THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITIN No.26981 OF 2010 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) The relief sought for in this Writ Petition is to declare the order of the 1st respondent dated 26.05.2010 as arbitrary and illegal. A consequential direction is sought to the 1st respondent to grant approval to the petitioner society in terms of Section 10(23C) (vi) of the Income Tax Act (hereinafter referred to as the “Act”). The petitioner, a society registered under the Andhra Pradesh (Telangana area) Public Societies Registration Act 1350 Fasli with registration No.79 of 1964 dated 15.05.1964, had the following objects: i. To establish run maintain and expend various types of educational institutions and ancillary establishment including schools, colleges, hostels, libraries in Kamareddy Taluq, directly by itself or jointly with or exclusively through other concerned institutions approved by the Society operating in the Taluk, or, lastly through personal specifically nominated by it in respect of any particular institution or institutions; ii. To provide further technical education for students. iii. To open and establish hostels for the sake of students of the Institutions under the management of the Society and to conduct them in such a manner that the physical, moral and mental improvement is brought amongst the students. iv. To do all such things which are incidental or conducive to the attainment of the above objects. These objects are said to have been amended by the petitioner society in its meeting held on 28.01.2010, and to have been registered with the Registrar of Societies on 29.06.2009. The amended objects of the society are as under: i. To establish, run, maintain and expend various types of educational institutions and ancillary establishments including Schools, Colleges, Hostels, libraries in Kamareddy Taluq, directly by itself or jointly with or exclusively through other concerned institutions approved by the Society operating in the Taluq, or, lastly through personal specifically nominated by it in respect of any particular institution or institutions; ii. To provide further, technical education for students. The petitioner society is running various educational institutions such as PG colleges, Engineering colleges etc, after obtaining necessary approvals from the appropriate authorities. It is their case that they have been filing income tax returns claiming exemption under the provisions of the Act on the ground that they exist solely for the purposes of education. The petitioner made an application, for grant of exemption, in Form No.56D along with all necessary enclosures before the Director of Income Tax (Exemption) on 27.05.2009 for the assessment year 2008-09. The Director of Income Tax is said to have forwarded the application to the 1st respondent. The Deputy Commissioner of Income Tax issued notice dated 053.05.2010 informing the petitioner that the application filed by them on 27.05.2009, in so far as it related to the assessment year 2008-09, was not in accordance with the fourteenth proviso to Section 10(23C), and was beyond time; and in so far as the application related to the assessment years 2009- 10, they were not registered under Section 43(1) of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987, (A.P. Act No.30 of 1987); as such they were not a charitable institution and were, therefore, not entitled for exemption. The petitioner was called upon to submit their objections to the show cause notice. They were directed to furnish details of the Corpus Fund Deposit of Rs.80 lakhs appearing in the balance sheet, and to appear before the 1st respondent for a hearing on 14.05.2010. In their reply dated 17.05.2010, the petitioner sought condonation of the delay in filing the application. They contended that A.P. Act 30 of 1987 was not applicable since they had not sought approval as a charitable and religious institution; and the corpus fund of Rs.80 lakhs was being maintained in a Fixed deposit in the joint names of the Regional Officer, Southern Regional Office, AICTE, Chennai. They claimed to have submitted a photostat copy of the fixed deposit receipt, with UCO bank, to the 1st respondent. The 1st respondent, by his order dated 26.05.2010, rejected the petitioner’s application for the assessment year 2008-09 on the ground that the application submitted by them on 27.05.2009 was beyond the time stipulated in the fourteenth proviso to Section 10(23C); and, for the assessment year 2009-10, on the ground that, since the petitioner was not registered under A.P. Act 30 of 1987, they were not a charitable institution and were not entitled for exemption under Section 10(23C)(iv) of the Act. Aggrieved thereby the present Writ Petition. The petitioner would contend that A.P. Act 30 of 1987 had no role to play in the functioning of their institution; they were seeking approval as an educational institution under Section 10(23C)(vi) and not as a charitable institution; the 1st respondent had erred in holding that Section 10(23C)(vi) would apply only if they existed for charitable purposes and, if there was no charity involved, it would mean that the institution was being run for profit; the 1st respondent ought to have condoned the delay in filing the application by adopting a liberal approach in view of the reasons stated in the application for condonation of the delay; the petitioner was registered under Section 12-AA of the Act, and was under the bonafide impression that the provisions of Section 10(23C) were not attracted; the application under Section 10(23C) was made after receipt of professional advice, and the delay was wholly unintentional and not deliberate. Under the first proviso to Section 10(23C)(vi) of the Act, educational institutions are required to make an application, in the prescribed form and manner, to the prescribed authority for the purpose of grant of exemption or continuance thereof. The second proviso enables the prescribed authority, before approving any educational institution under sub-clause (vi), to call for such documents, including audited annual accounts or information from the educational institution, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such an educational institution. The second proviso also enables the prescribed authority to make such enquiries as it deems necessary. The fourteenth proviso to Section 10(23C) of the Act, in its entirety, was inserted by the Finance Act, 2006 with effect from 1.6.2006 and, prior to its amendment by Finance Act, 2009, required an educational institution which makes an application, on or after the first day of June, 2006, for the purpose of grant of exemption or continuance thereof to make an application at any time during the financial year immediately preceding the assessment year. After its amendment by Finance Act, 2009, with retrospective effect from 1.4.2009, the fourteenth proviso to Section 10(23C) stipulates that where an educational institution, referred to in the first proviso, makes an application, on or after the first day of June, 2006, for the purpose of grant of exemption or continuance thereof, such application shall be made on or before the 30th day of September of the relevant assessment year for which the exemption is sought. No power is vested with the Chief CIT to entertain an application, filed under Section 10(23C)(vi), beyond the statutory period by condoning the delay in presenting the application. In this context, it is relevant to reproduce the Notes on Clauses to the Finance Bill, 2006 which reads thus:- “Providing a time-limit for application for grant of exemption or continuance of exemption for certain charitable and religions trusts and institutions and certain educational and medical institutions. Under the existing provisions contained in Sub-clauses (iv), (v), (vi) and (via) of Clause (23C) of Section 10, there is no time-limit for any university or other educational institution or any hospital or other institutions, or any fund or trust or institution specified therein to make an application for issue or notification/grant of approval or continuance thereof. It is proposed to insert a new proviso in Clause (23C), so as to provide a time-limit for the purposes of making an application under the said sub-clause. Such application for grant of exemption or continuance thereof under any of these sub-clauses shall have to be filed at any time during the financial year immediately preceding the assessment year from which such exemption is sought. Such application cannot be made for any earlier period. The proposed amendment shall apply only in respect of applications which are made on or after 1st June, 2006. This amendment will take effect from 1st June, 2006.” The fourteenth proviso to Section 10(23C), has been inserted by the Finance Act 2006, inter alia, to provide for a period of limitation for entertaining an application, under Section 10(23C) (vi) for grant of exemption, on or after the 1st June, 2006. The legislature has, however, not made any provision for condonation of the delay in presenting such an application. The Chief CIT, being a creature of the statute, cannot travel beyond the statutory provisions, and does not have the jurisdiction to entertain an application filed under Section 10(23C)(vi) beyond the statutory period of limitation or to condone the delay in presenting the said application. The petitioner’s application for the assessment year 2008- 09 was submitted only on 27.05.2009. Since the amendment to the fourteenth proviso to Finance Act, 2009 came into operation only from 01.04.2009, it has no application to the assessment year 2008-09. Prior to its amendment, the fourteenth proviso required the petitioner to submit the application, seeking exemption under Section 10(23-C)(vi) of the Act, during the financial year immediately preceding the assessment year for which approval is sought and, since approval was sought for the assessment year 2008-09, the petitioner ought to have submitted the application on or before the 31st of March, 2008 and not subsequent thereto. The fourteenth proviso does not empower the Chief Commissioner of Income-tax to condone the delay in submitting the application and, in the absence of any such power of condonation, the first respondent cannot be faulted for rejecting the petitioner’s application, seeking exemption for the assessment year 2008-09, on the ground of its belated submission. However, rejection of the application for the assessment year 2009-10 on the ground that the petitioner was not registered under Section 43(1) of A.P. Act 30 of 1987 cannot be sustained. As held by this Court in M/s. New Noble Educational Society v. The Chief Commissioner of Income-tax[1], registration under Section 43(1) of A.P. Act 30 of 1987 is not a precondition for grant of approval and the first respondent can, if he so chooses, prescribe registration under A.P. Act 30 of 1987 as a condition subject to which approval may be granted. The first respondent was, therefore, in error in rejecting the petitioner’s application for the assessment year 2009-10 on this ground. The impugned order, to the extent it relates to the assessment year 2009-10, is set aside and the matter is remanded back to the 1st respondent who shall consider the petitioner’s application, seeking exemption, under Section 10(23C)(vi) of the Act for the assessment year 2009-10, after giving the petitioner an opportunity of being heard, afresh and pass orders thereupon in accordance with law. The Writ Petition is disposed of accordingly. No costs _____________ V.V.S.RAO, J ___________________________ RAMESH RANGANATHAN, J 23.11.2010 MRKR [1] Judgment in W.P.No.21248 of 2010 and batch dated 11.11.2010