Asst.Director of Income-tax (Exemptions)-I, V. Hyderabad Study Circle, Hyderabad

ITA 1645/HYD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87260 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Reopening of assessment; Capital asset; Depreciation; Charitable institution; Rule of consistency; Cost of acquisition
• Section: 143(3); 12A; 147; 263; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH, A.M. & SAKTIJIT DEY, J.M. ITA.NO.1645/HYD/2013 ASSESSMENT YEAR 2007-2008 ASST. DIRECTOR OF INCOME TAX, (EXEMPTIONS)-I, HYDERABAD. VS. HYDERABAD STUDY CIRCLE HYDERABAD. PAN AAATT1873G (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.23/HYD/2014 ARISING OUT OF ITA.NO.1645/HYD/2013 ASSESSMENT YEAR 2007-2008 HYDERABAD STUDY CIRCLE HYDERABAD. PAN AAATT1873G VS. ASST. DIRECTOR OF INCOME TAX, (EXEMPTIONS)-I, HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MR. RAJAT MITRA FOR ASSESSEE : MR. V. RAGHAVENDRA RAO DATE OF HEARING : 09.12.2014 DATE OF PRONOUNCEMENT : 30.01.2015 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-IV, HYDERABAD DATED 06. 09.2013 FOR THE ASSESSMENT YEAR 2007-2008. ASSESSEE HAS ALSO FI LED CROSS OBJECTION AGAINST THE SAME ORDER OF THE LD. CIT(A). 2 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. ITA.NO.1645/HYD/2013 : 2. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD.CIT (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND WHEN THE ASSESSEE IS CONDUCTING ONLY COACHING CLASSES FOR STUDENTS FOR APPEARING IN CIVIL SERVICE S EXAMINATION, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S.10(23C)(IIIAD) OF THE LT ACT, 1961. 3. THE LD. CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT CONDUCTING ONLY COACHING CLASSES FOR STUDENTS TO ENABLE THEM FOR THE PURPOSE OF APPEARING IN CIVIL SERVICES EXAMINATION DOES NOT COME UNDER THE PURVIEW OF EDUCATION AS DEFINED IN SECTION 2(15) OF THE LT ACT, 1961. 4. THE LD. CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ACTIVITY OF COACHING CONDUCTED BY THE ASSESSEE TO ENABLE STUDENTS FOR APPEARING IN COMPETITIVE EXAMINATION DOES NOT COME UNDER THE AMBIT OF EDUCATION, HAVING REGARD TO THE DECISION OF HON'BLE PATNA HIGH COURT IN BIHAR INSTITUTE OF MINING & MINE SURVEYING VS. CIT (1994) 208 ITR 608, AND HENCE THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(IIIAD) OF THE LT ACT, 1961. 5. THE LD. CIT(APPEALS) ERRED IN LAW IN HOLDING TH AT THE NET INCOME IS TO BE TAXED WHEN THE GROSS RECEIPTS FROM FEE COLLECTION, IN THE HANDS OF THE ASSESSEE, WHICH CONSTITUTES ITS TOTAL INCOME IS TAXABLE, AS IT IS NOT ENTITLED FOR EXEMPTION FOR TH E GROUNDS OF APPEAL RAISED ABOVE. 6. THE LD. CIT(APPEALS) IS NOT JUSTIFIED IN DELETI NG THE DISALLOWANCE OF DEPRECIATION, WHEN THE ASSESSEE HAS DEBITED A SUM OF RS.3,64,941 IN THE INCOME & EXPENDITURE ACCOUNT AND ITS INCOME IS NOT ELIGIBLE FOR EXEMPTION U/S.10(23C)(IIIAD) OF THE LT ACT, 1961. 3 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. GROUNDS NO. 1 AND 7 BEING GENERAL GROUNDS NEED NOT REQUIRE SPECIAL ADJUDICATION. GROUNDS NO. 2, 3 AND 4 ARE ON THE COMMON ISSUE OF ALLOWANCE OF EXEMPTION UNDER SECTION 10(23C) (IIIAD) OF THE ACT. 3.1. BRIEFLY THE FACTS RELEVANT TO THIS ISSUE ARE ASSESSEE A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATI ON ACT WAS ESTABLISHED IN THE YEAR 1976. THE OBJECTS OF THE SO CIETY AS NOTED BY THE A.O. IS TO PROMOTE LITERACY, SCIENTIFI C AND OTHER EDUCATIONAL ACTIVITIES TO UNDERTAKE RESEARCH PROGRA MMES AND TO ARRANGE TRAINING OF LOCAL BOYS AND GIRLS APPEARI NG AT THE COMPETITIVE EXAMINATION HELD BY UPSC, APPSC ETC., A S NOTED BY THE A.O. THE MAIN OBJECT OF THE ASSESSEE SOCIETY IS TO ENCOURAGE YOUNG MEN AND WOMEN ESPECIALLY FROM ANDHR A PRADESH TO TAKE-UP CIVIL SERVICES AS A CAREER. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF I NCOME ON 22.10.2007 DECLARING NIL INCOME AFTER CLAIMING EXEM PTION UNDER SECTION 10(23C)(IIIAD). DURING THE SCRUTINY A SSESSMENT PROCEEDING, THE A.O. AFTER VERIFICATION OF THE BOOK S OF ACCOUNTS AND OTHER INFORMATION AVAILABLE ON RECORD OBSERVED THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE CONDUCTING COACHING FOR STUDENTS APPEARING FOR CIVIL SERVICES MAIN, 200 6, CIVIL SERVICES PRELIMS 2007 AND CIVIL SERVICES CRASH CO URSE (PRELIMS) HAS RECEIVED THE FOLLOWING AMOUNTS : (I) FEES OF RS.9,62,785 FROM 271 STUDENTS APPEARING FOR C.S. MAIN 2006. (II) FEES OF RS.6,78,785 FROM 212 STUDENTS APPEARING FOR C.S. PRELIMINARY 2007. 4 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. (III) FEES OF RS.86,500 FROM 72 STUDENTS APPEARING FOR C.S.CRASH COURSE 2007. 3.2. THE A.O. WAS OF THE VIEW THAT COACHING STUDEN TS AND PREPARING THEM FOR PARTICULAR COMPETITIVE EXAMI NATION DOES NOT PARTAKE THE NATURE OF IMPARTING EDUCATION. HENCE, THE ASSESSEE IS NOT A CHARITABLE INSTITUTION UNDER SECT ION 2(15) OF THE ACT. ACCORDINGLY, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY THE EXEMPTION CLAIMED SHOUL D NOT BE DISALLOWED. THOUGH, THE ASSESSEE OBJECTED TO THE IN FERENCE DRAWN BY THE A.O. BY STATING THAT IT IS ELIGIBLE FO R EXEMPTION BUT THE A.O. REJECTING THE CLAIM OF THE ASSESSEE HE LD THAT AS ASSESSEE IS A COACHING INSTITUTE GIVING COACHING TO STUDENTS FOR VARIOUS COMPETITIVE EXAMINATION AND IS NOT MEANT FO R IMPARTING A SYSTEMATIC EDUCATION, IT CANNOT BE CLAS SIFIED AS CHARITABLE INSTITUTION. IN THIS CONTEXT, A.O. RELIE D UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT 101 ITR 234 A ND SOME OTHER DECISIONS OF THE SUPREME COURT AS WELL AS OTH ER HIGH COURTS. ACCORDINGLY, THE A.O. HELD THAT THE TOTAL F EES COLLECTED OF RS.17,28,070 FROM THE STUDENTS APPEARING FOR COM PETITIVE EXAMINATION IS REQUIRED TO BE BROUGHT TO TAX AND TR EATED IT AS INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. 4. BEING AGGRIEVED OF THE ADDITION MADE BY THE A.O . ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). IN COURSE OF HEARING OF APPEAL BEFORE THE FIRST APPELLATE AUTHOR ITY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE WORD EDUCATION HAD NOT BEEN DEFINED IN THE ACT, HENCE, SHOULD NOT BE RESTR ICTED TO MERE CONVENTIONAL OR ACADEMIC EDUCATION. IT WAS SUB MITTED, EDUCATION INCLUDES VOCATIONAL EDUCATION AND TRAI NING ALSO. ASSESSEE SUBMITTED, EVEN AS PER THE RATIO LAID DOWN BY THE 5 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT (SUPRA), THE WORD EDUCATIO N CANNOT BE GIVEN A RESTRICTIVE MEANING. IN SUPPORT OF SUCH CONTENTION, ASSESSEE RELIED ON NUMBER OF DECISIONS. FURTHER, IT WAS SUBMITTED BY THE ASSESSEE THAT AS ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(23C)(IIIAD) HAD BEEN GRA NTED FOR EARLIER ASSESSMENT YEARS, THE RULE OF CONSISTENCY D EMANDED THAT IT HAS TO BE ALLOWED FOR THE ASSESSMENT YEAR U NDER CONSIDERATION ALSO. IT WAS ALSO SUBMITTED BY THE AS SESSEE THAT