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Judgment
Sabina, J
The appellant has filed the instant Appeal challenging the order, dated 24th January, 2017, passed by the Income Tax Appellate Tribunal, Chandigarh in ITA No.1219/CHD/2016.
At the time of admission of the appeal, on 24.07.2017, following substantial questions of law were framed:-
“(i) Whether the ITAT has erred in ignoring the contention that as per the scheme of the Act, the entity availing the benefits of Section 10(23C) (iiad)) historically and for a number of years should seek approval u/s 10(23C) (vi) and not registration u/s 12A, the two being completely different codes in themselves, one relying on income from property/voluntary donations and the other on receipts?
(ii) Whether as per the scheme of the Act and the ratio of the decision of the Hon'ble Supreme Court in the case of the Dental Council of India Vs. Subharti K.K. B. Charitable trust and anr, the ITAT has exceeded its jurisdiction in passing the impugned order?
We have heard the learned counsel for the parties and have also gone through the record available on the file carefully.
The respondent is running a school and had moved an application seeking registration under Section 12A of the Income Tax Act, 1961. The application moved by the respondent was dismissed by the Commissioner Income Tax (Exemptions), Chandigarh, vide its order, dated 26th September, 2016. The operative part of the order reads as under:-
“9. In the instant case, given all of the above, not only is the applicant's status suspect it is also deemed to have utilised its generic objects to focus mainly on running an educational institution on commercial lines. Large Fees have been collected under several additional heads apart from admission and tuition fees. The same have not been utilised for betterment of education but kept unutilized under separate heads of special funds, building funds and cash in hand. There is no charitable purpose that gets reflected in the way the limb of education has been invoked to impart in the instant case. Charity can't happen in education if despite huge disposal funds (collected unduly from the students) the teachers are paid lowly amounts that don't even enable them to reach the taxable bracket. The legislative intent never has been to accord exemption from taxation to such entities that seek to profiteer under the garb of education. The application under section 12A for grant of registration is accordingly rejected.”
Aggrieved against the said order, the respondent approached the Income Tax Appellate Tribunal and the appeal filed by the respondent was allowed vide impugned order dated 24th January, 2017.
Admittedly, the respondent is running a school for the last 34 years in a rented premises. It is the case of the respondent hat the funds were being saved by it with a view to have its own building in future. Since, the school is being run for the last so many years, it could not be alleged against the respondent that it was an institute with a profit motive. The respondent is running a school in a rented premises, therefore, it is within its right to create funds for constructing its own building for running the school.
In the factual background of this case, the learned tribunal has rightly allowed the appeal filed by the respondent.
It has also been submitted by the learned counsel for the respondent, during the course of arguments, that provisional registration has been granted under the amended Act, for the year 2021.
For the foregoing reasons, we find no merit in the instant appeal and it is dismissed. All pending applications, if any, also stand disposed of.