Order dt.04.08.2020 in T.C.A.No.432 of 2017 1/12 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 4.8.2020 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.432 of 2017 M/s.Kamaraj Educational Trust, Kakankari Road, M.Savalur, Kaveripattinam P.O., Krishnagiri 635 112. Appellant Vs. Chief Commissioner of Income Tax, 44 Williams Road, Cantonment, Trichy. Respondent Prayer: Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal Madras "A" Bench, dated 27.11.2015 in I.T.A.No.2009/Mds/20l5. For Appellant : Mr. N.V.Balaji For Respondent : Mr.J. Narayanaswamy, Senior Standing Counsel ORDER (Made by Dr.Vineet Kothari,J) Court was held by Video Conference, as per Resolution of Full Court dated 3 July 2020, by Judges at their respective residences and counsel, staff of Court appearing from their respective residences. http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 2/12 2. Assessee, M/s.Kamaraj Educational Trust, has filed this Appeal aggrieved by order dated 27.11.2015, by which, learned Tribunal dismissed Appeal of Assessee and upheld order of learned Chief Commissioner of Income Tax dated 10.8.2015 by which, learned Chief Commissioner of Income Tax denied exemption to Appellant-Trust under Section 10 (23C) (vi) of Income Tax Act, 1961. 3. reasons assigned by Tribunal in its order are quoted below for ready reference:- "(i) Heard both sides. Perused order of Chief Commissioner. On perusal of object clauses of trust deed, we find that assessee is established not only for managing all types of educational institutions but also to promote finance, hospitals, research centers in medical science. On perusal of profit and loss account and income & expenditure account of assessee, we find that assessee incurred certain expenditure towards awareness on agriculture, awareness on scientific research programme and blood donor camp expenses, medical treatment expenses, free eye camp activity which goes to show that http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 3/12 assessee's activities are not confined only to education during year ended 31.03.2014. Chief Commissioner also observed that assessee trust amended its deed only on 29.07.2015 which is beyond year ended 31.03.2014, therefore not relevant for assessment year 2014-15 and he denied exemption holding that assessee trust is existing not only for education but also for other activities. We do not find any infirmity in coming to conclusion by Chief Commissioner in rejecting application for exemption under section 10(23C)(vi) of Act. Thus, we reject grounds raised by assessee and sustain order of Chief Commissioner of Income Tax." 4. learned Chief Commissioner, in his order dated 10.8.2015, gave following reasons for denying said exemption to Educational Trust of Appellant/Assessee:- " Decision on application It is seen that trust deed amendment has been made only on 29.7.2015 which is beyond 31.3.2014 which is relevant for assessment year http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 4/12 2014-15. It is seen that objects of trust deed relevant for current year included promotion, finance and maintenance of hospitals and charitable dispensaries, child welfare centers. Trust deed also included objects like development of human skills, sports, games. It is seen that trust in relevant year is not running only for educational purposes. As per income and expenditure account, expenses of Rs.6,00,763/- is incurred for awareness of agriculture. sum of Rs.55,000/- has been incurred for free medical treatment. sum of Rs.27,480/- is spent towards free eye camp activity. Since trust is existing not solely for education but also for other activities, Exemption u/s 10(23C) iv is hereby denied in their application dated 29.9.2014 for grant of exemption. Exemption u/s 10(23C)vi is hereby rejected." 5. Assessee has sought to raise following questions of law in present Appeal filed under Section 260-A of Act before us:- "(i) Whether under facts and circumstances of case, Income Tax Appellate Tribunal was right in http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 5/12 upholding order of Chief Commissioner of Income Tax, rejecting application of assessee for grant of approval for exemption under section 10(23C) in respect of income its School? (ii) Whether under facts and circumstances of case, Income Tax Appellate Tribunal was right in holding that assessee is not existing solely for purpose of education but also other activities and therefore Respondent was right in rejecting application for grant of approval under section 10(23C) in respect of income of School run by it? (iii) Whether based on material and evidences before it, Income Tax Appellate Tribunal could have come to conclusion that that assessee is not existing solely for purpose of education but also other activities and therefore Respondent was right in rejecting application for grant of approval under section 10(23C)?" 6. learned counsel appearing for Assessee Mr.N.V.Balaji has submitted that evidence adduced by Appellant-Educational Trust for spending amount in question on Agricultural http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 6/12 Awareness, Medical Camps and Blood Donation Camps organised by Assessee were not considered by learned Chief Commissioner and he also submitted that expenditure incurred in question was for maintenance of Hospitals, Charitable Dispensaries, Child Welfare Centres and Development of Human Skills, Sports, Games, etc., which were included in 'Objects' Clause of Memorandum of Trust of Assessee. He further submitted that Trust Deed was amended by Trust itself, on 29.7.2015 to specifically emphasize that Trust exists solely for purpose of engaging above services. said Resolution dated 29.7.2015 is also quoted below for ready reference:- "The objects of trust shall include and be