Case Law Details
Assessee society is generating surplus year after year is not the deciding factor to determine whether it is eligible for exemption under section 11 of the Act. And on this ground alone, the exemption claimed by the assessee society under section 11 can not be denied. What is relevant to examine is whether the surplus so generated is ploughed back in furtherance of its educational objectives and related activities or not.
RELEVANT EXTRACT OF THE ITAT JUDGMENT
3. The brief facts of the case are that the assessee is a society registered under the Rajasthan Society Registration Act, 1958 vide registration No. 518/1985-86 dated 19.02.1986. The assessee society is also registered under the provisions of Section 12AA of the IT Act, 1961 with effect from 17.12.1990. For the year under consideration, the assessee society filed its return of income on 15.10.2010 showing income as NIL after claiming exemption u/s 11(1)(a) of the IT Act, 1961 and the assessment was concluded u/s 143(3) on 25.03.2013 at total income of Rs. 8,46,93,414/-. Aggrieved with the order of AO, the assessee society filed an appeal before the ld CIT(A), Jaipur who has allowed partial relief to the assessee. Now the Revenue is in appeal against relief granted by the ld CIT(A) in terms of allowing exemption under section 11 and deleting the disallowance relating to salary, foreign travel and treating contribution to Jaipur National University as application of income. The assessee society is in appeal against the order of ld CIT(A) for not treating the allowance of depreciation as application of income.
4. The first question that arises in the present appeal is the entitlement of the assessee society to exemption under section 11 of the Act. The relevant provisions which govern the exemption under section 11, are contained in section 2(15), 11, 12 ,12A, 12AA read with section 13 of the Act.
5. Section 2(15) defines “charitable purpose” to include relief of the poor, education, medical relief and the advancement of any other object of general public utility. The Hon’ble Supreme Court in case of Sole trustee, Lok Sikshana Trust V. CIT reported in 101 ITR 234, 241 (SC) has held that “What ‘Education’ connotes in section 2(15) is the process of training and developing the knowledge, skill, mind and character of students by normal schooling. It is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received.” Further, it is noted that the proviso to section 2(15) doesnt apply to first three limbs which includes relief of the poor, education and medical relief and is limited is the last limb “the advancement of any other object of general public utility.
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