TMI Blog2018 (12) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... f exemption to assessee-institution u/s. 10(22). Accordingly, we dismiss the appeal of Revenue. - ITA No. 5581/Mum/2014, CO No. 16/Mum/2016 - - - Dated:- 28-11-2018 - Sri Mahavir Singh, JM And Sri Manoj Kumar Aggarwal, AM For the Appellant : Shri Anadi Varma, CIT-DR For the Respondent : Shri Porus Kaka Shri Divesh Chawla, ARs ORDER PER MAHAVIR SINGH, JM: This appeal by the Revenue and Cross Objection by assessee are arising out of the order of Commissioner of Income Tax (Appeals)-I, Mumbai, in appeal No. CIT(A)-I/IT-E2(88)/2013-14 vide dated 27-06-2014. The Assessment was framed by the Asst. Director of Income Tax(Exemption)-II(2), Mumbai for the AY 1998-99 vide order dated 28-03- 2013 under section 143(3) read with section 253 of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in this appeal of Revenue is against the order of CIT(A) granting exemption u/s. 10(22) of the Act by treating the assessee as educational institute, existed purely for education. For this, Revenue has raised the following four effective grounds: 1. Whether on the facts and circumstances of the case, and in law, the CTT(A) was justified in directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10(23C)(vi), whereas, the assessee was entitled to exemption under section 10(22). He, therefore, submitted that the matter needs to be restored back to the file of Assessing Officer for examining assessee trust s income in the light of the provisions contained under section 10(22) of the Act as the same has not been considered by the Assessing Officer. .. 5. We have heard rival contentions and gone through the facts and circumstances of the case. the rival submissions, perused the orders of the lower authorities and the materials available on record. In view of the submissions noted above, we set aside the impugned order of the learned CIT(A) for assessment year 1998-99 and restore the matter back to the file of Assessing Officer for deciding the issue denovo with reference to section 10(22) in accordance with law . 3.1. The AO framed assessment u/s. 143(3) read with section 253 of the Act vide order dated 28-03-2013, just repeating the earlier assessment order dated 27-02-2006. The assessee carried the mater before the CIT(A) and CIT(A) passed order u/s. 251 of the Act, after considering the submissions of assessee vide order dated 27-06-2014, allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case. the rival submissions, perused the orders of the lower authorities and the materials available on record. In view of the submissions noted above, we set aside the impugned order of the learned CIT(A) for assessment year 1998- 99 and restore the matter back to the file of Assessing Officer for deciding the issue denovo with reference to section 10(22) in accordance with law . 7.1 It has been reiterated and submitted by the appellant that the relevant provision under which exemption has been claimed by the appellant for the current assessment year (1998-99) is section 10(22) of the I.T. Act. It has further been submitted that the only condition for exemption u/s. 10(22) is existence of institution for educational purposes and not for the purpose of profit. The appellant has submitted details of recognition and affiliation of various courses taught by the appellant, and the ambit of its activities confined to the educational purposes, as summarily reproduced by way of relevant submissions of the appellant above. There is no discussion and material bringing out business activity for the purpose of earning profit so as to deny exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are clearly laid down. The condition precedent for claiming exemption u/s.10(22) was that 'the_educational institution_must_exist solely for educational purposes and not for profit and once this condition was fulfilled the fact that the recipient of income was a person other than the educational institution would not affect the position'. I.T.O. vs. Shri Bhuvanendra College Trust [1983] 4 ITD (Bang.) It was also laid down in Shanti Devi Progressive Educational Society vs. Asst. Director (1999) 68 ITD (Del.) that Exemption u/s.10(22) not to be denied_since Revenue could not point out any case where any part of profit/income being diverted for purpose other than for educational purpose. The facts and circumstances of the case of the appellant for claim of exemption u/s.10(22) of the I.T. Act find support and are endorsed by these judicial decisions. n '. V. .' * - '. 7.4 The legal position viz. section 10(22) of the I,T. Act, 1961 in respect of facts and circumstances of the case of the appellant is well settled in the following decisions of the Hon'ble higher Judicial authorities - . 