# Manas Sewa Samiti v. Addl. Commissioner of Income Tax, Range-I, Aligarh

- **Citation:** (2021) 11 ILRA 380
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-10-05
- **Case number:** Income Tax Appeal No. 52 of 2013
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/manas-sewa-samiti-v-addl-commissioner-of-income-tax-range-i-aligarh-46558
- **Pages:** 7

## Headnote

A. Civil Law - Income Tax Act, 1961: Sections
10 (23C) (iiiad) & 12AA - The Court rejected the
reasoning of the assessing authority for clubbing
the receipts of the Institution with the other
income of the Society, for the purpose of
considering the benefit of Section 10(23C)(iiiad).
The Court finds that the there were two separate
accounts were maintained by the assessee. One for
the institution and the other one for the Society.
After the Income and Expenditure account of the
Institution has been made, its excess of Income
over expenditure were carried to the account of
society for taxation and other purposes. That did
not lead to an inference that the receipts of thw
Society were also the receipts of the Institution.
(Para 22)

Appeal Allowed. (E-10)

List of Cases cited:-

## Text

380 INDIAN LAW REPORTS ALLAHABAD SERIES
continue as it exists today and shall abide by
ultimate order to be passed by the prescribed
authority as directed hereinabove.

34. With the aforesaid observations and
directions, the writ petition is disposed of.
----------
(2021)11ILR A380
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.10.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Income Tax Appeal No. 52 of 2013

Manas Sewa Samiti ...Appellant
Versus
Addl. Commissioner of Income Tax, Range-I,
Aligarh ...Respondent

Counsel for the Appellant:
Sri Rahul Agarwal, Sri Vishwjit

Counsel for the Respondents:
C.S.C., I.T., Sri Gaurav Mahajan

A. Civil Law - Income Tax Act, 1961: Sections
10 (23C) (iiiad) & 12AA - The Court rejected the
reasoning of the assessing authority for clubbing
the receipts of the Institution with the other
income of the Society, for the purpose of
considering the benefit of Section 10(23C)(iiiad).
The Court finds that the there were two separate
accounts were maintained by the assessee. One for
the institution and the other one for the Society.
After the Income and Expenditure account of the
Institution has been made, its excess of Income
over expenditure were carried to the account of
society for taxation and other purposes. That did
not lead to an inference that the receipts of thw
Society were also the receipts of the Institution.
(Para 22)

Appeal Allowed. (E-10)

List of Cases cited:-
1. CIT Vs M/s Children's Education Society (2013) 358
ITR 373 (Kar) (followed)

2. M/s Vivekan & Society of Education &Research Vs
CIT another ITA No. 23/2014 (followed)

3. CIT Alld Vs Wachaspati Madhupati Prani Sewa
Sansthan ITA No. 258 of 2013

4. Visvesvaraya Technological University Vs Assistant
Commissioner of Income Tax (2016) 384 ITR 37 (SC)
(distinguished)
(Delivered by Hon'ble Naheed Ara Moonis, J.
&
Hon'ble Saumitra Dayal Singh, J)

1. Heard Sri Rahul Agarwal, learned
counsel for the appellant/assessee and Sri
Gaurav Mahajan, learned counsel for the
revenue.

2. Present appeal has been filed under
Section 260-A of the Income Tax Act, 1961
(hereinafter referred as the Act) against the order
of the Income Tax Appellate Tribunal, Agra
Bench, dated 23.10.2012 passed in ITA
No.29/Agra/2011 for the A.Y. 2007-08. By that
order the Tribunal has dismissed the appeal filed
by the assessee and upheld the assessment of the
appellant's income at Rs.86,34,460/-, after
denying the benefit claimed by the assessee
under Section 10(23C)(iiiad) of the Act.

3. Upon earlier hearing, the question of
law, on which the present appeal arises, was
framed as below:

"Whether, in view of the law laid down
in CIT Vs. Children's Education Society [2013]
358 ITR 373 (Kant.) and the order passed by
this Hon'ble Court in CIT (Exemption) v.
Chironji Lal Virendra Pal Saraswati Shiksha
Parishad [2016] 380 ITR 265 (All), the order of
the Tribunal denying the exemption under
Section 10 (23C) (iiiad) and clubbing the
voluntary
contributions
received
by
the
11 All. Manas Sewa Samiti Vs. Addl. Commissioner of Income Tax, Range-I, Aligarh
381
appellant Society with the receipts of the
educational institution is justified in law?"

