Senate of Serampore College, Kolkata V. J.C.I.T. (OSD), Cir- 2,Hooghly, Hooghly

ITA 1678/KOL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7916 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY MUKHERJEE JDIT
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Ignorance of law
• Section: 143(3); 147; 148

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NOS.1677 & 1678/KOL/2012 #$ %&/ ASSESSMENT YEARS: 2009-10 & 2010-11 SENATE OF SERAMPORE COLLEGE VS. JOINT COMMISSIO NER OF INCOME-TAX (OSD), (PAN:AAAJS1188B) CIRCLE-2, HOOGHLY (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 05.09.2014 DATE OF PRONOUNCEMENT: 14.10.2014 FOR THE APPELLANT: SHRI MIRAJ D. SHAH, ADVOCATE FOR THE RESPONDENT: SHRI SANJAY MUKHERJEE, JDIT, SR.DR / ORDER PER SHRI MAHAVIR SINGH, JM : BOTH THESE APPEALS BY ASSESSEE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A)-XXXVI, KOLKATA IN APPEAL NOS. 264 & 265/CIT(A)-XXXVI/KOL/C IR.2,HGL./11-12/1240 & 1182 RESPECTIVELY BOTH DATED 25.09.2012. ASSESSMENTS WE RE FRAMED BY JCIT(OSD), CIRCLE-2, HOOGHLY U/S. 143(3) READ WITH SECTION 147 OF THE IN COME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2009-10 AND 2010 -11, VIDE HIS SEPARATE ORDERS, BOTH DATED 28.11.2011. 2. FIRST COMMON ISSUE RAISED BY ASSESSEE IN THESE A PPEALS IS THAT, WHETHER INSTITUTION KNOWN AS SENATE OF SERAMPORE COLLEGE IS A TAXABLE ENTITY OR NOT. FOR THIS ASSESSEE RAISED FOLLOWING GROUND NOS 2 &3. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE BE HELD TO NOT TO BE A TAXABLE ENTITY AND HENCE THE ASSESSMENT ORDER PAS SED ON THE ASSESSEE BE CANCELLED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ASSESSEE CANNOT BE ASSESSED TO TAX MERELY BECAUSE IT FILED A RETURN OF INCOME THOU GH IT WAS NOT A TAXABLE ENTITY. SECOND COMMON ISSUE RAISED BY ASSESSEE IN THESE APP EALS IS, THAT, WHETHER ASSESSEE IS ENTITLED TO EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT OR NOT. FOR THIS ASSESSEE RAISED FOLLOWING GROUND NO 4: 2 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 4. WITHOUT PREJUDICE TO ABOVE AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE BE ENTITLED TO EXEMPTION U/S. 10(23C)(IIIA B) OF THE IT ACT 1961 AND ACCORDINGLY THE ENTIRE INCOME OF THE ASSESSEE BE HELD TO BE EXE MPT U/S 10(23C)(IIIAB) OF THE IT ACT 1961. 3. BRIEF FACTS RELATING TO ABOVE TWO INTER CONNECTE D ISSUES ARE THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTE, WHICH DOES NOT EXIST FOR PRO FIT. THE AO IN ASSESSMENT ORDER NOTED THE FACT THAT IT IS A THEOLOGICAL UNIVERSITY ESTABLISHED TO PROMOTE PIETY AND LEARNING, PARTICULARLY AMONG THE NATIVE CHRISTIAN POPULATION OF INDIA. THE SERAM PORE COLLEGE IS A UNIVERSITY INCORPORATED BY THE ROYAL CHARTER OF 1818. THE SERAMPORE COLLEGE WA S GRANTED