RUKMANRANI EDUCATION FOUNDATIONS vs. CHIEF COMMISSIONER OF INCOME TAX AND ANR

WP5849.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 5849 OF 2011 Rukmanrani Education Foundations ] A public charitable trust registered under the] provisions of the Bombay Public Trusts Act ] 1951, having its registered office at B/33, ] NICE Industrial Area, Satpur, Nashik ] 422 007, Maharashtra ]... Petitioner Vs 1. Chief Commissioner of Income Tax, ] having his office at Kendriya Rajaswa ] Bhavan, Gadkari Chowk, Old Agra Road ] Nashik – 422 002, Nashik, Maharashtra ] 2. Union of India, ] Ayakar Bhavan, Maharshi Karve Road, ] New Marine Lines, Marine Lines, ] Mumbai. ]... Respondents Mr. V. Sridharan, senior counsel with Mr. Abhijeet Marathe and Ms. Pallavi Smriti i/b M/s. Wadia Ghandy & Co. for the Petitioner. Mr. Tejveer Singh for the Respondents. CORAM : S.J. VAZIFDAR, & M.S. SANKLECHA, JJ. FRIDAY, 15TH JUNE, 2012 SRP                                                                                                                                                           1/7 CNR No : HCBM010214422011 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. ORAL JUDGMENT. : [Per S.J. Vazifdar, J.] 1. Rule. With the consent of the parties, the petition is taken up for final hearing. 2. The petitioner seeks a writ of certiorari quashing and setting aside an order dated 15th December, 2010, passed by respondent No.1 and a writ of mandamus directing the respondents to grant the petitioner approval under section 10(23C)(vi) of the Income Tax Act, 1961. 3. The petitioner, a public trust, registered under the Bombay Public Trusts Act, 1951, runs schools in Maharashtra. The petitioner was set up under a trust deed dated 18th January, 2003, the provisions whereof entitle the petitioner to establish educational institutions and to do and perform various other matters and things in connection therewith. SRP                                                                                                                                                           2/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. 4. On 29th December, 2009, the petitioner filed an application seeking approval under section 10(23C)(vi), the relevant portion whereof reads as under : “10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included …... (23C) any income received by any person on behalf of …..... (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub- clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority.” 5. By a letter dated 1st December, 2010, the respondents sought certain information from the petitioner and requested the petitioner to appear on 8th December, 2010. Accordingly, one of the trustees appeared before the respondents on 8th December, 2010 and also filed a response dated 8th December, 2010 to the particulars sought by the respondents. The petitioners also furnished additional information by a further letter dated 8th December, 2010. 6. The respondents, by the impugned order dated 15th December, 2010, rejected the application for approval under section 10(23C)(vi) SRP                                                                                                                                                           3/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. observing that the petitioners, in addition to regular fees, collected amounts from students under the head “Building fund/Infrastructure maintenance” and the petitioner, therefore, does not exist solely for educational purpose, but has been constituted with the intention to earn profit. It is also observed that with an intention to earn profits, the school managed by the petitioner collects Rs.2,200/- per student in respect of coaching for dramatics conducted by one Helon O Grady and that out of the said sum, Rs.2,000/- is paid to the said Helon O Grady and the balance Rs.200/- is retained by the petitioner. This too, it is held, indicates that the petitioner has been making profits. 7. Mr. Sridharan, the learned counsel appearing on behalf of the petitioner sought to challenge the impugned order on merits before us. We, however, find that the petitioner seeks to furnish information/ evidence to meet the grounds on which the impugned order has rejected the application. Mr. Sridharan contended that this has been necessitated on account of the fact that the petitioners were not informed the grounds on which the application was rejected or even proposed to be rejected. SRP                                                                                                                                                           4/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. 8. The learned counsel appearing on behalf of both the parties stated that there is no procedure prescribed for the purpose of considering such applications. 9. It is necessary and desirable that an applicant should be informed the grounds on and the reasons for which an application is proposed to be rejected. In the absence thereof, it would not be possible for the applicant to meet the objections. This would be so even with respect to objections raised solely on the basis of the information furnished by the applicant, including any inferences based on the same. It is only then that the applicant can offer an explanation and deal with the objections. There is always a possibility of an applicant being able to satisfy the respondents regarding the objections that may be raised. In the absence of this, the High Court in a writ petition would, of necessity, have to go into these questions for the first time which is not desirable. SRP                                                                                                                                                           5/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. 10. We do not intend stipulating a procedure to be followed in every case. The details must be left to the respondents as may be deemed necessary in each case. However, in the event of the respondents proposing to reject the application they must inform the petitioners, the grounds of rejection and afford them an opportunity of being heard thereafter before rejecting the application. 11. In the present case, it is necessary that the petitioners are afforded an opportunity of responding to the grounds on which their application has been rejected in the first instance before the respondents themselves. 12. The writ petition is, therefore, disposed of by the following order : (i) The impugned order is quashed and set aside. SRP                                                                                                                                                           6/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56

WP5849. (ii) The respondents shall inform the petitioner by a notice, the grounds on which they seek to reject the petitioner's said application dated 9th December, 2009, under section 10(23C)(vi). It will be open to the respondents to call upon the petitioner to consider the impugned order to be such a notice. (iii) The petitioner shall be entitled to file a reply before the respondents in respect of such notice. (iv) The respondents shall pass a reasoned order, after hearing the petitioners. M.S. SANKLECHA, J. S.J. VAZIFDAR, J. SRP                                                                                                                                                           7/7 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:56 Powered by TCPDF (www.tcpdf.org)