TMI Blog2020 (1) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... se of systematic instruction, schooling or training and not in wide and extended sense according to which every acquisition of further knowledge. Imparting secondary education has never been treated as trade or business and the citizen of the country have a fundamental right of secondary education. Article 21 prescribes that every child/citizen of this country has a right to free education until he completes the age of 14. At the age of 14 one may complete Secondary Education and it is also a duty cast on a State to safeguard fundamental right of citizen which includes education up to the age of 14 years. Therefore, the sole existence of Board is to impart secondary education, which safeguards the duty cast on a State. Taking into consideration the activities taken by the petitioner s institution, which is responsible for education up to secondary education in the State while carrying out its statutory liability and obligation, the notices issued as at Annexures-1, 2 and 3 describing it to be commercial activities, in our considered opinion, are not sustainable as the issue is covered by the decision in the case of Rajasthan Hindi Granth Academy v- Deputy Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l right of citizen which includes education up to the age of 14 years. Therefore, the sole existence of Board is to impart secondary education, which safeguards the duty cast on a State. 4. Previously, a notice was issued to the petitioner- Board by the Income Tax Department for assessment, which was under challenge before this Court in OJC No.305 of 1969. Said writ petition was disposed of quashing the notices and observing that the assessing authorities under Income Tax Act have no power to assess an account in which exemption is given under the Income Tax Act. At the relevant point of time, Section 10(22) under Income Tax Act was in force to achieve the aforesaid purpose. The same reads as under: 10(22) any income of a university or other educational institution, existing solely for educational purpose and not for purpose of profit is exempted from Income Tax. Section 10(22) has been deleted by the Finance Act (Act 21 of 1998) with effect from 1.4.1999. Thereafter, the legislature inserted a new section 10 (23C), which came into effect from 1.4.1999. Relevant portion of the said provision is quoted as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. 7. Learned Tribunal vide order dated 05.09.2006 directed the CCIT to dispose of the application on priority basis preferably within fifteen days. In pursuance of the said order, the CCIT issued notices to the petitioner and it appeared before him through its authorized representative and filed necessary documents with books of accounts as required by the CCIT. 8. The CCIT after hearing the petitioner rejected its application with the following findings: (a) There are serious irregularities in the accounts from the extracts of local funds audit which have a direct bearing on the exemption. (b) The decision of Hon ble Orissa High Court in the earlier case of the petitioner is not applicable. (c) The petitioner running a Secondary High School and majority of activities of the petitioner was not running the school and not for solely for the purpose of running any educational institution. (d) The expenditure on the school is only around two percent of the total receipt of the petitioner for each year. Therefore, major part of the activities of the petitioner cannot su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the facts of this case while drawing the conclusion that the activities are not solely for educational purpose. The CCIT s order is elaborate and speaking wherein all the facts of the case have been considered and relying on the interpretation of the statute by the Apex Court of the land, the finding has been given. 4. That in reply to the averments made in para-1(b) of the writ petition it is respectfully submitted that save and except what appears from the record nothing is admitted. The allegation is totally false as the notice u/s.148 of the I.T. Act for reopening of the case by the Assessing Officer for Assessment Years 1990-2000 and 2000-01 was issued on 22.03.2006 and for the asst. year 2001-02 was issued on 21.03.2006 whereas the CCIT passed the order rejecting approval u/s. 10(23C)(vi) on 18.01.2007. 