POWER TO GRANT DEGREE, DIPLOMA AND CERTIFICATE IN ANY BRANCH OF KNOWLEDGE UNDER RO YAL DANISH CHAPTER OF 1827 FOR ESTABLISHMENT OF UNIVERSITIES AT CALCUTTA, BOMBAY A ND MADRAS. SERAMPORE COLLEGE HAS TWO BRANCHES AT BANGALORE AND CALCUTTA. IT HAS 47 AFFIL IATED COLLEGES. THE GENERAL EDUCATION IN THE STREAMS OF ARTS, SCIENCE AND COMMERCE WAS AFFILIATE D TO THE UNIVERSITY OF CALCUTTA AFTER ITS ESTABLISHMENT IN 1857. SUBSEQUENTLY, THE SERAMPORE COLLEGE ACT 1918 WAS PASSED BY GOVERNMENT OF INDIA, AS BENGAL ACT IV OF 1918, TO S UPPLEMENT AND IN CERTAIN MATTERS TO SUPERSEDE, THE ROYAL CHARTER OF INCORPORATION. BY T HIS STATUE, REGULATIONS OF THE SERAMPORE COLLEGE WAS BROUGHT IN FOR BETTER GOVERNANCE AND M ANAGEMENT, AND COLLEGE HAS BEEN RUN IN TERMS OF THE STATUES. THE SERAMPORE COLLEGE HAS F OLLOWING CONSTITUTES UNITS IN ITS FUNCTIONS AND ACTIVITIES, AS IS EVIDENT FROM THE SERAMPORE CO LLEGE ACT 1918: I) COLLEGE COUNCIL HEADED BY A MASTER (PRESIDENT ) WHICH IS THE SUPREME BODY WHICH FRAMES POLICY ISSUES AND CONFERS DEGREE, DIPLOMA, C ERTIFICATE: II) SENATE OF THE COLLEGE (SENATE OF SERAMPORE COLLEGE) : APPOINTED BY THE COUNCIL, THE SENATE SHALL FRAME COURSES OF STUDY AND MAKE RULES FOR CONDUCT OF EXAMINATION AND PERFORM ALL OTHER MATTERS AND THINGS NECESSARY OR P ROPER SUBJECT TO THE CONTROL OF THE COUNCIL. III) THEOLOGY DEPARTMENT: THE PURPOSE OF THIS DEPARTME NT IS TO IMPART HIGHER THEOLOGICAL EDUCATION TO THE PROSPECTIVE MINISTER OF CHURCHES O R LAY PEOPLE THROUGH ITS FACULTY OF THEOLOGY. IT HAS AFFILIATED COLLEGE IN INDIA AND SU B-CONTINENT. THE COLLEGE CONFERS BACHELOR DIVINITY DEGREE AND OTHER DIPLOMA UNDER SE RAMPORE COLLEGE (UNIVERSITY) WHICH IS RECOGNIZED FOR FURTHER POST GRADUATE EXAMI NATIONS BY MANY INDIAN UNIVERSITIES INCLUDING CALCUTTA UNIVERSITY. ANY PERSON IRRESPECT IVE OF CASTE, CREED AND RELIGION CAN STUDY THESE COURSES UNDER THE THEOLOGY DEPARTMENT. IV) SERAMPORE COLLEGE (ARTS, SCIENCE AND COMMERCE) THE GENERAL FIELDS OF STUDIES IN THE STREAMS OF ARTS, SCIENCE AND COMMERCE IS AFFILI ATED TO THE UNIVERSITY OF CALCUTTA SINCE ITS INCEPTION IN 1857. THE DEGREES ARE GRANTE D BY THE UNIVERSITY OF CALCUTTA. 4. THE ASSESSEE FILED ITS RETURN OF INCOME IN THE N AME OF SENATE OF SERAMPORE COLLEGE FOR THE FIRST TIME FOR THE ASSESSMENT YEAR 2009-10 ON 28-09-2010 DECLARING NIL INCOME. THE 3 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 ASSESSEE ALSO APPLIED FOR GRANT OF EXEMPTION U/S. 1 0(23C) (VIA) OF THE ACT ON 11-11-2009 BEFORE CCIT KOLKATA-X. THE CCIT KOLKATA-X ASKED FOR REPORT FROM THE AO AND THE AO AFTER EXAMINE THE AUDITED ACCOUNTS FOR THE FY 2003-04 TO 2008-09, FORWARDED ITS FINDING TO CCIT KOLKATA-X ON 05-10-2010. IN VIEW OF THE REPORT OF A O, CCIT KOLKATA-X REJECTED THE APPLICATION