- (1.) This order will dispose of two Civil Writ Petn. Nos. 4119 and 4155 of 2011 as facts and law involved in these petitions are common. However, the facts of Civil Writ Petn. No. 4155 of 2011 are being adverted to. The petitioners are aggrieved by the order dt. 29th Sept., 2010 whereby respondent dismissed their applications in Form 56D for grant of exemption under s. 10(23C)(vi) of the IT Act, 1961 (hereinafter referred to as "the Act") for the asst. yr. 2009-10.
(2.) The petitioner-assessee filed an application dt. 27th Sept., 2009 in Form 56D seeking grant of exemption/approval under s. 10(23C)(vi) of the Act on the ground that it was a society registered on 16th Sept., 1992 under the Societies Registration Act, 1860 and for the last 18 years engaged in the activity of providing education and relied upon aims and objects mentioned in the memorandum of association to press forth the ground that it exists solely for educational purposes and not for purposes of earning profit. Information was sought by the office of the ITO from the petitioner society on 4th May, 2010 whereby it was asked to furnish various information including activities undertaken by the petitioner society, list of trustees and copy of accounts etc. The said information was accordingly furnished on 17th May, 2010 to the IT Department and it was also brought to the notice of the said officer that the petitioner society was running two schools at Hansi and details of strength of students and ownership of lands and rooms were also given. Thereafter, fresh information was asked for on 20th Sept., 2010 vide Annex. P-6 as to whether the society exists solely for educational purposes or it has other activities also which were not related to education. The petitioner was also asked to explain the surplus for the last three assessment years i.e. 30.54 per cent, 45.32 per cent and 48.8 per cent, and the petitioner was asked to analyse the above profit with respect to utility thereof. Accordingly, detailed reply was submitted on 22nd Sept., 2010 and stress was laid down that aims and objects of the society were mainly in the context of imparting education and (sic) establishing schools, hostels, libraries, reading rooms and playgrounds etc. And further that income was not to go to the members of the society in any manner rather the society exists solely for imparting education and falls within the ambit of s. 10(23C)(vi) of the Act. As far as the issue of surplus of the society and profit, explanation was given in the reply that percentage of surplus had been miscalculated by not excluding depreciation and adding capital expenditure incurred for the purpose of benefit of the society. This explanation was further elaborated in a representation dt. 28th Sept., 2010 and stress was laid down on s. 2(15) of the Act that education itself is a charitable purpose and the term is wide and extensive. Reliance was also placed on various judgments including given the one by the Division Bench of this Court on 29th Jan., 2010 in Pinegrove International Charitable Trust vs. Union of India & Ors., 2010 230 CTR(P&H) 477 and also the judgment of the same Division Bench dt. 29th Jan., 2010 in Civil Writ Petn. No. 858 of 2009 (Kshatriya Sabha, Maharana Partap Bhawan, Kurukshetra vs. Union of India & Anr.) whereby a number of writ petitions including the petitioners' writ petition being Civil Writ Petn. No. 8258 of 2009 for the asst. yrs. 2005-06 to 2008-09 had been decided in favour of the assessee. Stress was again laid down on the fact that depreciation had not been applied for calculating the percentage of surplus and a chart was prepared wherein percentage of surplus was accordingly reduced after calculating depreciation. The respondent, however, vide order dt. 29th Sept., 2010 rejected the application of the petitioner and concluding portion of the impugned order is reproduced hereunder : In conclusion, it may be mentioned here that for the grant of exemption/approval under s. 10(23C)(vi), the basic requirement of sub-cl. (vi) of cl. (23C) of s. 10 is that the educational institution seeking exemption should be existing solely for the purposes of education and not for the purposes of profit. Here the emphasis is laid on the word 'solely'. Keeping in view the above facts, it is held that in the light of observations of the Supreme Court which were not taken note of in the case of Pinegrove International Charitable Trust by the Hon'ble Punjab & Haryana High Court (Civil Writ Petn. No. 6031 of 2009) order dt. 29th Jan., 2010 and the fact that the profits are held not to be incidental as they do not arise merely for one year but systematically, the educational institutions namely 'S.D. Modern Public School and S.D. Modern Shishu Public School' do not satisfy the basic condition of existing solely for educational purpose and not for profit as per s. 10(23C)(vi) of IT Act, 1961. The approval sought cannot be granted and the application is dismissed.
(3.) The petitioner is, thus, aggrieved by the said order of the respondent whereby its application for exemption has been rejected and whereas the respondent has sought to distinguish the Division Bench judgment in Pinegrove International Charitable Trust's case on the ground that the Division Bench judgment had not taken note of observations of the Hon'ble Supreme Court regarding profiteering in P.A. Inamdar & Ors. vs. State of Maharashtra & Ors., 2005 6 SCC 537.;