TMI Blog2021 (10) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... only claimed the benefit of Section 10(23C)(iiiad) with respect to the receipts of the Institution, Information Management and Technology and it had not claimed any benefit with respect to the donations received by the Society. There would be no clubbing of the receipts of the Institution with the other income of the Society, for the purpose of considering the benefit of Section 10(23C)(iiiad).The question of law is answered in the negative i.e. in favour of the assessee and against the Revenue. - Income Tax Appeal No. - 52 of 2013 - - - Dated:- 5-10-2021 - Hon'ble Naheed Ara Moonis And Hon'ble Saumitra Dayal Singh JJ. For the Appellant : Rahul Agarwal, Vishwjit For the Respondent : C.S.C. I.T.,Gaurav Mahajan ORDER 1. Heard Sri Rahul Agarwal, learned counsel for the appellant/assessee and Sri Gaurav Mahajan, learned counsel for the revenue. 2. Present appeal has been filed under Section 260- A of the Income Tax Act, 1961 (hereinafter referred as the Act) against the order of the Income Tax Appellate Tribunal, Agra Bench, dated 23.10.2012 passed in ITA No.29/Agra/2011 for the A.Y. 2007-08. By that order the Tribunal has dismissed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )................ (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed. 6. It is also undisputed that in the relevant Assessment Year, the upper limit prescribed for such receipts was ₹ 1 Crore, under Rule 2(BC) of the Income Tax Rules, 1962. 7. The assessing authority accepted the fact that the Society was running the Institution. He also accepted the fact that the total receipts of the Institution were below the prescribed limit of ₹ 1 Crore. However, he proceeded to deprive the assessee of the benefit of Section 10(23C)(iiiad) of the Act since the aggregate of the fee receipts of the Institution and the receipts of the Society breached the prescribed upper limit of ₹ 1 Crore. That reasoning came to be approved and affirmed by Commissioner of Income Tax vide his order dated 15.3.2011, in Appeal No.59 of 2009. He rejected the claim made by the assessee on the further reasoning since the Institute was the only activity carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the intent of the Act to look at the aggregate income or receipt of such person for the purpose of granting the benefit under section 10(23C)(iiiad) of the Act. 14. In fact, as lucidly explained in the decision of the Karnataka High Court, it is the receipt of each individual University or other educational institution that would be looked at to determine whether the receipt would qualify for the benefit conferred under Section 10(23C)(iiiad), read with Rule 2 BC of the Income Tax Rules, 1962. 15. In paragraphs 20, 21, 23 and 24 of the report in CIT Vs. M/S Childrens Education Society (Supra) decision, it was held as under:- 20. Now, we are concerned with the meaning to be attached to the word aggregate annual receipt . The argument is, other educational institution referred to in the said sub-clause refers to all educational institutions run by the assessee and aggregate annual receipts of such other educational institutions means the aggregate of annual receipts of all such educational institutions put together. Otherwise, the use of the word aggregate loses its meaning. We find it difficult to accept the said argument. 21. Firstly, if the word a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty providing course in various subjects at various levels and for that purpose they have established more than one educational institution. Each educational institution is a separate entity controlled under various statutes for various purposes. May be the Management of these educational institutions would be in the hands of the Societies or the Trust, but for all other purposes they are different, independent entities. That is the reason why Section 10 (23)(c) is worded as under: Any income received by any person on behalf of... 24. Here any person refers to the assessee and on behalf of refers to such institutions. It may be an University, it may be an educational institution, it may be a hospital or other institutions of similar nature. As all such institutions are independent entity and they generate income and when that income is received by the assessee, it becomes the income in the hand of the assessee and it is such income which is sought to be excluded while computing the total income of the assessee under Section 10. The test prescribed under the aforesaid provision is not the income of the educational education. It is the aggregate annual receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee society. It is also not disputed that these two institutions exist solely for educational purposes and not for purposes of profit. It is, therefore, clear that there is a distinction between the expression any person in the and educational institution in the , and that the two are not the same. Had it been the intention of the legislature to have limited the scope of the provision to the interpretation which has been given by the Tribunal, it could easily have said that, if the aggregate annual receipts of any person from all institution(s) do not exceed ₹ 1.00 crore then the income derived there from would not be included in the total income of that person. But, this is not the case here. The reference here is pointedly to the aggregate annual receipts in the of the educational institution. The expression, educational institution in the and any person in the do not refer to the same entity and are distinct and different insofar as Section 10 (23C) (iiiad) of the said Act is concerned. 15. In our view, therefore, where there are more than one such institutions, which are under a particular society or trust, such as the assessee soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue is concerned, it was a case pertaining to provision of Section 10(23C)(iiiab). The question that arose before the Supreme Court was whether the University receiving finance by the Government below one percent of its total receipts could be considered to be a University substantially financed by the Government. Those facts of law are not involved in the present case. Therefore, the said decision is found to be wholly distinguishable and hence inapplicable. 20. In the first place, for reasons given above, we find ourselves in complete agreement with the reasoning of the Karnataka High Court in CIT vs. Children's Education Society (Supra) as also the decision of the Jammu Kashmir High Court in M/s Vivekanand Society of Education and Research vs. CIT and another (Supra). 21. Next, we find, the reasoning adopted by the assessing authority as affirmed by the appellate authority and the Tribunal, wholly erroneous in law. As noted above, the benefit of Section 10(23C)(iiiad) being activity centric, the limit of ₹ 1 crore prescribed thereunder had to be seen only with reference to the fee and other receipts of theeligible activity/Institution. Admit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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