Delhi High Court
Director Of Income-Tax (Exemption) vs Manav Bharti Institute Of Child ... on 5 April, 2006
Bench: T.S. Thakur, J.M. Malik
ORDER
1. The respondent-assessed is a society running an educational institution in the name and style of Manav Bharti School. The society has in addition established a teachers' training institution also. For the assessment year 1998-99, the society disclosed a surplus of Rs. 1,66,41,658, and claimed exemption from income-tax under Section 10(22) of the Income Tax Act, 1961, on the ground that the society was established for promotion and imparting of education. The assessing officer was, however, of the view that the affairs of the society were being managed and controlled by Mr. V.K. Pandey with a profit motive who was utilising the capital of the society for earning profit. He was also of the view that the activities of the society were not carried on exclusively for educational purposes. On that finding, the assessing officer denied the exemption claimed by the assessed and brought to tax the surplus amount. Penalty proceedings under Section 271(1)(c) of the Act were also directed to be initiated separately.
2. Aggrieved by the aforementioned order, the assessed went up in appeal to the Commissioner (Appeals) who upon an appreciation of the material on record and keeping in view the exemption granted to the assessed for the previous years, viz., 1992-93, 1994-95, 1995-96 and1996-97 held that the assessed-society had no profit motive in running the educational institutions. The Commissioner also came to the conclusion that the objects of the society were purely educational in nature and that merely because certain surplus funds were available with the society did not make the institution a profit making body to justify denial of the benefit of the exemption under Section 10(22) of the Act. Reliance in support was placed by the Commissioner upon the decisions of the Supreme Court in Aditanar Educational Institution v. Addl CIT and the decision of this Court in CIT v. Delhi Kannada Education Society (2000) 164 CTR (Delhi) 46. A further appeal taken by the revenue to the Tribunal against the said order having failed, the revenue is, in appeal before us, assailing the view taken by the Commissioner of Income-tax and the Tribunal.
3. We have heard Ms. Bansal, learned counsel for the revenue and perused the order under challenge. As noticed earlier, the Commissioner of the Income-tax and the Tribunal have concurrently come to the conclusion that the assessed-society has been established without any profit motive. It has also been found on appreciation of the available material that the objects of the assessed-society are purely educational and that the society-has been granted exemption of that basis for the previous assessment years. Merely because certain surplus has been declared by the assessed would not, therefore, justify denial of the exemption claimed by the society under Section 10(22) of the Income Tax Act. The decisions of the Supreme Court in Aditanar Educational Institution's case (supra) and in Kannada Education Society case (supra) clearly support that proposition. No substantial question of law arises for our consideration in this appeal, which fails and is accordingly dismissed.