Dr.C.T.Eapen Trust, Kollam V. The ITO, Kollam

ITA 136/COCH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6258 (ITAT-COCHIN)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R KRISHNA IYER
• Keywords: Gift; Competent authority; Condonation of delay
• Section: 12AA; 12; 11

Judgement Text

1 ITA NO. 135/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 135 & 136/COCH/2014 (ASSESSMENT YEARS 2009-10 & 2010-11) & S.P. NOS 23 & 24/COCH/2014 (ARISING OUT OF I.T.A NO. 135 & 136/COCH/2014) (ASSESSMENT YEARS 2009-10 & 2010-11) DR. C.T. EAPEN TRUST VS ITO, WD.1 LAKE VIEW, MUTHUPILAKKAD P.O KOLLAM SASTHAMKOTTA, KOLLAM 690 520 PAN : AABTD3997J (APPELLANT / APPLICANT) (RESPONDENT) APPELLANT BY : SHRI R. KRISHNA IYER RESPONDENT BY : SHRI M ANIL KUMAR, CIT-DR SMT. LATHA V KUMAR, JR DR DATE OF HEARING : 02-07-2014 DATE OF PRONOUNCEMENT : 25-07-2014 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF CIT(A) FOR THE ASSESSMENT YEARS 2009-10 A ND 2010-11. 2. SHRI R KRISHNA IYER, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST IS RUNNING EDUCATIONAL INST ITUTIONS. FOR THE YEAR 2 ITA NO. 135/COCH/2014 UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF I NCOME CLAIMING EXEMPTION U/S 11 OF THE ACT. HOWEVER, THE ASSESSIN G OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 ON THE G ROUND THAT THE ASSESSEE TRUST WAS NOT REGISTERED AS CHARITABLE INS TITUTION U/S 12AA OF THE ACT. ACCORDING TO THE LD.COUNSEL, THE REGISTRATION OF THE TRUST WAS REJECTED BY THE ADMINISTRATIVE COMMISSIONER AND THIS TRIBUNA L AND THE APPEAL IS NOW PENDING BEFORE THE HIGH COURT. THE LD.REPRESEN TATIVE FURTHER SUBMITTED THAT THE APPLICATION FILED BY THE ASSESSE E FOR CONDONATION OF DELAY IN FILING THE APPLICATION FOR REGISTRATION IS PENDING BEFORE CBDT. ACCORDING TO THE LD.REPRESENTATIVE, GRANT OF EXEMPT ION U/S 11 DOES NOT REQUIRE REGISTRATION U/S 12AA OF THE ACT. EVEN OTH ERWISE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE IS ENTITLED FOR EXE MPTION U/S 10(23C)(IIIAB) AND (IIIAD) OF THE ACT SINCE THE RECEIPT OF EACH ED UCATIONAL INSTITUTION IS LESS THAN RS.1 CRORE. ACCORDING TO THE LD.REPRESENTATIV E, THE AGGREGATE INCOME OF THE TRUST SHOULD NOT BE TAKEN FOR THE PURPOSE OF SECTION 10(23C) OF THE ACT. EACH INSTITUTION SHALL BE TAKEN AS SUCH FOR T HE PURPOSE OF EXEMPTION U/S 10(23)(IIIAB) AND (IIIAD) OF THE ACT. THEREFOR E, IN RESPECT OF THE INSTITUTION, WHOSE ANNUAL RECEIPT IS LESS THAN RS.1 CRORE HAS TO BE GRANTED EXEMPTION U/S 10(23C) (IIIAD) OF THE ACT. MOREOVER , WHEN THE GOVERNMENT SUBSTANTIALLY FINANCES, SUCH INSTITUTION IS EXEMPTE D UNDER SECTION 10(23C)(IIIAB) OF THE I.T. ACT. FOR THE PURPOSE OF COMPUTING THE AGGREGATE RECEIPT, THE GOVERNMENT AID HAS TO BE EXCLUDED. SI NCE THESE POINTS WERE 3 ITA NO. 135/COCH/2014 NOT CONSIDERED BY THE LOWER AUTHORITIES, ACCORDING TO THE LD.REPRESENTATIVE, FOR THE PURPOSE OF CONSIDERING THESE POINTS, THE MA TTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECON SIDERATION. ACCORDING TO THE LD.REPRESENTATIVE, APPROVAL OF THE CHIEF COMMIS SIONER IS REQUIRED U/S 10(23C) ONLY IF THE ANNUAL RECEIPT EXCEEDED RS.1 CR ORE. