Source: https://taxcaselaw.com/income_tax_case_laws/section-10/sec-1023c/allahabad-h-c-where-assessee-a-society-was-running-a-degree-college-and-it-made-an-application-for-approval-under-section-1023cvi-said-application-could-not-be-rejected-merely-on-ground-that-i/
Timestamp: 2019-04-19 21:17:05+00:00

Document:
Manoj Kumar Gupta And Prakash Krishna, JJ.
1. The petitioner is a society registered under the Societies Registration Act, 1860 vide registration no. 545/199091 dated 3-9-1990. It is running a co-educational degree college in the name and style of Ch. Natthu Singh Yadav Mahavidyalaya Dihuli Barnahal, Karhal, Mainpuri. It is stated that the College is located in a backward area and is imparting education to boys and girls by charging a very nominal fees. Fee is being charged to meet out the running cost and surplus is being used for developing necessary infrastructure to promote education. It has further been claimed that the institution is providing fee concession to poor, handicapped and disabled students while no fee is being charged from SC and ST students.
(A) The approval u/s. 10(23C)(vi) of the Act is available only to an educational institution existing solely for the educational purposes while the memorandum of the society stipulates other objects as well.
(B) The application for exemption of the Income Tax should have been filed by the educational institution while the application in the instant case has been made by the society.
(C)The aims and objects of the society provides for free education but the income and expenditure account filed along with the application shows that the institution has been charging fees and which is against the objects of the society.
3. Challenging the said order, petitioner has come up in writ petition before this court.
4. We have heard Sri Ashish Bansal, advocate for the petitioner and Sri Shambhu Chopra, learned counsel appearing for the department.
5. Learned counsel for the petitioner submitted that for obtaining approval from the Prescribed Authority under clause (vi) of section 10(23C) it is not necessary that the application should have been filed by the educational institution itself. Such an application has to be filed by ‘person’ as defined under section 2(31) of the Act which, according to him in the instant case is the society. Elaborating his argument he further submitted that the ‘person’ contemplated by section 2(31) of the Act may be having income from various sources but under section 10, such of its income which falls under any of the clauses stipulated thereunder is exempt and not income from other sources. Thus, it is not necessary that the ‘person’ which in the instant case is the society, should be having income only from one or other source stipulated under various clauses of section 10 and from no other source.
6. He further submitted that Rule 2-CA of the Income Tax Rules, 1962 which provides for application for approval being made in form 56D by educational institution is procedural one and cannot restrict or whittle down the scope and ambit of the statutory provision, i.e. section 10 which is applicable to a ‘person’ as defined under section 2(31) of the Act. Alternatively, he submits that it has been the specific case of petitioner society that it is engaged only in running the Education institutions and is not perusing any other object mentioned in its original bye-laws. In support of his contentions, he placed strong reliance on the judgement of this court dated 16-10-2012 passed in Writ petition No. 1185 of 2011 C.P. Vidya Niketan Inter College Shikshan Society v. Union of India. He has also placed reliance on the judgement of the Apex Court in Aditanar Educational Institution v. Addl. CIT  224 ITR 310, Pinegrove International Charitable Trust v. Union of India  188 Taxman 402/327 ITR 73 (Punj & Har.), Digember Jain Society for Child Welfare v. Director General of Income-Tax (Exemptions)  185 Taxman 255 (Delhi) and American Hotel & Lodging Association Educational Institute v. CBDT  301 ITR 86/170 Taxman 306 (SC).
7. On the other hand, Sri Shambhu Chopra, counsel for the department contended that the application filed by the petitioner society was rightly rejected as not maintainable and since the society has not been formed with the sole object of imparting education, but its memorandum of association reflects that it has other aims and objects as well and, therefore, it has rightly been denied approval u/s. 10(23C)(vi).
“The Supreme Court in Aditanar Educational Institution v. Additional CIT  224 ITR 310, has held that a society or a trust or other similar body running educational institutions solely for educational purposes and having the overall object of not to make any profit can be regarded as ‘other educational institution’ even if some surplus arises from its activities.
11. In view of the authoritative pronouncement of law by the Apex Court and various High Courts, we have no hesitation in holding that the application filed by the petitioner society cannot be rejected on the ground that it is not at the instance of “educational institution” as referred to under section 10(23C)(vi) of the Act and Rule 2-CA of the Income Tax Rules, 1962.
13. Perusal of the impugned order shows that the pleading in this regard have not been taken into consideration. Further, in the impugned orders, although, there is a finding that the society is having many objects other than educational, but there is no application of mind to the assertion made by the society that it is only pursuing the educational activity and no other. In view of the Division Bench decision of this Court in case of C.P. Vidya Niketan Inter College Shikshan Society (supra), in case, the society is pursuing only educational objects and no other activity then the application by such a society for grant of approval u/s. 10(23C) (vi) cannot be rejected on the ground that its aims and objects contain several other objects apart from educational and application by such a society is perfectly maintainable.
14. Sri Shambhu Chopra, appearing for the department could not point out any distinguishing feature but rather accepted that the judgement of the Division Bench in C.P. Vidya Niketan Inter College Shikshan Society (supra) will have full application to the facts of the instant case.
15. Respectively following such judgement, the impugned order dated 31-8-2010 passed by the Chief Commissioner, Income Tax, Ghaziabad is quashed. The matter is remitted back to the Prescribed authority for a fresh decision in accordance with the observations made above. It is desirable that the said decision may be taken by the Prescribed Authority within three months from the date of production of a certified copy of this order before it.
16. Since the matter is being remitted to the Prescribed Authority and, therefore, this court is not going into the other questions which may also be pressed and decided by the concerned authority afresh strictly in accordance with law.
17. Subject to the above, the writ petition is allowed. No orders as to costs.
This entry was posted in Sec. 10(23C) and tagged 360 ITR, Allahabad High Court, educational institution, In favour of Matter remanded.

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