Income Tax Appellate Tribunal - Chandigarh
M/S Prakash Education Society, Karnal vs Cit (Exemptions), Chandigarh on 30 May, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "B", CHANDIGARH
ीमती दवा संह, या"यक सद#य एवं, डा. बी.आर.आर. कुमार, लेखा सद#य
BEFORE: SMT. DIVA SINGH, JM & Dr. B.R.R. KUMAR , AM
आयकर अपील सं./ ITA NO. 1083/Chd/2016
Under Section 10(23C)(vi)
M/s Prakash Education Society, 794/13 बनाम The CIT(Exemptions)
Urban Estate, Karnal Chandigarh
थायी लेखा सं./PAN NO: AAATP3856H
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri. B.M. Monga, Shri Rohit Kaura
राज व क ओर से/ Revenue by : Shri. Ram Mohan Singh
सन
ु वाई क तार$ख/Date of Hearing : 30/05/2019
उदघोषणा क तार$ख/Date of Pronouncement : 30/05/2019
आदे श/Order
PER DR. B.R.R. KUMAR, A.M:
The present appeal has been filed by the Assessee against the order of the Ld. CIT(Exemptions), Chandigarh dt. 31/08/2016.
2. In the present appeal Assessee has raised the following grounds:
1. That the order of Id. CIT (Exemptions), is bad in law as it did not appreciate that the conditions laid down under Section 10(23C)(vi) of the Income-tax Act, 1961 were duly fulfilled by appellant society and as such, the exemption as claimed should have been allowed.
2. That the Id. CIT (Exemptions) has erred in interpreting the provisions of Section 10(23C)(vi) of the IT Act, while holding that it is applicable only to university or other educational institutions and not to the society, that too against the 'Principles of Natural Justice'.
3. That the Id. CIT (Exemptions) did not appreciate that the appellant society is running only one school under its aegis, without any profit motive on charitable basis and there is no violation of the objects of the society, as no non-charitable activity was carried on during the year.
4. That the Learned Commissioner of Income Tax has erred while rejecting the registration u/s 10(23C)(vi) on the premise of purchase/adding transport vehicle/school bus without appreciating that these are solely for the purposes of transportation of school children only and there is no separate source of income and receipts from the same is utilized solely and exclusively for the purpose of education only .
5. That the Learned Commissioner of Income Tax has erred in holding that use of sedans-car by an entity that claims to be charitable & altruistic is not tenable at all, whereas the said vehicle is being use wholly & exclusively for the educational activities of the society.
6. That the Learned Commissioner of Income Tax has erred in holding that the salary structure of the society is pitiably low, where as it is as per the market rates prevalent in the vicinity.2
7. That the Learned Commissioner of Income Tax (Exemptions) has grossly erred in holding that the applicant society is charging exorbitant fees, without appreciating the actual facts & figures and taking and reproducing the chart of some other society/school in para 7.1 of the impugned order.
8. That the Learned Commissioner of Income Tax (Exemptions) has grossly erred in misinterpreting the provisions of section 10(23C)(vi) wherein, the condition is with regard to expenditure/utilization of income.
3. Brief facts of the case are that the assessee filed an application in Form No. 56D dated 25.08.2015 before the Ld. CIT(E) requesting for grant of exemption / approval u/s 10(23C)(vi) of the Income tax Act, 1961. The assessee is a 'society' registered under Society's Registration Act XXI of 1860 on 17.05.1993 and has claimed exemption u/s 10(23C) (iiiad) of the I J. Act till Assessment year 2014-15. During the F.Y. 2014-15 the gross receipt of the society exceeded Rs. One crore and therefore the society preferred to apply for approval u/s 10(23C)(vi) of the I.T. Act.
4. The assessee was accorded opportunity by the Ld. CIT(E) vide letter dated 03.08.2016 to answer the various queries. After affording due opportunity and examination of the details, the Ld. CIT(E) denied the grant of approval under section 10(23C)(vi) on the grounds that a. The society is adding transport vehicles rather than re deploying the funds on education and transportation is not mentioned in the objects of the society.
b. The society which has been hitherto owning cars has further purchased another car for Rs. 13.04 Lacs.
c. The salary structure is not in sync with the instructions of CBSE guidelines.
d. The fee structure of the student is too exorbitant.