4. Having heard the learned counsel for the
parties, it transpires that the appellant/assessee
Manas Sewa Samiti is a Society (hereinafter
referred to as "Society"). It is registered under
the Societies Registration Act, 1860. Under its
registered objects, it established an educational
institution in the name, Institute of Information
Management
and
Technology
at
Aligarh
(hereinafter referred to as "Institution"). For the
previous year relevant to A.Y. 2007-08,
undisputedly the said Institution received fees
Rs. 85,95,790/- and interest on FDR Rs.
86,121/-. Thus the total receipts of the Institution
were
Rs.86,81,911/-.
After
deducting
expenditure of the Institution, the excess of
Income over Expenditure, Rs.38,54,310/- was
carried to the Income and Expenditure Account
of the Society. Also, undisputedly the Society
received donations or subscription amount
Rs.47,62,000/- and interest on FDR Rs.18,155/-.

5. With respect to the receipts arising from
the Institution, the assessee claimed benefit of
Section 10(23C)(iiiad) of the Act. Relevant to
our discussion, that provision of law is quoted
below:

"Section 10 In computing the total
income of a previous year of any person, any
income falling within any of the following
clauses shall not be included:-

S. 10 (23C) any income received by
any person on behalf of

(i) .....................

(ii) .....................

(iii) ....................

(iiia).................

(iiiaa)...............

(iiiaaa).............

(iiiaaaa)............

(iiiab)...............

(iiiac)................

(iiiad)
any
university
or
other
educational
institution existing
solely
for
educational purposes and not for purposes of
profit if the aggregate annual receipts of such
university or educational institution do not
exceed the amount of annual receipts as may be
prescribed."

6. It is also undisputed that in the relevant
Assessment Year, the upper limit prescribed for
such receipts was Rs.1 Crore, under Rule 2(BC)
of the Income Tax Rules, 1962.

7. The assessing authority accepted the fact
that the Society was running the Institution. He
also accepted the fact that the total receipts of
the Institution were below the prescribed limit of
Rs.1 Crore. However, he proceeded to deprive
the
assessee
of
the
benefit
of
Section
10(23C)(iiiad) of the Act since the aggregate of
the fee receipts of the Institution and the receipts
of the Society breached the prescribed upper
limit of Rs.1 Crore. That reasoning came to be
approved and affirmed by Commissioner of
Income Tax vide his order dated 15.3.2011, in
Appeal No.59 of 2009. He rejected the claim
made by the assessee on the further reasoning
since the Institute was the only activity carried
out by the Society, all donations received by the
Society were attributable to that activity alone
and therefore to the Institution. He further relied
on the fact that the surplus of income over
expenditure of the Institute was carried to the
accounts of the Society.

8. The Tribunal has also affirmed that
order on the further reasoning that there was no
evidence that the donations had been received by
the Society with any specific direction that they
will form part of the corpus of the Institution.
Reliance has also been placed on the fact that
there exists no registration under Section 12AA
of the Act. Hence the assessee was not entitled
to the benefit and it did not exit solely for
education purpose of imparting education.
382 INDIAN LAW REPORTS ALLAHABAD SERIES

9. In support of his submission, learned
counsel for the assessee has relied on the
decisions in the case of CIT vs M/S Childrens
Education Society reported in (2013) 358 ITR
373 (Kar); M/S Vivekanand Society of
Education and Research vs. CIT another,
dated 29.12.2017 in ITA No.23/2014 and a
division bench of this Court in ITA No.258 of
2013
(The
CIT
Alld.
Vs.
Wachaspati
Madhupati Prani Sewa Sansthan) decided on
30.10.2017.

10. On the other hand, Sri Gaurav
Mahajan, learned counsel for the revenue has
relied on a decision of the Supreme Court in
Visvesvaraya Technological University Vs.
Assistant Commissioner of Income-tax reported
in (2016)384 ITR 37(SC).

11. Having considered the submissions
advanced by the learned counsel for the parties
and having perused the record, the benefit
granted under Section 10(23C)(iiiad) is only
with reference to an activity of running a
University or other educational institution,
existing solely for educational purposes. By
virtue of Section 10(23C)(iiiad) such receipts are
excluded from the income received by the
"person", who may have run such University or
other educational institution.

12. Thus, the benefit has been granted with
respect to receipts arising from a specified
activity. The benefit is not conditioned or
restricted to the person who may have
established or may have run such activity or who
may have been in receipt of such receipts.

13. Though, obviously, the issue whether
that benefit is available or not would arise only
in the course of assessment proceedings of a
person/assessee , who may have engaged in such
activity, at the same time, it is not the intent of
the Act to look at the aggregate income or
receipt of such person for the purpose of
granting the benefit under section 10(23C)(iiiad)
of the Act.

