BLDE UNIVERSITY BIJAPUR V. THE CHIEF COMMISSIONER

WP/81425/2012

AI Insights

B.L.D.E. University, represented by its registrar, filed a writ petition against the Chief Commissioner of Income Tax, challenging the denial of tax exemption on income generated from its Central Drug Stores under Section 10(23C)(vi) of the Income Tax Act, 1961. The university argued that subsequent orders from the Income Tax Appellate Tribunal (ITAT) and the Assistant Commissioner of Income Tax (Exemptions) had rendered the original denial redundant, as they had been granted registration under Section 12-AA and assessed with a nil taxable income for the year 2009-10. The respondent did not dispute the facts but acknowledged that any consequential orders would be passed accordingly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 726491 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-06-2023
• Assessment Year: misc
• Other Referred Cases: ITA Nos.578 & 579(B)/2011, ITA Nos.499 & 500 (BANG)/2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: A SHANKAR
• Keywords: Income tax exemption; NIL taxable income; Public charitable trust; Refund of Tax; Writ petition
• Section: 143(3); 142(1); 10(23C)(vi); 12-AA

Judgement Text

" - 1 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 20TH DAY OF JUNE, 2023 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 81425 OF 2012 (T-IT) BETWEEN: B.L.D.E. UNIVERSITY, BIJAPUR HAVING ITS REGISTERED OFFICE AT SMT. BANGARAMMA SAJJAN CAMPUS SHOLAPUR ROAD, BIJAPUR-586103 REPRESENTED BY ITS REGISTRAR DR. J.G.AMBEKAR S/O SRI GANGADHAR, AGED ABOUT 57 YEARS …PETITIONER (BY SRI.A.SHANKAR., SENIOR COUNSEL FOR SRI.M.LAVA, ADVOCATE) AND: THE CHIEF COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN PLOT NO.5, EDC COMPLEX PATTO PLAZA, PANAJI, GOA-403001 …RESPONDENT (BY SRI.Y.V.RAVIRAJ, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE ORDER PASSED BY THE RESPONDENT TO THE EXTENT IT IS HELD AGAINST THE PETITIONER IN F.NO.CCIT/PNJ/10(23C)/136(5)/2010- 11 DATED 21.10.2011 ANNEXURE-A AND ETC. THIS PETITION COMING ON FOR HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: Digitally signed by B NAGAVENI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 ORDER 1. The petitioner claiming to be a Society registered under the Registrar of Societies, Bijapur, carrying on educational and charitable objects being registered under the Income Tax Act, 1961 (for short, hereinafter referred to as 'the Act') as a Public Charitable Trust, is before this Court seeking for the following reliefs: a. “Issue a writ in the nature of certiorari and set aside the order passed by the respondent to the extent it is held against the petitioner in F.No.CCIT/PNJ/10(23C)/136(5)/2010-11 dated 21.10.2011 Annexure-A. b. Issue a writ in the nature of Mandamus and direct the respondent to exempt the income arising from pharmacy established by the petitioner under Section 10(23C)(vi) of the Income-Tax Act, 1961. c. And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity.\" 2. Though initially the aforesaid reliefs have been sought for on account of the denial made by the respondent in granting exemption in respect of the income generated from the Central Drug Stores run - 3 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 by the petitioner vide impugned order at Annexure-A dated 21.10.2011, subsequent thereto, several events have occurred. As regards the denial for the year 2009-10, an appeal having been filed, the Income Tax Appellate Tribunal has partly allowed the appeals in ITA.Nos.578 & 579(B)/2011 and directed the CIT, Belgaum to allow the registration under Section 12-AA of the Act from assessment year 2009-10. 3. As regards the denial of the benefit under Section 11 of the Act under the assessment order under Section 143(3) of the Act, ITAT on 29.06.2016 in ITA Nos.499 & 500 (BANG)/2014, of which the petitioner's appeal was ITA No.500 (BANG)/2014, had remitted the matter to the Assessing Officer to frame the order de novo in light of the fact that the registration under Section 12-A having been granted for the assessment year 2009-10 also. Pursuant to the said order, a notice under Section 142(1) of the - 4 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 Act was issued on 28.07.2017 which was replied to by the petitioner-Society on 11.08.2017 and the total income of the assessee was computed resulting in a Nil net taxable income. 4. It is in that background, that Sri.A.Shankar., learned Senior Counsel appearing for the petitioner would submit that paragraph-5 of the impugned order at Annexure-A dated 21.10.2011 has been rendered redundant and otiose, since the same now stands overridden by the order passed in ITA Nos.578 & 579 (B)/2011 dated 22.06.2012 allowing registration under Section 12-AA of the Act for the assessment year 2009-10 and insofar as the taxability of the income, assessment stands completed by the order dated 23.08.2017 passed by the Assistant Commissioner of Income Tax (Exemptions) quantifying the taxable income as Nil. Therefore, he submits that the paragraph-5 of the impugned order at Annexure-A would have to be quashed and since - 5 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 the taxable income is Nil, the tax which has been paid by the petitioner for the earlier assessment carried out for the year 2009-10 would have to be refunded to the petitioner. 5. Sri.Y.V.Raviraj, learned counsel for the respondent- department does not dispute the above order but would submit that the orders having been passed by the ITAT and by the Assessing Officer, whatever consequential orders have to be passed would be so passed. 6. Heard Sri.A.Shankar, learned Senior Counsel appearing for the petitioner and Sri.Y.V.Raviraj, learned counsel for the respondent-Department. Perused the papers. 7. A perusal of the documents would categorically indicate that subsequent to the filing of the Writ Petition, ITAT Bangalore 'C' Bench vide its order dated 22.06.2012 in ITA Nos.578 & 579 (B)/2011 - 6 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 had directed CIT, Belgaum to allow the registration under Section 12-AA for the assessment year 2009- 10. Thus, the registration being complete under Section 12-A of the Act, the requirement under Section 10(23C)(vi) of the Act would not arise and the exemption granted under Section 12-A of the Act would take care of the exemption sought for by the petitioner under Section 10(23C)(vi) of the Act. That being so, the subsequent assessment which has been carried out resulting in Nil net taxable income, the earlier assessment which had been made and taxes paid by the petitioner would stand overridden by the subsequent orders and as such, the clock has been put back to the year 2009-10 and the net taxable income having been determined as Nil requiring any amount paid by the petitioner to be refunded to the petitioner. 8. Hence, I pass the following: - 7 - NC: 2023:KHC-K:1319 WP No. 81425 of 2012 ORDER i. The Writ Petition is allowed. ii. The portion of paragraph-5 denying the exemption to the petitioner insofar as Central Drug Stores being now overridden by the order passed in ITA Nos.578 & 579 (B)/2011 directing the CIT, Belgaum, to register the petitioner under Section 12-AA of the Act for the Assessment year 2009-10, paragraph-5 is quashed. iii. In view of the nil assessment which has been made for the year 2009-2010, by order dated 23.08.2017 by the Assistant Commissioner of Income Tax (Exemptions), the Department is directed to refund any tax paid on account of the Central Drug Stores for the assessment year 2009-10 within a period of ninety days from the date of receipt of copy of this order. Sd/- JUDGE NB List No.: 1 Sl No.: 46 "