restricted to following only- To establish, promote, finance and maintain and manage all type of educational institutions and individuals for advancement of education of knowledge in arts, Science, Literature, humanity and all other useful subjects in all their manifestations." He, therefore, submitted that Appeal of Assessee deserves to be allowed. http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 7/12 7. In support of his contentions, learned counsel for assessee relied upon following decisions:- (i) Director of Income Tax (Exemptions) Vs. Institute of Franciscan Clarist (2005) 148 TAXMAN 78 (DEL.) (ii) Sri Sai Educational Trust Vs. CIT (Mad-W.P.No.11301 of 2018 dated 10.10.2018) (iii) CIT Vs. Karnataka Lingayat Educational Society (371 ITR 249 (KAR)) (iv) Queen's Educational Society Vs. CIT (2015 ) 372 ITR 699 (SC) (v) Aditanar Educational Institution Vs. Additional CIT (224 ITR 210 (SC) (vi) Vanita Vishram Trust Vs. CCIT (327 ITR 121 (BOM)). 8. Per contra, Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for Respondent/Revenue, relying upon decision of Andhra Pradesh High Court in R.R.M.Educational Society v. Chief Commissioner of Income Tax (2012) 20 taxmann.com 269 (A.P.), urged that expenditure in question was not incurred solely for educational purposes and therefore, case of Assessee did not fall within four corners of Section 10(23C) (vi) of Act and therefore, Authorities below were justified in rejecting said Application. http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 8/12 9. Section 10(23C)(vi) of Act reads as under:- "Incomes not included in total income 10. In computing total income of previous year of any person, any income falling within any of following clauses shall not be included-- ... .... ... (23C) any income received by any person on behalf of -- ... ... ... (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;" 10. Having heard learned counsel for parties, we are of opinion that learned Chief Commissioner has not brought on record any evidence for holding that expenditure incurred in question did not relate to educational activities of Appellant Trust, which runs School. expenditure incurred to extent of Rs.6,00,763/- for Awareness on Agriculture, Rs.55,000/- for Medical http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 9/12 Camps and Rs.27,480/- for Eye Camp activity could very well be part of activities carried out in School itself. We cannot accept view of learned Chief Commissioner that these expenditure incurred could not be related to educational activities of Appellant Trust. 11. Admittedly, Objects of Trust included such Medical facilities, Charitable activities, Child Welfare etc., in its Trust Deed. amendment with effect from 29.7.2015 was only to further emphasize and to bring case within four corners of Section 10(23C)(vi) of Act in its strict sense. 12. In our opinion, burden lies upon Revenue to bring on record evidence to rebut claim of Appellant Trust and to establish that activities carried out and expenditure incurred by Assessee Trust could not be related to educational activities of Appellant Trust by any stretch of imagination. No such exercise of either bringing evidence on record or controverting or rebutting evidence produced by Assessee before Chief Commissioner appears to have been undertaken by learned Chief Commissioner. mere reference to expenditure incurred and Head of expenditure in question while rejecting Application under Section http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 10/12 10(23C)(vi) of Act is not enough to reject Application under provisions of Act. 13. very purpose of educational activities and charitable activities for which said provision intends to extend benefit of exemption and for educational activities in particular, Section 10(23C)(vi) of Act, is likely to be defeated if such pedantic and narrow approach on part of revenue Authorities is allowed. 14. In these circumstances, we are not inclined to uphold order passed by Tribunal dated 27.11.2015 which upholds order dated 10.8.2015 passed by learned Chief Commissioner. Instead of answering questions at our own end at this stage, we are inclined to remand case back to learned Chief Commissioner of Income Tax, Trichy. Further, we are not inclined to go into details of decisions cited by learned counsel for Appellant/Assessee as we are inclined to remand matter to learned Chief Commissioner. 15. In these circumstances, we hope and expect that learned Chief Commissioner would pass fresh orders on said Application of Assessee dated 29.9.2014 after giving due opportunity of hearing http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 11/12 to Assessee and considering evidence in detail and also details of expenditure incurred, by assigning proper reasons for either accepting said Application or rejecting same. However, we would expect detail reasoning on part of learned Chief Commissioner while passing fresh orders upon such remand. 16. With these observations, we dispose of Tax Case Appeal setting aside order dated 27.11.2015 passed by learned Tribunal and that of learned Chief Commissioner dated 10.8.2015 and restore matter on file of learned Chief Commissioner of Income Tax, Trichy for passing fresh orders in accordance with law. parties shall appear before learned Chief Commissioner of Income Tax in first instance on 25th August 2020 and thereafter, learned Chief Commissioner of Income Tax shall pass fresh orders within period of 3 months from that date. No order as to costs. (V.K.J.) (K.R.,J.) 4.8.2020 ssk/kpl Index:Yes/No Internet:Yes/No http://www.judis.nic.in Order dt.04.08.2020 in T.C.A.No.432 of 2017 12/12 Dr.VINEET KOTHARI, J. and KRISHNAN RAMASAMY, J. ssk. T.C.A.No.432 of 2017 4.8.2020 http://www.judis.nic.in Kamaraj Educational Trust v. Chief Commissioner of Income-tax Trichy