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1 - 10 of 10 (0.25 seconds)Section 260A in The Income Tax Act, 1961 [Entire Act]
Additional Commissioner Of Income-Tax ... vs Surat Art Silk Cloth Manufacturers ... on 19 November, 1979
13.In Addl. CIT v. Surat Art Silk Cloth Mfr. Association reported in
(1980) 121 ITR 1, the Hon'ble Supreme Court while construing the
definition of “charitable purpose” in Section 2(15) of the Act, held that
every Trust or institution must have a purpose for which it is established and
every purpose must for its accomplishment involve the carrying of an
activity. The activity must, however, be for profit in order to attract the
exclusionary clause and the question therefore, is when can an activity be
said to be one for profit? It was held that it is not enough that as a matter of
fact, an activity results in profit, but it must be carried on with the object of
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earning profit. It was further observed that profit-making must be the end to
which the activity must be directed or in other words, the predominant
object of the activity must be making a profit. Further, where an activity is
not pervaded by profit motive, but is carried on primarily for serving the
charitable purpose, it would not be correct to describe it as an activity for
profit, though it may be carried on in advancement of the charitable purpose
of the Trust or institution. It was further pointed out that the predominant
object of such activity must be to subserve the charitable purpose and not to
earn profit.
Dharmadeepti, Alwaye, Kerala vs The Commissioner Of Income Tax, Kerala on 24 July, 1978
14.By referring to the decision in the case of Dharmadeepti vs. CIT
reported in (1978) 3 SCC 499, it was pointed out that the activity must be
“essentially charitable in nature” and it must not be a cover for carrying on
an activity, which has profit making as its predominant object. Further, it
was pointed out that this interpretation of the exclusionary clause in Section
2(15) derives considerable support from the speech made by the Finance
Minister while introducing that provision. It was further pointed out that
the test to be applied is whether the predominant object of the activity
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involved in carrying out the object of general public utility is to subserve
the charitable purpose or not to earn profit. Where profit making is the
predominant object of the activity, the purpose, though an object of general
public utility, would cease to be a charitable purpose. But where the
predominant object of the activity is to carry out charitable purpose and not
to earn profit, it would not lose its character of a charitable purpose merely
because some profit arises from the activity. Further, it was pointed out that
the exclusionary clause does not require that the activity must be carried on
in such a manner that it does not result in any profit. Further, it would be
difficult for persons in-charge of a Trust or institution to carry on the
activity that the expenditure balances the income and there is no resulting
profit and that would not only be difficult of practical realisation, but would
also reflect unsound principle of management.
Sole Trustee Loka Shikshana Turst vs Commissioner Of Income Tax, Mysore on 28 August, 1975
The Hon'ble Supreme Court
agreed with the decision in Sole Trustee, Loka Shikshana Trust vs. CIT
reported in (1975) 101 ITR (SC), that if the profits must necessarily feed a
charitable purpose under the terms of the Trust, the mere fact that the
activities of the Trust yield profit will not alter the charitable character of
the Trust.
The Commissioner Of Sales Tax, Mumbai vs M/S Shoe Bazar Queen on 28 April, 2017
10.Further, it is submitted that the decision in Queen's Educational
Society (supra) rendered by the High Court of Uttaranchal was tested for its
correctness before the Hon'ble Supreme Court by the Trust in Queen's
Educational Society vs. CIT reported in (2015) 55 taxmann.com 255 (SC)
and the said decision was reversed. Further, the said decision could not
have been applied to the case of the assessee-Trust, as the case was whether
the said Queen's Educational Society had fulfilled the three requirements
as stipulated under Section 10(23C) of the Act whereas, in the instant case,
the issue is whether the application filed by the assessee-Trust for
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registration under Section 12AA could have been rejected. Therefore, the
appellant erroneously rejected the application without noticing the fact that
the claim made by the Queen's Educational Society was a claim for
exemption under Section 10(23C) of the Act and such claim made by them
was rejected by the Assessing Officer, the said order was reversed by the
CIT(A), which order was confirmed by the Tribunal in an appeal filed by
the Revenue and challenging the order, appeal was filed before the High
Court, which was allowed by setting aside the order of the Tribunal and
affirming the order of the Assessing Officer and aggrieved by the same, the
said assessee filed appeal before the Hon'ble Supreme Court. It is submitted
that in the said decision, various other decisions of the Hon'ble Supreme
Court were referred to and the law laid down in those decisions will come to
the aid and assistance of the assessee-Trust and therefore, the Tribunal
rightly allowed the appeal filed by the assessee-Trust and directed
registration to be granted under Section 12AA of the Act.