1. Exemption cannot tie denied merely because there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued that the AO has rightly denied the claim of exemption to assessee u/s. 10(22) of the Act. It was the finding of AO that the assessee is unable to produce any evidence relating to correctness of its accounts of South Asia International Education Service Foundation (SAIESF). AO observed that the expenditure claimed by assessee incurred by SAIESF on behalf of assessee is not allowable as the accounts of SAIESF were not audited by CPA in USA or by any Chartered Accountant in India. According to him, the completeness and authenticity of the accounts could not be proved with regard to the claim made by assessee. Accordingly, Ld. CIT-Departmental Representative supported the assessment order and urged to restore the order of Assessing Officer. 5. On the other hand, Ld. Counsel for the assessee Shri Porus Kaka argued that the assessee is eligible for exemption u/s. 10(22) of the Act considering that it fulfills the requirement that it is an institution existing solely for educational purposes and not for the purpose of profit. It was contended that assessee is following international curriculum. The International Baccalaureate (IB) program was established at ASB in 1998. ASB has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the school is located at Bandra Kurla Complex, a low lying area, which is bordered by the Mithi River. It was stated that the entire schools area including the basement where the documents were stored was destroyed due to water logging caused from flooding of the Mithi River. Many documents/computers containing records including supporting of expenses were destroyed. The assessee has also filed First Information Report (FIR) with the local police and copy of FIR is now enclosed in assessee s Paper Book at page No. 78. Ld. Counsel for the assessee stated that the ledger accounts extracted from computer were produced before the AO and vouchers were destroyed in the flood could not be produced. Ld. Counsel also submitted that this issue has been considered by the Hon'ble Delhi High Court in W.P.(C) No. 2186/2014 and CM No. 4561/2015, dated 13th August, 2015 has given a finding that the assessee exists solely for the educational purposes and not for the purpose of profit and the relevant finding in para 6, reads as under: 6. The only question that survives before us is whether we remit the matter to the CBDT once again for it to decide the question of approval or on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt of any application made to the CBDT. Thus, there is no disobedience of the order dated 31 March 2011 of the Tribunal. In the circumstances, so far as the order dated 28 March 2013 of the Assessing Officer for the A.Y. 1998-1999 is concerned, the Petitioners are at liberty to avail of the remedies available under the Act. However, in view of the fact that these petitions were pending in the Court, the delay in filing an appeal against the order dated 28 March, 2013 in respect of A.Y. 1998-1999 before the Commissioner of Income Tax (Appeals) is condoned, if it is filed within a period of three weeks from today before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) is directed to entertain the appeal, if so filed, on merits . 6. We have gone through the facts and circumstances of the case. We find from the facts of the case that during the infamous flood hit occurred in Mumbai, the assessee s school being located in a low lying area as a result, flood water entered the school premises and caused damages to the documents as well as various records, articles and goods lying in their premises. The copies of photographs also reveal these facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute upto AY 1998-99, the year under consideration before us in the case of assessee, can be stated as under: (a) the educational institution must actually exist for the application of the said section and the mere taking steps would not be sufficient to attract the exemption; (b) the educational institution need not be affiliated to any university or Board, in fact a society need not itself be imparting education and it is enough if it runs some schools or colleges; (c) the educational institution must exist solely for educational purposes and not for purposes of profit but merely because there is a surplus, that is to say, a surplus of receipts over expenditure, it cannot be said that the educational institution exists for profit; (d) an entity may be having income from different sources but if a particular income is from an educational institution which exists solely for educational purposes and not for purposes of profit, then that income would be entitled to exemption and further the income should be directly relatable to the educational activity . 6.2. We find that even the Hon'ble Supreme Court in the case of American Hotel Lodging Association, E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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