M/S SHAHEED UDHAM SINGH EDUCATYIONAL SOCIETY,MOGA vs. INCOME TAX OFFICER, (EXEMPTIONS), JALANDHAR

That the Ld. CIT(A) was not justified to uphold the action of the Ld. Assessing Officer in coming to the conclusion that the appellant had not been granted exemption u/s 80G.” Further, the assessee has also raised before us the following Additional Ground of appeal:

During the course of the assessment proceedings the assessee in reply to the query raised by the A.O as regards the source of the cash deposits in its bank account, submitted that the same was the fees deposited by the students. It was observed by the A.O that the assessee which was an educational institution had filed its return of income claiming its income as exempt as per the provisions of Sec. 10(23C)(iiiad) of the IT Act. On the basis of necessary verifications, it was gathered by the A.O that the assessee during the year had claimed to have received a gross amount of Rs. 22,11,779/- from P a g e | 3 ITA No. 562/Asr./2016 A.Y. 2011-12 Punjab Technical University (for short ‘PTU’) and other miscellaneous receipts of Rs. 19,218/-. It was noticed by the A.O that the assessee had claimed the surplus/excess of income of Rs. 12,36,369/- as exempt under Sec. 10(23C)(iiiad). On a perusal of the details pertaining to the amount received by the assessee from PTU, it was discernible from the Form 16A that the same was in the nature of payments towards commission or brokerage which had been subjected to deduction of tax at source under Sec. 194H. In the backdrop of the aforesaid facts, the A.O was of the view that though the assessee society was engaged in imparting education as a learning centre of PTU, however, the commission receipts which had been subjected to TDS in its hands under Sec. 194H were in the nature of business, trade and commerce and were not eligible for exemption under Sec. 10(23C)(iiiad). Apart there from, the A.O held a conviction that even otherwise the objects of the assessee society did not render it eligible for the exemption under Sec. 10(23C)(iiiad). In fact, the A.O was of the view that as a perusal of the ‘Memorandum of Association’ of the assessee society and its aims and objectives clearly revealed that the assessee society was not existing solely for educational purposes, therefore, it was not eligible for claim of exemption under Sec. 10(23C)(iiiad). In order to fortify his aforesaid conviction, it was observed by the A.O that as per the aims and objects of the assessee society it was proposed to carry out other activities other than education, therefore, it could safely be concluded that it was not existing solely for education purposes which was the basic requirement for claim of exemption under Sec. 10(23C)(iiiad). On the basis of his aforesaid deliberations the A.O was of the view that the activities of the assessee were in the nature of ‘business’ with a profit motive and not for a charitable purpose as defined in Sec. 2(15) of the IT Act. In the backdrop of his aforesaid observations the A.O declined

Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating at length on the contentions advanced by the assessee as regards its entitlement towards claim of exemption under Sec. 10(23C)(iiiad), was however not persuaded to accept the same. The CIT(A) observed that the assessee society which was not running its own educational institution but was running a learning centre on behalf of PTU was engaged in trade, commerce or business on commission basis. In fact, the CIT(A) was of the view that the working of the assessee society was more or less as that of an educational visa consultancy firm for earning maximum profits. On the basis of his aforesaid observations the CIT(A) upheld the view taken by the A.O and concluded that the latter had rightly declined the claim of exemption of Rs. 12,66,771/- raised by the assessee under Sec. 10(23C)(iiiad) and brought the same to tax in its hands.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Authorized Representative (for short ‘A.R) for the assessee submitted that the assessee is an educational institution which has been in operation since the year 2009. It was submitted by the Ld. A.R that the assessee which was involved in the sole purpose of imparting education as per the guidelines of the PTU distance education programme, had been claiming exemption under Sec. 10(23C)(iiiad) in the preceding years. Further, it was submitted by the Ld. A.R that the assessee had been granted registration under Sec. 12A of the IT Act, vide order dated 30.06.2011. It was averred by the Ld. A.R that now when the CIT (Exemptions) had himself granted the registration to the assessee