Apeejay Education Society, Ludhiana vs Dcit (Exemptions), Chandigarh on 22 February, 2021
16.The Court took into consideration the decision of the High Court
of Punjab and Haryana, which has been followed by the Delhi High Court in
St. Lawrence Educational Society (Regd.) vs. CIT reported in (2013) 353
ITR 320 and also in Tolani Education Society vs. Dy. DIT (Exemptions)
reported in (2013) 35 ITR 184, where the High Court of Bombay held that
the petitioner (therein) has a surplus of income over expenditure for the
three years cannot by any stretch of logical reasoning, lead to the conclusion
that the petitioner therein does not exist solely for educational purposes or
that it exists only for profit. Further, it was held that the test to be applied is
as to whether the predominant nature of the activity is educational. The fact
that an incidental surplus, which is generated and which has resulted in
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additions to the fixed assets, is utilized towards upgrading the facilities of
the educational institution, was held to be permissible. Further, it was
observed that without the advancement of technology, no college or
institution can offer to remain stagnant. Further, it was held that an
educational institution cannot be prohibited from upgrading its
infrastructure or facilities save on the pain of losing the benefit of the
exemption under Section 10(23C) and imposing such a condition, which is
not contained in the statute, would lead to a perversion of the basic purpose
for which such exemptions have been granted to educational institutions. It
was further pointed out that knowledge in contemporary times is technology
driven. Educational institutions have to modernize, upgrade and respond to
the changing ethos of education. The said decision of the High Court of
Bombay and the other decisions of the High Courts were approved by the
Hon'ble Supreme Court.
Section 11 in The Income Tax Act, 1961 [Entire Act]
St.Lawrence Educational Socieity ... vs Commissioner Of Income Tax Delhi ... on 4 February, 2011
16.The Court took into consideration the decision of the High Court
of Punjab and Haryana, which has been followed by the Delhi High Court in
St. Lawrence Educational Society (Regd.) vs. CIT reported in (2013) 353
ITR 320 and also in Tolani Education Society vs. Dy. DIT (Exemptions)
reported in (2013) 35 ITR 184, where the High Court of Bombay held that
the petitioner (therein) has a surplus of income over expenditure for the
three years cannot by any stretch of logical reasoning, lead to the conclusion
that the petitioner therein does not exist solely for educational purposes or
that it exists only for profit. Further, it was held that the test to be applied is
as to whether the predominant nature of the activity is educational. The fact
that an incidental surplus, which is generated and which has resulted in
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additions to the fixed assets, is utilized towards upgrading the facilities of
the educational institution, was held to be permissible. Further, it was
observed that without the advancement of technology, no college or
institution can offer to remain stagnant. Further, it was held that an
educational institution cannot be prohibited from upgrading its
infrastructure or facilities save on the pain of losing the benefit of the
exemption under Section 10(23C) and imposing such a condition, which is
not contained in the statute, would lead to a perversion of the basic purpose
for which such exemptions have been granted to educational institutions. It
was further pointed out that knowledge in contemporary times is technology
driven. Educational institutions have to modernize, upgrade and respond to
the changing ethos of education. The said decision of the High Court of
Bombay and the other decisions of the High Courts were approved by the
Hon'ble Supreme Court.
M/S Queen'S Educational Society vs Commr.Of Income Tax on 16 March, 2015
10.Further, it is submitted that the decision in Queen's Educational
Society (supra) rendered by the High Court of Uttaranchal was tested for its
correctness before the Hon'ble Supreme Court by the Trust in Queen's
Educational Society vs. CIT reported in (2015) 55 taxmann.com 255 (SC)
and the said decision was reversed. Further, the said decision could not
have been applied to the case of the assessee-Trust, as the case was whether
the said Queen's Educational Society had fulfilled the three requirements
as stipulated under Section 10(23C) of the Act whereas, in the instant case,
the issue is whether the application filed by the assessee-Trust for
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registration under Section 12AA could have been rejected. Therefore, the
appellant erroneously rejected the application without noticing the fact that
the claim made by the Queen's Educational Society was a claim for
exemption under Section 10(23C) of the Act and such claim made by them
was rejected by the Assessing Officer, the said order was reversed by the
CIT(A), which order was confirmed by the Tribunal in an appeal filed by
the Revenue and challenging the order, appeal was filed before the High
Court, which was allowed by setting aside the order of the Tribunal and
affirming the order of the Assessing Officer and aggrieved by the same, the
said assessee filed appeal before the Hon'ble Supreme Court. It is submitted
that in the said decision, various other decisions of the Hon'ble Supreme
Court were referred to and the law laid down in those decisions will come to
the aid and assistance of the assessee-Trust and therefore, the Tribunal
rightly allowed the appeal filed by the assessee-Trust and directed
registration to be granted under Section 12AA of the Act.
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