ISHAN INTERNATIONAL EDUCATIONA V. CHIEF COMMISSIONER OF INCOME T

CWJC/5468/2008

AI Insights

The case involves Ishan International Educational Society, which sought exemption from income tax under section 10(23-C)(vi) or (via) of the Income Tax Act, 1961 for the assessment years 2005-06 and 2006-07. The Chief Commissioner of Income Tax, Patna, rejected their application, citing that the society had registered a profit beyond 15% from its 'transporting business' and failed to maintain separate books of accounts for this activity. The society contested this decision, leading to the writ petition in the Patna High Court. The court found that the matter required detailed consideration, which had been denied to the petitioner, and thus set aside the impugned order.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 732726 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 18-03-2010
• Assessment Year: misc
• Other Referred Cases: American Hotel and Lodging Association Educational Institute vs. Central Board of Direct Taxes and others
• Laws Referred To: Income Tax Act 1961, Article 226 of the Constitution of India
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: RISHI RAJ SINGH
• Assessee Lawyers: D V PATHY
• Keywords: Educational institution; Exemption; Income Tax; Separate books of accounts; Transporting business
• Section: 2(15); 10(23)(c)(vi); 10(23-C)(via)

Judgement Text

"CIVIL WRIT JURISDICTION CASE No.5468 OF 2008 ****** In the matter of an application under Article 226 of the Constitution of India. ****** Ishan International Educational Society, a Society registered under the Societies Act, 1860 having its office at South end of Doctor‟s Colony, Malahi Pakri, Kankarbagh, Patna-800020, through its President, Dr. Arbind kumar, son of late Durga Singh, resident of South end of Doctor‟s Colony, Malahi Pakri, Kankarbagh, Patna- 800020. ..... Petitioner. Versus 1. Chief Commissioner of Income Tax-1, Patna. 2. Additional Commissioner of Income Tax, Range-1, Patna. .... Respondents. ***** For the Petitioner: Mr. D.V. Pathy, Advocate For the Respondents: Mr. Rishi Raj Singh, Counsel for Income-Tax Department. ****** P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE KISHORE KUMAR MANDAL ****** S K Katriar & Kishore K. Mandal, JJ. This writ petition is directed against the order dated 28/29.11.2007 (Annexure-2), passed by the learned Chief Commissioner of Income Tax, Patna, whereby he has rejected the petitioner‟s application for exemption under section 10(23-C) (vi) or (via) of the Income Tax Act 1961 (hereinafter referred to as the „Act‟), for the assessment years 2005-06 and 2006-07. Elaborate submissions have been advanced by learned counsel for both sides 2 in support of their respective stand. We do not wish to recapitulate them, let alone deal with them, in view of the nature of the order that we are going to pass. 2. It appears that the petitioner is an educational institution and is engaged in the task of imparting education to boys and girls. It was earlier treated to be an institution within the meaning of sub-section (15) of section 2 of the Act for the periods prior to the ones in question, and had accordingly enjoyed exemption from taxation under the Act. The learned authorities under the Act noticed for the two periods in question that it had registered profit beyond 15% for five cumulative years from “transporting business” as the impugned order describes this part of the petitioner‟s activity. One of the important reasons assigned in the impugned order for rejecting the petitioner‟s application for exemption from payment of income-tax is that it has “...sizeable surplus over 15% as permitted under the Act...”, and has failed to maintain separate books of accounts for this activity. Learned counsel for the petitioner has endeavoured to satisfy us that sufficient materials had been placed before the learned authorities under the Act which have had been maintained by the petitioner in routine course of business, have been duly certified by the Chartered Accountant to satisfy them that the books of accounts have been satisfactorily maintained as per the legal requirements in 3 so far as “transporting business” is concerned. It appears to us on a perusal of the impugned order that the matter needs a detailed consideration which has perhaps been denied to the petitioner. We, therefore, set aside the impugned order. 3. In the result, this writ petition is allowed, the impugned order dated 28/29.11.2007 (Annexure-2) is hereby set aside. The matter goes back to the learned Chief Commissioner of Income Tax, Patna, for a fresh decision in accordance with law. It goes without saying that the petitioner would be afforded adequate opportunity to place all their relevant materials and on consideration of the same, the matter may be disposed of by a reasoned and exhaustive order. He should also, inter-alia, take into account the judgment of the Supreme Court in American Hotel and Lodging Association Educational Institute vs. Central Board of Direct Taxes and others, reported in (2008)10 SCC 509. (S K Katriar, J.) (Kishore K. Mandal, J.) Patna High Court, Patna Dated the 18th day of March, 2010. S.K.Pathak/ (NAFR) "