Gyan Ganga Educational Academy v. Chief Commissioner of Income-tax, Raipur
[Citation -2017-LL-0803-19]

Citation 2017-LL-0803-19
Appellant Name Gyan Ganga Educational Academy
Respondent Name Chief Commissioner of Income-tax, Raipur
Court HIGH COURT OF CHHATISGARH
Relevant Act Income-tax
Date of Order 03/08/2017
Judgment View Judgment
Keyword Tags infrastructure development • prescribed authority • educational society • surplus fund
Bot Summary: The present writ petition under Article 226 of the Constitution of India has been filed by the Petitioner assailing Annexure P-5 which is an order passed by the Chief Commissioner of Income Tax, Raipur, on 9.9.2009, under Section 10(23C)(vi) of the Income Tax Act, 1961, whereby the claim of the petitioner-society for grant of exemption of income tax under the aforementioned provision has been rejected. Under the provisions of the Income Tax Act, 1961, Section 10(23C) provides for a provision wherein an educational society can seek exemption under the head of income which do not form part of a total income, which reads as follows: -2- 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 xxx xxx xxx any income received by any person on behalf of xxx xxx xxx any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause or sub-clause and which may be approved by the prescribed authority, or xxx xxx xxx 4. After hearing the parties, the Chief Commissioner of Income Tax vide impugned order has rejected the application holding that from the record of the institution it appears that the petitioner-society was not utilizing its funds solely for the objects of the society. According to the Chief Commissioner, from the documents which have been furnished before the income tax authorities it appeared that the receipts which were received by the educational institution were been largely invested in infrastructure developments. The impugned order thus deserves to be and is accordingly quashed and the matter is further remitted back to the Chief Commissioner of Income Tax to decide the claim of the petitioner afresh and in the process they may have the liberty of again perusing the entire accounts of the petitioner-educational institution before deciding the application of the petitioner seeking exemption. While deciding the application the authority may take into consideration the judgment of the Hon ble Supreme Court in the case of Queen's Educational Society v. Commissioner of Income Tax.


NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WRIT PETITION (T) NO. 852 OF 2011 Gyan Ganga Educational Academy, Village Nardaha, Baloda Bazar Road, Raipur (C.G.), through Smt. Manju Shandilya, W/o Late Shri Upendra Kumar Shandilya, aged about 60 years, R/o S-25, Rajeev Nagar, P.O. Shankar Nagar, Raipur (C.G.) Petitioner Versus Chief Commissioner of Income Tax, Central Revenue Building, Civil Line, Raipur (C.G.) Respondent For Petitioner : Ms. Smiti Sharma, Advocate. For Respondent : Mr. Amit Chaudhary, Advocate. Hon'ble Shri Justice P. Sam Koshy Order on Board 03/08/2017 1. present writ petition under Article 226 of Constitution of India has been filed by Petitioner assailing Annexure P-5 which is order passed by Chief Commissioner of Income Tax, Raipur, on 9.9.2009, under Section 10(23C)(vi) of Income Tax Act, 1961, whereby claim of petitioner-society for grant of exemption of income tax under aforementioned provision has been rejected. 2. petitioner-society is society registered under Societies Registration Act, 1973 and is running educational institution which also imparts free education to economically weaker students and also provides concession to children of government employees and surplus fund of institution is being used to sponsor programs promoting education. 3. Under provisions of Income Tax Act, 1961, Section 10(23C) (vi) provides for provision wherein educational society can seek exemption under head of income which do not form part of total income, which reads as follows: -2- 10. In computing total income of previous year of any person, any income falling within any of following clauses shall not be included xxx xxx xxx (23C) any income received by any person on behalf of xxx xxx xxx (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 prescribed authority, or xxx xxx xxx 4. Petitioner had applied for grant of exemption of income tax under aforesaid provisions. After hearing parties, Chief Commissioner of Income Tax vide impugned order (Annexure P-5) has rejected application holding that from record of institution it appears that petitioner-society was not utilizing its funds solely for objects of society. According to Chief Commissioner, from documents which have been furnished before income tax authorities it appeared that receipts which were received by educational institution were been largely invested in infrastructure developments. Chief Commissioner has relied upon decision of Uttarakhand High Court in cases of CIT, Nainital v. M/s Queen's Education Society, Nainital and CIT, Nainital v. M/s St. Paul's Sr. Secondary School, Nainital, while rejecting application of petitioner-society. 5. contention of petitioner-society has been that, whatever surplus of receipts that they were having were being used for development of educational institution itself and that accounts reflected it inasmuch as it was shown that surplus amounts have been used for infrastructure development of educational institution itself. perusal of record would show that department has not been able to show or establish as to whether funds of petitioner-establishment were being used or invested in some third-party agency other than petitioner-establishment/institution and it was stand of petitioner -3- that investments were being made only for infrastructure development of institution itself and not for any other purposes. 6. What is all more relevant at this juncture is that, judgment which has been relied upon by Chief Commissioner while passing impugned order itself has subsequently been reversed/quashed by Hon ble Supreme Court in case of Queen's Educational Society v. Commissioner of Income Tax, reported in 2015 (8) SCC 47. 7. Learned Counsel for Respondent however opposes petition but does not dispute fact that judgment relied upon by Chief Commissioner, i.e., judgment of Uttarakhand High Court, has since been reversed. 8. From bare perusal of impugned order, it clearly reflects that there is no material which was brought during course of enquiry with which it can be said that investments in infrastructure development were in those areas which are unconnected or unrelated to petitioner-institution, whereas contention of petitioner in this regard was that they have made investments in infrastructure development but said investments were all for development/growth of petitioner-establishment itself. 9. It is also pertinent to mention that coordinate Bench of this Court in Writ Petition (T) No. 1516 of 2011 (G.H. Raisoni Foundation v. Chief Commissioner of Income Tax) also has elaborately dealt with same issue vide its order dated 4.5.2007. 10. In view of aforesaid factual matrix of case and authoritative decision of Hon ble Supreme Court in case of Queen's Educational Society v. Commissioner of Income Tax (supra) and decision of coordinate Bench of this Court in similar factual -4- matrix, this Court has no hesitation in holding that in instant case also same view has to be applied. 11. impugned order (Annexure P-5) thus deserves to be and is accordingly quashed and matter is further remitted back to Chief Commissioner of Income Tax (Exemptions) to decide claim of petitioner afresh and in process they may have liberty of again perusing entire accounts of petitioner-educational institution before deciding application of petitioner seeking exemption. However, while deciding application authority may take into consideration judgment of Hon ble Supreme Court in case of Queen's Educational Society v. Commissioner of Income Tax (supra). 12. writ petition accordingly is allowed and disposed of. Sd/- (P. Sam Koshy) /sharad/ Judge Gyan Ganga Educational Academy v. Chief Commissioner of Income-tax, Raipur
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