AS IT IS ALSO REGISTERED UNDER SECTION 12A OF THE A CT, ALTERNATELY, IT SHOULD BE ALLOWED EXEMPTION UNDER S ECTION 11 AS ITS ACTIVITIES WOULD ALSO QUALIFY AS TOWARDS GENERA L PUBLIC UTILITY. IN SUPPORT OF SUCH CONTENTION, ASSESSEE AL SO RELIED ON NUMBER OF DECISIONS. LD. CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD AS WELL AS ON EXAMINING THE RAT IO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SO LE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT (SUPRA) OBSER VED AS UNDER : 4.4. WHILE ADVOCATING A RESTRICTIVE USAGE OF THE WORD 'EDUCATION', THE COURT EXCLUDED THE EDUCATION SAID TO BE PROVIDED BY THE 'GREAT SCHOOL OF LIFE'. IT AFFIRMED THAT 'THE PROCESS OF TRAINING AND DEVELOPI NG THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENT S BY NORMAL SCHOOLING' WOULD BE INCLUDED IN THE TERM 'EDUCATION'. THE OBSERVATION OF THE COURT THAT EDUCATION CONNOTES THE WHOLE COURSE OF SCHOLASTIC INSTRUCTIONS WHICH THE PERSON HAS RECEIVED INDICATE S THAT THE COURT DID NOT INTEND TO GIVE A NARROW AND PEDANTIC SENSE TO THE WORD. 4.5. THIS VIEW IS ALSO EXPRESSED IN THE FOLLOWING DECISIONS : (I) DIT (EXEMP) VS. NATIONAL SAFETY COUNCIL [2008] 305 ITR 257 (BOM.) 6 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. (II) CIT V S. AMM ARUNACHALAM EDUCATIONAL SOCIETY [2000] 243 ITR 229 (MAD.) (III) ADDL . CIT VS. ADITANAR EDUCATIONAL INSTITUTION [1979] 118 ITR 235 (MAD.) (IV) GOVERNING BODY OF RANGARAYA MEDICAL COLLEGE VS. ITO [1979] 117 ITR 284 (AP) 4.6 FOLLOWING THESE DECISIONS, THE COURSES IMPARTED BY THE APPELLANT DO, THEREFORE, FALL WITHIN THE CON CEPT OF EDUCATION. EDUCATION IS NO MORE TO BE UNDERSTOOD AS MERE IMPARTING THE '3 R'S I.E. READING, WRITING AND ARITHMETIC. IN THE CASE OF CIT VS. SRI LAL BAHADUR SHASTRI EDUCATIONAL SOCIETY [2001] 252 ITR 837 (RAJ), THE GUJARAT HIGH COURT CONSIDERED THE EDUCATIONAL INSTITUTION, RUNNING A STONE CRUSHING U NIT UNDER THE SCHEME OF CENTRAL SOCIAL WELFARE BOARD INTENDED TO PROVIDE EMPLOYMENT TO POOR WOMEN BELONGING TO BACKWARD COMMUNITY, AS A PUBLIC CHARITABLE SOCIETY ENGAGED IN IMPARTING EDUCATION. THE ENGAGING OF STUDENTS IN MANUFACTURING OF FURNAC E AND STONE CRUSHING ACTIVITIES, WHICH MADE THEM SELF RELIANT, WAS CONSIDERED AS AN EDUCATIONAL ACTIVITY. IN THE CASE OF GUJARAT STATE CO-OP UNION VS. CIT [1992] 195 ITR 279 (GUJ), AN INSTITUTION CONDUCTING DIPLOMA CERTIFICATE AND ORIENTATION COURSES IN CO- OPERATION AND BANKING WAS FOUND BY THE COURT TO BE ELIGIBLE FOR EXEMPTION AS AN EDUCATIONAL INSTITUTIO N. SIMILARLY, IN THE CASE OF CIT VS. SRI RAM EDUCATIONAL FOUNDATION [2001] 250 ITR 504 (DEL), A VOCATIONAL TRAINING CENTRE WAS CONSIDERED AS AN EDUCATIONAL INSTITUTION, BY PLACING RELIANCE ON THE DECISION IN THE CASE OF ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [1980] 121 ITR 1 (SC). 4.7. THERE IS NO DISPUTE THAT THE APPELLANT IS ENGAGED IN PROVIDING TRAINING AND SKILLS FOCUSED AT ENABLING ITS 'STUDENTS' TO OBTAIN JOBS THROUGH COM ETITIVE EXAMINATIONS. THE APPELLANT IS ALSO DOING I T IN A SYSTEMATIC AND STRUCTURED MANNER. AWARD OF FORMAL DEGREES OR CERTIFICATES AT THE CULMINATION O F THE TRAINING PROGRAMME IS NOT A MANDATORY REQUIREMENT FOR QUALIFYING AS 'EDUCATION'. 7 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. 4.8. I, THEREFORE, HOLD THAT THE ACTIVITIES OF THE APPELLANT FALL IN THE REALM OF 'EDUCATION' AS A RES ULT OF WHICH THE APPELLANT IS HELD TO BE ELIGIBLE FOR EXEM PTION U/S 10(23C)(IIIAD). THE APPEAL IS ALLOWED ON THIS ISSUE. 5. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. LD. D.R. SUPPORTING THE VIEW OF THE A.O. SUBMITTED THAT AS THE ASSESSEE IS ONLY RUNNING A COACHING CEN TRE, IT CANNOT BE CONSIDERED TO BE IMPARTING EDUCATION SO A S TO CONSIDER ITS ACTIVITIES TO BE TOWARDS CHARITABLE PU RPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. THEREFORE, ASSESSEE CANNOT BE GRANTED EXEMPTION UNDER SECTION 10(23C) ( IIIAD). 6. LEARNED A.R. ON THE OTHER HAND STRONGLY SUPPORTING THE FINDING OF THE LD. CIT(A) ON THIS IS SUE SUBMITTED THAT AS THE ACTIVITY CARRIED ON BY THE AS SESSEE CANNOT BE ANYTHING ELSE EXCEPT IMPARTING OF EDUCATI ON, ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10 (23C)(IIIAD). IT WAS SUBMITTED THAT EDUCATION CANNOT BE GIVEN A R ESTRICTED MEANING TO MEAN THAT ONLY EDUCATION IMPARTED IN SCH OOLS AND COLLEGES OR UNIVERSITIES ARE TO BE TREATED AS TO FU LFILL THE CRITERIA OF CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15 ). THE LEARNED A.R. SUBMITTED THAT AS THE ACTIVITY OF THE ASSESSEE AS PER ITS OBJECTS, IS ALSO IN THE NATURE OF IMPARTING EDUCATION THROUGH PROCESS OF TRAINING FOR DEVELOPING THE KNOW LEDGE, SKILL, MIND AND CHARACTER OF THE STUDENTS, IT HAS TO BE CO NSIDERED AS EDUCATION AS ENVISAGED UNDER SECTION 2(15) OF THE ACT. IN SUPPORT OF ITS CONTENTION, THE LEARNED A.R. RELIED UPON THE FOLLOWING DECISIONS : 1. ICAI ACCOUNTING RESEARCH FOUNDATION & ANOTHER VS . DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) AND OTH ERS (2010) 321 ITR 73 (DEL.) 8 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. 2. DIRECTOR OF INCOME TAX (EXEMPTIONS) VS. NATIONAL SAFETY COUNCIL (2008) 305 ITR 257 (BOM.) 3. DIT VS. INDO-SOVIET MEDICARE & RESEARCH FOUNDATI ON (2005) 146 TAXMAN 384 (DEL.) 4. CIT VS. A.M.M. ARUNACHALAM EDUCATIONAL SOCIETY ( 2000) 243 ITR 229 (MAD.) 5. GUJARAT STATE COOPERATIVE UNION VS. CIT (1992) 1 95 ITR 279 (GUJ.) 6. CIT VS. ACADEMY OF GENERAL EDUCATION, MANIPAL (1 984) 150 ITR 135 (KAR.) 7. ADDL. CIT VS. ADITANAR EDUCATIONAL INSTITUTION ( 1979) 118 ITR 235 (MAD.) 8. ICAI VS. DGIT (E) (2012) 347 ITR 99 (DEL.) 9. INDO-AMERICAN SOCIETY VS. ADIT (E) (2005) 278 IT R (A.T.) 49 (ITAT) (MUM.) 10. CIT VS. SHRI RAM EDUCATION FOUNDATION (2001) 25 0 ITR 504 (DEL.) 11. VICTORIA TECHNICAL INSTITUTE VS. CIT (1991) 188 ITR 57 (SC) 12. ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURER S ASSOCIATION (1980) 121 ITR 1 (SC) 13. ITO VS. SRM FOUNDATION OF INDIA (1988) 30 TTJ 2 83 (ITAT) (DEL.) 14. SPECTRA SHARES & SCRIPS P. LTD., VS. CIT (2013) 354 ITR 35 (A.P.). 15. CIT VS. HINDUSTHAN MOTORS LTD., (1991) 192 ITR 619 (CAL.) 16. CIT VS. DALMIA DADRI CEMENT LTD., (1970) 77 ITR 410 (P & H). 17. DDIT (E)-I, HYDERABAD VS. KAMINENI EDUCATIONAL SOCIETY, HYDERABAD ITAT, HYDERABAD B BENCH ITA.NO. 807 TO 809/HYD/2010 DATED 03.09.2010. 