TMI Blog2024 (3) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... d thus, seeking the exemption under Section 10 (23C) (vi) of the Act of 1961, and the generation of surplus from year to year cannot be bar in seeking such exemption under the said provision of law. This Court further observes that after the judgment rendered by the Hon ble Apex Court in case of Queen s Educational Society [ 2015 (3) TMI 619 - SUPREME COURT] and issuance of the aforementioned clarificatory Circular, the case of the present petitioner needs to be duly considered by the respondents. Thus, in light of the aforesaid observations and looking into the factual matrix of the present case, particularly, the precedent of Queen s Educational Society (supra) and the aforementioned clarificatory circular, the present petition is partly allowed; accordingly, while quashing and setting aside the impugned order matter is remanded back to the respondents with a direction to re-consider and decide the application in question preferred by the petitioner under Section 10 (23C) (vi). - HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI And HON'BLE MR. JUSTICE MUNNURI LAXMAN For the Petitioner : Mr. Sharad Kothari For the Respondent : Mr. K. K. Bissa JUDGMENT 1. This writ petition und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the petitioner s application for granting the exemption under Section 10 (23C) (vi) of the Act of 1961. 3. Learned counsel for the petitioner submitted that the petitioner is engaged solely in the educational purposes, and therefore, the petitioner falls under Section 10 (23C) (vi) of the Act of 1961. 3.1. It was further submitted that the respondents issued various query letters to the petitioner and the petitioner acted upon each and every such letter and provided the requisite information, to the satisfaction of the respondents, to the effect that the petitioner is engaged exclusively in imparting of education and no other purpose is being carried out by the petitioner, and therefore, the impugned order is not justified in law. 3.2. It was also submitted that in the impugned order, a finding was recorded regarding the figures of surplus of income over and above the expenditure to infer that the petitioner is being run for the purpose of profits, but even for carrying on an education institution for charity, some surplus is bound to follow for various reasons, and therefore, the impunged action of the respondents in not extending the exemption to the petitioner is arbitrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption under Section 10 (23C) (vi) of the Act of 1961 in the prescribed Form No. 56D for the year 2011-12 before the respondents; whereafter, during the proceedings in question, the respondent no.3 issued various communications to the petitioner calling upon it to furnish certain documents in relation to the application in question, which as per the petitioner was duly furnished. Subsequently, the respondents vide the impugned order dated 26.11.2013 rejected the petitioner s application in question. 7. This Court further observes that the respondent-Chief Commissioner gave a finding in the impugned order that the petitioner is being run as an institution for the profitable purposes and regularly earning a surplus income out of its activities, and thus, the petitioner s case does not fall under the exemption category. In furtherance, the respondent, while passing the impugned order, relied upon the judgment rendered by the Hon ble High Court of Uttarakhand in case of CIT Vs Queen s Educational Society (Uttarakhand) 177 Taxmann 321. This Court also observes that the said judgment was challenged before the Hon ble Apex Court in case of Queen s Educational Society Vs Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to accumulate this income and claim exemption from income tax Under Section 11(1)(a). We set aside the judgment of the Uttarakhand High Court dated 24th September, 2007. The reasoning of the ITAT (set aside by the High Court) is more in consonance with the law laid down by this Court, and we approve its decision. 8. This Court also observes that the Ministry of Finance, Department of Revenue, Central Board of Direct Tax issued a Circular bearing No. 14/2015 (F.No.197/38/2015-ITA-I) dated 17.08.2015, stating therein that representations have been received seeking clarification on certain issues relating to grant of approval and claim of exemption under Section 10 (23C) (vi) of the Act of 1961, and vide the said circular, it was clarified that the mere generation of surplus from year to year cannot be a basis for rejection of application under Section 10(23C) (vi) of the Act of 1961. Relevant portion of the said Circular is reproduced hereunder:- 3. Generation of surplus out of gross receipts A doubt has been raised whether generation of surplus out of gross receipts would necessarily breach the threshold condition that the educational institution should exist solely for education ..... X X X X Extracts X X X X X X X X Extracts X X X X
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