5. During the hearing before us, the Ld. AR argued that the opening value of the cars was Rs. 8.30 lacs and a vehicle was purchased for Rs. 13.04 Lacs for the purpose of meeting objects of the society. The bus purchased of Rs. 17.05 Lacs is used only for transportation of students and no commercial profits are earned 3 on this operations. Further the school fees is less than Rs. 1000/- which can be gauzed from the table below:
Registration and prospectus 500 Admission Form 100
Admission fee (new admission) 8000 Re-admission to class XI (old student) 4000
Amalgamated fund (payable in 3 instalments) 3600 Security 2500 Child welfare fund 24 Tuition Fee 1st to 5th 2470 6th to 10th 2640 10th to 12th 3240 Additional subject 200
6. It was further argued that the assessee has been claiming exemption under section 10(23C) (iiiad) upto the A.Y. 2014-15 and the society is existing solely for educational purpose and not for purpose of the profit and hence rightly eligible for registration under section 10(23C)(vi) of the Income Tax Act,1961.
7. On the other hand the Ld.CIT (DR) vehemently argued quoting the provisions of the Act that section 10(23C)(vi) is clearly applicable to any "university" or "other educational institution". A society or a trust cannot claim to be either of them. Trusts/ Societies/ Section 8 companies are entitled to claim exemption after registration under 12AA. A closer examination of the other sections of 10(23C) further reveals that wherever the legislative intent was to extend benefits to trusts and societies it has been dearly mentioned therein. The provisions of section 10(23C)(v) is case in point. Further as is evident from the provisions of section 13(6) it is clear that the act acknowledges the clear distinction between a charitable trust and an educational institution. The Ld. CIT(DR) Mr. Ram Mohan Singh further argued that a logic can be extended that society/ trust etc. are included within the scope of section 10(23C) (vi) because of the use of the term 'person' in the opening preamble of the section. This logic, however, would fail given the fact that a person as per section 2(31) of the IT. 4 Act would invariably also include an individual, HUF, Company etc that would bely the legislative intent. The intent is not to extend the exemption to all entities covered by the definition of person but only to a university or other educational institution. And hence he pleaded that the order of the Ld. CIT(E) needs to be confirmed.
8. We have heard the arguments of both the parties. The Income Tax Act envisages exemption u/s 10(23C)(vi) to Universities or Educational Institution only but not to Trusts. The relevant portion of the Act reads as under:
(vi) Any income received by any person on behalf of -
"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 (Wad) and which may be approved by the prescribed authority.
9. To allow the exemption to the Assessee Trust , the bare provisions of the Income Tax Act, 1961 are examined as to which category of assessees the exemptions are allowed :
(iiiaac) - The clean Ganga fund (iiiab) - Any University or other Educational Institute (iiiac) - Any Hospital or other Institutions (iiiad) - Any University or other Educational Institute (iiiae) -Any Hospital or other Institutions
(iv) - Any other fund or Institutions
(v) - Any Trust
(vi) - Any University or other Educational Institution
(vii) - Any Hospital or other Institution Thus we find different sub sections / clauses are meant for different category of assessee's and clause (vi) do not provide for any exemption to Trusts. Hence, the assessee has not crossed the first level of eligibility or the primary filter to be eligible for deduction under section 10(23C)(vi). Any adjudication on the other grounds would be only academic in nature keeping 5 in view the above findings. Therefore we hereby decline to interfere in the order of the Ld. CIT(E).
10. In the result, appeal of the Assessee is dismissed. Order pronounced in the open Court.
Sd/- Sd/-
दवा संह डा. बी.आर.आर. कुमार,
(DIVA SINGH) (Dr. B.R.R. KUMAR)
या"यक सद#य/ Judicial Member लेखा सद#य/ Accountant Member
AG
Date: 30/05/2019
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील$य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File