INCOME TAX ACT, 1961

--Exemption under section 10(23(vi)--Educational institutionEducational Institution vis-a-vis coaching centre--The society was allotted a land measuring 0.422 acres by the Ministry of Works, Housing and Supply, Land & Development Office, Government of India in Diplomatic Enclave, Nyaya Marg. Till the financial year 2007-08 the petitioner/society was stated to have been allowed exemption from income tax under section 10(22) . However, in the financial year 2008-09, the gross receipts of the petitioner exceeded Rs. 1 crore and, therefore, as stipulated in section 10(23C)(vi), the petitioner was obliged to apply to the prescribed authority” for approval so that it can continue to enjoy the tax exemption. The prescribed authority referred to in the provision is the Director General (Exemptions). Accordingly, the petitioner moved an application before him in form No. 56D, which is the prescribed form, on 7th September, 2009 for grant of exemption. It would appear that the application covered both clauses (vi) and (via) of section 10(23C). Couert is however, concerned only with clause (vi) which was the focus of the arguments before court. The application for exemption was for the assessment year 2010-11 onwards. The prescribed authority, after giving the petitioner an opportunity of being heard, rejected the claim for exemption by order dated 27-9-2010 which is the impugned order. The above objections of the prescribed authority were contested by the petitioner and detailed submissions would appear to have been filed before him. However, he rejected those submissions and held that the petitioner was not entitled to be characterized as an educational institution” within the meaning of section 10(23C) (vi) for the assessment year 2010-11 onwards. In support of his decision, the prescribed authority mainly relied on the judgment of the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT (1975) 101 ITR 234 (SC) and it was observed that the word education” has not been used in section 2(15) of the Act in a wide sense, that it refers to systematic instruction, schooling or training given to the young in preparation for the work of life and that it connotes the process of training and developing the knowledge, skill, mind and character of students by normal schooling . According to the prescribed authority, the petitioner did not satisfy those requirements. He also referred to the judgment of the Patna High Court in Bihar Institute of Mining & Mine Surveying v. CIT (1994) 208 ITR 608 (Pat) wherein it was held that coaching of the students in an institution could not be held as imparting of education as it was not a process of training and development of the students in normal schooling. It was further observed that the institution should be recognized by an authority and should have an element of normal schooling and mere preparation of the students for appearing in various competitive examinations did not amount to imparting of education. The petitioner is aggrieved by the order of the prescribed authority and has approached this Court for issue of a writ of certiorari or any other appropriate writ or direction under articles 226/227 of the Constitution of India to quash the order of the prescribed authority dated 27-9-2010 and also for staying the operation of the said order and all consequential proceedings arising out of the order. There is also a prayer for issue of a writ of mandamus or any other appropriate writ directing the respondent to allow exemption under section 10(23C)(vi). Held: The prescribed authority had not examiend and appreciated properly the nature of activities of the petitioner-school and the Rules and Regulations governing those activities. The primary object of the coaching institutes is personal or self gain and activity undertaken is with the said objective. Knowledge of education may be imparted but charity” or philanthropy is missing. No such finding or observation is recorded and stated in the impugned order. The difference between coaching centres and an educational institution” from section 2(15) or 10(vi) (sic 23C) was apparent. The assessee cannot be said to have an element of normal schooling. As noticed the petitioner's case was different on facts. It was not a mere coaching centre but it imparts education and learning in western classical music in the first instance. Another aspect to be noticed is that normally coaching centres are run for shorter periods and they have no strict rules and regulations as an educational institution. There is no such thing as an academic year. Strict discipline and requirements of attendance are not enforced. Further they are run on commercial lines and with a profit motive.