High Court Of Rajasthan
Geetanjali University Trust vs. CCIT & Anr.
Section 10(23C)
Asst. Year 2008-09
Dr. Vineet Kothari, J.
S.B. Civil Writ Petn. No. 11799 of 2010
24th November, 2011
Counsel appeared :
Vikas Balia, for the petitioner : K.K. Bissa, for the Respondent
JUDGMENT
BY THE COURT :
This writ petition has been filed by the petitioner assessee being aggrieved of the order dt. 27th Jan., 2010 passed by the Chief CIT, Udaipur under s. 10(23C) of the IT Act, 1961 rejecting the application of the petitioner trust for exemption from tax for asst. yr. 2008-09 in prescribed Form No. 56D. The petitioner trust runs a medical college with attached hospital of 450 beds and imparts such education to 150 students of MBBS Course besides running the colleges of Pharmaceutical, Physiotherapy and Nursing having separate intake of students. During the relevant year 2008-09, the admissions by the petitioner trust were not made on the basis of merit list/waiting list prepared on the basis of RPMT-2008 Examination, which system has been approved by the Medical Council of India and Rajasthan University. Against such admissions made by the petitioner trust, a writ petition, namely; SBCWP No. 10858 of 2008—Abhishek Sain & Ors. Vs. Raj. University of Health Sc. & Ors. Was filed before the High Court and learned single judge of this Court vide order dt. 18th March, 2009 held that Medical Council of India Regulations were mandatory and have to be complied with and admissions should have been given on the basis of Common Entrance Test of RPMT-2008 and merit of Common Entrance Test RPMT-2008 could not sacrificed even in the aided institutions for which admission to 85 per cent of 150 seats have been made and accordingly the learned Single Judge declared the admissions made by the petitioner trust against 85 per cent of the seats as illegal. The Division Bench appeal filed by the petitioner trust, namely Division Bench Civil Special Appeal (Writ) No. 241 of 2009 also failed and Division Bench vide its judgment dt. 3rd Sept., 2009 affirmed the decision of learned Single Judge, against which the petitioner trust is said to have approached the apex Court by filing special leave petition, namely; Special Leave Petn. (Civil) No. 23763 of 2009 and there the matter is still pending before the Hon’ble Supreme Court.
2. Learned counsel for the petitioner, Mr. Vikas Balia urged that the right to litigate and contest in Courts of law that the admissions were rightly and legally made by the petitioner trust cannot be curtailed or shut in indirect manner by denying the exemption from income-tax under s. 10(23C) of the Act for which the periodical sanction from the Chief CIT was required. He submitted that according to the petitioner trust, such admissions were legally made and merely because some students challenged the admissions, which litigation is pending before the apex Court as of now, it cannot be said that petitioner was not running the educational institution for educational purposes without profit motive as per the provisions of s. 10(23C) of the Act. He submitted that this is the only reason assigned by the Chief CIT in the impugned order dt. 27th Jan., 2010.
Learned counsel for the petitioner also brought to the notice of the Court that for subsequent years i.e. asst. yr. 2010-11 and onwards, same authority i.e. Chief CIT, Udaipur has granted such approval under s. 10(23C) of the Act vide order dt. 17th Jan., 2011, a copy of which has been placed on record along with the additional affidavit of the petitioner.
On the other hand, learned counsel Mr. K.K. Bissa appearing for the respondent Department submitted that in the subsequent years since no such illegal admission procedure was found out against the petitioner Trust, the necessary approval was granted for such subsequent years vide order dt. 17th Jan., 2011. He submitted that since illegality in admission was committed by the petitioner trust in the year 2008, the respondent authority could even infer a profit motive in the same and could deny such approval under s. 10(23C) of the Act and, therefore, he has rightly passed the order dt. 27th Jan., 2010.
Having heard the learned counsels, this Court is of the opinion that the since question of legality of the admissions made by the petitioner Trust is still a matter sub judice before the apex Court, of course, the Rajasthan High Court has held against the petitioner trust that such admissions were not made in accordance with law vide judgment of learned Single Judge as aforesaid and affirmed by the Division Bench, it cannot be said finally yet that petitioner has committed any such illegality and no such opinion could be formed by the learned Chief CIT so long as the matter is pending before the Supreme Court of India and is not decided against the petitioner trust.