OF THE ASSESSEE, SENATE OF SERAMPORE COLLEGE VIDE HIS ORDER NO.CCIT- X/10(23C)/2/2010-11/1910-14 DATED 25-11-2010. THERE AFTER THE AO ISSUED NOTICE U/S 148 OF THE ACT DATED 01-02-2011 FOR THE AYS 2009-10, 2010- 11, 2006-07 AND 2004-05, FOR THE REASON THAT IN EACH OF THE YEAR THERE IS EXCESS OF INCOME OVER EXPENDITURE AS PER THE AUDITED INCOME AND EXPENDITURE ACCOUNT. IN THE PRESENT YEAR, THE A SSESSEES EXCESS OF INCOME OVER EXPENDITURE AS PER AUDITED INCOME AND EXPENDITURE OF ACCOUNT WA S TO THE TUNE OF RS.64,39,213/-. ACCORDING TO AO, EVEN THE EXEMPTION APPLICATION U/S 10(23C)(V IA) OF THE ACT WAS ALSO REJECTED BY THE CCIT KOLKATA-X VIDE ORDER DATED 25-11-2010. BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED DETAILED WRITTEN SUB MISSIONS, WHICH ARE REPRODUCED IN THE ASSESSMENT ORDER, CLAIMING THAT SENATE OF SERAMPORE COLLEGE IS ONLY A UNIT OF COLLEGE AND THE LEGAL ENTITY SHOULD BE, THE SERAMPORE COLLEGE . IT WAS PLEADED BY THE ASSESSEE THAT SERAMPORE COLLEGES ACTIVITIES ARE DISCHARGED THROUGH ITS FOU R UNITS, NAMELY, UNIT1: COLLEGE COUNCIL UNAUDITED BY GOVERNMENT UNIT II: SENATE OF SERAMPORE COLLEGE UNAUDITED BY GOVERNMENT UNIT III: THEOLOGY DEPARTMENT UNAUDITED BY GOVERN MENT UNIT IV: ARTS, SCIENCE, COMMERCE (GENERAL) GOVERNME NT AUDITED. ACCORDING TO ASSESSEE, THESE INDEPENDENT UNITS WERE CREATED FOR OPERATIONAL CONVENIENCE. ACCORDING TO ASSESSEE THE ASSESSABLE ENTITY IS, TH E SERAMPORE COLLEGE. THE ASSESSEE ALSO CLAIMED BEFORE THE AO THAT THE ASSESSEE BEING A SUB STANTIALLY AIDED BY THE GOVERNMENT, IS ELIGIBLE FOR EXEMPTION U/S 10(23C) (IIIAB) OF THE A CT. THE ASSESSEE REFERRED THE COMPLETE FACTS AND FIGURES AND TOTAL FINANCIAL PICTURE OF THE COLL EGE AS UNDER:- UNIT GROSS INCOME (RS.) GOVERNMENT GRANT UNIT I : COUNCIL 15,93,458/- NIL UNIT II: SENATE 2,22,36,988/- NIL UNIT III : THEOLOGY 58,64,359/- NIL UNIT IV : ARTS, SCIENCE, & COMMERCE 3,80,26,064/- 2,98,80,638/- TOTAL 6,77,20 ,869/- 2,98,80,638/- 4 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 IN TERM OF THE ABOVE, THE ASSESSEE STATED THAT THE GOVERNMENT GRANT OR FINANCIAL AID BY THE GOVERNMENT WORKS OUT TO 44.12% OF THE TOTAL RECEIPT S/ INCOME OF THE FOUR UNITS OF THE COLLEGE DURING THE PREVIOUS YEAR 2008-09 RELEVANT TO AY 200 9-10. HENCE, ACCORDING ASSESSEE, THE FINANCIAL ASSISTANT RECEIVED FROM GOVERNMENT IS, SUBSTANTIAL WHICH IS EVIDENT FROM THE FACTS OF THE CASE. THE AO HAS REJECTED THE EXPLANATION OF THE ASSESSEE ON BOTH THE ISSUES AND ASSESSED THE EXCESS OF INCOME OVER EXPENDITURE AS TOTAL INCO ME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 5. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER:- 6. THE LD. A/R TO JUSTIFY HIS STAND THAT THE APPEL LANT IS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PR OFIT AND THAT IT IS NOT A SEPARATE ENTITY AS ALLEGED BY THE AO HAS NARRATED THE BACKGROUND, FUNC TIONS AND ACTIVITIES OF THE APPELLANT AND SUBMITTED THAT THE APPELLANT (SENATE OF SERAMPORE C OLLEGE) IS A PART OF THE SERAMPORE COLLEGE WHICH WAS INCORPORATED BY THE ROYAL CHARTER DATED 2 3/02/1827 AND SUBSEQUENTLY SUPPLEMENTED BY THE SERAMPORE COLLEGE ACT, 1918. THE ENTIRE PROP ERTIES ARE VESTED IN THE SERAMPORE COLLEGE AND THE COUNCIL AND THE SENATE OF SERAMPORE IS NOT AS TAXABLE ENTITY AND THUS NOT LIABLE TO BE ASSESSED TO TAX. HE FURTHER SUBMITTED THAT ON CONSO LIDATION OF THE INCOME & EXPENDITURE ACCOUNTS OF THE FOUR UNITS OF SERAMPORE COLLEGE FOR THE RELEVANT FINANCIAL YEAR IT WOULD BE EVIDENT THAT MORE THAN 53% OF THE GROSS INCOME WAS FINANCED BY THE GOVERNMENT OF INDIA AS PER UGC NORMS FOR EDUCATIONAL PURPOSES DISCHARGED B Y THE FOUR UNITS OF SERAMPORE COLLEGE FOR THEIR ACTIVITIES AND PROJECTS AND, THEREFORE, T HE COLLEGE INCLUDING THE APPELLANT IS COVERED BY SEC.10(23C)(IIIAB) OF THE ACT AND THUS ELIGIBLE FOR BLANKET EXEMPTION. IN SUPPORT OF THE SUBMISSIONS, RELIANCE WAS PLACED ON SOME OF THE JUD ICIAL PRONOUNCEMENTS WHICH ARE MENTIONED IN THE WRITTEN COMPILATION EXTRACTED ABOVE. 7. I HAVE HEARD THE LD. A/R, GONE THROUGH THE WRITT EN SUBMISSION AND PERUSED THE ASSESSMENT ORDER AS WELL AS DETAILS AVAILABLE ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT THE APPELLANT APPLIED TO THE LD. C.C.I.T., KOLKATA-X, KOLKATA ON 11/11/2009 FOR GRANT OF EXEMPTION U/S. 10(23C)(VIA) OF THE ACT FOR ASSESSMENT YEARS 2007-0 8 TO 2009-10. THE LD. C.C.I.T., CALLED FOR A REPORT FROM THE AO AND AFTER CONSIDERING THE APPLIC ATION OF THE APPELLANT AND EXAMINING THE REPORT OF THE AO INCLUDING THE AUDITED BOOKS OF ACC OUNTS OF THESE YEARS REJECTED THE PRAYER OF THE APPELLANT FOR GRANT OF EXEMPTION VIDE ORDER DAT ED 25/11/2010. IT IS PERTINENT TO MENTION HERE THAT THE DATE OF APPLICATION MADE BEFORE THE LD. C. C.I.T. FOR GRANT OF EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT WAS 11/11/2009 AND THE OR DER ON SUCH APPLICATION PASSED BY THE LD. C.C.I.T. WAS DATED 25/11/2010. THE IMPUGNED ASSESSM ENT ORDERS WERE PASSED ON 28/11/2011. SECTION 10(23C) OF THE ACT SPEAKS OF INCOME RECEIVE D BY ANY PERSON WHICH DOES NOT FORM PART OF TOTAL INCOME. CLAUSE (VIA) OF THE SAID SECTION SPEC IFIES THE PERSONS AS UNDER:- (VIA) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RE CEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTIVENESS OR F OR THE RECEPTION AND TREATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUIRIN G MEDICAL ATTENTION OR REHABILITATION, EXISTING SOLELY FOR PHILANTHROPIC P URPOSES AND NOT FOR PURPOSES OF PROFIT, OTHER THAN THESE MENTIONED IN SUB-CLAUSE (IIIAC) OR SUB-CLAUSE (IIIAE) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. 5 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 NOW AT THE APPELLATE STAGE, THE APPELLANT CLAIMS TH AT THE INCOME OF THE APPELLANT IS EXEMPT U/S.10(23C)(IIIAB) OF THE ACT. SUB-CLAUSE (IIIAB) O F SEC. 10(23C) READS AS UNDER:- (IIIAB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AND WHICH I S WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. ON READING OF THE AFORESAID TWO SUB-CLAUSES OF SEC. 10(23C) OF THE ACT, IT IS OBVIOUS THAT THE PERSONS AND OBJECTS IN THOSE TWO SUB-CLAUSES ARE DI FFERENT. THEREFORE, IT IS A MATTER OF CHANGE OF STAND BY THE APPELLANT, WHICH IS NOT PERMISSIBLE AT THIS STAGE. VIDE GROUND NO.4, THE APPELLANT CHALLENGES THE ACTION OF THE AO IN NOT GRANTING THE EXEMPTION U/S.10(23C)(VIA) OF THE ACT. WHEN THE LD. C.C.I.T. ON THE APPLICATION MADE BY THE APP ELLANT ITSELF FOR GRANT OF EXEMPTION U/S.10(23C)(VIA) OF THE ACT HAS DENIED TO GRANT SUC H EXEMPTION, THE AO HAS NO HIERARCHICAL POWER OR JURISDICTION TO DISOBEY OR DISREGARD SUCH ORDER. THEREFORE, IN MY CONSIDERED OPINION, THIS GROUND OF THE APPELLANT BEING REDUNDANT IS DISMISSED . 8. THE APPELLANT ALSO AGITATES THAT THE INCOME OF T HE APPELLANT IS NOT CHARGEABLE TO TAX AS PER PROVISIONS OF THE CONSTITUTION OF INDIA AS WELL AS INCOME-TAX ACT, 1961. THE LD. A/R SUBMITTED THAT AN ASSESSEE CANNOT BE TAXED MERELY BECAUSE HE HAD IN IGNORANCE OF LAW SURRENDERED TO THE JURISDICTION OF THE ASSESSING AUTHORITY AND/OR FILE D RETURN OF INCOME. IT IS NOT IN DISPUTE THAT THE APPELLANT ( SENATE OF SERAMPORE COLLEGE ) IS A VERY OLD INSTITUTION AND ACCOUNTS ARE BEING AUDITED REGULARLY. THE APPELLANT IS NOT AN INDIVIDU AL OR LAYMAN, RATHER THE INSTITUTION IS RUN AND GUIDED BY A BODY OR COUNCIL. THEREFORE, THE STAND O F THE APPELLANT ON IGNORANCE OF LAW IS NOT CONSUMABLE ON THE FACTS AND CIRCUMSTANCES OF THE CA SE. MOREOVER, THE APPELLANT BEFORE THE AO HAS MADE A SUBMISSION ( PARA-5 OF THE ASSESSMENT ORDER ) FOR EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT THAT SENATE OF SERAMPORE COLLEGE ( UNIT II ) IS UNAIDED BY GOVERNMENT, WHEREAS AS PER SUB- CLAUSE (IIIAB) REPRODUCED ABOVE, ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION AMONGST OTHER CRITERIA SHALL BE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. IN THIS CONNECTION, I FIND SUBSTANTIAL BASIS AND FORCE IN THE ACTION OF THE AO IN ASSESSING THE APPELLANT AS AN INDEPENDENT ENTITY INASMUCH AS IT HAS FILED ITS RETURN AS AN IN DEPENDENT ENTITY SHOWING ITS OWN INCOME AND EXPENDITURE. THEREFORE, IN MY CONSIDERED OPINION, T HE APPELLANT IS NOT EVEN COMING UNDER THE PURVIEW OF SUB-CLAUSE (IIIAB) OF SEC. 10(23C) OF TH E ACT. THEREFORE, ON MERITS OF THE CASE, IN VIEW OF DISCUSSIONS ABOVE, THE APPELLANT HAS NO CAS E TO SURVIVE. THAT BEING SO, THE AO WAS JUSTIFIED IN TAXING THE EXCESS OF INCOME OVER EXPEN DITURE IN THE SU9MS OF RS.64,39,210/- FOR ASSESSMENT YEAR 2009-10. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE TR IBUNAL. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FROM THE FACTS OF THE CASE, WE FIND THAT THE SERAMP ORE COLLEGE ACT, 1918 WAS PASSED BY GOVERNMENT OF INDIA AS BENGAL ACT IV OF 1918 TO SUP PLEMENT AND SUPERSEDE THE ROYAL CHARTER OF INCORPORATION AND THE STATUTES AND REGULATIONS O F SERAMPORE COLLEGE FOR BETTER GOVERNANCE AND MANAGEMENT. ACCORDINGLY, THE COLLEGE HAS BEEN R UN IN TERMS OF THE SAID STATUTE. THE SERAMPORE COLLEGE HAS VARIOUS CONSTITUENT UNITS IN ITS FUNCTIONS AND ACTIVITIES. ALL THESE DEPARTMENTS, ENTITIES ARE UNITS OF THE SERAMPORE COLLEGE' HAVING INDEPENDENT AND INTERDEPENDENT FUNCTIONS AND ACTIVITIES WITH ULTIMA TE OBJECT OF FURTHERANCE OF EDUCATION FOR PUBLIC BENEFIT IN TERMS OF THE SERAMPORE COLLEGE AC T 1918. LIKE MANY OTHER UNIVERSITIES 6 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 HAVING CONSTITUENT UNITS AND DEPARTMENTS, SENATE, B UT LEGALLY ASSESSABLE ENTITY BEING THE UNIVERSITY OR COLLEGE, SAME HOLDS TRUE FOR THE SER AMPORE COLLEGE. ITS LEGAL ASSESSABLE ENTITY IS THE SERAMPORE COLLEGE AND SENATE OF SERAMPORE COLLEGE IS ONLY A SUBORDIN ATE BODY UNDER THE COUNCIL WITH SPECIFIED FUNCTIONS. THEREFORE, TH E SERAMPORE COLLEGE IS THE ASSESSABLE ENTITY FOR THE PURPOSE OF INCOME TAX AND SENATE OF SERAMPO RE COLLEGE IS A CONSTITUENT UNIT OF THE COLLEGE WHOSE ACCOUNTS MUST BE CONSOLIDATED ALONG W ITH OTHER UNITS IN THE THE SERAMPORE COLLEGE ACCOUNT. WE FIND THAT EACH UNIT MAINTAINS S EPARATE ACCOUNTS OF ITS RECEIPTS AND PAYMENTS AND INCOME-EXPENDITURE AND IS DULY AUDITED BY CHARTERED ACCOUNTANT. THE ARTS, SCIENCE AND COMMERCE DEPARTMENTS OF THE SERAMPORE C OLLEGE IS APPROVED BY THE UGC AND FUNDED BY GOVT. LIKE ALL OTHER COLLEGES UNDER THE U NIVERSITY OF CALCUTTA. IT WAS BROUGHT TO OUR NOTICE BY LD. COUNSEL FOR THE ASSESSEE THAT, THOUGH , ALL ACCOUNTS OF THESE 4 UNITS OF THE SERAMPORE COLLEGE ARE SEPARATELY AUDITED, A CONSOLI DATED FINANCIAL STATEMENT IS REQUIRED TO BE PREPARED AND LOOKED INTO FOR THE PURPOSE OF TAXATIO N UNDER THE PROVISIONS OF THE ACT CONSIDERING THE SERAMPORE COLLEGE AS ONE AND SOLE TAXABLE ENTITY. IN OUR VIEW, THE SERAMPORE COLLEGE THE ENTITY, AS PER SERAMPORE C OLLEGE ACT 1918, EXISTS FOR NEARLY TWO CENTURIES AS AN EDUCATIONAL INSTITUTION CATERING TO THEOLOGICAL AND GENERAL EDUCATION. THE COLLEGE IMPARTS FORMAL EDUCATION ON DIFFERENT STREA MS AND SUBJECTS FOR PUBLIC AT LARGE. EVEN RELIGIONS OR PHILOSOPHICAL EDUCATIONS THROUGH FORMA L SYSTEMS OF COURSE, CURRICULA, EXAMINATION AND AWARDING DEGREES IS ALSO EDUCATION FOR THE PURP OSE OF SECTION 2(15) OR 10(23C) OF THE ACT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT EACH UNIT MAINTAINS SEPARATE ACCOUNTS OF ITS RECEIP TS AND PAYMENTS AND INCOME-EXPENDITURE AND IS DULY AUDITED BY CHARTERED ACCOUNTANT. THE ARTS, SCIENCE AND COMMERCE DEPARTMENTS OF THE SERAMPORE COLLEGE IS APPROVED BY THE UGC AND FUNDED BY GOVT. LIKE ALL OTHER COLLEGES UNDER THE UNIVERSITY OF CALCUTTA. IT IS A FACT THAT ACCOU NTS OF THESE 4 UNITS OF THE SERAMPORE COLLEGE ARE SEPARATELY AUDITED, AND A CONSOLIDATED FINANCIA L STATEMENT IS PREPARED AND LOOKED INTO FOR THE PURPOSE OF TAXATION UNDER THE PROVISIONS OF THE ACT CONSIDERING THE SERAMPORE COLLEGE AS ONE AND SOLE TAXABLE ENTITY. HENCE WE HOLD THAT TH E SERAMPORE COLLEGE, ALTHOUGH THIS CONSISTS OF 4 UNITS BUT A SINGLE TAXABLE ENTITY, WH ETHER UNDER THE NAME OF THE SERAMPORE COLLEGE OR THE SENATE OF SERAMPORE, BOTH ARE ONE AND THE SAME. ACCORDINGLY, WE DIRECT THE AO TO ASSESSEE THE ASSESSEE AS SOLE TAXABLE UNIT/EN TITY. 7 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 7. AS REGARDS TO THE SECOND ISSUE, IT WAS THE CONTE NTION OF LD COUNSEL THAT THE SERAMPORE COLLEGE EXISTS SOLELY FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT. EVEN IF RUNNING OF AN INSTITUTION LEADS TO SOME SURPLUS BUT THE SAID PROFIT IS ACCUMULATED OR PLOUGHED BACK FOR THE PURPOSE AND OBJECTS OF THE INSTITUTION , IT IS DEEMED AS EXISTING NOT FOR THE PURPOSE OF PROFIT. HE ARGUED THAT THE SERAMPORE COLLEGE FUL FILS, WHOLLY, BOTH THESE REQUIREMENTS AS EXISTING SOLELY FOR THE PURPOSE OF EDUCATION AND NO T FOR THE PURPOSE OF PROFIT. ACCORDING TO HIM, THEREFORE , THE COLLEGE IS COVERED AND ENTITLED TO EXEMPTION U/ S 10(23C(IIIAB) OF THE I.T. ACT 1961 AS THE PROVISIONS OF SECTION 10(23C)(IIIAB) PROVIDE S THAT ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY TH E GOVERNMENT. WE ARE OF THE VIEW, IN VIEW OF THE ARGUMENT OF LD. COUNSEL THAT THE SERAMPORE COLLEGE WILL FALL UNDER THE CATEGORY OF OTHER EDUCATIONAL INSTITUTION UNDER SECTION 10(23 C) AND WILL BE EXEMPT UNDER CLAUSE (IIIAB), SINCE IT EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT, AS NO PART OF THE PROFIT OR SURPLUS IS DIVERTED FOR PRIVATE GAIN. BUT , ONLY CONDITION TO BE EXAMINED FACTUALLY IS THAT, WHETHER, ON CONSOLIDATION OF THE INCOME EXPEN DITURE ACCOUNTS OF 4 UNITS OF THE SERAMPORE COLLEGE FOR RELEVANT ASSESSMENT YEAR, CAN IT BE HEL D THAT THE COLLEGE WAS SUBSTANTIALLY FINANCED BY THE GOVERNMENT DURING THE YEAR AS PER PROVISIONS OF THE ACT OR NOT. THUS, ONLY FACT TO BE DETERMINED IS THAT WHETHER, THE SERAMPORE COLLEGE I S SUBSTANTIALLY FINANCED BY THE GOVERNMENT OR NOT? IN CASE THE FINDING COMES THAT THE COLLEGE IS FINANCED SUBSTANTIALLY, THEN IT IS COVERED BY THE SECTION 10(23C) (IIIAB) OF ACT AND IS ELIGIBLE FOR EXEMPTION. THE SERAMPORE COLLEGE WILL THEN LEGALLY BE COVERED BY SECTION 10(23C) (IIIAB) OF THE ACT FOR ITS ENTIRE INCOME INCLUDING INCOME OF SENATE OF SERAMPORE COLLEGE. THE CIT (A ) AS WELL AS THE AO HAS NOT EXAMINED THE CLAIM OF THE ASSESSEE AS REGARDS TO THE SOURCE OF F INANCE I.E. SUBSTANTIALLY FINANCING BY THE GOVERNMENT OR NOT, SO AS TO ELIGIBILITY OF THE CLAI M OF EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT, EVEN THOUGH CCIT REJECTED THE APPLICATION FOR REGIS TRATION U/S 10(23C)(VIA) OF THE ACT. THE CIT (A) AS WELL AS THE AO, BOTH, TOTALLY FAILED TO CONS IDER WHETHER THE ASSESSEE IS COVERED U/S 10(23C)(IIIB) OF ACT OR NOT, AS BOTH WERE DUTY BOUN D TO CONSIDER THE CLAIM AND EXAMINE THE SAME. THE MERE REJECTION OF APPLICATION 10(23C)(VIA ) OF THE ACT CANNOT BE REASON TO REJECT THE CLAIM OF EXEMPTION U/S. 10(23C)(IIIB) OF THE ACT. L D COUNSEL FOR THE ASSESSEE RELIED ON THE PROPOSITION LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V PARLE PLASTICS LTD. AND ANOTHER(2011) 332 ITR 63(BOM)-PANAJI BENCH AND REFERRED THE SAME FOR THE MEANING OF SUBSTANTIAL. HE ALSO RELIED ON THE ORDER OF ITAT, BANGLORE BENC H IN THE CASE OF ITO VS. M/S. NATIONAL EDUCATIONAL SOCIETY IN ITA NO. 472 & 473/B ANG/2009, OF MUMBAI BENCH F OF THIS 8 ITA NOS. 1677 &1678/K/2012 SENATE OF SERAMPORE COLLEGE AYS 2009-10 & 2010-11 TRIBUNAL IN THE CASE OF ADIT (EXEMPTION) VS. M/S. V IVEK EDUCATION SOCIETY IN ITA NO. 5896/MUM/2011 DATED 07.12.2012, OF DELHI BENCH D OF THIS TRIBUNAL IN THE CASE OF JAT EDUCATION SOCIETY VS. ITO IN ITA NO. 2542 & 2543/DE L/2011 DATED 19.07.2013 AND OF CHENNAI B BENCH OF THIS TRIBUNAL IN THE CASE OF M /S./ GANAPATHY EDUCATIONAL TRUST VS. ADIT (E) IN ITA NO. 159/MAD/2013 DATED 25.06.2013, WHEREIN, IN ALL ORDERS, THE MEANING OF SUBSTANTIALLY FINANCED BY THE GOVERNMENT IS DISCU SSED. THE AO IS DIRECTED TO CONSIDER THESE CASE LAWS AND ALSO ANY OTHER CASE LAW OF HONBLE SU PREME COURT OR ANY HIGH COURT AVAILABLE AT THE POINT OF DECISION, AND DECIDE THE ISSUE, WHETHE R THE ASSESSEES CASE FALLS IN THE CATEGORY OF WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT . IN TERM OF THE ABOVE, THESE TWO APPEALS OF ASSESSEE ARE SET ASIDE TO THE FILE OF THE AO. AP PEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, BOTH APPEALS OF ASSESSEE ARE ALLO WED FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.10.2 014 SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 TH OCTOBER, 2014 ,- #./ 0 JD.(SR.P.S.) 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SENATE OF SERAMPORE COLLEGE, C/O, D. J. SHAH & C/O, KALYAN BHAVAN, 2, ELGIN ROAD, KOLKATA-700 020 2 *+() / RESPONDENT JCIT (OSD), CIRCLE-2, HOOGHLY 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #