Ajay Kumar Mittal, J. - (1.) CHALLENGE in this petition filed under Articles 226/227 of the Constitution of India is to the order dated 26.9.2013, Annexure P. 7 passed by respondent No. 3 -Director General of Income Tax (Inv.) declining exemption/approval to the petitioner society under Section 10(23C)(vi) of the Societies Registration Act, 1860 (in short, "the Act"). A few facts relevant for the decision of the controversy involved, as narrated in the petition, may be noticed. The petitioner is a society registered in Punjab. It is having one institution namely St. Kabir Convent School established for accomplishment of the intention and the object of imparting education to 1455 students of all religions, castes and creeds and employing about 92 persons consisting of teaching and non teaching staff. For six assessment years namely 2003 -04 to 2007 -08, 2010 -11, the assessment has been completed treating the petitioner as to nil chargeable income. The petitioner filed an application in Form No. 56D, Annexure P. 2 for the assessment year 2012 -13 onwards for exemption under section 10(23CXvi) of the Act on 26.9.2012, Annexure P. 2. Thereafter, notices dated 10.5.2013 and 14.8.2013 were issued to the petitioner, Annexures P. 3 and P. 5 respectively. The petitioner submitted replies dated 10.5.2013 and 14.8.2013, Annexure P. 4 and P. 6 respectively to the notices. After examining the matter, the Director General of Income Tax (Inv.) passed the impugned order dated 26.9.2013, Annexure P. 7 rejecting the application under Section 10(23C)(vi) of the Act on the ground that the rules of the society did not provide for the method of application of funds in the case of dissolution of the society at the time of filing of the application. Hence the present petition.
(2.) WE have heard learned counsel for the parties and perused the record. Learned counsel for the petitioner submitted that the Director General of Income Tax (Inv.) had declined the request of the petitioner for exemption/approval under section 10(23C)(vi) of the Act for the assessment year 2012 -13 on the ground that in the trust deed, nothing had been provided regarding the utilization of the funds in the event of dissolution or winding up of the society. It was further urged that it was curable defect and after curing it, the petitioner was entitled to registration. The utilisation of funds in the event of dissolution or winding up of the society was an event which was yet to take place and cure done prior thereto, would not disentitle the petitioner.
(3.) ON the other hand, prayer of the petitioner was opposed by learned counsel for the respondents on the ground that reliance by the petitioner on Section 14 of the Act was unfounded and it has not been provided in Section 14 of the Act that the funds shall be given to any other charitable society. Further, provisions of Section 10(23C) of the Act shall override the provisions of Section 14 of the Act. It was further argued that the petitioner could claim benefit only for the subsequent year after the insertion of the clause in the trust deed.;