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISI ON OF THE DELHI BENCH OF THIS TRIBUNAL IN JAT EDUCATION SOCIETY VS DCIT (201 1) 58 DTR (DEL)(TRIB) 188, COPY OF WHICH IS AVAILABLE AT PAGE 27 OF THE P APER BOOK. THE LD.REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON T HE JUDGMENT OF THE KARNATAKA HIGH COURT IN CIT VS CHILDRENS EDUCATION SOCIETY (2013) 92 DTR (KAR) 158. 3. ON THE CONTRARY, SHRI M. ANIL KUMAR, THE LD.DR S UBMITTED THAT ADMITTEDLY, AS ON TODAY, THE ASSESSEE TRUST WAS NOT REGISTERED U/S 12AA OF THE ACT. THEREFORE, THE ASSESSEE IS NOT ENTITLED F OR EXEMPTION U/S 11 & 12 OF THE ACT. ACCORDING TO THE LD.DR, REGISTRATION U /S 12AA IS MANDATORY FOR GRANT OF EXEMPTION U/S 11 OF THE ACT. THE LD.DR PL ACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN U.P. FOREST CORPORATI ON & ANR VS DY.CIT (2008) 297 ITR 1 (SC). THE LD.DR FURTHER SUBMITTED THAT THE TRUST WHICH IS RUNNING THE EDUCATIONAL INSTITUTION HAS TO BE CONSI DERED AS AN INDIVIDUAL UNIT AND THE AGGREGATE INCOME OF THE TRUST SHALL BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF EXEMPTION. ACCORDING TO THE LD. DR, THE AGGREGATE 4 ITA NO. 135/COCH/2014 RECEIPT OF THE ASSESSEE TRUST EXCEEDS RS.1 CRORE, T HEREFORE, THE ASSESSEE CANNOT GET ANY EXEMPTION U/S 10(23C) OF THE ACT UNL ESS THE SAME IS APPROVED BY THE COMPETENT AUTHORITY, VIZ. THE CHIEF COMMISSIONER OF INCOME-TAX. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSESSEE WAS NOT REGISTERED U/S 12AA OF THE ACT AS CHARITABLE IN STITUTION. THE APPEAL IS SAID TO BE PENDING BEFORE THE HIGH COURT AND THE AP PLICATION FOR CONDONATION OF DELAY ON FILING APPLICATION FOR REGI STRATION IS SAID TO BE PENDING BEFORE CBDT. 5. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE APEX COURT IN U.P. FOREST CORPORATION & ANR (SUPRA). IN THE CASE BEFORE THE APEX COURT, THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/ S 12AA OF THE ACT WAS REJECTED BY THE COMMISSIONER OF INCOME-TAX AND THE APPEAL WAS PENDING BEFORE THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, TH E APEX COURT FOUND THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTIO N FROM PAYMENT OF TAX U/S 11 & 12 OF THE ACT. HERE ALSO, THE APPEAL IS N OW SAID TO BE PENDING BEFORE THE HIGH COURT, THEREFORE, IN VIEW OF THE JU DGMENT OF THE APEX COURT IN U.P. FOREST CORPORATION & ANR (SUPRA), THE ASSES SEE IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. 5 ITA NO. 135/COCH/2014 6. NOW THE ASSESSEE CLAIMS THAT IT IS ENTITLED FOR EXEMPTION U/S 10(23)(IIIAB) AND (IIIAD) IN RESPECT OF THE EDUCATI ONAL INSTITUTION WHOSE INCOME IS LESS THAN RS.1 CRORE. THE ASSESSEE ALSO CLAIMS THAT ONE OF THE INSTITUTIONS RECEIVES SUBSTANTIAL AID FROM GOVERNME NT, HENCE THE INCOME OF THAT INSTITUTION HAS TO BE EXCLUDED. THEREFORE, TH E QUESTION NOW ARISES FOR CONSIDERATION IS WHETHER THE EACH EDUCATIONAL INSTI TUTION HAS TO BE TAKEN AS INDEPENDENT UNITS OR THE TRUST HAS TO BE TAKEN A S A UNIT FOR ASSESSMENT. THIS ISSUE CAME UP BEFORE THE DELHI BENCH OF THIS T RIBUNAL IN JAT EDUCATION SOCIETY (SUPRA). THE DELHI BENCH OF THIS TRIBUNAL FOUND THAT FOR THE PURPOSE OF SECTION 10(23)(IIAB) AND (IIIAD), TH E ANNUAL GROSS RECEIPT OF EACH EDUCATIONAL INSTITUTION RUN BY THE ASSESSEE HA S TO BE TAKEN SEPARATELY AND IT CANNOT BE CLUBBED TOGETHER IN THE HANDS OF THE TRUST FOR EXAMINING THE FULFILLMENT OF CONDITION OF RECEIPT O F LESS THAN THE PRESCRIBED LIMIT OF THE ANNUAL GROSS RECEIPT. THE DELHI BENCH FOUND THAT IF THE ANNUAL GROSS RECEIPT OF THE EDUCATIONAL INSTITUTION IS CON SIDERED SEPARATELY, THE SAME IS BELOW RS.1 CRORE IN EACH YEAR, THEREFORE, T HE SAME IS ENTITLED FOR EXEMPTION U/S 10(23)(IIIAD) OF THE ACT. 7. THE APEX COURT IN THE CASE OF ADITANAR EDUCATION AL INSTITUTIONS & ORS VS ADDL CIT (1997) 224 ITR 310 (SC) HAS CONSIDE RED THE PROVISIONS OF SECTION 10(22), AS IT WAS THEN EXISTED, AND FOUND T HAT THE OBJECT OF THE 6 ITA NO. 135/COCH/2014 SOCIETY IS TO ESTABLISH, RUN, MANAGE OR ASSIST COLL EGES OR SCHOOLS AND OTHER EDUCATIONAL INSTITUTIONS. THE SOLE PURPOSE FOR WHI CH THE ASSESSEE TRUST CAME INTO EXISTENCE IS TO IMPART EDUCATION AT THE L EVELS OF COLLEGES AND SCHOOLS. THEREFORE, SUCH AN EDUCATIONAL SOCIETY CO ULD BE REGARDED AS AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTI ON 10(22) OF THE ACT. IN FACT, THE APEX COURT HAS OBSERVED AS FOLLOWS AT PAG ES 316 AND 317 OF THE ITR: COUNSEL FOR THE REVENUE MAINLY STRESSED THE PLEA THAT THE EXEMPTION UNDER SECTION 10(22) OF THE ACT WOULD APPLY ONLY TO EDUCATIONAL INSTITUTIONS AS SUCH. ACCORDIN G TO HIM, IN THIS CASE, THE ASSESSEE MIGHT BE FINANCING FOR RUNN ING AN EDUCATIONAL INSTITUTION, BUT IT IS NOT ITSELF AN ED UCATIONAL INSTITUTION. AS NOTED EARLIER, THE TRIBUNAL HELD T HAT THE ASSESSEE WAS AN INSTITUTION EXISTING FOR EDUCATIONA L PURPOSES AND NOT FOR THE PURPOSES OF EARNING ANY PROFIT AND THE ASSESSEE ITSELF COULD BE TERMED AS AN EDUCATIONAL INSTITUTION COMING WITHIN SECTION 10(22) OF THE ACT. THE HIGH COURT HAS CONCURRED WITH THIS VIEW. THE HIGH COURT HAS FURTH ER HELD THAT THE MEDIUM THROUGH WHICH THE ASSESSEE COULD EFFECTU ATE ITS OBJECTS IS THE COLLEGE AND BY EMPLOYING THIS MEDIUM , THE ASSESSEE IMPARTS EDUCATION AND IT CANNOT BE STATED THAT THE ASSESSEE IS ONLY A FINANCING BODY AND DOES NOT, ON THE FACTS, COME WITHIN THE SCOPE OF OTHER EDUCATIONAL INSTITU TION OCCURRING IN SECTION 10(22) OF THE ACT. RELIANCE W AS PLACED ON THE DECISION OF THE ALLAHABAD HIGH COURT IN KATRA E DUCATION 7 ITA NO. 135/COCH/2014 SOCIETY V. ITO [1978] 111 ITR 420, TO HOLD THAT AN EDUCATIONAL SOCIETY COULD BE REGARDED AS AN EDUCATIONAL INSTITU TION IF THE SOCIETY WAS RUNNING AN EDUCATIONAL INSTITUTION. WE ARE OF THE VIEW THAT AN EDUCATIONAL SOCIETY OR A TRUST OR OTHE R SIMILAR BODY RUNNING AN EDUCATIONAL INSTITUTION SOLELY FOR EDUCA TIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT COULD BE REGARDED AS OTHER EDUCATIONAL INSTITUTION COMING WITHIN S ECTION 10(22) OF THE ACT . (SEE CIT V. DOOM FOUNDATION [1985] 154 ITR 208 (CAL) AND AGARWAL SHIKSHA SAMITI TRUST V. CIT [1987 ] 168 ITR 751 (RAJ). IT WILL BE RATHER UNREAL AND HYPERTECHN ICAL TO HOLD THAT THE ASSESSEE-SOCIETY IS ONLY A FINANCING BODY AND WILL NOT COME WITHIN THE SCOPE OF OTHER EDUCATIONAL INSTITU TION AS SPECIFIED IN SECTION 10(22) OF THE ACT. THE OBJECT OF THE SOCIETY IS TO ESTABLISH, RUN, MANAGE OR ASSIST COLL EGES OR SCHOOLS OR OTHER EDUCATIONAL INSTITUTIONS SOLELY FO R EDUCATIONAL PURPOSES AND IN THAT REGARD TO RAISE OR COLLECT FUN DS, DONATIONS, GIFTS, ETC. COLLEGES AND SCHOOLS ARE TH E MEDIA THROUGH WHICH THE ASSESSEE IMPARTS EDUCATION AT THE LEVELS OF COLLEGES AND SCHOOLS AND SO, SUCH AN EDUCATIONAL SO CIETY SHOULD BE REGARDED AS AN EDUCATIONAL INSTITUTION COMING WITHIN SECTION 10(22) OF THE ACT. WE HOLD ACCORDIN GLY. IN OUR VIEW, THE JUDGMENT OF THE HIGH COURT DOES NOT MERIT INTERFERENCE. THE PLEA OF THE REVENUE TO THE CONTR ARY IS UNTENABLE AND WE REPEL THE SAME. ALL THE APPEALS F ILED BY THE REVENUE SHALL STAND DISMISSED, BUT THERE SHALL BE N O ORDER AS TO COSTS. 8 ITA NO. 135/COCH/2014 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE KARNATAKA HIGH COURT IN CHILDRENS EDUCATION SOCIETY (SUPRA). IN THE CASE BEFORE THE KARNATAKA HIGH COURT, THE ASSESSEE CONTENDED THAT A FTER DELETION OF SECTION 10(22) AND INTRODUCTION OF SECTION 10(23C)( IIIAB) THE WHOLE SCENARIO HAS BEEN CHANGED. UNDER SECTION 10(23C)(I IIAB), THE UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION WHICH EXISTS SOLEL Y FOR EDUCATIONAL PURPOSES AND NOT FOR THE PROFIT AND WHICH IS WHOLLY OR SUBST ANTIALLY FINANCED BY GOVERNMENT ARE EXEMPTED. SIMILARLY, IN RESPECT OF THE UNIVERSITY OR EDUCATIONAL INSTITUTION, WHOSE RECEIPT DOES NOT EXC EED RS.1 CRORE IS ALSO EXEMPTED. HOWEVER, UNDER SUB CLAUSE (IV) OF SECTIO N 10(23C), THE APPROVAL OF THE PRESCRIBED AUTHORITY IS REQUIRED WH EREVER THE RECEIPT EXCEEDED RS.1 CRORE. THE KARNATAKA HIGH COURT, AFT ER REFERRING TO RULE 2BC AND THE JUDGMENT OF THE APEX COURT IN ADITANAR EDUCATIONAL INSTITUTIONS & ORS (SUPRA) FOUND THAT IF AN ASSESSE E SOCIETY RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, IF SOME OF THEM ARE WHOLL Y OR SUBSTANTIALLY FINANCED BY GOVERNMENT IN TERMS OF SUB SECTION (III AB) OF SECTION 10(23C), THE INCOME ON BEHALF OF SUCH EDUCATIONAL INSTITUTIO N RECEIVED BY THE ASSESSEE SOCIETY IS EXEMPTED FROM THE TOTAL INCOME. THE KARNATAKA HIGH COURT FOUND THAT INCOME FROM EACH EDUCATIONAL INSTI TUTION, IF THEY ARE NOT RECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUB STANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DO NOT EXCEED RS . 1 CRORE RECEIVED BY THE ASSESSEE IS ALSO NOT INCLUDED WHILE COMPUTING T HE ANNUAL TOTAL INCOME. 