ITO, Guntur V. St Joseph's Convent, Guntur

ITA 113/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7130 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: N O N E
• Keywords: Charitable institution
• Section: 143(3); 12A; 12AA; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.113/VIZAG/2009 ASSESSMENT YEAR : 2005-06 ITO, WARD-1(1) GUNTUR ST. JOSEPHS CONVENT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AABTS 1276R APPELLANT BY: SHRI SUBRATA SARKAR, DR RESPONDENT BY: SHRI N O N E ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE LD. CIT(A), GUNTUR ERRED IN BOTH ON FACTS IN LA W IN ALLOWING ASSESSEES APPEAL. 2. THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE ASSESSME NT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), GUNTUR HAS ERRED IN HOLDING THAT THE ASSESSEE CAN C LAIM EXEMPTION U/S 10(23C)(VI) OR SEC.11 OF THE ACT. 4. THE PROVISIONS OF SEC.10(23C)(VI) HAVING BEEN INSER TED BY THE FINANCE (NO.2) ACT, 1998 W.E.F. 1.4.1999, THE LD. C IT(A), GUNTUR OUGHT NOT TO HAVE GIVEN RELIEF ON THE CASE LAWS REF ERRED TO IN HER ORDER WHICH ARE DISTINGUISHABLE ON FACTS. 5. THE LD. CIT(A), GUNTUR ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, OUGHT TO HAVE HELD THAT THE ASSESSEE IS OBLIG ED TO GET AN APPROVAL FROM THE PRESCRIBED AUTHORITY U/S 10(23C)( VI) WHEN THE RECEIPTS ARE ABOVE RS.1.00 CRORE, IRRESPECTIVE OF T HE FACT THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12A OF T HE ACT. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING OF THE APPEAL. THIS APPEAL CAME UP FOR HEARING ON 4 TH FEBRUARY, 2010 BUT NONE APPEARED ON BEHALF OF THE ASSESSEES. FROM A CAREFU L PERUSAL OF THE GROUNDS OF APPEAL AND THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THIS APPEAL CAN BE DISPOSED OFF EVEN IN THE ABSENCE OF THE ASSESSEE S. ACCORDINGLY, REVENUE WAS HEARD. 2 2. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS B UT THEY ALL RELATE TO THE CLAIM OF EXEMPTION OF THE ASSESSEE U/S 10(23C)( VI) OR SECTION 11 OF THE I.T. ACT. 3. THE FACTS BORNE OUT IN THIS REGARD ARE THAT ASSE SSEE IS A SOCIETY REGISTERED WITH SOCIETIES REGISTRATION ACT AS WELL AS U/S 12A OF THE ACT. RETURNS HAVE BEEN FILED REGULARLY AND FOR THE ASSES SMENT YEAR 2005-06, RETURN WAS FILED DECLARING NIL INCOME AFTER CLAIMIN G EXEMPTION U/S 11 OF THE I.T. ACT. ONE OF THE OBJECTS OF THE SOCIETY IS TO PROMOTE EDUCATION. APART FROM RUNNING PRIMARY AND SECONDARY SCHOOLS, THE ASS ESSEE SOCIETY IS ALSO RUNNING ORPHANAGE AND HOSPITALS. 4. A.O. HAS DENIED THE ASSESSEES CLAIM FOR EXEMPTI ON U/S 11 OF THE ACT HOLDING THAT ASSESSEE OUGHT TO HAVE OBTAINED AN APP ROVAL FROM THE PRESCRIBED AUTHORITY U/S 10(23C)(VI) SINCE IT HAS G ROSS RECEIPTS EXCEEDED THE PRESCRIBED AMOUNT. ACCORDINGLY, TOTAL INCOME WAS A SSESSED AT RS.65,52,895/- BY THE A.O. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) ON VARIOUS GROUNDS WHICH ARE EXTRACTED AS UN DER:- 1. THE LD. ASSESSING OFFICER HAS ERRED IN PASSING AN ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 AND DETERMINING THE TOT AL INCOME AT RS.65,52,895/-. YOUR APPELLANT SUBMITS THAT THE OR DER PASSED BY THE LD. ASSESSING OFFICER U/S 143(3) OF THE ACT IS BAD IN LAW, IN VALID, ARBITRARY AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE. IT IS SUBMITTED THAT THE ASSESSMENT ORDE R PASSED BY THE LD. ASSESSING OFFICER IS QUASHED. 2. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT SUBMI T THAT THE LD. ASSESSING OFFICER HAS ERRED IN DISALLOWING THE CLAI M OF EXEMPTION U/S 11 ON A GROUND THAT THE APPELLANT IS RUNNING ME DICAL INSTITUTION AND THE GROSS ANNUAL RECEIPTS OF THE INSTITUTION EX CEEDED RS.1 CRORE AND YET HAVE NOT OBTAINED THE APPROVAL FROM THE PRE SCRIBED AUTHORITY, AS MANDATED BY SUB-CLAUSE (VIA) OF SECTI ON 10(23C). THE LD. ASSESSING OFFICER OUGHT NOT TO HAVE CONCLUDED T HAT THE APPELLANT SHOULD HAVE OBTAINED APPROVAL U/S 10(23C) WHERE AN ALTERNATIVE PROVISION U/S 11 IS AVAILABLE TO CLAIM EXEMPTION OF INCOME OF INSTITUTION THAT IS NOT SOLELY EXISTING FOR MEDICAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. THEREFORE, IT I S PRAYED THAT THE EDITION BE DELETED. 3. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT SUBMI T THAT THE LD. ASSESSING OFFICER HAS ERRED IN COMING TO A VAGUE CO NCLUSION THAT THE APPELLANT SOCIETY SHALL GET APPROVAL UNDER CLAU SE (VIA) OF 3 SEC.10(23C) WHICH IS INTRODUCED AS MONITORING MECHA NISM FOR THOSE INSTITUTIONS HITHERTO WHERE CLAIMING BLANKET EXEMPTION U/S 10(22A). THE APPELLANT SOLELY IS REGISTERED U/S 12 A AND IS FILING ITS RETURNS CLAIMING EXEMPTION U/S 11 FROM ITS VERY INC EPTION. THEREFORE IT IS PRAYED THAT THE EXEMPTION CLAIMED U /S 11 BE ALLOWED AND THE ORDER PASSED BY THE LD. ASSESSING O FFICER IS QUASHED. 4. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT SUBMI T THAT THE LD. ASSESSING OFFICER OUGHT TO HAVE REASONABLY CONSIDER ED THE APPELLANTS PLEA THAT SECS. 11 AND 10(23C) ARE NOT M UTUALLY EXCLUSIVE AND OPERATE SIMULTANEOUSLY AND WHICH CLEA RLY INDICATE THAT THE LEGISLATURE DID NOT INTEND TO RULE OUT SEC .11 WHEN EXEMPTION WAS CLAIMABLE UNDER SUCH SPECIFIC PROVISI ONS OF SEC.10. THEREFORE, IT IS PRAYED THAT THE ADDITION MADE BY T HE LD. ASSESSING OFFICER BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT SUBMI T THAT THE LD. ASSESSING OFFICER ERRED IN COMING TO VAGUE CONCLUSI ON THAT SECS.11, 12 & 13 ARE INEFFECTIVE BY AMENDING SEC.10(23C) WHI CH IS A SPECIAL PROVISION AND MANDATORY. SECTIONS 10(22) AND 10(22 A) WERE ALREADY THERE IN THE STATUTE PRIOR TO 1.4.1999. TH ESE SECTIONS ARE REPEALED AND BROUGHT INTO AS CLAUSES (IIIAD); (IIIA E); (VI) AND (VIA) OF SEC. 10(23C) WITH EFFECT FROM 1.4.1999. THEREFORE, THESE ARE NOT SPECIAL PROVISIONS BUT ONLY CONTINUOUS PROVISIONS. THEREFORE, IT IS PRAYED THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER BE DELETED. 6. