SANDHAWALIA, J. - (1.) THE present writ petition has been filed against the order dt. 26/27th Sept., 2011 (Annex. P9) whereby the Chief CIT, Ludhiana has rejected the application of the petitioner for grant of exemption under S. 10 (23C)(vi) of the IT Act, 1961 (hereinafter referred to as "the Act") for the asst. yr. 2010-11 in Form No. 56D.
(2.) THE petitioner submitted the said application on 29th Sept., 2010 and a report was called from the office of CIT-II, Jalandhar, who submitted his report on 16th Sept., 2011 and accordingly, show-cause notice dt. 20th Sept., 2011 was issued to the assessee wherein the following two issues were raised : (a) That the objects of the trust are not exclusively related to education but are partly religious in nature. (b) That payments have been made to the Diocese of Jalandhar without much justifiable cause." The said notice was replied to on 21st Sept., 2011 wherein the assessee submitted the following reply regarding the above two issues : "First and formost it is submitted that our society is imparting education to the public at large without distinction of any caste, creed and religion. The society is running school for imparting education to the public at large without distinction of any caste, creed, religion and sex. The students are not from any particular community but are belonging to the various religions. As regards educational extension services Rs. 75,00,000 given to Diocese of Jalandhar for the year ending 31st March, 2010, it is submitted that Diocese of Jalandhar is engaged in running schools which are located at different places in Punjab. Even our objects are to promote education among the children and henceforth for the purpose of our objects of society we have given educational extension services to Diocese of Jalandhar. We are enclosing herewith memorandum of association alongwith confirmation of Diocese of Jalandhar." The Chief CIT after taking into consideration the objects of the institution came to the conclusion that firstly the aims and objects of the assessee institutution were partly religious in nature since it was imparting education to the Christians and was giving financial aid to the Diocese of Jalandhar. It was also noticed by the Chief CIT that for the last three years under the head of education extension services a sum of Rs. 24,00,000, Rs. 75,84,700 and Rs. 17,76,378 had been paid and the memorandum of association of Diocese of Jalandhar was also taken into consideration which was to administer the churches, chapels, schools and hostels etc. and also to apply the moneys and properties for the support and maintenance of the Roman Catholic Bishop and Clergy of the Diocese of Jalandhar, apart from managing local or parochial funds of churches or parishes. Accordingly, it was held that under S. 10(23C) (vi) of the Act, the institution has to exist solely for educational purposes and exemption is not to be granted if the trust does not exist solely for educational purposes. The judgment of this Court in case of Pinegrove International Charitable Trust & Ors. vs. Union of India & Ors. (2010) 230 CTR (P&H) 477 : (2010) 37 DTR (P&H) 105 : (2010) 327 ITR 73 (P&H) was also relied upon by holding that various principles have to be taken into consideration for deciding the case of the assessee for granting exemption under S. 10(23C)(vi) of the Act and accordingly, the claim of exemption was rejected.
(3.) THE petitioner before us has pleaded that since the petitioner's school was registered under the Societies Registration Act, 1860 on 13th March, 1992 and since out of total 1640 students, Christian students were only 190 and out of the staff strength of 71, only 23 were Christian, therefore, it was imparting education to people for all religions and employing persons from all walks of life and religions. The memorandum of association and rules went to show that the aims and objects were to set up a educational charitable society and to impart education to all without any discrimination of caste and creed. It is further pleaded that the memorandum of association of the Diocese of Jalandhar was also charitable in nature and, therefore, the order of respondent No. 3 was not justifiable. That in our view, the findings of respondent No. 3 cannot be faulted with and are liable to be upheld as there is no illegality or impropriety in the order of respondent No. 3, which after examining the record and asking for explanation of the assessee has come to the conclusion that the funds are being used by the institution for religious purpose and the institution is further diverting funds to the Diocese of Jalandhar under the head of Education Extension Services, details thereof are reproduced below : "Year Amount paid under the head of ending ESS 31-3-2009 24,00,000 31-3-2008 75,84,700 31-3-2007 17,76,378" ;