5. That in reply to the averments made in para-1(c) of the writ petition it is respectfully submitted that save and except what appears from the record nothing is admitted. There is no illegality in the order of the Assessing Officer while passing Assessment order u/s.147 of the I.T. Act as Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Rajasthan High Court in the case of Rajasthan Hindi Granth Academy v- Deputy Commissioner of Income Tax , reported in 2017 SCC Online 3547, more particularly at paragraphs-16 onwards which is quoted as under: 16. He also relied upon the decision of Supreme Court in Assam State Text Book Production Publication Corpn. v. CIT, Gauhati (2009) 319 ITR 317 (SC) wherein it has been held as under:- 3. On going through the records, we find that the High Court has not taken into account the prior history of the case, particularly in the context of incorporation of the Corporation under the Companies Act, 1956, as a Government Company. Initially, as stated above, the assessee was a State-controlled Committee and Board, which were attached to the office of the Director of Public Instruction, State of Assam. It is only in the year 1972 that the Government Company got constituted under Section 617 of the Companies Act, 1956. That, prior to 1972, the entire funding for the working of the Committee/Board was done by the State of Assam and that even the ownership of the assets remained vested in the State of Assam which stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the aims and objects of the Tamil Nadu Text Book Society and those of the respondent-assessee are almost identical. It is also not shown to us that the surplus amount, if any, of the respondent-assessee, is used for any other purpose or distributed to other members. The Commissioner of Income-tax (Appeals) as well as the Tribunal have noticed that even if some amount remains surplus, that is utilised only for the purposes of education. Thus, having regard to the concurrent findings of fact recorded by the Commissioner of Income-tax (Appeals) and the Tribunal and also taking note of the letter of the Central Board of Direct Taxes itself, it is not possible for us to say that the order of the Tribunal is erroneous in any way. In this way, no question of law arises for consideration much less a substantial question of law. 17. He also relied upon the decision of Rajasthan High Court in CIT v. Rajasthan State Text Book Board (2000) 113 Taxman 204 (Raj.) wherein it has been held as under:- It could be seen from the orders of the Commissioner (Appeals) as well as the tribunal that, in a similar situation, in the case of Tamil Nadu Text ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, be computed in the total income of the previous year u/s 10(22). The ITO exercised his 19. He also relied upon the decision of Madhya Pradesh High Court in CIT v. Madhya Pradesh Rajya Pathya Pustak Nigam (2009) 318 ITR 497 (MP) wherein it has been held as under:- 19. From a perusal of the aforesaid decisions, it is lucid that for the entitlement for getting exemption for the assessment year, it is required to see the activities of the assessee. That is the acid test. If the income/profit is applied for non-educational purposes, it is decided only at the end of the financial year. It is to be seen whether the assessee is engaged in any kind of educational activities. The authorities which we have referred to above have laid down the criteria under what circumstances, an assessee can claim exemption being involved in educational purposes and how the income is spent. We have already referred to the memorandum of association and also stated about reasonings assigned by the CIT (Appeals) to deny the exemption and the analysis made by the Tribunal to dislodge the finding of the first appellate authority. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following clauses shall not be included-[(23C) any received by any person on behalf of- [iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit and which is wholly or substantially financed by the Government; or Hence in light of the above the undersigned and the opinion of the then AO rant it is reported that no exemption u/s 10(23C)(iiiab) should allowed to the assessee. In continuation with the letter dt. 23.12.2013, it is further clarified that the assessee's submission that it should be allowed exemption u/s 10(23C)(iiiab) and 10(23C)(iv) and addition so made by the AO may also be deleted is not correct on the basis of following issues:- 1. The assessee in its return of income has no where claimed exemption u/s 10(23C)(iv) rather it has claimed exemption u/s 10(23C)(iiiab). (copy of computation enclosed). Hence, the assessee cannot be granted such exemption without claiming it. 2. The assessee is also not eligible for exemption u/s 10(23C)(iiiab) as discussed in letter dt.23.12.2013. 3. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, your get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word education is used in clause (15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling. 24. He also relied upon the decision of Rajasthan High Court in Commissioner of Income Tax v. Maharaja Sawai Mansinghji Museum Trust reported in 1988 (169) ITR 379 wherein it has been held as under:- 7. It is amply clear from a bare reading of it that the educational institution must exist solely for educational purposes. Solely means exclusively and not primarily. Simply because certain persons may add something to their knowledge by visiting the museum, it cannot be said that the museum exists solely for educational purposes. The emphasis in Section 10(22) is on the word solely . 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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