Punjab-Haryana High Court
The Commissioner Of Income Tax ... vs Swami Ganga Giri Janta Girls College on 2 May, 2024
Author: Sanjeev Prakash Sharma
Bench: Sanjeev Prakash Sharma
Neutral Citation No:=2024:PHHC:062827-DB
ITA-61-2024 (O&M) 2024:PHHC:060829-DB
Page 1 of 4
104
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
ITA-61-2024 (O&M)
Date of Decision: 02.05.2024
The Commissioner of Income Tax (Exemptions) Chandigarh
. . . . Appellant
Vs.
Swami Ganga Giri Janta Girls College
. . . . Respondent
****
CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
HON'BLE MRS. JUSTICE SUKHVINDER KAUR
****
Present: Mr. Amanpreet (A.P.) Singh, Advocate
for the appellant.
****
SANJEEV PRAKASH SHARMA, J.(Oral)
CM-7915-CII-2024
For the reasons stated, application for condonation of delay of
80 days in filing of appeal is allowed and accordingly delay is condoned.
Main case
1. This is an appeal preferred against the order passed by the ITAT
whereby the order passed by the CIT (Exemptions), Chandigarh was
quashed and set aside.
2. Learned counsel for the Revenue submits that the ITAT has fallen in
error and a substantial question of law arises in the present case for
adjudication by this Court.
3. However, we find that the ITAT has found that Rule 2BBB was not
applicable during the impugned assessment year i.e. A.Y. 2012-13, as
the same was brought in force from 12.12.2014.
1 of 4
Neutral Citation No:=2024:PHHC:062827-DB
ITA-61-2024 (O&M) 2024:PHHC:060829-DB
4. Learned counsel further submits that judgment of Tolani Education
Society vs. Deputy Director of Income Tax (Exemptions), [2013] 351
ITR 184 relied on the judgment passed by the Supreme Court in
Queen's Educational Society vs. Commissioner of Income Tax, [2015]
372 ITR 699 (SC), which has been overruled by the Supreme Court in
the case of M/s New Noble Educational Society vs. The Chief
Commissioner of Income Tax and another, 2022 SCC Online SC
1458.
5. However, we find the argument to be misconceived. The only part of
the judgment where the reasoning and conclusions pertain to the
interpretation of expression 'solely' is mentioned in American Hotel
and Lodging Association vs. CBDT and others, [2008] 301 ITR 86 (SC)
and Queen's Educational Society (supra), has been overruled and the
larger Bench in New Noble Educational Society (supra) has held as
under:
"76. The conclusions of this court are summarized as
follows:
a. It is held that the requirement of the charitable
institution, society or trust etc., to 'solely' engage itself in
education or educational activities, and not engage in any
activity of profit, means that such institutions cannot have
objects which are unrelated to education. In other words, all
objects of the society, trust etc., must relate to imparting
education or be in relation to educational activities.
b. Where the objective of the institution appears to be
profit-oriented, such institutions would not be entitled to
approval under Section 10(23C) of the IT Act. At the same time,
where surplus accrues in a given year or set of years per se, it is
not a bar, provided such surplus is generated in the course of
providing education or educational activities.
c. The seventh proviso to Section 10(23C), as well as
Section 11(4A) refer to profits which may be 'incidentally'
2 of 4
Neutral Citation No:=2024:PHHC:062827-DB
ITA-61-2024 (O&M) 2024:PHHC:060829-DB
generated or earned by the charitable institution. In the present
case, the same is applicable only to those institutions which
impart education or are engaged in activities connected to
education.
d. The reference to 'business' and 'profits' in the seventh
proviso to Section 10(23C) and Section 11(4A) merely means
that the profits of business which is 'incidental' to educational
activity - as explained in the earlier part of the judgment i.e.,
relating to education such as sale of text books, providing
school bus facilities, hostel facilities, etc.
e. The reasoning and conclusions in American Hotel
(supra) and Queen's Education Society (supra) so far as they
pertain to the interpretation of expression 'solely' are hereby
disapproved. The judgments are accordingly overruled to that
extent.
f. While considering applications for approval under
Section 10(23C), the Commissioner or the concerned authority
as the case may be under the second proviso is not bound to
examine only the objects of the institution. To ascertain the
genuineness of the institution and the manner of its functioning,
the Commissioner or other authority is free to call for the
audited accounts or other such documents for recording
satisfaction where the society, trust or institution genuinely
seeks to achieve the objects which it professes. The observations
made in American Hotel (supra) suggest that the Commissioner
could not call for the records and that the examination of such
accounts would be at the stage of assessment. Whilst that
reasoning undoubtedly applies to newly set up charities, trusts
etc. the proviso under Section 10(23C) is not confined to newly
set up trusts - it also applies to existing ones. The
Commissioner or other authority is not in any manner
constrained from examining accounts and other related
documents to see the pattern of income and expenditure.
g. It is held that wherever registration of trust or
charities is obligatory under state or local laws, the concerned
trust, society, other institution etc. seeking approval under
Section 10(23C) should also comply with provisions of such
state laws. This would enable the Commissioner or concerned
authority to ascertain the genuineness of the trust, society etc.
3 of 4
Neutral Citation No:=2024:PHHC:062827-DB
ITA-61-2024 (O&M) 2024:PHHC:060829-DB
This reasoning is reinforced by the recent insertion of another
proviso of Section 10(23C) with effect from 01.04.2021.
6. In view of the fact that the Assessing Officer in his order reached to the
conclusion that the Trust had claimed exemptions under Sections
10(23C)(iiiab) of the Income Tax Act, 1961 as it is substantially
financed by the Government receiving grant of Rs. 89,19,294/- against
gross receipts of Rs.2,66,32,390/- which is more that 20%, and the
expenditure of Rs.2,56,60,780/- had been incurred by the Trust towards
its aims and objects in carrying out activities in the field of education,
and the expenditures having been incurred with respect to that alone,
the exemptions were rightly granted. Thus, we find that the order
passed by the ITAT as well as the assessing officer do not require to be
interfered with keeping in view the observations and directions passed
by Hon'ble the Supreme Court in New Noble Educational Society's
case (supra).
7. Thus, no substantial question of law arises in the present case. Appeal
is accordingly dismissed.
8. All pending applications also stand disposed of accordingly.
(SANJEEV PRAKASH SHARMA)
JUDGE
(SUKHVINDER KAUR)
JUDGE
May 02, 2024
Mohit goyal
1. Whether speaking/reasoned? Yes/No
2. Whether reportable? Yes/No
4 of 4
