Makhan Lal Chaturvedi National University Of Journalism And Communication vs. Commissioner Of Income Tax

WP-4694-2012 ( MAKHAN LAL CHATURVEDI NATIONAL UNIVERSITY OF JOURNALISM AND COMMUNICATION Vs COMMISSIONER OF INCOME TAX) 02-09-2016 Shri Sumit Nema, learned counsel for the petitioner. Shri Sanjay Lal, learned counsel for the respondents. Challenging the order Annexure P/7 dated 30th November 2011 in the matter of assessing liability on the petitioner institute and refusing exemption under Section 10 ( 23C)(vi) of the Income Tax Act, this writ petition has been filed. Even though various grounds have been raised in the writ petition during the course of hearing, it transpires that recently on 10.03.2015 the Hon’ble Supreme Court in the case of Queen’s Educational society Vs. Commissioner of Income Tax (2015) 55 Taxmann.com 255 has considered the question of imposing liability on Educational Institution. The provisions of Section 10(23C) and the profit motive in the matter of running and functioning of an Educational Institute and after detailed analyses of various aspects of the matter, the law has been crystalized in para 11 in following terms : 11. Thus, the law common to Section 10(23C) (iiiad) and (iv) may be summed up as follows: (1) Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied – the purpose of education should not be submerged by a profit making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on “for profit”. No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes. (5) The ultimate test is whether on an overall view of the matter in the concerned assessment year the object is to make profit as opposed to educating persons. Now in the light of aforesaid judgment the question has to be considered and a decision taken. That apart, in para 25 also certain analyses have been made with observations regarding right of an assesse to be considered. The Hon’ble Supreme Court in this case has remanded the matter back to the Assessing Officer for reconsideration, keeping in view the same we deem it appropriate to remand the matter back to the Principal Chief Commissioner Income Tax, Aaykar Bhawan, Hoshangabad Road, Bhopal for reconsideration, accordingly, on the assesse filing a certified copy of this order along with a copy of the order passed in the case of Queen’s Educational Society (supra). The Chief Commissioner shall take note of the principle laid down by the Supreme Court as indicated hereinabove and after considering the provisions of sub section 1(iii) of Section 10(23C) and the proviso thereto shall take a decision in the matter. We make it clear that we have not expressed any opinion on the merits of the claim and it is exclusively for the Chief Commissioner to take a decision in the matter. With the aforesaid, the writ petition stands disposed of. (RAJENDRA MENON) ACTING CHIEF JUSTICE (SUBHASH KAKADE) JUDGE mrs. mishra