9 ITA NO. 135/COCH/2014 IN FACT, THE KARNATAKA HIGH COURT HAS OBSERVED AS F OLLOWS AT PARAGRAPH 17 OF THE JUDGMENT: 17. RULE 2BC OF THE INCOME TAX RULES PRESCRIBES TH E AMOUNT OF ANNUAL RECEIPTS FOR THE PURPOSES OF SUB-C LAUSES (III)(AD) AND (III)(AE) OF CLAUSE (23C) OF SECTION 10, WHICH READS AS UNDER: 2BC(1) FOR THE PURPOSES OF SUB-CLAUSE (I II)(AD) OF CLAUSE (23C) OF SECTION 10, THE AMOUNT OF ANNUAL RE CEIPTS ON OR AFTER THE 1 ST DAY OF APRIL, 1998, OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION, EXISTING SOLELY FOR EDUCAT IONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, SHALL BE ONE CRORE RUPEES. (2) FOR THE PURPOSES OF SUB-CLAUSE (III)(AE) OF CLAUSE (230) OF SECTION 10, THE AMOUNT OF ANNUAL RECEIPTS ON OR AFT ER THE 1 ST DAY OF APRIL, 1998, OF ANY HOSPITAL OR OTHER INSTIT UTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTION AND TREAT MENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUIRIN G MEDICAL ATTENTION OR REHABILITATION, EXISTING SOLELY FOR PH ILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROFIT, SHALL BE O NE CRORE RUPEES.] THEREFORE, ONE CRORE OF RUPEES IS THE AG GREGATE ANNUAL RECEIPTS WHICH IS PRESCRIBED UNDER THE RULES . IN OTHER WORDS, IF THE AGGREGATE ANNUAL RECEIPTS OF AN EDUCA TIONAL INSTITUTION IS LESS THAN ONE CRORE, THE INCOME FROM SUCH EDUCATIONAL INSTITUTION IN THE HANDS OF THE ASSESSE E, IS NOT TAKEN INTO CONSIDERATION IN COMPUTING THE TOTAL INC OME OF THE ASSESSEE. SUB-CLAUSE (VI) PROVIDES THAT ANY UNIVER SITY OR OTHER EDUCATIONAL INSTITUTION EXISTING FOR EDUCATIO NAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT OTHER THAN THOSE MENTIONED IN 10 ITA NO. 135/COCH/2014 SUB-CLAUSE (III)(AB) AND SUB-CLAUSE(III)(AD) AND WH ICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY, THEY ARE ALSO ENTITLED TO THE SAID BENEFIT. IN OTHER WORDS, SUB-CLAUSE (III) (AB), SUB- CLAUSE (III)(AD) AND CLAUSE (VI) APPLIES TO THREE C ATEGORIES OF INSTITUTIONS. NOW, WE ARE CONCERNED WITH THE MEANI NG TO BE ATTACHED TO THE WORD AGGREGATE ANNUAL RECEIPT. T HE ARGUMENT IS OTHER EDUCATIONAL INSTITUTION REFERRED TO IN THE SAID SUB-CLAUSE REFERS TO ALL EDUCATIONAL INSTITUTIONS R UN BY THE ASSESSEE AND AGGREGATE ANNUAL RECEIPTS OF SUCH OTHE R EDUCATIONAL INSTITUTIONS MEANS THE AGGREGATE OF ANN UAL RECEIPTS OF ALL SUCH EDUCATIONAL INSTITUTIONS PUT T OGETHER. OTHERWISE, THE USE OF THE WORD AGGREGATE LOSES IT S MEANING. WE FIND IT DIFFICULT TO ACCEPT THE SAID ARGUMENT. FIRSTLY, IF THE WORD AGGREGATE ANNUAL RECEIPTS OF OTHER EDUCATION AL INSTITUTION IS TO BE UNDERSTOOD AS CLUBBING OF ANNU AL RECEIPTS OF ALL EDUCATIONAL INSTITUTIONS RUN BY AN ASSESSEE SOC IETY, THEN IT WILL ALSO INCLUDE THE ANNUAL RECEIPTS OF AN EDUCATI ONAL INSTITUTION WHICH IS WHOLLY OR SUBSTANTIALLY FINANC ED BY THE GOVERNMENT. IF THAT WAS INTENTION OF THE LEGISLATU RE, THEY WOULD NOT HAVE INTRODUCED SEPARATE SUB-CLAUSES (III )(AB) AND (III)(AD). IF SUCH INTERPRETATION IS PLACED, SUB C LAUSE (III)(AB) BECOMES OTIOSE. THEREFORE, IT IS NOT POSSIBLE TO P LACE SUCH AN INTERPRETATION. IF AN ASSESSEE SOCIETY IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, IF SOME OF THEM