The court emphasized the importance of considering the relevant provisions of the Income-Tax Acts and the Gujarat Private Universities Act, 2009 in determining the eligibility for exemption under Section 10(23C)(vi) of the Income-Tax Act, 1961.

A.J. Desai, J.

1. By way of present petition filed under Article 226 of the Constitution of India, the petitioner has challenged the order dated 20.10.2014 passed by the Chief Commissioner of Income Tax, Ahmedabad-IV, Ahmedabad, under Section 10 (23C)(vi) of the Income-Tax Act, 1961 (for short, 'the Act'). Pursuant to the issuance of notice, the respondent authority has filed an affidavit-in-reply, to which, a rejoinder has been filed by the petitioner.

2. The brief facts arise from the record are as under:

2.1 The petitioner - University has been established under the Gujarat Private Universities Act, 2009 in the year 2012, and accordingly, the name of the petitioner was entered into the Schedule of the Universities Act, 2009.

3. The present petitioner - University submitted a Form No. 56D under Rule 2CA of the Income Tax Rules and requested the authority to grant exemption under Section 10(23C)(vi) of the Act for the Assessment Year 2013-2014 and onwards. The Chief Commissioner of Income-Tax, after giving an opportunity of hearing to the petitioner - applicant, refused to grant exemption, as prayed for, mainly on the ground that the objects of the petitioner - University, are not found to be only for educational purpose but also for profit. Hence, this petition.

4. Mr. J.P. Shah, the learned advocate appearing for the petitioner would submit that the Rai Foundation, New Delhi and one Bhandari Charitable Trust, Ahmedabad applied to the State of Gujarat for establishment of a University, namely, Rai University under the provisions of Universities Act, 2009. The application of the petitioner was scrutinized by the Scrutiny Committee, and ultimately, considered the applications submitted by the Charitable Trust as well as Rai Foundation, and accordingly, Rai University made one of the Scheduled Universities under Section 3 of the Universities Act, 2009.

5. The Education Department of State of Gujarat published a Notification dated 19.02.2013 i.e. the First Statutes for the petitioner - Rai University. Mr. Shah, learned advocate appearing for the petitioner would submit that the objects of the University are in consonance with the provisions of the Universities Act, 2009. He would further submit that the objects of the University referred in the Statute No. 3 are in consonance with Section 4 of the Universities Act, 2009, and the objects do not disclose that the University has been established to earn profit from imparting education to the students. He would submit that the funds received by the University are used only for the benefit of the University in accordance with the provisions of the Universities Act, 2009. He would submit that the case of the petitioner - University was under the provisions of Section 10(23C)(vi) of the Act, and therefore, the authority ought not to have refused exemption to the petitioner - University.

6. He would submit that all these specific contentions were raised before the Chief Commissioner of Income-Tax, however, the respondent officer has dealt with the case of the petitioner - University on an extraneous consideration, and therefore, the impugned order is required to be quashed and set aside, and it may be held that the petitioner is entitled for exemption under Section 10(23C)(vi) of the Act. By taking us to the observations made in paragraphs 4 and 4.1 of the order, he would submit that the authority has misread the provisions of two Sections, namely, Sections 37 and 38 of the Universities Act by holding that the said Clauses do not restrain the University from not taking any profit. He would submit that Sections 37 and 38 binds the University established under the provisions of the Universities Act, 2009 as far as using funds received by the University and therefore, observations made therein are contrary to the provisions of Sections 37 and 38 of the Universities Act, 2009. He would submit that observations made in paragraph 5 and conclusion recorded thereof in paragraph 5.1 are not rel