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TMI Blog1993 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... vocational and in plant training; to equip the selected trainees in setting up industrial and other ventures, including self-employment ventures, in different sectors; to impart orientation or training in industrial promotion, planning and implementation and management of industrial ventures to persons drawn from different segments of society;" In the first meeting of the governing body of the said society, a resolution was passed on 25th May, 1983 by the sponsors in which it was decided that the promoters and/or sponsors would contribute various amounts for creating a corpus fund so as to earn regular interest income. The relevant extract from the said resolution is reproduced hereunder: "It is agreed by the promoter institutions to contribute towards corpus fund by way of grant as under: 1. IDBI Rs.56 lakhs 2. ICICI & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 81 lakhs received towards corpus, Rs. 10 lakhs are from SBI. The balance sheet showed that a sum of Rs. 65,28,653 have been kept in savings bank account with SBI. Therefore, the applicability of the provisions of section 13(1)(c) read with section 13(3)(b) will have to be verified. According to the learned Commissioner, the ITO's order accepting the declared amount of deficit shown by the assessee, without going into the question of taxability of Rs. 81 lakhs received as contribution by it and without examining the applicability of the provisions of section 13, is an order which is erroneous and prejudicial to the interests of revenue. He, therefore, set aside the assessment order with a direction to reframe the same in the light of observations made in this order. 3. The Assessing Officer made a fresh assessment In the light of directions given in the order u/s 263. The A.O. arrived at the conclusion that the institution is not entitled to grant of exemption u/s 10(22) as no educational institution is being run by the assessee. He also observed that the assessee is not entitled to the benefit of sections 11 and 12 of the I.T. Act. The income of the assessee was, accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not properly appreciated the relevant facts and circumstances. The SBI with whom the amount is lying in the savings bank account cannot constitute any violation of sec. 13(2)(b) merely because SBI is one of the sponsors and his contributed Rs. 10 lakhs towards the corpus of the institute. The SBI is carrying on banking business and has accepted the deposit in the normal course of its banking business. The SBI has not derived any benefit by accepting the deposit. Sec. 13(2)(ii) is applicable only if the benefit is derived by the settlor. Furthermore, the amounts invested with SBI is covered by one of the approved mode of investment prescribed u/s 11(5). Hence there is no violation of the provisions of sec. 13. He submitted that the institution qualifies for grant of exemption u/s 10(22) as well as u/s 11/12 of the Act. The contributions made by the FIs and the Govt. of Gujarat, aggregating to Rs. 81 lakhs are towards the corpus of the institution is apparent from the resolution passed by the governing body. The same by no stretch of imagination could be treated as income liable to tax. He, therefore, urged that the order passed by the CIT u/s 263 should be cancelled and the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not exist for any profit motive. The articles clearly prohibit distribution of any income to the members or to any other person as is clear from rule 3 of the relevant rules of this institute, which is reproduced hereunder: "The grants made by the Central and State Govt. and Central Financial Institutions may be applied subject to such limitations as the respective Governments and Central Financial Institutions may from time to time stipulate. No portion of the income and property of the Institute shall be paid or transferred directly or indirectly by way of dividends, bonus, or otherwise howsoever by way of profits to the persons who may at any time be or have been members of the Institute or to any persons claiming through them: Provided that nothing herein contained shall prevent payment of remuneration in return for any service rendered to the Institute as may be approved by the Governing Body." The mere fact that the institution charged assignment fees from different State Governments in the course of carrying out the primary object of the institution and such fees were intended for meeting a part of the cost of training programmes would not lead to the conclusion that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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