M/S CHOUHAN EDUCATION SOCITY ,BHOPAL vs. CIT , BHOPAL
No AI summary yet for this case.
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Per Vijay Pal Rao, JM:
This appeal by the assessee is directed against the order dated 26.11.2009 of Commissioner of Income Tax (Appeal)-1, Bhopal, for the Assessment Year 1999-2000.
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
There is a delay of 55 days in filing the present appeal. The assessee has
filed an application for condonation of delay, which is supported by the
affidavit of Chairman of the assessee Society.
We have heard the ld. Authorized Representative as well as the ld. DR on
condonation of delay.
The ld. Authorized Representative has submitted that initially the
assessee challenged the order of Pr.CIT rejecting the approval u/s 10(23C) of
the Income-tax Act, 1961, before the Hon'ble High Court in petition
No.7692/2008 and thereafter the proceedings for registration u/s 12AA were
also pending and decided by this Tribunal. Due to multiplicity of proceedings
pending before the Hon'ble High Court as well as before this Tribunal, and ,
therefore, the tax consultant of the assessee could not decide whether to file
the appeal against the impugned order of the CIT(A) or wait till the outcome of
the writ petition filed by the assessee. Therefore, the assessee could not take
the requisite steps for filing the appeal within the period of limitation. The
assessee was taking the steps as per the advice of the legal consultant handling
the income tax matters and, therefore, the delay in filing the appeal is neither
intentional nor deliberate, but due to multiplicity of the proceedings pending at
various levels and the legal adviser was not sure about filing the appeal at the
initial stage as the assessee has already challenged the order before the Hon'ble
High Court. Accordingly, the ld. Authorized Representative prayed that the
Page 2 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
delay in filing the appeal may be condoned and the appeal of the assessee be
adjudicated on merit.
On the other hand, the ld. DR has objected to the condonation of delay
and submitted that the filing of writ petition cannot be a reasonable cause for
delay in filing the appeal, as the appropriate remedy against the order passed
by the ld. CIT(A) is the appeal before the Tribunal.
We have considered the rival submissions as well as the relevant
material on record.
At the out-set, we note that the claim of the assessee u/s 10(23C)(iiiad)
of the Income tax Act was rejected by the ld.AO on the ground that the
assessee does not exist solely for the purpose of education. The assessee has
generated enough surplus funds and, therefore, the assessee has not satisfied
the conditions provided u/s 10(23C)(iiiad) of the Income-tax Act. The assessee
should exist solely for educational purpose and not for earning profit. The AO
has also placed reliance on the order dated 7.2.2006 passed by CCIT, Bhopal,
rejecting the application for seeking approval u/s 10(23C)(vi) for the
assessment year 2003-04. Therefore, the writ petition filed by the assessee
against the said order is very much relevant for taking a decision whether a
separate appeal to be filed before the Tribunal. The assessee was acting as per
the advice of the legal consultant and, therefore, if the delay in filing the appeal
is caused by the advice of the consultant to wait for the outcome of the writ
Page 3 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
petition filed before the Hon'ble High Court, then we are satisfied that the
assessee was having a sufficient cause for delay in filing the present appeal.
Accordingly, the delay of 55 days in filing the appeal is condoned.
The assessee has raised the following grounds :-
(i) In view of the facts and law, the Ld. CIT(A) was not justified in denying the exemption u/s 10(23)(c)(iiiad) to the assessee society for assessment year 1999-2000.
(ii) In view of the facts and law, the Ld. CIT(A) has not considered the assessee society to be registered as per the provisions u/s 12AA(2) of Income-tax Act, 1961.
At the time of hearing, the ld. Authorized Representative of the assessee
submitted that the effective ground in the present appeal of the assessee is
only ground no. (i) and ground no. 2 does not emanate from the impugned
orders passed by the ld.AO and CIT(A). Therefore, the ld. Authorized
Representative has prayed that the ground no.2 may be dismissed as not
arising from the impugned order. The ld. DR e has not disputed the fact that in
the present appeal the effective ground is only ground no.(i) and ground no. (ii)
does not arise from the impugned order relevant for the year under
consideration. Accordingly, the ground no. 2 of the appeal is dismissed being
not arising from the impugned order passed by the ld. CIT(A).
Page 4 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Ground no. (i) is regarding denying the claim of exemption u/s
10(23C)(iiiad) of the Act, therefore, claiming the benefit of exemption, the
approval u/s 10(23C) is not required.
The ld. Authorized Representative has submitted that the assessee exists
solely for educational purpose and not to earn profit as it is clear from the
objectives of the assessee society. The assessee has carried out the only activity
of imparting the education through its educational institution and no other
activity has been carried out by the assessee for the year under consideration.
The source of receipts for the year under consideration, is only from
educational activities carried out by the assessee. This fact can be verified
from the source of income and expenditure account for the year under
consideration placed at page no.4, 8 & 18 of the paper book. The excess of
income over the expenditure for the year was applied towards imparting the
objectives of the assessee and, therefore, the same cannot be considered as a
profit earned by the assessee. The ld. Authorized Representative pointed out
that the entire fund has been applied in construction and development of
school building, library books and sports equipments. Therefore, when the
entire fund has been applied for the purpose of imparting the education, it
cannot be said that the mere generation of surplus would amount to earning
profit. The ld. Authorized Representative has submitted that the AO as well as
CIT(A) erred in concluding that the assessee has not complied with the
Page 5 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
conditions prescribed under section 10(23C)(iiiad), while rejecting the claim of
exemption.
The ld. Authorized Representative has referred to the gross receipts and
submitted that the annual receipts do not exceed the prescribed limit of Rs. 1
crore and, therefore, the assessee is entitled for the exemption u/s
10(23C)(iiiad) of the Income tax Act. The AO as well as CIT(A) has misguided
themselves by taking into consideration the subsequent amendments of the
Bye-laws of the assessee society which also permits the assessee to carry out
some other activities of charitable in nature, but these amendments in the
byelaws are not relevant for the year under consideration as the same were
w.e.f. 4th May, 2006. Thus, the ld. Authorized Representative has submitted
that the denial of the claim of exemption u/s 10(23C)(iiiad) is unjustified and,
accordingly, the impugned order is liable to be set-aside and the claim of the
assessee be allowed.
On the other hand, the ld. DR has submitted that the CCIT while
rejecting the application filed by the assessee for approval u/s 10(23C(vi) has
clearly held that the assessee does not exist solely for educational purpose, but
for the purpose of profit. Therefore, said order of the CCIT still holds the
ground on this issue. He has relied upon the orders of the lower authorities.
We have considered the rival submissions of both the sides as well as
relevant material on record. The AO as well as CIT(A) has rejected the claim of
Page 6 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
the assessee u/s 10(23C)(iiiad), solely on the ground that the CCIT Bhopal,
while rejecting the application of the assessee seeking approval under section
10(23CV)(vi), vide order dt. 7th February, 2006, held that the assessee does not
exist solely for education and the present case is not found for grant of
exemption under section 10(23C). It is pertinent to note that the order of the
CCIT, Bhopal dt. 7th February, 2006, was regarding the approval u/s
10(23C)(vi) of the Act for the assessment year 2003-04 and, therefore, the
observation and the view of CCIT, Bhopal, while passing the said order, shall
not have any bearing on the claim of the assessee for assessment year 1999-
2000 and that too u/s 10(23C)(iiiad). The AO ought to have decided the claim
of exemption independently and solely on the basis of the facts relevant for the
year under consideration without getting influenced by the order of the CCIT
for deciding the application for approval for the assessment year 2003-04.
There is no quarrel on the point that for seeking the exemption u/s
10(23C)(iiiad), the assessee has to satisfy the conditions prescribed under the
said section, which reads as under :-
“10(23C) any income received by any person on behalf of - Xx xx xx xx xx xx xx xx xx xx xx xx Xx xx xx xx xx xx xx xx xx xx xx xx Xx xx xx xx xx xx xx xx xx xx xx xx (iiiad) any university or other educational institution existing solely
for educational purposes and not for purposes of profit if the
Page 7 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
aggregate annual [ receipts of the person from such university or
universities or educational institution or educational institutions do
not exceed five crore rupees] ; or ”
Without going into controversy whether the assessee society has earned
any profit for the year under consideration or not at the outset, it is to be
noted that as per the provisions of section 10(23C)(iiiad), the society is a
person which receives the income on behalf of any university or other
educational institution existing solely for educational purposes and not for the
purpose of profit. Therefore, the existence of educational institution solely for
educational and not for the purpose of earning profit is required to be seen
and not the existence of the society, who is running the educational
institution. The Ld. CIT(A) has considered and decided this issue by referring
to the decision of the CCIT as well as the objects of the assessee society in
para 3.5 and 3.6 as under :-
Page 8 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Page 9 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Page 10 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Page 11 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Page 12 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
Page 13 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
It is evident from the impugned order of the CIT(A) that the two sets of
objectives are reproduced and the amendment of the objects on 4th May, 2006,
are also taken into account while deciding the issue. In our view, the
subsequent amendment in the objects of the assessee society is entirely
irrelevant for the year under consideration, even otherwise, while allowing the
exemption u/s 10(23C)(iiiad), the existence of the educational institution i.e. (i)
school or college run by the assessee society is to be considered and not the
existence of the assessee society . The assessee society may have more than
one activity and objects including imparting the education through educational
institution and, therefore, the exemption u/s 10(23C)(iiiad) is available only in
respect of the income received by the assessee society from the educational
institution subject to the condition that the said educational institution exists
solely for educational purpose and not for purpose of profit. The AO as well as
the CIT(A) misguided themselves by taking existence of the society into
consideration and not the educational institution run by the society. Neither
the AO nor the CIT(A) has disputed the accounts produced by the assessee,
which are reflecting the income received by the assessee society from the
educational institution and activity of imparting the education. Accordingly, in
the facts and circumstances of the case, the impugned order of the Ld. CIT(A)
is set-aside and the claim of the assessee u/s 10(23C)(iiiad) of the Act is
allowed.
Page 14 of 15
Chouhan Education Society, Bhopal I.T.A.No. 192/Ind/2009 A.Y.1999-2000
In the result, appeal of assessee is partly allowed.
Order pronounced in the open court on 07.06.2023. .
Sd/- sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member
Indore, 07.06 .2023
CPU/Sr. PS
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
Page 15 of 15