Right to litigate a particular issue in the Court of law is a legal right of any Institution or a charitable trust, who is seeking exemption from income-tax for which sanction is required by the competent authority within the parameters like no profit motive, or object of education of the Trust etc. laid down under s. 10(23C) of the Act which are relevant and not the admission procedure undertaken by the petitioner trust. Nexus between the profit motive and alleged illegal admission is too remote and cannot be presumed without any other adverse material on record against the assessee, for drawing such adverse inference. Learned Chief CIT vide order dt. 27th Jan., 2010 has only assigned one single reason as stated above to deny the approval under s. 10(23C) of the Act. The relevant portion of the impugned order dt. 27th Jan., 2010 is reproduced hereunder for ready reference : “11. It is also apparent that the trust is not satisfying essential condition for exemption under s. 10 (23C)(vi) and (via). As per the relevant clause, any income received by any person on behalf of any university or other educational purposes. Moreover, the income earned should be applied wholly and exclusively to the objects for which it is established, i.e. for educational purpose. In the institution’s case, the Hon’ble High Court has held that the admissions made for academic year 2008-09 were illegal. The purpose of education would not be served, if the education is for students who have been illegally admitted. The purpose of education as contemplated in the section would be served only if the students have been legally admitted and not otherwise. The spending of funds on education of students who have been admitted illegally will not amount to application of income for the purpose of education. In the Trust’s case, neither the condition regarding existence for the purpose of education nor the application of funds for the objects, are being fulfilled.
12. Keeping in view the above discussion and the decision of the Hon’ble High Court, I hereby reject the trust’s application for approval under s. 10(23C)(vi) and (via) for asst. yr. 2008-09 onwards. Sd/-(Mukesh Bhanti) Chief CIT, Udaipur.”
7. The subsequent order granting such approval passed on 17th Jan., 2011 subject to usual conditions reads as under : “In exercise of powers conferred on me by the sub-cl. (vi) of cl. (23C) of s. 10 of the IT Act, 1961 (43 of 1961) r/w r. 2CA of the IT Rules, 1962, I Chief CIT, Udaipur hereby accord approval to M/s Geetanjali University Trust, Udaipur (PAN : AAATG9525E) for the purpose of the said section for the asst. yr. 2010-11 and onwards subject to conditions mentioned hereunder.”
8. If the alleged illegal admissions made by the petitioner trust in the year 2008-09 could be a valid criteria or relevant consideration for denying approval under s. 10(23C) of the Act, such alleged illegal admissions continued in the subsequent years also as those students continued to be in the college for subsequent years also and the same authority on the same set of facts, once denied the approval and subsequently granted such approval for subsequent years. This incongruity in the two orders itself repels the argument of learned counsel for the respondent Revenue.
9. In the opinion of this Court also, this ground alone as such could not be relevant and a valid basis for refusing the approval under s. 10(23C) of the Act to the petitioner trust especially since the matter is still pending before the Hon’ble Supreme Court. Of course, the authority concerned is free to apply its mind and take into account the relevant consideration while deciding the case of petitioner trust under s. 10(23C) of the Act as laid down in the provisions of s. 10(23C) itself and if there are other grounds made out of rejection of its case under s. 10(23C) of the Act or say if Hon’ble Supreme Court of India also holds against the petitioner, the authority concerned may be justified in denying the exemption under s. 10(23C) of the Act.
10. Consequently, the present writ petition is allowed and setting aside the impugned order Annex. 16 dt. 27th Jan. 2010 passed by the learned Chief CIT under s. 10(23C) of the Act, the said authority is left free to decide afresh the said proceedings for asst. yr. 2008-09 and on wards till asst. yr. 2010-11 by passing fresh speaking order under s.10(23C) of the Act for asst. yr. 2008-09 to asst. yr. 2010-11 after affording opportunity of hearing to the petitioner trust. No order as to costs.
[Citation : 352 ITR 427]