14. In fact, as lucidly explained in the
decision of the Karnataka High Court, it is the
receipt of each individual University or other
educational institution that would be looked at to
determine whether the receipt would qualify for
the
benefit
conferred
under
Section
10(23C)(iiiad), read with Rule 2 BC of the
Income Tax Rules, 1962.

15. In paragraphs 20, 21, 23 and 24 of the
report in CIT Vs. M/S Childrens Education
Society (Supra) decision, it was held as under:-

20. Now, we are concerned with the
meaning to be attached to the word "aggregate
annual receipt". The argument is, other
educational institution referred to in the said
sub-clause refers to all educational institutions
run by the assessee and aggregate annual
receipts of such other educational institutions
means the aggregate of annual receipts of all
such educational institutions put together.
Otherwise, the use of the word "aggregate" loses
its meaning. We find it difficult to accept the
said argument.

21. Firstly, if the word "aggregate
annual receipts" of other educational institution
is to be understood as clubbing of annual
receipts of all educational institutions run by an
assessee society, then it will also include the
annual receipts of an educational institution
which is wholly or substantially financed by the
Government. If that was intention of the
Legislature, they would not have introduced
separate sub- clauses as (iii)(ab) and (iii)(ad). If
such
interpretation
is
placed,
sub-clause
(iii)(ab) becomes otiose. Therefore, it is not
possible to place such an interpretation. If an
assessee society is running several educational
institutions, if some of them are wholly or
substantially financed by the Government in
terms of sub-clause (iii)(ab), the income on
11 All. Manas Sewa Samiti Vs. Addl. Commissioner of Income Tax, Range-I, Aligarh
383
behalf of such educational institution received
by the assessee is exempted from being
computed the total income of the assessee. If the
assessee
is
running
other
educational
institutions which are not wholly or substantially
financed by the Government, then the benefit of
that exemption is also extended to the income
derived from such educational institutions and
received by the assessee under sub-clause
(iii)(ad) reading with sub-clause (iii)(ad) along
with Rule2BC. It was contended, the Legislature
used the word "aggregate annual receipt" and
"amount of annual receipts" and therefore, the
provisions are not one and the same. The word
"aggregate" has been defined in Chambers 21st
Century Dictionary as under:

"aggregate - noun = a collection of
separate units brought together, a total taken
altogether, bring together."

In Wharton's Law Lexicon, it is
defined as thus:

"a collocation of individuals, units or
things in order to form a whole"

23. No doubt, education has become a
business, a very profitable business also. But it
requires huge investment. It is the duty of the
Government to provide education to all its
citizens, as the Government is not able to
shoulder
the
responsibility
completely.
Therefore, the field of education is now thrown
open to private organizations. But for throwing
open the field to the private operators, probably,
the country would not have achieved in the field
of education what it has achieved. Therefore, lot
of funds are invested in running these
educational institutions, either by creating a
Society or a Trust. In course of time, they have
expanded their activity providing course in
various subjects at various levels and for that
purpose they have established more than one
educational
institution.
Each
educational
institution is a separate entity controlled under
various statutes for various purposes. May be
the
Management
of
these
educational
institutions would be in the hands of the
Societies or the Trust, but for all other purposes
they are different, independent entities. That is
the reason why Section 10 (23)(c) is worded as
under:

"Any income received by any person
on behalf of..."

24. Here "any person" refers to the
assessee and "on behalf of" refers to such
institutions. It may be an University, it may be
an educational institution, it may be a hospital
or other institutions of similar nature. As all
such institutions are independent entity and they
generate income and when that income is
received by the assessee, it becomes the income
in the hand of the assessee and it is such income
which is sought to be excluded while computing
the total income of the assessee underSection 10.
The test prescribed under the aforesaid
provision is not the income of the educational
education. It is the aggregate annual receipts of
such educational institution that is prescribed at
Rs.1 crore. Therefore, irrespective of the
expenditure incurred by those institutions, the
exemption is based on the total receipts. Even if
the word "aggregate" has to be understood as
suggested by the Revenue as the annual receipts
of such educational institutions put together,
probably,
the
said
provision
regarding
exemption would be of no use at all. Especially,
if the society is running a medialcollege or any
engineering college or other professional
courses, then the annual receipt of each
institution would run to few crores and
therefore, the very object of granting exemption
to such genuine institution would be lost.
Therefore, the word "aggregate annual receipt"
has to be understood with the context in which it
is used and the purpose for which the said
provision was inserted, keeping in mind,
theScheme of the Act. Therefore, if an assessee
is running several educational institutions, if
any of them is wholly or substantially financed
by the Government, then the income from such
educational institution received by the assessee
is not included while computing his total
384 INDIAN LAW REPORTS ALLAHABAD SERIES
income.
Similarly,
income
from
each
educational institution if they are not receiving
any aid from the Government wholly or
substantially in respect of which the aggregate
annual receipt do not exceed Rs.1 crore received
by the assessee, is also not included while
computing annual total income of the assessee."

