TMI Blog2021 (3) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent-revenue allowing the claim u/s. 11 of the Act prior to A.Y. 2016-17. Therefore, no dispute in respect of granting exemption u/s. 11 of the Act treating the assessee having got registration u/s. 12AA of the Act and u/s. 80G of the Act. Merely because profits have resulted from the activity of imparting education would not result in change of character of the institution that it exists solely for educational purpose - See SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (AND OTHER REFERENCES) [ 1979 (11) TMI 1 - SUPREME COURT] In view of the law laid down in the case of St. Peter s Educational Society [ 2016 (6) TMI 536 - SUPREME COURT] by following the decision in the case of Queen s Educational Society [ 2015 (3) TMI 619 - SUPREME COURT] we hold that the assessee is entitled for grant of registration u/s. 12AA of the Act from the date of application and CIT(Exemption) is directed to grant the same. Accordingly, the grounds raised by the assessee are allowed. - ITA No. 1316/PUN/2019 - - - Dated:- 3-3-2021 - SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI , JUDICIAL MEMBER Assessee by : Mrs. Arati Vissanji Revenue by : Shri Deep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The assessee applied for continuation of registration vide letter dated 16-04-1999 and there was no response to the said application from the respondent-revenue. The assessee from A.Y. 2000-01 onwards continued to file its return of income each year claiming exemption u/s. 11 under the presumption the assessee s registration is granted from 16-04-1999 and respondent-revenue accepted such returns of income. Further, she submits that the assessee was also granted certificate u/s. 80G from 06-02-2004 and the last being on 04-09-2009 and which is in force till date by virtue of CBDT Circle No. 7/2010 dated 27-10-2009. 6. Regarding surplus, she submits that the only activity of the assessee is running the Holy Cross Convent School for girls and it does not carry on any other activity nor is it permitted to do so by its objects. For A.Y. 2014- 15 there is a deficit in the secondary section and surplus in the preprimary and primary section has been utilized for the purpose of education and no fees are charged in the secondary section which receives grants from the Maharashtra State Education Board. Surplus generated by an educational institution is not detrimental to its charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s school. He vehemently argued that that the CIT(Exemption) sough the actual report from the AO and on examination of such report in detail rightly held that the assessee is not entitled to grant registration u/s. 12AA of the Act as its activities are not charitable in nature in view of excess generation of funds. 9. Heard both the parties and perused the material available on record. The assessee filed paper book containing pages 1 to 490. We note that the assessee runs Holy Cross Convent School exclusively for girls which was established on 26-10-1963. The assessee Society registered in the name and style of Deepak Society, Kolhapur on 21-01-1974 under the Societies Registration Act, 1860 and also under the Bombay Public Trist Act, 1950 on 02-02-1974. The assessee s institution has three divisions i.e. Pre- Primary, Primary and Secondary. The secondary section of the school provides free education and also receives grant from the Maharashtra State Education Board which are placed at page Nos. 276, 297, 336, 373 and 412 of the paper book. The assessee has been claiming exemption u/s. 10(22) of the Act from A.Y. 1974-75 till 1999-2000 which is evident from page No. 21 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the exemption claimed by the assessee therein as it shown surplus. The CIT (Appeals) allowed exemption u/s. 11 of the Act. The ITAT, Delhi Benches dismissed the appeal preferred by the revenue against the order of CIT(A). In a reference the Hon ble High Court of Uttarakhand, Nainital set aside the judgment of the ITAT and affirmed the order of the AO. That all the disputes reached Hon ble Supreme Court in the case of Queen s Educational Society (supra) and also in batch of other cases on similar issue from Hon ble High Court of Allahabad. The Hon ble Supreme Court was pleased to hold 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 (vide para 11). Further, by referring the decision of Constitution Bench judgment in the case of Surat Art Silk Cloth Manufacturers Association reported in 121 ITR 1 held it has to be borne in mind that merely because profits have resulted from the activity of imparting education would not result in change of characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 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. 4. In all those appeals which have come from the High Court of Punjab and Haryana and filed by the Department of Income Tax except one from Gujarat High Court, the High Court has followed its aforesaid judgment in Pinegrove International Charitable Trust. Since this view stands approved, all these appeals are dismissed. 11. In view of the law laid down by the Hon ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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