6.1. LEARNED A.R. SUBMITTED, FOR THAT MATTER, ASSE SSEE IS ALSO CONDUCTING MCA COURSE. LEARNED A.R. FURTHER SUBMITTED THAT EVEN OTHERWISE ALSO THE OBJECTS OF T HE ASSESSEE HAVING BEEN FOUND TO BE OF CHARITABLE NATURE, THE A SSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT FROM THE DATE OF ITS ESTABLISHMENT WHICH PROVES THE FACT THAT ASSESSEE IS A CHARITABLE INSTITUTION EXISTING FOR C HARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. THEREFORE, TILL SUCH REGISTRATION CONTINUES AND ASSESSEE CARRI ES ON 9 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. ACTIVITIES AS PER ITS OBJECTS, THE A.O. CANNOT TREA T THE ASSESSEE NOT TO BE A CHARITABLE INSTITUTION. FURTHER, THE LE ARNED A.R. SUBMITTED THAT FROM THE DATE OF ITS INCEPTION, ASSE SSEE HAS BEEN GRANTED EXEMPTION AS A CHARITABLE INSTITUTION IN PRECEDING ASSESSMENT YEARS AND AS PER RULE OF CONSI STENCY, THE SAME VIEW SHOULD HAVE BEEN FOLLOWED IN THE PRESENT ASSESSMENT YEAR ALSO. IN SUPPORT OF SUCH ARGUMENT, LEARNED A.R. RELIED ON THE FOLLOWING DECISIONS : (I) SPECTRA SHARES & SCRIPS P. LTD., VS. CIT (2013) 354 ITR 35 (A.P.) (II) CIT VS. HINDUSTAN MOTORS LTD., (1991) 192 ITR 619 (KOL.) (III) CIT VS. DALMIA DADRI CEMENT LTD., (1970) 77 ITR 410 (P & H). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD AS WELL AS ORDER S OF THE REVENUE AUTHORITIES. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS PLACED BEFORE US. UNDISPUTED FACTS ARE, A SSESSEE WAS ESTABLISHED AS A SOCIETY AS EARLY AS IN DECEMBER, 1 976 AND IS REGISTERED UNDER THE SOCIETIES ACT. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTIO N 12A OF THE ACT BY THE COMMISSIONER OF INCOME TAX VIDE ORDE R DATED 23.09.1978 WHICH PRE-SUPPOSES THAT ASSESSEES OBJEC TS BEING OF CHARITABLE NATURE, ASSESSEE WAS GRANTED REGISTRA TION AS A CHARITABLE INSTITUTION. KEEPING IN VIEW THE AFORECI TED FACTUAL POSITION, LET US EXAMINE THE FACTS OF THE CASE. THE OBJECTS OF THE ASSESSEE SOCIETY AS PER ITS BYE LAWS ARE AS UNDER : THE AIMS AND OBJECTIVES OF THE SOCIETY ARE AS FOLL OWS: A. TO PROMOTE LITERARY, SCIENTIFIC AND OTHER EDUCATION AL ACTIVITIES AMONG LOCAL YOUNG MEN AND WOMEN. 10 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. B. TO BE A CENTRE FOR RESEARCH IN ACADEMIC, ADMINISTRA TIVE, EDUCATIONAL AND MANAGEMENT FIELDS WITH A VIEW TO CONTRIBUTING TO IMPROVEMENT IN THE SYSTEMS, METHODS THEREOF. C. TO PROMOTE, INTEGRATION AND DISSEMINATION OF KNOWL EDGE IN VARIOUS FIELDS OF HUMAN ACTIVITY RELATED TO ACAD EMIC, EDUCATION, MANAGEMENT AND ADMINISTRATIVE FIELDS AND OTHER PROGRAMMES. D. TO UNDERTAKE RESEARCH, ORGANISATIONAL AND DEVELOPMENTAL PROGRAMMES ON CONTRACT WITH GOVERNMEN T, PUBLIC OR PRIVATE AGENCIES. E. TO ORGANISE AND PROMOTE SUCH OTHER RELATED ACTIVITI ES AS WOULD HELP THE ACHIEVEMENT OF ITS OBJECTIVES; AND F. TO ARRANGE FOR THE TRAINING OF LOCAL BOYS AND GIRLS APPEARING AT THE COMPETITIVE EXAMINATION HELD BY TH E UNION PUBLIC SERVICE COMMISSION, THE ANDHRA PRADES H PUBLIC SERVICE COMMISSION, THE PUBLIC SERVICE COMMISSIONS OF OTHER STATES, NATIONAL OR REGIONAL B ODIES FOR APPOINTMENT TO THE BANKING INSTITUTIONS AND OTH ER ORGANISATIONS. G. TO MAKE DONATIONS, CONTRIBUTIONS AND GIVE SUBSCRIPT IONS TO CHARITABLE INSTITUTIONS PROMOTING EDUCATIONAL OR LITERACY ACTIVITIES. H. TO ESTABLISH, MAINTAIN, RUN, DEVELOP, IMPROVE, EXTE ND, GRANT DONATE, FOR AND TO AID IN THE ESTABLISHMENT, MAINTENANCE, IMPROVEMENT AND EXTENSION OF SCHOOLS, COLLEGES, POLYTECHNICS AND OTHER EDUCATIONAL INSTIT UTIONS, INCLUDING VOCATIONAL TRAINING CENTERS, RESEARCH CEN TERS, FOUNDATIONS AND ADULT EDUCATION CENTERS AND HOSTELS FOR STUDENTS. 8. THE A.O. WHILE EXAMINING THE BOOKS OF ACCOUNTS AND OTHER INFORMATION AVAILABLE ON RECORD HAS NOT F OUND ANY MATERIAL TO SUGGEST THAT ASSESSEE HAS UNDERTAKEN AC TIVITIES CONTRARY TO ITS AIMS AND OBJECTS. THE ONLY REASON O N WHICH THE A.O. HAS COME TO CONCLUSION THAT IT IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) IS THAT SINC E THE ASSESSEE IS ENGAGED IN COACHING STUDENTS FOR COMPET ITIVE 11 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. EXAMINATION, THE SAID ACTIVITY DOES NOT PARTAKE THE NATURE OF IMPARTING EDUCATION. HENCE, IS NOT WITHIN THE MEANI NG OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT. THE A.O. HAS ALSO OBSERVED THAT ASSESSEE CANNOT BE CLASSIFIED AS CHARITABLE INSTITUTION FOR THAT VERY REASON. HOWEVER, ON EXAMI NATION OF THE DEFINITION CHARITABLE PURPOSE, IT IS CLEAR TH AT EDUCATION IS ONE OF THE ACTIVITY COMING WITHIN THE MEANING OF CH ARITABLE PURPOSE. THOUGH IT IS A FACT THAT THE HONBLE SUPRE ME COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT (SUPRA) HAS OBSERVED THAT EDUCATION AS USED IN SECTION 2( 15) OF THE ACT CANNOT BE CONSTRUED TO BE IN A VERY WIDE AND EX TENDED SENSE BUT THE SAID DECISION CANNOT BE INTERPRETED I N A MANNER TO MEAN THAT THE EXPRESSION EDUCATION ENVISAGED UND ER SECTION 2(15) HAS TO BE GIVEN A RESTRICTED MEANING AND WOUL D ONLY MEAN THE EDUCATION AS IMPARTED IN SCHOOLS AND COLLE GES. THEREFORE, IF EDUCATION IS CONSIDERED TO MEAN TRAIN ING AND DEVELOPING THE SKILL, KNOWLEDGE, MIND AND CHARACTER OF STUDENTS, THEN THE ACTIVITY OF THE ASSESSEE CAN BE TERMED TO BE COMING WITHIN THE EXPRESSION EDUCATION AS USED IN SECTION 2(15) OF THE ACT. MOREOVER, THE PROVISION CONTAINED UNDER SECTION 10(23C)(IIIAD) USED THE WORDS ANY UNIVERSI TY OR OTHER EDUCATIONAL INSTITUTION SOLELY FOR EDUCATIONAL PUR POSE AND NOT FOR THE PURPOSE OF PROFIT. IF WE CONSIDER THE ACTIV ITIES OF THE ASSESSEE AS ENUMERATED IN THE AIMS AND OBJECTS THEN IT HAS TO BE CONSIDERED AS OTHER EDUCATIONAL INSTITUTION EXIS TING SOLELY FOR EDUCATIONAL PURPOSE AND WITHOUT PROFIT MOTIVE. THEREFORE, CONSIDERED IN THE AFORECITED PERSPECTIVE AND KEEPIN G IN VIEW THE RATIO LAID DOWN IN THE DECISIONS REFERRED TO BY THE LEARNED A.R. AND RELIED UPON BY THE LEARNED CIT(A), THE ASS ESSEE WOULD BE ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(III AD). FURTHER, FROM THE FACTS AND MATERIALS PLACED ON RECORD, IT I S VERY MUCH 12 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. EVIDENT THAT FROM ITS INCEPTION ASSESSEE HAS BEEN C LAIMING EXEMPTION AND THE DEPARTMENT HAS ALSO ACCEPTED SUCH CLAIM OF THE ASSESSEE IN SUCCESSIVE ASSESSMENT YEARS. PERUSA L OF THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) OF TH E ACT FOR THE ASSESSMENT YEARS 1997-98 AND 1999-2000 CLEARLY ESTABLISHES THIS FACT. MOREOVER, EVEN IN THE SUCCE EDING ASSESSMENT YEAR ALSO I.E., ASSESSMENT YEARS 2010-20 11 AND 2011-2012, A.O. HAS ALLOWED CLAIM OF EXEMPTION UNDE R SECTION 10(23C)(IIIAD) AFTER EXAMINING THE ISSUE IN DETAIL. THEREFORE, WHEN THE DEPARTMENT HAS OVER THE YEARS ACCEPTED ASS ESSEES CLAIM OF EXEMPTION UNDER SECTION 10(23C)(IIIAD), TH ERE IS NO REASON WHY A DIFFERENT VIEW SHOULD BE TAKEN IN THE IMPUGNED ASSESSMENT YEAR. THOUGH, PRINCIPLES OF RES JUDICATA DOES NOT APPLY TO TAX PROCEEDINGS AS EACH ASSESSMENT YEAR IS A INDEPENDENT UNIT, BUT AS HELD BY THE HONBLE SUPREM E COURT IN THE CASE OF RADHASOAMI SATSANG (193 ITR 321) WHE RE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER IT WOULD NOT AT ALL BE AP PROPRIATE TO ALLOW THE POSITION TO CHANGE IN A SUBSEQUENT YEAR. THE HONBLE JURISDICTIONAL