1) Visvesvaraya Technological University vs. ACIT (Karnataka High Court)
S. 10 (23C): An institution which regularly makes more than 10% – 15% surplus is existing for profit & is not eligible for exemption
S. 10 (23C) (iiiab), (iiiad) and (vi) applies to an institution “existing solely for educational purposes and not for purposes of profit”. As long as “surplus” is “reasonable surplus”, there should not be any difficulty in giving exemption u/s 10(23C) (iiiab) of the Act. There could be surplus every year, but the word “surplus” will have to be read and understood in proper perspective. In our opinion, “Surplus” cannot be more than 10% – 15% so as to meet contingencies or unforeseen expenditure. If an University or an educational institution under the guise of “surplus” start making huge profit, in our opinion, it would cease to exist for net making profit and in that event would not be entitled for exemption under this provision. On facts, the University collects huge sums which are 3-4 times more than the requirement. Such “surplus” which is invested in fixed deposits and fetches huge interest cannot be stated to be “incidental”. The constant increase in surplus year after year by way of collection of fees under various heads, more than what is required would not amount to “reasonable surplus” and indicates that the University is systematically making profit. There cannot be any justification to collect the monies under different heads 3-4 times more than what they require to spend for the purpose for which they collect it.
2) Dholadhar Investment Pvt. Ltd vs. CIT (Delhi High Court)
S. 254: Tribunal is not required to consider pleadings, material etc to which its pointed attention is not drawn
It is true, as held by the Supreme Court in a long line of cases that the Tribunal is duty-bound to consider all the grounds, the evidence produced and consider the contentions of the parties before it and all other material brought to its notice in a judicial spirit and should not feel incommoded by technicalities: The duty is limited to the points raised before it. It would be placing an impossible burden on the Tribunal if it is ordained to rule upon aspects and contentions which were not raised by the parties before it or to deal with pleadings, evidence or material to which its pointed attention was not drawn in the course of the proceedings and which lies buried in the forest of papers filed by the parties.
3) CIT vs. Sadia Shaikh (Bombay High Court At Goa)
S. 2(47)(v): Mere execution of a development agreement is not a “transfer” if possession as per s. 53A of the Transfer of Property Act is not given
Though the development agreement was executed in AY 2003-04, the possession as contemplated in Section 53A of the Transfer of Property Act was in fact not handed over by the assessee to the developer. The agreement only permitted the development to be carried out by the said developer. The entire control over the property was in fact with the assessee inasmuch as the licence to construct the property was also in the name of the assessee and the occupancy certificate was also given to the assessee. Therefore the execution of the agreement could not amount to transfer as contemplated under Section 53A of the Transfer of Property Act. The agreement was subsequently specifically modified and the assessee was liable to pay the capital gain as per the last agreement i.e. for assessment year 2008-09.
S. 10 (23C): An institution which regularly makes more than 10% – 15% surplus is existing for profit & is not eligible for exemption
S. 10 (23C) (iiiab), (iiiad) and (vi) applies to an institution “existing solely for educational purposes and not for purposes of profit”. As long as “surplus” is “reasonable surplus”, there should not be any difficulty in giving exemption u/s 10(23C) (iiiab) of the Act. There could be surplus every year, but the word “surplus” will have to be read and understood in proper perspective. In our opinion, “Surplus” cannot be more than 10% – 15% so as to meet contingencies or unforeseen expenditure. If an University or an educational institution under the guise of “surplus” start making huge profit, in our opinion, it would cease to exist for net making profit and in that event would not be entitled for exemption under this provision. On facts, the University collects huge sums which are 3-4 times more than the requirement. Such “surplus” which is invested in fixed deposits and fetches huge interest cannot be stated to be “incidental”. The constant increase in surplus year after year by way of collection of fees under various heads, more than what is required would not amount to “reasonable surplus” and indicates that the University is systematically making profit. There cannot be any justification to collect the monies under different heads 3-4 times more than what they require to spend for the purpose for which they collect it.
2) Dholadhar Investment Pvt. Ltd vs. CIT (Delhi High Court)
S. 254: Tribunal is not required to consider pleadings, material etc to which its pointed attention is not drawn
It is true, as held by the Supreme Court in a long line of cases that the Tribunal is duty-bound to consider all the grounds, the evidence produced and consider the contentions of the parties before it and all other material brought to its notice in a judicial spirit and should not feel incommoded by technicalities: The duty is limited to the points raised before it. It would be placing an impossible burden on the Tribunal if it is ordained to rule upon aspects and contentions which were not raised by the parties before it or to deal with pleadings, evidence or material to which its pointed attention was not drawn in the course of the proceedings and which lies buried in the forest of papers filed by the parties.
3) CIT vs. Sadia Shaikh (Bombay High Court At Goa)
S. 2(47)(v): Mere execution of a development agreement is not a “transfer” if possession as per s. 53A of the Transfer of Property Act is not given
Though the development agreement was executed in AY 2003-04, the possession as contemplated in Section 53A of the Transfer of Property Act was in fact not handed over by the assessee to the developer. The agreement only permitted the development to be carried out by the said developer. The entire control over the property was in fact with the assessee inasmuch as the licence to construct the property was also in the name of the assessee and the occupancy certificate was also given to the assessee. Therefore the execution of the agreement could not amount to transfer as contemplated under Section 53A of the Transfer of Property Act. The agreement was subsequently specifically modified and the assessee was liable to pay the capital gain as per the last agreement i.e. for assessment year 2008-09.
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