Chief Commissioner Of Income Tax v. Maharani Luxmi Bai Memorial Educational Society

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALSpecial Appeal No. 340 of 2015 Chief Commissioner of Income Tax. .………. Appellant Versus Maharani Luxmi Bai Memorial Educational Society. ...………. Respondent Mr. H.M. Bhatia, Advocate for the appellant. Mr. Mohit Maulekhi, Advocate for the respondent. JUDGMENT Coram: Hon’ble K.M. Joseph, C.J. Hon’ble V.K. Bist, J. Dated: 29thJuly, 2015 K.M. JOSEPH, C.J. (Oral) Appellant is the respondent in the writ petition. The writ petitioner is Maharani Luxmi Bai Memorial Educational Society. It runs an educational institution in the name and style of Doon (PG) College of Agriculture Science and Technology. It is granted registration under Section 12A of the Income Tax Act by the Commissioner of Income Tax, Dehradun, treating it as a charitable society on 14.03.2008. Writ petitioner Society applied for exemption under Section 10(23C)(vi) of the Income Tax Act for the financial year 2008-2009. The same was rejected by the order, which was impugned in the writ petition, saying that Objects 3, 4 & 5, as mentioned in the memorandum, do not fall within the definition of “solely for educational purposes”. The learned Single Judge allowed the writ petition, set aside the impugned order and directed the Prescribed Authority to take a decision afresh in the light of the observations made by the court. 2. We have heard Mr. H.M. Bhatia, learned counsel for the appellant and Mr. Mohit Maulekhi, learned counsel for the respondent / writ petitioner. 3. The learned counsel for the appellant would urge the following contentions before us: Firstly, it is contended that the educational institution is to move the Application; whereas, in this case, the Society has moved the Application. Secondly, he would contend that the learned Single Judge was in error in taking the view in regard to Objects 3, 4 & 5 in the memorandum of the Society. 4. In order to appreciate the contentions, we extract the following memorandum: “1. To impart the education to the students of the school with the aid of modern equipment and with the help and guidance of the best suited staff members amidst the modern and best surroundings to enable the students to develop their potentialities to the fullest. aid of modern equipment and with the help and guidance of the best suited staff members amidst the modern and best surroundings to enable the students to develop their potentialities to the fullest. 2. To generate the ideals of good citizenship, disciplined life and good more character. and good more character. 3. To foster and develop an active and positive feeling of love and brotherhood for everyone and cultivate a strong sense of patriotism. and brotherhood for everyone and cultivate a strong sense of patriotism. 4. To ensure an all round development of their personalities through educational social and cultural activities. through educational social and cultural activities. 5. To foster such education to the poor irrespective of caste, creed and culture.” creed and culture.” 5. In regard to Objects 3, 4 & 5, the learned Single Judge has taken a view that they do not demonstrate that, by fulfilling the objects, Society can earn profit. The further finding is that Objects 3, 4 & 5 seem ancillary to the educational purposes and the main object of the Society remains as educational purpose. It is on this basis that the impugned order came to be set aside. 6. The learned counsel for the appellant would further submit that, in terms of the judgment of the Hon’ble Apex Court rendered in the case of American Hotel & Lodging Association, Educational Institute vs. Central Board of Direct Taxes & Others, reported in 2008 AIR SCW 4996 and in terms of the provisions contained in Section 10(23C)(vi) of the Income Tax Act, the authority is entitled to call for information even in relation to past four years; whereas, the learned counsel for the respondent / writ petitioner would submit that the writ petitioner has 6. The learned counsel for the appellant would further submit that, in terms of the judgment of the Hon’ble Apex Court rendered in the case of American Hotel & Lodging Association, Educational Institute vs. Central Board of Direct Taxes & Others, reported in 2008 AIR SCW 4996 and in terms of the provisions contained in Section 10(23C)(vi) of the Income Tax Act, the authority is entitled to call for information even in relation to past four years; whereas, the learned counsel for the respondent / writ petitioner would submit that the writ petitioner has already produced the documents relating to the previous three years, which is what is relevant. 7. As far as the first contention that the educational institution must itself move the Application is concerned, we notice that Section 10(23C)(vi) of the Income Tax Act provides as follows: “10. Incomes not included in total income. – In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included – (23C) any income received by any person on behalf of – (vi) 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 (iiiad) and which may be approved by the prescribed authority;” for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority;” 8. The word ‘person’ is undisputedly defined to include persons like the writ petitioner, which is a registered Society. Therefore, on a conjoint reading of Section 10(23C)(vi) of the Income Tax Act and also the definition of the word ‘person’, we would think that there is no merit in the contention of the learned counsel for the appellant. In this context, we also notice that Form 56D, which is the form prescribed under Section 10(23C)(vi), also refers in the first column to the educational institution and, at the second column, to the trust or society. It provides for the signing of the application obviously by the person, who is competent to certify the facts made in the application. When a society is running the educational institution, then, we would think that, both, for the reason that it is running the institution and also conceiving the impossibility of an institution as such de hors the society making an application, we would reject the contention. When an application is made by the society, it is being made on behalf of the institution. The society would be assessed, if it is denied the benefit of Section 10(23C)(vi), for running the institution and deriving an income out of it and it is the income from the educational institution derived by the society, which is to be excluded from the total income under Section 10(23C)(vi). Therefore, we reject the said contention. 9. Coming to Objects 3, 4 & 5, we are of the view that the contention of the appellant, which appears to be that they indicate that the society can earn from other objects which do not amount to imparting education, may not be correct. The objects appear to be ancillary to the main object of running the institution. We are not persuaded to hold that the objects can be anything, but ancillary to the main purpose, which is for imparting education. Therefore, we see no merit in the said contention. 10. Regarding the last contention, we are of the view that it is for the authority concerned to take a decision. The only limitation, which has been put on the authority, was that it should decide the matter in accordance with the observations. We see nothing in the observations, which will stand in the way of the authority to take a decision in accordance with law, which the authority is free to do. 11. Subject to the same, the appeal will stand dismissed. 10. Regarding the last contention, we are of the view that it is for the authority concerned to take a decision. The only limitation, which has been put on the authority, was that it should decide the matter in accordance with the observations. We see nothing in the observations, which will stand in the way of the authority to take a decision in accordance with law, which the authority is free to do. 11. Subject to the same, the appeal will stand dismissed. 12. The learned counsel for the appellant would submit that the time may be enlarged. We enlarge the time by directing the authority to take a decision within a period of two months from the date of production of a copy of this judgment by the assessee. G (V.K. Bist, J.) (K.M. Joseph, C. J.) 29.07.2015 29.07.2015