16. Similar view was taken by the Jammu
and Kashmir High Court in M/s Vivekanand
Society of Education and Research vs. CIT and
another (Supra). It was held as under:-

13. On a plain reading of the above
provisions, it is evident that any income received
by any person on behalf of any University or
other educational institution existing solely for
educational purposes and not for purposes of
profit, if the aggregate annual receipts of such
University or educational institution do not
exceed the amount of aggregate receipts, as may
be prescribed (which is Rs. 1 crore as per Rule
2BC of the said Rules), would not be included in
the total income of that person.

14. It is not in issue that ,,the person‟
in the facts of the present case has reference to
the assessee society. It is also not in issue that
the expression ,,educational institution‟ has
reference to the two institutions of the assessee
society. It is also not disputed that these two
institutions exist solely for educational purposes
and not for purposes of profit. It is, therefore,
clear that there is a distinction between the
expression ,,any person‟ and ,,educational
institution‟, and that the two are not the same.
Had it been the intention of the legislature to
have limited the scope of the provision to the
interpretation which has been given by the
Tribunal, it could easily have said that, if the
aggregate annual receipts of any person from
all institution(s) do not exceed Rs. 1.00 crore
then the income derived there from would not be
included in the total income of that person. But,
this is not the case here. The reference here is
pointedly to the ,,aggregate annual receipts‟ of
the educational institution. The expression,
,,educational institution‟ and ,,any person‟ do
not refer to the same entity and are distinct and
different insofar as Section 10 (23C) (iiiad) of
the said Act is concerned.

15. In our view, therefore, where there
are more than one such institutions, which are
under a particular society or trust, such as the
assessee society in the present case, the aggregate
annual receipts of each of the educational
institutions would have to be considered separately
and not together. Thus, if there are two institutions
A and B and if the aggregate annual receipts of the
Institution A is less than Rs. 1.00 crore, then the
income received by a person (such as the assessee
society) on behalf of the Institution A, would not be
included in the total income of that person (such as
the assessee society). At the same time, if the
aggregate annual receipts of Institution B exceeds
Rs. 1.00 www.taxguru.inITA No. 23/2014 Page 6
of 8 crore, then any income received by any person
on behalf of Institution B would be included in the
total income of that person. Similarly, by taking
this logic further, if neither Institution A nor
Institution B has aggregate annual receipts of Rs.
1.00 crore or more, any income received by any
person on behalf of these institutions, would not
form part of the total income for the purposes of
income tax."

17. Thereafter, the Jammu and Kashmir
High Court concurred with the opinion of the
Karnataka High Court in CIT Vs. Children's
Education Society [2013] 358 ITR 373.

18. A coordinate bench of this Court also
appears to have offered a similar reasoning in
ITA No.258 of 2013 (The Commissioner of
Income Tax Alld. Vs. Wachaspati Madhupati
Prani Sewa Sansthan) wherein, it was observed
as under:-

"We are in full agreement with the
finding of the ITAT as we find that the assessee
society is running a school and has admittedly
11 All. Manas Sewa Samiti Vs. Addl. Commissioner of Income Tax, Range-I, Aligarh
385
received the tuition fee being the annual receipts
below the prescribed limit of Rs.1 crore and
according to us the exemption limit clearly
provides the cut of figure of Rs.1 crore being the
annual receipt of the educational Institution or
the University, as the case may be, and not that
of the total income of the society running the
educational Institution or University. In the
present case, the income of Rs.6,67,000/-
towards
the
buildings/capital
assets
and
Rs.4,01,900/- received towards donation cannot
be part of the annual receipts of the
University/College/School. Therefore, in our
considered opinion the assessee is entitled for
exemption under Section 10(23C)(iiiad) as
annual income of the assessee society did not
exceed Rs.1 crore."

19. Insofar as the decision of the Supreme
Court relied upon by the learned counsel for the
Revenue is concerned, it was a case pertaining to
provision
of
Section
10(23C)(iiiab).
The
question that arose before the Supreme Court
was whether the University receiving finance by
the Government below one percent of its total
receipts could be considered to be a University
substantially financed by the Government.
Those facts of law are not involved in the
present case. Therefore, the said decision is
found to be wholly distinguishable and hence
inapplicable.

20. In the first place, for reasons given
above, we find ourselves in complete agreement
with the reasoning of the Karnataka High Court
in CIT vs. Children's Education Society
(Supra) as also the decision of the Jammu &
Kashmir High Court in M/s Vivekanand Society
of Education and Research vs. CIT and
another (Supra).

21. Next, we find, the reasoning adopted
by the assessing authority as affirmed by the
appellate authority and the Tribunal, wholly
erroneous in law. As noted above, the benefit of
Section 10(23C)(iiiad) being activity centric, the
limit of Rs. 1 crore prescribed thereunder had to
be seen only with reference to the fee and other
receipts
of
theeligible
activity/Institution.
Admittedly, those were below Rs. 1 Crore. In
the facts of the present case, the eligibility
condition prescribed by law was wholly met by
the assessee.

22. The further reasoning offered by the
assessing authority to disallow that benefit, on
account of excess of income over expenditure of
the Institution having been carried to the
Society, is extraneous to the issue involved in
the present case.

23. The fact that the Institution did not
exist on its own and was run by the Society
could never be a valid consideration to disallow
that benefit. It is clearly not contemplated under
the Act. Here, we may further note, according to
the assessing authority itself, there were two
accounts maintained. One for the Institution and
the other of the Society. After the Income and
Expenditure account of the Institution had been
made, its excess of Income over Expenditure
were carried to the account of Society for
taxation and other purposes. That did not and it
could not lead to the inference that the receipts
of the Society were also the receipts of the
Institution. That reasoning is based on no
material or evidence on record.

24. Legally, it is only a figment of
imagination. Even in the computation of the
income, the assessing authority has recognized
the difference between the two receipts being
"Surplus as per Income/ Expenditure A/c of
college". It was taken at Rs. 38,54,310 and,
"Surplus as per Income/Expenditure A/c of
Society" of the of society which was taken at Rs.
47,62,000/-.

25. Once that difference of the receipts
was acknowledged by the assessing authority,
386 INDIAN LAW REPORTS ALLAHABAD SERIES
there was absolutely no other material existing
to treat the donations received by the Society
to be receipts of the Institution.

26. Similarly, the further reasoning
offered by the appellate authority to affirm
the order of the assessing authority is wholly
erroneous and contrary to law. Merely
because the assessee Society was the person
running the Institution, it did not cause any
legal effect of depriving the benefit of
Section 10(23C)(iiiad) which was activity
specific and had nothing to do with the other
income of the same assessee.

27. To complete the discussion, the
Tribunal has also erred in looking at
provisions Section 12 AA of the Act and the
fact that the donations received by the
Society may not have been received with
any specific instructions. It is not relevant in
the facts of the present case. It is so because
here the assessee had only claimed the
benefit
of
Section
10(23C)(iiiad)
with
respect to the receipts of the Institution,
Information Management and Technology
and it had not claimed any benefit with
respect to the donations received by the
Society.

28. In view of the above, the question
of law is answered in the negative i.e. in
favour of the assessee and against the
Revenue. There would be no clubbing of the
receipts of the Institution with the other
income of the Society, for the purpose of
considering
the
benefit
of
Section
10(23C)(iiiad).

29. Appeal Allowed. No order as to
costs.
----------
(2021)11ILR A386
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.09.2021

BEFORE

THE HON'BLE AJAY BHANOT, J.

Writ C No. 40261 of 2018

Sanjay Maheshwari ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Pawan Kumar Shukla

Counsel for the Respondents:
C.S.C.

A. Stamp deficiency - Nature of land -
Small
scale
production
of
jiggery
-
Industrial activity - Competent authority
declared the land as agricultural land in a
proceeding u/s 144 of UPZA&LR Act, 1950
- However, Collector (Stamps) determined
the valuation holding that land was not
being used for agricultural purpose
-
Legality challenged - Held, Production of
jaggery on small scale is an agricultural
activity undertaken by small farmers. This
is clearly distinguishable from large scale
industrial production of jiggery - Small
scale production of jaggery is often made
by various village households. The same
cannot be categorized as industrial activity
for the purposes of the Indian Stamp Act -
High Court set aside the impugned order
holding it arbitrary and illegal - Matter
remanded back to the Collector (Stamp)
with several direction. (Para 5, 6 and 7)
Writ petition allowed. (E-1)
(Delivered by Hon'ble Ajay Bhanot, J.)

1. The order dated 30.10.2017 passed by
the Collector (Stamps)/ District Magistrate,
Moradabad found that there is an old
dilapidated boundary wall around the disputed
land. Further the existence of sugar cane
crushing equipment attests the fact that the
land was not being used for agricultural