ARE WHOLL Y OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT IN TERMS O F SUB- CLAUSE (III)(AB), THE INCOME ON BEHALF OF SUCH EDUC ATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS EXEMPTED FR OM BEING COMPUTED THE TOTAL INCOME OF THE ASSESSEE. IF THE ASSESSEE IS RUNNING OTHER EDUCATIONAL INSTITUTIONS WHICH ARE NO T WHOLLY OR 11 ITA NO. 135/COCH/2014 SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE BENEFIT OF THAT EXEMPTION IS ALSO EXTENDED TO THE INCOME DERIV ED FROM SUCH EDUCATIONAL INSTITUTIONS AND RECEIVED BY THE A SSESSEE UNDER SUB-CLAUSE (III)(AD) READING WITH SUB-CLAUSE (III)(AD) ALONG WITH RULE 2BC. IT WAS CONTENDED, THE LEGISLA TURE USED THE WORD AGGREGATE ANNUAL RECEIPT AND AMOUNT OF ANNUAL RECEIPTS AND THEREFORE, THE PROVISIONS ARE NOT ONE AND THE SAME. THE WORD AGGREGATE HAS BEEN DEFINED IN CHAMB ERS 21 ST CENTURY DICTIONARY AS UNDER : AGGREGATE NOUN = A COLLECTION OF SEPARATE UNITS BROUGHT TOGETHER, A TO TAL TAKEN ALTOGETHER, BRING TOGETHER. IN WHARTONS LAW LEXI CON, IT IS DEFINED AS THUS: A COLLOCATION OF INDIVIDUALS, UNI TS OR THINGS IN ORDER TO FORM A WHOLE SIMILARLY RELYING ON THE JU DGMENT OF THE APEX COURT IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTION VS. ADDITIONAL COMMISSIONER OF INCOME-TAX, IT WAS CONTENDED THE WORD OTHER EDUCAT IONAL INSTITUTION REFERS TO THE ASSESSEE SOCIETY AND NOT TO THE INDIVIDUAL EDUCATIONAL INSTITUTION. IF THE INTENTI ON OF THE LEGISLATURE WAS TO CLUB THE ANNUAL RECEIPTS OF ALL EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE SOCIETY, THEY COUL D HAVE SAID SO IN CLEAR TERMS. ON CONTRARY WHAT IS STATED IN T HE SAID SECTION IS THE AGGREGATE ANNUAL RECEIPTS OF SUCH UN IVERSITY OR SUCH EDUCATIONAL INSTITUTION REFERRING TO OTHER EDU CATIONAL INSTITUTION. OTHER EDUCATIONAL INSTITUTION IS TO B E UNDERSTOOD WITH THE CONTEXT OF THE FIRST WORD I.E., THE UNIVER SITY. BOTH IN THE UNIVERSITY AND ANY EDUCATIONAL INSTITUTIONS, ED UCATION IS IMPARTED. THE UNIVERSITY IS A STATUTORY BODY. BUT THERE ARE A NUMBER OF EDUCATIONAL INSTITUTIONS WHICH ARE NOT RU N BY A STATUTORY AUTHORITY WHICH ARE IMPARTING EDUCATION, THE WORD 12 ITA NO. 135/COCH/2014 OTHER EDUCATIONAL INSTITUTION HAS TO BE UNDERSTOO D IN THE CONTEXT OF OTHER THAN ANY UNIVERSITY. IF SO UNDERS TOOD, ALL THAT IT MEANS IS EVERY EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROF IT, IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH EDUCATIONAL INSTI TUTION EXCEEDS RS.1 CRORE, THEN THE INCOME FROM SUCH EDUCA TIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS EXCLUDED F ROM HIS TOTAL INCOME. IN AN EDUCATIONAL INSTITUTION THE AMOUNT A RE CALCULATED PERIODICALLY. IT MAY BE CALCULATED UNDE R DIFFERENT HEADS. ALL SUCH AMOUNT RECEIVED CONSTITUTED RECEIP TS AND THOSE RECEIPTS MAY BE RECEIVED THROUGHOUT THE YEAR. THEREFORE, THE WORD ANNUAL HAS BEEN INSERTED. BU T TO BE ELIGIBLE FOR EXEMPTION, AGGREGATE OF ANNUAL RECEIPT S SHOULD NOT EXCEED RS.1 CRORE I.E. THE TOTAL ANNUAL RECEIPTS OF A YEAR IF IT DOES NOT EXCEED RS.1 CRORE, THEN THE INCOME DERIVED FROM SUCH EDUCATIONAL INSTITUTION IN THE HANDS OF THE AS SESSEE CANNOT BE TAKEN INTO CONSIDERATION TO COMPUTE THE I NCOME OF THE ASSESSEE. NO DOUBT, EDUCATION HAS BECOME A BUS INESS, A VERY PROFITABLE BUSINESS ALSO. BUT IT REQUIRES HUG E INVESTMENT. IT IS THE DUTY OF THE GOVERNMENT TO PROVIDE EDUCATI ON TO ALL ITS CITIZENS, AS THE GOVERNMENT IS NOT ABLE TO SHOULDER THE RESPONSIBILITY COMPLETELY. THEREFORE, THE FIELD OF EDUCATION IS NOW THROWN OPEN TO PRIVATE ORGANIZATIONS. BUT FOR THROWING OPEN THE FIELD TO THE PRIVATE OPERATORS, PROBABLY, THE COUNTRY WOULD NOT HAVE ACHIEVED IN THE FIELD OF EDUCATION W HAT IT HAS ACHIEVED. THEREFORE, LOT OF FUNDS ARE INVESTED IN RUNNING THESE EDUCATIONAL INSTITUTIONS, EITHER BY CREATING A SOCIETY OR A TRUST. IN COURSE OF TIME, THEY HAVE EXPANDED THEIR ACTIVITY PROVIDING COURSE IN VARIOUS SUBJECTS AT VARIOUS LEV ELS AND FOR 13 ITA NO. 135/COCH/2014 THAT PURPOSE THEY HAVE ESTABLISHED MORE THAN ONE ED UCATIONAL INSTITUTION. EACH EDUCATIONAL INSTITUTION IS A SEP ARATE ENTITY CONTROLLED UNDER VARIOUS STATUTES FOR VARIOUS PURPO SES. MAY BE THE MANAGEMENT OF THESE EDUCATIONAL INSTITUTIONS WOULD BE IN THE HANDS OF THE SOCIETIES OR THE TRUST, BUT FOR ALL OTHER PURPOSES THEY ARE DIFFERENT, INDEPENDENT ENTITIES. THAT IS THE REASON WHY SECTION 10(23)(C) IS WORDED AS UNDER: A NY INCOME RECEIVED BY ANY PERSON ON BEHALF OF HE RE ANY PERSON REFERS TO THE ASSESSEE AND ON BEHALF OF REFERS TO SUCH INSTITUTIONS. IT MAY BE AN UNIVERSITY, IT MAY BE AN EDUCATIONAL INSTITUTION, IT MAY BE A HOSPITAL OR OT HER INSTITUTIONS OF SIMILAR NATURE. AS ALL SUCH INSTITUTIONS ARE IN DEPENDENT ENTITY AND THEY GENERATE INCOME AND WHEN THAT INCOM E IS RECEIVED BY THE ASSESSEE, IT BECOMES THE INCOME IN THE HAND OF THE ASSESSEE AND IT IS SUCH INCOME WHICH IS SOUG HT TO BE EXCLUDED WHILE COMPUTING THE TOTAL INCOME OF THE AS SESSEE UNDER SECTION 10. THE TEST PRESCRIBED UNDER THE AF ORESAID PROVISION IS NOT THE INCOME OF THE EDUCATIONAL EDUC ATION. IT IS THE AGGREGATE ANNUAL RECEIPT OF SUCH EDUCATIONAL IN STITUTION THAT IS PRESCRIBED AT RS.1 CRORE. THEREFORE, IRRES PECTIVE OF THE EXPENDITURE INCURRED BY THOSE INSTITUTIONS, THE EXE MPTION IS BASED ON THE TOTAL RECEIPTS. EVEN IF THE WORD AGG REGATE HAS TO BE UNDERSTOOD S SUGGESTED BY THE REVENUE AS THE ANNUAL RECEIPTS OF SUCH EDUCATIONAL INSTITUTIONS PUT TOGET HER, PROBABLY, THE SAID PROVISION REGARDING EXEMPTION WOULD BE OF NO USE AT ALL. ESPECIALLY, IF THE SOCIETY IS RUNNING A MEDIC AL COLLEGE OR ANY ENGINEERING COLLEGE OR OTHER PROFESSIONAL COURS ES, THEN THE ANNUAL RECEIPT OF EACH INSTITUTION WOULD RUN TO FEW CRORES AND THEREFORE, THE VERY OBJECT OF GRANTING EXEMPTIO N TO SUCH 14 ITA NO. 135/COCH/2014 GENUINE INSTITUTION WOULD BE LOST. THEREFORE, THE WORD AGGREGATE ANNUAL RECEIPT HAS TO BE UNDERSTOOD WIT H THE CONTEXT WHICH IT IS USED AND THE PURPOSE FOR WHICH THE SAID PROVISION WAS INSERTED, KEEPING IN MIND, THE SCHEME OF