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANT SUBMI T THAT THE LD. ASSESSING OFFICER ERRED IN OUGHT TO HAVE REASONABLY CONSIDERED THE APPELLANTS PLEA THAT THE PROVISIONS OF SEC.10(23C)( VIA) IS APPLICABLE TO MEDICAL INSTITUTION EXISTING SOLELY FOR RECEPTION AND TREATMENT FROM ILLNESS AND NOT FOR THE PURPOSES OF PROFIT. W HEREAS, THE APPELLANT SOCIETY DOES NOT EXIST SOLELY FOR SUCH PURPOSE; IT IS ALSO RUNNING EDUCATIONAL INSTITUTIONS ETC. THEREFORE, I T IS PRAYED THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER BE DELET ED. 5. THE CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEE S IN THE LIGHT OF RELEVANT PROVISIONS OF THE ACT AND VARIOUS JUDGEMEN TS PLACED BEFORE HIM AND BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESS EES THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEES. THE RELEVANT O BSERVATION OF THE CIT(A) ARE EXTRACTED HEREUNDER: THE QUESTION TO BE CONSIDERED, THEREFORE, IS WHETH ER SEC.10(23C) (VI) IS A MANDATORY PROVISION AND WHETHER IT OVER R IDES SECS.11. CAN SEC.10 (23C)(VI) AND SEC.11 OPERATE PARALLELLY AND CAN AN APPELLANT CLAIM EXEMPTION UNDER ANY OF THE TWO PROVISIONS AT ITS OPTION? (I) THE SUPREME COURT IN THE CASE OF CIT VS. BAR COUNCI L OF MAHARASHTRA (130ITR 28{SC} 32/33) HELD THAT ` WE MAY POINT OUT THAT THERE ARE OTHER ALLIED PROVISIONS, 4 LIKE FOR INSTANCE, SUB SECTION (23C) IN SEC.10, WHICH CLEARLY INDICATE THAT THE LEGISLATURE DID NOT INTEND TO RULE OUT SEC.11, WHEN EXEMPTION WAS CLAIMABLE UNDER SUCH SPECIFIC PROVISIONS OF SEC.10 THE CLAIM FOR EXEMPTION U/S 11 OF THE ACT COULD NOT BE SAID TO BE RULED OUT BY REASON OF THE PROVISIONS OF SEC.10(23A). (II) IN CASE OF BAR COUNCIL OF UP VS. CIT(143 ITR 584{AL L} THE HIGH COURT HAD HELD THAT THE BAR COUNCIL OF UP, BEI NG AN INSTITUTION FOR CHARITABLE PURPOSE, IS ENTITLED TO CLAIM RELIEF BOTH UNDER SEC.10(23A) AND SEC.11 OF THE ACT . THE HIGH COURT HELD THAT THE PROVISIONS OF SEC.10(23A) AND SEC.11 ARE NOT MUTUALLY EXCLUSIVE AND THEY CAN HAVE SIMULTANEOUS APPLICATION IF THE NECESSARY INGREDIEN TS OF THE PROVISIONS ARE MADE OUT. THE HIGH COURT FURTHE R HELD THAT THERE IS NOTHING IN SEC.10(23A) OR SEC.11 TO S UGGEST THAT THEY ARE INCONSISTENT WITH EACH OTHER AND CANN OT OPERATE SIMULTANEOUSLY. (III) THAT THE PROVISIONS OF SEC.10(23) AND SEC.11 ARE NO T MUTUALLY EXCLUSIVE AND EXEMPTION CAN BE CLAIMED U/S 11 EVEN WHEN GOVERNED BY THE PROVISIONS OF SEC.10 IS C LEARLY HELD IN THE DECISION OF THE JURISDICTIONAL ANDHRA P RADESH HIGH COURT IN CIT VS. ANDHRA PRADESH RIDING CLUB (1 68 ITR IN PG.393). A READING OF SEC.10(23) ITSELF POSTULATES THAT ANY INCOME DERIVED BY AN ASSOCIATION OR INSTITUTION ESTABLISHED IN INDIA HAVING AS ITS OBJECT THE CONTR OL SUPERVISION, REGULATION OR ENCOURAGEMENT IN INDIA O F THE GAMES OF CRICKET, HOCKEY, FOOTBALL, TENNIS OR SUCH OTHER GAMES OR SPORTS SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF THE ASSOCIATION OR INSTITUTION THE CONTENTION OF .. IS THAT SEC.10(23) HAS SPECIFICAL LY HAS BEEN ENGRAFTED FOR GIVING EXEMPTION TO THE PROMOTIO N OF SPORTS LIKE THE ONES SPECIFIED THEREIN. IT IS EXCL USIVELY DEALT WITH UNDER SECTION 