under:- Issue No. Issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in para 10, 17, and 19 which reads as under: 10. The ld A/R submitted that the legislature is not averse to earning of income by charitable institutions bu desires that if the income is earned through pursuing charitable objects, such income should be re-applied into the charitable objects and for charitable purpose so that the society and the nation can enjoy the larger benefits from such charitable institutions. The logic behind devising such scheme is that even after collection of taxes the Government applies the same towards public charitable purposes therefore why to at all collect tax from such institutions which are themselves utilizing their incomes for charitable purposes. Therefore to all those charitable institutions, which plough back their earnings for charitable purposes, the fiscal incentive of exemption under section 11 is allowed and no tax is being charged. 17. The ld. A/R pointed out that the appellant society was granted registration under section 12A, as a charitable institution, by ld. Commissioner of Income Tax after considering and examining the objects and activities of the society. This registration under section 12A/12AA is in force even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote from a portion of the said property tax judgment which was rendered in the context of whether an educational society is supported wholly or in part by voluntary contributions, something which is completely foreign to Section 10(23C) (iiiad). The final conclusion that if a surplus is made by an educational society and ploughed back to construct its own premises would fall foul of Section 10(23C) is to ignore the language of the Section and to ignore the tests laid down in the Surat Art Silk Cloth case, Aditanar case and the American Hotel and Lodging case. It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit. In fact, in S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income Tax MANU/SC/0107/1998 : (1998) 2 SCC 584, this Court in the context of benefit claimed Under Section 11 of the Act held: 9. In the present case, the Assessee is not claiming any benefit Under Section 11(2) as it cannot; because in respect of this assessment year, the Assessee has not complied with the conditions laid down in Section 11(2). The Assessee, however, is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the correct tests which have been culled out in the three Supreme Court judgments stated above, namely, Surat Art Silk Cloth, Aditanar and American Hotel and Lodging, would all apply to determine whether an educational institution exists solely for educational purposes and not for purposes of profit. In addition, we hasten to add that the 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that the Revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C)read with Section 11 of the Income-tax Act. In all those ..... X X X X Extracts X X X X X X X X Extracts X X X X
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