TMI Blog2019 (2) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an educational institution, it cannot be said that the society exists solely for educational purposes and not for profit. The Tribunal rightly concluded that the acquisition of property in the name of individuals is indicative of the fact that the profits of the institution was being used for self aggrandizement; which is the explicit motive. The explanation that the property was inadvertently purchased in the name of individuals by an innocuous mistake, can only be taken with a pinch of salt. Also the assessee is a society, formed with many objectives, one of which is imparting education. Hence, the assessee cannot be found to be an institution established and existing solely for educational purposes. The assessee also has declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The facts in brief are thus: M/s Sree Chithra Educational, Cultural and Film Society was registered as a society on 04.03.1993 as per Annexure A, with one of its objects being, running an educational institution. It is pointed out that the Society is also registered under Section 12A of the Act as per the order of the Commissioner of Income Tax (Appeals) at Annexure B. A school was started by the Society in 1995, initially in a rented premises. Thereafter, in 1997, the Society purchased land measuring 27 cents vide Annexure C sale deed and constructed a permanent building for running the school, where it has been functioning all these years. It is submitted that the income derived from the school is being exclusively used for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the income of the Trust is mainly derived from running of the educational institution, and therefore, the assessee is entitled to get the order of the Tribunal reversed. Reliance is placed on the decisions Oxford University Press v. C.I.T., [2001] 247 ITR 658, American Hotel and Lodging Association Educational Institute v. Central Board of Direct Taxes, [2008] 101 SCC 509 and Queen's Educational Society v. C.I.T., (2015) 8 SCC 47 . 8. The assessment order reveals that the Society had disclosed a gross receipt of ₹ 25,93,864/-, which includes income from running of educational institutions at different places. The return for the assessment year under consideration, ie., 1997-98, the income from school was excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the trust. But the land was purchased in the individual name of the Manager and Secretary. The A.O clearly found that the funds of the Society were diverted to purchase assets, immovable property in the name of persons managing the society. The clear finding was that it cannot be held that the institution is existing solely for educational purposes and not for profit. 11. American Hotel and Lodging Association Educational Institute (supra), considered the provision brought in, of exemption for income from education in similar cases, under sub-clause (vi) of Section 23C after deleting sub-section (22) from Section 10, with effect from 01.04.1999. The new provision was identical insofar as the conditions of existence solely f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court that test of predominant object of the activity is to be seen whether it exists solely for education and not to earn profit. However, the purpose would not lose its character merely because some profit arises from the activity. That, it is not possible to carry on educational activity in such a way that the expenditure exactly balances the income and there is no resultant profit, for, to achieve this, would not only be difficult of practical realisation but would reflect unsound principles of management. In order to ascertain whether the institute is carried on with the object of making profit or not it is the duty of the prescribed authority to ascertain whether the balance of income is applied wholly and exclusively to the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Indian Universities or Institutions carrying educational activities solely in India being enabled the exemption under Section 10(22). However, the majority view was that the non-profit motive has to be tested against Indian activities and since the assessee therein was carrying on only commercial activity of selling printed books and materials, within India, it cannot claim the exemption under section 10(22). This aspect has application in the instant case because here too the profit motive was discernible from the purchase of land in favour of the personnel in management. 13. In Queen's Educational Society (supra) it was reiterated that if the activities are primarily for educating persons, the fact that institutions make su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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