10(23) AND, BY NECESSARY IMPLICATION; THE EXEMPTION U/S 11(1)(A) IS EXCLUDED . THEREFORE, THE ASSESSEE-CLUB IS NOT ENTITLED TO TAK E AID OF SEC.11(1)(A) OF THE ACT. WE ARE UNABLE TO AGREE WI TH THIS CONTENTION TOO. IT IS TRUE THAT SEC.10(23) OF THE ACT GIVES A RIGHT TO AN ASSOCIATION OR INSTITUTION TO CLAIM E XEMPTION BY MAKING AN APPLICATION IN THAT REGARD TO THE CENT RAL GOVERNMENT AND THE CENTRAL GOVERNMENT IS GIVEN POWE R TO GRANT EXEMPTION BY A NOTIFICATION PUBLISHED IN T HE OFFICIAL GAZETTE. THAT DOES NOT MEAN THAT IF AN ASSOCIATION OR INSTITUTION ESTABLISHES THAT THE GAM ES OR SPORTS UNDER ITS CONTROL, SUPERVISION, REGULATION O R ENCOURAGEMENT ARE OF GENERAL PUBLIC UTILITY, IT CAN NOT, AS OF RIGHT, SEEK EXEMPTION U/S 11(1)(A) OF THE ACT. POWER UNDER SECTION 10(23) IS ONE OF DISCRETION GIVEN TO THE GOVERNMENT. IT MAY GIVE EXEMPTION OR REFUSE TO ACC ORD EXEMPTION. IF AN ASSESSEE IS OTHERWISE ENTITLED TO 5 EXEMPTION UNDER LAW OR UNDER ANY OTHER RELEVANT PROVISION OF THE ACT LIKE THE ONE U/S 11(1)(A), IT IS ALWAYS OPEN TO THE ASSESSEE TO SATISFY THE AUTHORITIES OF ITS/HIS ENTITLEMENT AND SEEK EXEMPTION. (IV) RELIANCE IS ALSO PLACED ON THE DECISION OF THE ITAT DELHI `B BENCH IN THE CASE OF SHARAK SHIKSHA SAMITI V/S. CIT (16 SOT 23 {DEL}). THE QUESTION THAT WAS CONSIDERE D BY THE ITAT IN THAT CASE WAS WHETHER THE APPELLANT SOC IETY, WHICH HAS ESTABLISHED WITH THE MAIN OBJECT OF IMPAR TING EDUCATION, COULD BE STATED TO BE ESTABLISHED FOR CHARITABLE PURPOSE AND WAS ENTITLED TO REGISTRATI ON U/S 12AA OF THE I.T. ACT. CONSIDERING THIS QUESTION, THE ITAT HELD THAT THE SOCIETY WAS ENTITLED TO BE GRANTED REGISTRATION AND FURTHER OBSERVED `NO DOUBT THE INCOME OF THE SOCIET Y CAN ALSO BE EXEMPTED U/S 10(23C) BUT WHEN TWO RECOURSES ARE AVAILABLE TO A PERSON UNDER THE LAW, IT IS FOR HIM TO CHOOSE ONE, THE OTHER, OR BOTH THE RECOURSES. THE APPELLANT APPLIED FOR REGISTRATION, TO WHICH IT WAS ENTITLED AND THEREFORE HAD TO BE REGISTERED. FROM THE DISCUSSIONS IN THE PRECEDING PARAGRAPHS, T HE FOLLOWING POINTS EMERGE: (I) `CHARITABLE PURPOSE AS DEFINED IN SEC.2(15) INCLUD ES EDUCATION AND THIS HAS NOT BEEN EXCLUDED IN SEC.11( 1)(A). (II) THE SUPREME COURT IN THE CASE OF BAR COUNCIL OF MAHARASHTRA HAS CLEARLY OBSERVED THAT THE EXISTENCE OF THE SPECIFIC PROVISIONS OF SECTION 10 DO NOT RULE OUT T HE CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT. (III) AS HELD BY THE AP HIGH COURT WITH REFERENCE TO THE AP RIDING CLUB IF THE LEGISLATURE INTENDED TO EXCLUDE THE APPLICATION OF SEC.11(1)(A) OF THE ACT (TO SPORTS), WE WOULD EXPECT TO FIND AN EXPRESS MENTION IN THIS REGARD IN SEC.11(1)(A) ITSELF. THERE IS NO SUCH SPECIFIC EMB ARGO CREATED THERE UNDER. IF WE WOULD GIVE CREDENCE TO THE CONTENTION OF THE REVENUE THAT SEC.10(23) OF SEC.11 (1)(A) ARE MUTUALLY EXCLUSIVE, THEN SEC.11(1)(A) WOULD BE RENDERED OTIOSE... (IV) THE ITAT, HYDERABAD BENCH IN THE CASE OF DDI (EXEMP T) VS. ST. THERESAS CONVENT (SUPRA) AND ADI (EXEMPT) VS. RAJASTHANI SIKSHA SAMITI HAS DISTINGUISHED THE DECI SION IN THE CASE OF VODITHALA EDUCATIONAL SOCIETY, WHERE TH E APPELLANT HAD BEEN DENIED THE CLAIM FOR EXEMPTION M ADE UNDER SECTION 11 OF THE ACT. IN THE ORDER DATED 6. 6.2008, IN THE CASE OF ST. THERESAS CONVENT, THE ITAT HAS HEL D THAT THE DECISION OF THE ANDHRA PRADESH HIGH COURT IN TH E CASE OF AP RIDING CLUB (SUPRA) IS SQUARELY APPLICABLE TO THE MAIN ISSUE, WHICH WAS THAT EXEMPTION UNDER SECTION 11 CO ULD NOT BE GRANTED TO THE APPELLANT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT. CONSIDERING THE DECISION 6 OF THE DIVISION BENCH OF THE ITAT, HYDERABAD IN THE CASE OF VODITHALA EDUCATION SOCIETY, THE ITAT, IN THE ORDER DATED 6.6.08 MADE THE FOLLOWING OBSERVATIONS IN THE CASE OF VODITHALA EDUCATION SOCIETY (SUPRA), TO WHICH ONE O F US (THE V.P.) IS A PARTY THE OBSERVATIONS OF THE TRIBUNA L THAT SEC.11 MAY NOT OVERRIDE THE PROVISIONS OF SPECIFIC SECTION I.E. SEC.10(23C) IS A MERE PASSING OBSERVATION WHICH IS INDICATED BY THE USE OF THE WORD MAY. IN FACT, THIS WAS NO T THE CONTENTION OF THE DEPARTMENT ALSO IN THAT CASE AS I S EVIDENT FROM THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTAINED IN PARAGRAPHS 4 AND 5 OF T HE SAID ORDER IN THE CASE OF VODITHALA EDUCATION SOCIETY. FURTHER, THE TRIBUNAL DID NOT GRANT EXEMPTION U/S 11, NOT ON THIS GROUND BUT BECAUSE OF THE FACTUAL POSITION. IN THA T CASE IN SO FAR AS THAT THERE WAS A CLEAR VIOLATION OF THE P ROVISIONS OF SEC.13(1) (C) THE ACT. FURTHER, THERE IS ALSO A JU DGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . ANDHRA PRADESH RIDING CLUB (168 ITR 393) WHEREIN A SIMILAR ISSUE WAS CONSIDERED. THE HIGH COURT FOLLOWED THE JUDGEM ENT OF THE SUPREME COURT IN THE CASE OF BAR COUNCIL OF MAH ARASHTRA (SUPRA) AND AT PAGE 404 OF THE REPORT HELD THAT EVE N THE OBITER DICTUM OF THEIR LORDSHIPS OF THE SUPREME COU RT IS BINDING ON THE HIGH COURTS UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. THEREFORE, THERE IS NO GAIN SAYING THAT BOTH THE JUDGEMENTS, THAT OF THE SUPREME COURT AND THAT OF THE JURISDICTIONAL HIGH COURT ARE NOT BINDING ON TH E TRIBUNAL. WHILE DECIDING THE APPEAL IN THE CASE OF VODITHAL A EDUCATION SOCIETY, THE ABOVE TWO JUDGEMENTS WERE NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL AND HENCE THE OBSERVATION BY THE TR IBUNAL. IN OTHER WORDS, THE OBSERVATION OF THE TRIBUNAL IS PER INCURIAM AND HENCE NOT BINDING. (V) THE ITAT THERE HELD THAT THE APPELLANTS IN THOSE CA SES WERE ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT, ALTHOUGH THEY WERE EDUCATIONAL INSTITUTIONS AND THEIR ANNUAL RECEIPTS EXCEEDED RS.1 CRORE. THE ITAT OBSERVED THAT IT IS THE COMMISSIONER WHO GRANTS REGISTRATION UNDER SECTION 12AA OF THE ACT, THEREBY IMPLYING THAT THE TRUST OR INSTITU TION IS ESTABLISHED FOR CHARITABLE PURPOSES. THEN IT IS FO R THE ASSESSING OFFICER TO ONLY EXAMINE WHETHER THE INCOM E HAS BEEN APPLIED FOR CHARITABLE PURPOSES OR NOT. THE I TAT ALSO HELD THAT THE ASSESSING OFFICER CANNOT GO BEYOND EX AMINING WHETHER THE INCOME OF THE TRUST HAS BEEN APPLIED FO R CHARITABLE PURPOSES OR NOT, ONCE A SUPERIOR AUTHORI TY, I.E. THE COMMISSIONER HAS GRANTED REGISTRATION AFTER BEING S ATISFIED THAT IT WAS ESTABLISHED FOR CHARITABLE PURPOSES. (VI) THE MINISTRY OF FINANCE IN THEIR RESPONSE TO AN AUD IT PARA ON THE GRANT OF EXEMPTION UNDER SECTION 11 OF THE ACT TO EDUCATIONAL INSTITUTIONS, INSTEAD OF APPROVAL OF TH E PRESCRIBED 7 AUTHORITY AS REQUIRED UNDER SECTION 10(23C) (VI), S TATED THOUGH THE REGISTRATION U/S 10(23C) HAD NOT BEEN S OUGHT FOR IN 7 CASES AND HAD NOT BEEN GRANTED IN 6 CASES, THE INSTITUTIONS WERE REGISTERED U/S 12A AND WERE ELIGI BLE FOR EXEMPTION U/S 11. UNDER SECTION 10(23C) OF THE INC OME TAX ACT, 1961, ANY INCOME OF AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES, AND NOT FOR THE PU RPOSES OF PROFIT, IS EXEMPT IF SUCH EDUCATIONAL INSTITUTION I S APPROVED BY THE DIRECTOR GENERAL OF INCOME TAX ACT (EXEMPTIO NS). SECTION 11 EXEMPTS THE INCOME OF ANY INSTITUTION DE RIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURP OSES, INCLUDES EDUCATION ALSO. IT IS AT THE OPTION OF TH E INSTITUTION TO SEEK EXEMPTION U/S 10(23C) OR U/S 11 OF THE INCO ME TAX ACT 1961, AND THE EXEMPTION UNDER THESE TWO SECTION S IS, THEREFORE MUTUALLY EXCLUSIVE. FOLLOWING THE DECISIONS OF THE ITAT, HYDERABAD BENC H IN THE CASE OF RAJASTHAN SIKSHA SAMITI AND ST. THERESAS CONVEN T, AND RELYING ON THE DECISIONS OF THE ANDHRA PRADESH HIGH COURT I N AP RIDING CLUB, AND THE SUPREME COURT IN BAR COUNCIL OF MAHAR ASHTRA (SUPRA), I HOLD THAT ONCE GENUINENESS OF ACTIVITIES IS ESTABLISHED, THE APPELLANT CAN CLAIM EXEMPTION EITHER U/S 10(23C ) OR SEC.11. I THEREFORE, HOLD THAT THE APPELLANT CAN CLAIM EXEMPT ION U/S 11, SUBJECT TO THE VERIFICATION OF FULFILLMENT OF THE C ONDITIONS SPECIFIED UNDER THAT SECTION. THE APPELLANT HAS ALSO RAISED THE GROUND THAT THE P ROVISIONS OF SECTION 10(23C)(VIA) IS APPLICABLE ONLY WITH RESPEC T TO MEDICAL INSTITUTIONS EXISTING SOLELY FOR RECEPTION AND TREA TMENT OF ILLNESS WHEREAS THE APPELLANT WAS RUNNING EDUCATIONAL INSTI TUTIONS ALSO. SINCE IT HAS BEEN HELD THAT THE APPELLANT IS ELIGIB LE FOR EXEMPTION U/S 11 OF THE ACT, THIS ISSUE IS NOT BEING ADJUDICA TED. 6. NOW THE REVENUE HAS PREFERRED AN APPEAL BUT DURI NG THE COURSE OF HEARING COULD NOT POINT OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE CIT(A). 7. WE HOWEVER CAREFULLY EXAMINED THE ORDER OF THE C IT(A) AND WE FIND THAT CIT(A) HAS ADJUDICATED THE ISSUE IN THE L IGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND THE LEGAL PROPOSITIONS LAID BY V ARIOUS JUDICIAL FORUMS. SINCE NO INFIRMITY IS POINTED OUT IN THE ORDER OF T HE CIT(A) WE CONFIRM THE SAME. 8 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 8.2.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 8 TH FEBRUARY, 2010 COPY TO 1 THE ITO, WARD-1(1), GUNTUR 2 ST. JOSEPHS CONVENT, NAGARAMPALEM, GUNTUR 3 THE CIT, GUNTUR 4 THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM