Nutan Kelavani Mandal v. Chief Commnr. Of Income-Tax & Anr

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.242 OF 2008 Nutan Kelavani Mandal ..Petitioner Versus Chief Commnr. of Income-tax & Anr...Respondents ---- Ms.A.Vissanji with Mr.S.J.Mehta for the appellant. Mr.B.M.Chatterji with Mrs.P.P.Bhosale and Mr.P.S.Sahadevan and Mr.H.P.Chaturvedi for the respondents. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Date : 3rd March 2008. PC 1. Rule. Heard forthwith. 2. The petitioner is aggrieved by the order of respondent no.1 dated 31st October 2007 rejecting the application for exemption under section 10(23C) (vi) of the Income Tax Act 1961. 3. The 1st respondent by the impugned order considered the objects of the society and after considering the same observed as under :- " In light of the above fact it was apparent that the applicant did not fulfil the basic condition laid down under Section 10 (23C) (vi) of the Act viz. solely existing for educational purpose." . After considering the explanation pertaining to : 2 : the show cause notice issued to the petitioner, rejected the application made by the petitioner herein. . It is this order which is the subject matter of the present petition. 4. The relevant portion of section-10 with which we are concerned reads as under :- " 10. 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................." 23(c) 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 ; . It will thus, be clear that while considering the income of any person, income set out in section 23(c) (vi) would not be considered if the person has approval of the prescribed authority that the educational institution exists solely for educational purposes and not for purposes of profit. 5. On behalf of the petitioner, learned Counsel submits that considering this provision the 1st respondent mis-directed itself in law by addressing : 3 : the wrong question. The fact that the institution has some other objectives are immaterial. In respect of other objectives, if the assessee receives any income that income would be assessed to tax. Reliance is also placed on the judgment of the Division Bench of this Court in CIT Vs.Vidya Vikas Vihar reported in 265 ITR 489 and Trustees of Vanita Vishram V/s.CIT reported in [2006] 280 ITR 345 (Bom). . On the other hand on behalf of the respondent learned Counsel submits that the assessee is receiving income by way of rent and consequently that will not fall within the ambit of section (23) (c)(vi). 6. Having considered the impugned order, we find that respondent no.1 has not rejected the application of the petitioner herein on the grounds which learned Counsel for respondents seeks to contend but solely on the ground that object of the trust includes objectives other than for education. In our opinion, this is clearly contrary to the provisions of section itself. . The respondent no.1 would have to address itselt as to whether the income received by the trust running the educational institution, meets the twin tests of the educational institution existing solely : 4 : for educational purposes and not for purposes of profit. The fact that the Government may give grant in the name of the institution run by the trust and (c)(vi). 6. Having considered the impugned order, we find that respondent no.1 has not rejected the application of the petitioner herein on the grounds which learned Counsel for respondents seeks to contend but solely on the ground that object of the trust includes objectives other than for education. In our opinion, this is clearly contrary to the provisions of section itself. . The respondent no.1 would have to address itselt as to whether the income received by the trust running the educational institution, meets the twin tests of the educational institution existing solely : 4 : for educational purposes and not for purposes of profit. The fact that the Government may give grant in the name of the institution run by the trust and certain amount may be adjusted towards rent of the building as long as the assessee is the trust prima facie will not take that income out of the purview of section 10 (23) (c) (vi) unless it can be contended that income from house property is not ‘income’ contemplated by section 10(23c) (vi). Similarly will be the case of an educational institution being run on no grant basis. . These are purely questions which respondent no.1 will have to consider in granting the permission as contemplated under section 10 (23c) (vi). 7. In the light of the above, the impugned order is set aside. The respondent no.1 is directed, after hearing the petitioner, to pass fresh order according to law. It will be open for the petitioner to produce any additional material that they may have before respondent no.1. . Rule made absolute accordingly with no order as to costs. (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J)