THE ACT. THEREFORE, IF AN ASSESSEE IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, IF ANY OF THEM IS WHOLLY OR SUBSTANTI ALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME FROM SUCH EDUCATION AL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDE D WHILE COMPUTING HIS TOTAL INCOME E. SIMILARLY, INCOME FR OM EACH EDUCATIONAL INSTITUTION IF THEY ARE NOT RECEIVING A NY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESPECT OF WH ICH THE AGGREGATE ANNUAL RECEIPT DO NOT EXCEED RS.1 CRORE R ECEIVED BY THE ASSESSEE, IS ALSO NOT INCLUDED WHILE COMPUTING ANNUAL TOTAL INCOME OF THE ASSESSE. 9. THIS JUDGMENT OF THE KARNATAKA HIGH COURT WAS NO T CONSIDERED BY THE LOWER AUTHORITIES. MOREOVER, THE ASSESSEE CLAI MED EXEMPTION U/S 10(23C) BEFORE CIT(A). HOWEVER, THE CIT(A) HAS NOT CONSIDERED THE CLAIM OF ASSESSEE U/S 10(23C). MOREOVER, THE DETAI LS OF THE AIDS SAID TO HAVE BEEN RECEIVED FROM THE GOVERNMENT AND THE ANNU AL RECEIPTS ARE NOT AVAILABLE ON THE FILE OF THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ISSUE NEEDS TO BE RECON SIDERED BY THE ASSESSING OFFICER AFTER CONSIDERING THE JUDGMENT OF THE KARNATAKA HIGH COURT IN CHILDRENS EDUCATION TRUST (SUPRA) AND THE APEX COURT JUDGMENT IN ADITANAR EDUCATIONAL INSTITUTIONS & ORS (SUPRA). ACCORDINGLY, THE ORDERS 15 ITA NO. 135/COCH/2014 OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSU E OF EXEMPTION U/S 10(23C) IS REMITTED BACK TO THE FILE OF THE ASSESSI NG OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH AFTER CONSIDERING THE JUDGMENT OF THE APEX COURT IN ADITANAR EDUCATIONAL INSTITUTIONS & ORS (SUPRA) AND THE JUDGMENT OF THE KARNATAKA HIGH COUR T IN CHILDRENS EDUCATION TRUST (SUPRA) AND WILL THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENCED BY ANY OF THE OBS ERVATIONS MADE IN THE ORDER. IT IS MADE CLEAR THAT WE ARE NOT EXPRESSING ANY OPINION IN RESPECT OF EXEMPTION U/S 10(23C), AND THE ASSESSING OFFICER SHALL CONSIDER THE SAME INDEPENDENTLY AND DECIDE. THE ASSESSING OFFIC ER SHALL ALSO EXAMINE WHETHER THE ASSESSEE HAS COLLECTED ANY CAPI TATION FEE OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION F STUDENTS L IKE BUILDING, FUND, ETC. IF THE ASSESSEE COLLECTED CAPITYATION FEE, IT MAY N OT BE ENTITLED FOR EXEMPTION U/S 10(23C) OR 11 OF THE I.T. ACT. 10. SINCE THE APPEALS ARE DISPOSED OF, THE STAY PET ITIONS BECOME INFRUCTUOUS. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSE AND THE STAY PETITIONS FILED BY THE ASSESSEE ARE DISMISSED. 16 ITA NO. 135/COCH/2014 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH JULY, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 25 TH JULY, 2014 PK/- COPY TO: 1. DR C.T. EAPEN TRUST, LAKE VIEW, MUTHUPILAKKAD P. O., SASTHAMKOTTA, KOLLAM 690 520 2. THE ITO, WD.KARBALA JUNCTION, R.S. ROAD, KOLLAM 3. THE COMMISSIONER OF INCOME-TAX, THIRUVANANTHAPUR AM 4. THE COMMISSIONER OF INCOME-TAX(A), AAYAKAR BHAVA N, KOWDIAR, THIRUVANANTHAPURAM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH