2022 (4) TMI 1328
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....ated 31st July, 2012 disposing of the above writ petition. This Court remanded the matter to the CCIT to reexamine the case of the Petitioner in light of the observations of the said judgment. 3. The background facts are that the Petitioner is a Trust registered by virtue of a trust deed dated 3rd July, 1993 subsequently rectified on 23rd August, 1993 and finally on 7th May, 1998. The object of the Trust is to impart scientific and technical education and research facilities. It is stated that pursuant thereto, the Petitioner established two educational institutions with the intention of providing higher education and without any profit motive. One is the Bhubaneswar Institute of Management and Information Technology and the other one is Indian Institute of Science and Information Technology (IISIT). An application in Form 56-D was made by the Petitioner for the FY 2008-09 for grant of exemption under Section 10 (23C) (vi) of the Act on 23rd September, 2009. While adjudicating the said claim, the CCIT required the Commissioner of Income Tax, Bhubaneswar (CIT) (Opposite Party No.2) to make an enquiry and submit a report on the activities of the Petitioner. The CIT then visited the ....
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....nt and training" was indeed for educational purposes and how the income earned under the said head was utilised that is, whether for educational purposes or non-educational purposes. It is with this in mind that this Court remanded the matter to the CCIT for a fresh examination. 8. Pursuant to the above judgment dated 31st July, 2012 of this Court, the CCIT again examined the Petitioner's application and has passed the impugned order dated 5th October, 2012 maintaining the earlier decision to reject the Petitioner's request for exemption under Section 10 (23C) (vi) of the Act. In the first instance, the CCIT examined the issue of 'fees collected under the head 'Placement and Training" for the FY 2008-09. The CCIT examined the Ledger account, and noticed that the Assessee had collected fees at Rs. 4000/- from most of the students and Rs. 5000/- from as many as 23 students. This appeared to be in excess of fees prescribed both for MBA and MCA students. The reconciliation statement furnished by the authorised representatives (ARs) of the Petitioner showed that fees amounting to Rs. 12,14,000/- had been collected under the head 'Placement and Training' which did not ma....
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....rt in the subsequent order dated 18th June, 2007 in Civil Appeal No.2872 of 2007, a Fee Structure Committee was required to be constituted for determination of fee. The said Committee had recommended the fees under different heads, which could be charged for the academic session 2007-08. Under clause (1) a ceiling limit was fixed for certain costs, which could be levied including placement fee by institutions. It is pursuant thereto that the notification was issued by the Government of Odisha on 12th July, 2007 as regards the fees that could be charged from the students by the Petitioner institutions. 12. Mr. Sahoo submitted that for the purposes of Placement and Training, the Petitioner had to incur certain other expenses for in-house training and this included the salary cost as well as expenses like providing food to the trainers and students expenses for in-house faculty and visiting faculty, including their food, commuting, accommodation and allied expenses. He submitted that it was not justified on the part of the CCIT to construe a sum of Rs. 4,62,811/- as being towards non-educational purposes. He also submitted that the collection of Rs. 5000/- from 23 students in no way ....
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....n excess was in fact refunded to the students and that explains the difference in the collection amount between Rs. 12,14,000/- and Rs. 11,94,000/-. This appears to be a perfectly plausible explanation and ought not to have been viewed adversely by the CCIT. 16. As far as utilisation of the fees is concerned, the Court is of the view that the CCIT has taken a rather narrow view of the possible expenses that could be incurred by institution in the process of imparting training. Recently, in the context of an application by a Trust which was created for the purposes of importing training in Computers And Management Education, this Court had an occasion to examine the correctness of the order of a CIT rejecting the request for exemption. In its order dated 23rd March, 2022 in ITA No. 35 of 2007 (Commissioner of Income Tax, Bhubaneswar v. Odisha Trust of Technical Education and Training, Bhubaneswar), this Court addressed the question whether the income earned by the trust was exclusively from educational activities. In that context, this Court observed after referring to the decision in Aditanar Educational Institution v. Addl. CIT (1997) 224 ITR 310 (SC), which was followed in Ameri....
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....ct to describe it as an activity for profit. But where, on the other hand, an activity is carried on with the predominant object of earning profit, it would be an activity for profit, though it may be carried on in advancement a of the charitable purpose of the trust or institution. Where an activity is carried on as a matter of advancement of the charitable purpose or for the purpose of carrying out the charitable purpose, it would not be incorrect to say as a matter of plain English grammar that the charitable purpose involves the carrying on of such activity, but the predominant object of such activity must be to subserve the charitable purpose and not to earn profit. The charitable purpose should not be submerged by the profit making motive; the latter should not masquerade under the guise of the former." 19. It was further observed as under: "17.....The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge, of a trust or institution to so carry on the activity that the expenditure balances the income and there is not resulting profit." 20. The domi....