HIGH COURT WHILE FOLLOWING THE AFORE CITED PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF SPECTRA SHARES AND SCRIPS VS. CIT (SUPRA) HELD AS U NDER : IN VIEW OF THE ABOVE, WE HOLD THAT THE RESPONDENT CANNOT UNDER SECTION 263 INTERFERE ON AN ISSUE WHICH HAS B EEN ACCEPTED BY THE REVENUE FOR A NUMBER OF YEARS PARTICULARLY, WHEN THE A.O. IN THE ASSESSMENT ORDER FOR THE A.Y. 2006-07 TAKES THE SAME VIEW BY TERMING IT ERRONEOUS 8.1. THOUGH THE SAME VIEW HAS BEEN EXPRESSED IN OT HER DECISIONS REFERRED TO BY THE LEARNED A.R. IT IS NOT NECESSARY TO 13 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. REFER TO ALL OF THEM AS THE PRINCIPLE IN THIS REGAR D IS A WELL KNOWN. AT THIS JUNCTURE, IT WILL BE PERTINENT TO ME NTION HERE THAT IN A.Y. 2004-05 ALSO WHILE COMPLETING THE ASSE SSMENT UNDER SECTION 143(3), THE A.O. HAD ACCEPTED ASSESSE ES CLAIM OF EXEMPTION. SUBSEQUENTLY, ON THE BASIS OF AUDIT REPO RT, THE A.O. REOPENED THE ASSESSMENT UNDER SECTION 147 AND PASSE D THE ASSESSMENT ORDER HOLDING THAT ASSESSEE IS NOT ELIGI BLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD). HOWEVER, WH EN THE ASSESSEE CARRIED AN APPEAL TO THE TRIBUNAL, THE TRI BUNAL VIDE ORDER DATED 13.05.2011 IN ITA.NO.1468/HYD/2010 HELD REOPENING OF ASSESSMENT TO BE INVALID AS THE A.O. I N ORIGINAL ASSESSMENT HAS EXAMINED THE ISSUE RELATING TO CLAIM OF EXEMPTION AND THERE WAS NO CHANGE IN CIRCUMSTANCES OR FRESH MATERIAL BEFORE THE A.O. FOR REOPENING THE ASSESSME NT. IT IS INTERESTING TO NOTE THAT NOT ONLY THE A.O. WHO REOP ENED THE ASSESSMENT, IS THE SAME WHO HAS PASSED THE ASSESSME NT ORDER FOR THE IMPUGNED ASSESSMENT YEAR, BUT THE ASSESSMEN T ORDER PASSED FOR THE IMPUGNED ASSESSMENT YEAR IS ALMOST A REPLICA OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) RE AD WITH SECTION 147 FOR THE ASSESSMENT YEAR 2004-05 A COPY OF WHICH HAS BEEN PLACED IN ASSESSEES PAPER BOOK. IN THESE CIRCUMSTANCES, IT IS NOT DIFFICULT TO UNDERSTAND WH Y THE A.O. IN THE IMPUGNED ASSESSMENT YEAR HAS TAKEN SUCH A VIEW. HOWEVER, WHEN DEPARTMENT HAS ACCEPTED ASSESSEES CL AIM OF EXEMPTION NOT ONLY IN THE PRECEDING ASSESSMENT YEAR S BUT ALSO IN SUBSEQUENT ASSESSMENT YEARS, LATEST BEING ASSESS MENT YEARS 2010-2011 AND 2011-2012 UNDER SIMILAR FACTS A ND CIRCUMSTANCES, A CONTRARY VIEW SHOULD NOT BE TAKEN. ONE MORE ASPECT WHICH NEEDS TO BE LOOKED INTO IS, THERE IS N O DISPUTE THAT ASSESSEE IS REGISTERED UNDER SECTION 12A OF TH E ACT AND THE REGISTRATION GRANTED ALSO CONTINUES TILL DATE. THAT BEING THE 14 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. CASE, THERE IS NO JUSTIFICATION ON THE PART OF THE A.O. TO OBSERVE THAT THE ASSESSEE CANNOT BE TREATED AS A CHARITABLE INSTITUTION. THEREFORE, KEEPING IN VIEW THE FACT THAT ASSESSEE I S REGISTERED AS A CHARITABLE INSTITUTION UNDER SECTION 12A OF TH E ACT, IT CAN ALTERNATIVELY ALSO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. THE A.O. WHILE COMPLETING THE ASSESSMENT HAS TOTALL Y IGNORED THIS ASPECT AND HAS FAILED TO EXAMINE WHETHER THE A SSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. FOR THE AFORESTATED REASONS, WE CANNOT THEREFORE, ACCEPT TH E CONCLUSION DRAWN BY THE A.O. WHILE DISALLOWING THE CLAIM OF EXEMPTION. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD THAT LD. CIT(A) WAS CORRECT IN ALLOWING ASSESSEES CLAIM OF OF EXEMPTION UNDER SECTION 10(23C)(IIIAD). ACCORDINGLY, WE UPHOL D THE ORDER OF LD. CIT(A). GROUNDS NO. 2, 3, AND 4 OF THE DEPAR TMENT ARE DISMISSED. 9. GROUND NO.5 IS WITH REGARD TO FINDING OF THE LD . CIT(A) THAT ONLY THE NET INCOME IS TO BE TAXED. HAV ING HEARD THE PARTIES THOUGH WE AGREE IN PRINCIPLE WITH THE O BSERVATIONS MADE BY THE LD. CIT(A) BUT SINCE IT IS PURELY OF AC ADEMIC INTEREST, THERE IS NO NEED TO ADJUDICATE THIS GROUN D. ACCORDINGLY, GROUND NO.5 OF THE DEPARTMENT IS DISMI SSED. 10. GROUND NO.6 IS WITH REGARD TO CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECI ATION. WHILE COMPLETING THE ASSESSMENT, THE A.O. DISALLOWE D DEPRECIATION OF RS.3,63,962 BY OBSERVING THAT DEPRE CIATION IS NOT ALLOWABLE FOR A CAPITAL ASSET WHOSE ENTIRE COST OF ACQUISITION IS EITHER WRITTEN OFF IN THE FIRST YEAR ITSELF OR THE COST OF ACQUISITION IS TREATED AS APPLICATION OF INCOME. LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 15 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. 7.0 THE EIGHTH GROUND OF APPEAL RELATES TO THE APPELLANT'S CLAIM OF DEPRECIATION. THE AR, WHILE AGREEING IN PRINCIPLE THAT DEPRECIATION IS NOT ALLO WABLE ON CAPITAL ASSETS THE ENTIRE COST OF ACQUISITION OF WHICH HAS EITHER BEEN WRITTEN OFF OR BEEN TREATED AS APPLICATION OF INCOME, HAS SUBMITTED THAT THE APPELLANT HAD NOT DONE EITHER BUT HAD MERELY DEBITE D THE DEPRECIATION TO THE INCOME AND EXPENDITURE ACCOUNT. I HAVE VERIFIED THE APPELLANT'S CLAIM AND FIND IT TO BE FACTUALLY CORRECT. THERE IS, THEREFORE, NO REASON TO DISALLOW THE APPELLANT'S CLAIM OF DEPRECIATION A ND THE APPEAL I S ALLOWED ON THIS ISSUE. 11. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS CAN BE SEEN LD. CIT(A) HAS DELETED THE ADDITION HAVING FOUND THAT ASSESSEE HAS NEITHER WRI TTEN OFF THE COST OF ACQUISITION NOR HAS TREATED IT AS APPLICATI ON OF INCOME. AS THE LEARNED D.R. HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE AFORESAID FINDING OF THE LD. CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDING LY, THE SAME IS UPHELD. 12. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. C.O.NO.23/HYD/2014 13. THE ASSESSEE HAS FILED THE CROSS OBJECTION ON THE GROUND THAT LD. CIT(A) SHOULD ALSO HAVE DECIDED ASS ESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THO UGH, IN PRINCIPLE, WE AGREE WITH THE ASSESSEE THAT IT IS EL IGIBLE TO CLAIM EXEMPTION EITHER UNDER SECTION 10(23C)(IIIAD) OR UN DER SECTION 11 CONSIDERING THE FACT THAT REGISTRATION HAS BEEN GRANTED UNDER SECTION 12A OF THE ACT, HOWEVER, SINCE WE HAV E UPHELD THE ORDER OF THE LD. CIT(A) ALLOWING ASSESSEES CLA IM OF EXEMPTION UNDER SECTION 10(23C)(IIIAD), THE GROUND RAISED IN THE CROSS OBJECTION ARE REDUCED TO MERE ACADEMIC IN TEREST. 16 ITA.NO.1645/HYD/2013 & C.O.NO.23/HYD/2014 HYDERABAD STUDY CIRCLE, HYDERABAD. HENCE, THERE IS NO NECESSITY TO ADJUDICATE THEM. AC CORDINGLY, CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INF RUCTUOUS. 14. TO SUM-UP, APPEAL OF THE DEPARTMENT AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2 015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACOUNTANT MEMBER JUDICIALMEMB ER HYDERABAD, DATED 30 TH JANUARY, 2015 VBP/- COPY TO : 1. ASST. DIRECTOR OF INCOME TAX (EXEMPTIONS)-I, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 04. 2. HYDERABAD STUDY CIRCLE, 1-2-365/25/1, DOMALGUDA, HYDERABAD. 3. CIT(A)-IV, HYDERABAD 4. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD.