ITO(E), Wd-1(4),Kolkata, Kolkata V. Mamata Shankar Ballet Troupe, Kolkata

ITA 2136/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1780 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 07-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITAL CHANDRA DAS
• Keywords: Audit objection; Question of law; Right to appeal; Tax effect
• Section: 143(3); 260A; 12A

Judgement Text

1 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A.T.VARKEY, JM & SHRI M.BALAGA NESH, AM ] I.T.A NO. 1300/KOL/20 10 ASSESSMENT YEAR : 2006-0 7 MAMATA SHANKAR BALLET TROUPE, -VS- DDIT(EXEMPTION )-II, KOLKATA KOLKATA [PAN : AAATM8509N] (APPELLANT) (RESPONDENT) I.T.A NOS. 2131-2137/KOL/2016 ASSESSMENT YEARS : 1998-99, 2002-03,2003-04,2007-08 ,2010-11 TO 2012-13 ITO(E), WD-1(4), -VS- MAMATA SHANKAR BA LLET TROUPE, KOLKATA KOLKATA [PA N : AAATM8509N] (APPELLANT) (RESPONDENT) FOR THE ASSESSEE : SHRI SOUMITRA CHOUDH URY, ADVOCATE FOR THE REVENUE : SHRI SITAL CHANDRA DAS, ADDL.CIT(DR) DATE OF HEARING : 27.07.2017. DATE OF PRONOUNCEMENT : 02 .08.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA [ IN SHORT THE LD CITA] IN APPEAL NO. 581/CIT(A)- XIV, KOLKATA DATED 26.02.2010 AGAINST THE ORDER PA SSED BY THE DDIT(E)-II, KOLKATA [ IN SHORT THE LD. AO] UNDER SECTION 143(3) OF THE INCOM E TAX ACT, 1961 ( IN SHORT THE ACT) DATED 30.12.2008 FOR THE ASST YEAR 2006-07. THESE APPEALS BY THE REVENUE ARISE OUT OF THE COMM ON ORDER IN THE FOLLOWING MANNER: 2 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 ASSESSMENT YEAR ARISING OUT OF COMMON ORDER OF CIT(A) WITH DATE ORDER OF LD. AO WITH DATE 1998-99 I.T.A. NO. 2131/KOL/2016 04.08.2016 143(3)/ 147/ 254 OF INCOME TAX ACT, 1961 23.12.2008 2002-03 I.T.A. NO. 2132/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2003-04 I.T.A. NO. 2133/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2007-08 I.T.A. NO. 2134/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2010-11 I.T.A. NO. 2135/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2011-12 I.T.A. NO. 2136/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2012-13 I.T.A. NO. 2137/KOL/2016 04.08.2016 143(3) OF INCOME TAX ACT, 1961 18.12.2009 2. ITA NO. 2131/KOL/2016 ASST YEAR 1998-99 REV ENUE APPEAL DURING THE COURSE OF HEARING, THE LD AR STATED THA T THE TOTAL ADDITION MADE BY THE LD AO IN THIS YEAR WAS ONLY RS 4,12,170/- WHERE THE TAX E FFECT IS ONLY RS 92,329/-. WE FIND THAT THE SAME FALLS WITHIN THE LOW TAX EFFECT CIRCULAR I SSUED BY THE CBDT VIDE CIRCULAR NO. 21/2015 DATED 10.12.2015, WHEREIN THE CBDT HAD CATE GORICALLY STATED AS UNDER:- 3. HENCEFORTH, APPEALS / SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER:- S.NO. APPEALS IN INCOME TAX MATTERS MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 10,00,000/- 2 BEFORE HIGH COURT 20,00,000/- 3 BEFORE SUPREME COURT 25,00,000/- 3 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILI NG OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CH ARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS D ISPUTED ISSUES). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHAR GEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE R ETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX O N DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM O F PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ON E ASSESSMENT YEAR , APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS I N WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIE D IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS , HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVA NT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YE ARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S ), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEED S THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGEMENT INVOLVES M ORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 8. ADVERSE JUDGEMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN A SSETS / BANK ACCOUNTS. 4 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDIN G APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN / NOT PRESS ED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. WE FIND THAT THE CIRCULAR MAKES IT VERY CLEAR THAT THE REVISED MONETARY LIMITS SHALL APPLY RETROSPECTIVELY TO PENDING APPEALS ALSO. WE FIND TH AT THE CIRCULAR IS BINDING ON THE TAX AUTHORITIES. THIS POSITION HAS BEEN CONFIRMED BY TH E HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION L TD REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULARS AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY I T AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. HENCE WE HOLD THAT THE APPEAL(S) OF THE REVENUE DESERVE TO BE DISMISSED IN TERMS OF LOW TAX EFFECT VIDE CIRCULAR NO.21 / 2015 DATED 10.12.2015. ACCORDINGLY, THIS B EING A LOW TAX EFFECT CASE, WE DISMISS THE APPEAL OF THE REVENUE IN LIMINE , AS UNADMITTED , WITHOUT GOING INTO THE MERITS OF THE CASE. 2.1. THE APPEAL PREFERRED BY THE REVENUE IN ITA NO. 2131/KOL/2016 FOR THE ASST YEAR 1998-99 IS DISMISSED. 3. NOW LET US TAKE UP THE APPEALS OF THE REVENUE FO R THE ASST YEARS 2002-03 , 2003-04, 2007-08 , 2010-11 , 2011-12 & 2012-13 . THE COMM ON ISSUE INVOLVED IN ALL THESE APPEALS IS AS TO WHETHER THE ASSESSEE COULD BE TREA TED AS AN EDUCATIONAL INSTITUTION AND THAT ITS INCOME WOULD BE EXEMPT U/S 10(23C)(IIIAD) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A SOCIETY IMPARTING EDUCATION IN CLASSICAL BALLET DANCE, DANCE DRAMA, MUSIC, CHOREOG RAPHY AND RELATED SUBJECTS, HOLDING EXAMINATIONS THEREON, ARRANGING SOCIAL AND CULTURAL FUNCTIONS, PERFORMANCES, PROMOTION OF THE ARTS AND CULTURE ETC MAINLY OF THE UDAY SH ANKAR STYLE OF DANCE / UDAYAN. THE SOCIETY IS REGISTERED UNDER THE SOCIETY ACT OF WEST BENGAL SINCE THE YEAR 1984. IT IS RECOGNIZED BY THE MINISTRY OF HUMAN RESOURCE DEPART MENT , GOVERNMENT OF INDIA, AND HAD BEEN RECEIVING GOVERNMENT GRANTS AND ASSISTANCE IN PROMOTING ITS ACTIVITIES. THE ASSESSEE SINCE THE BEGINNING HAS BEEN RUNNING DANCE SCHOOLS UNDER THE NAME UDAYAN IN DIFFERENT PLACES IN THE CITY OF KOLKATA FOR THE PUR POSE OF IMPARTING DANCE EDUCATION. MORE THAN 700 STUDENTS WERE ON THE ROLLS OF THE SAI D SCHOOL RUN BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. IN THE SCHOOL RUN BY TH E ASSESSEE, DANCE EDUCATION IS TAUGHT TO ITS STUDENTS THROUGH THE PROCESS OF TRAINING AND DE VELOPING THE KNOWLEDGE AND SKILL BY NORMAL SCHOOLING AND IT IS THEREAFTER PERFECTED THR OUGH STAGE PERFORMANCE. THE LD AO OBSERVED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE IS REGISTERED U/S 12A OF THE ACT. 4.1. SINCE THE BEGINNING , THE ASSESSEE WAS CLAIMIN G EXEMPTION OF ITS INCOME U/S 10(22) OF THE ACT PROCLAIMING IT TO BE AN EDUCATIONAL INST ITUTION NOT EXISTING FOR THE PURPOSE OF PROFIT UPTO ASST YEAR 1998-99. THIS CLAIM OF EXEMPT ION U/S 10(22) OF THE ACT WAS UPHELD BY THE ORDER OF THIS TRIBUNAL IN ITA NOS. 1728 TO 1 731/CAL/1999 & ITA NOS. 519 TO 522/CAL/1999 DATED 11.7.2002 FOR ASST YEARS 1986-87 TO 1993-94 RESPECTIVELY. AGAINST THIS ORDER OF TRIBUNAL, THE REVENUE PREFERRED AN AP PEAL BEFORE THE HONBLE CALCUTTA HIGH COURT WHICH DISMISSED THE SAME BY HOLDING THAT NO S UBSTANTIAL QUESTION OF LAW WAS INVOLVED IN THESE APPEALS VIDE ITS ORDER IN ITA NO. 23 OF 2003 DATED 14.8.2006. 4.2. MEANWHILE THIS TRIBUNAL FOR THE ASST YEARS 199 9-2000 AND 2000-01 IN ITA NOS. 1806 & 1807/KOL/2002 DATED 11.5.2004 HAD NEGATIVED THE C ONTENTION OF THE ASSESSEE THAT IT IS AN EDUCATIONAL INSTITUTION AND BROUGHT THE SURPLUS TO TAX. AGAINST THIS ORDER, THE ASSESSEE 6 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 HAD PREFERRED AN APPEAL BEFORE THE HONBLE CALCUTTA HIGH COURT AND THE SAME WAS ADMITTED AND PENDING. 4.3. THE LD AO FOR THE IMPUGNED ASST YEARS I.E ( A YS 02-03 , 03-04, 07-08 , 10-11 , 11- 12 & 12-13) HAD OBSERVED THAT THE ASSESSEE IS NOT A N EDUCATIONAL INSTITUTION AND NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT AND ACCORDINGLY DENIED THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. HE ALSO OBSERVED THAT THE FEES STRUCTURE HAS BEEN MADE IN SUCH A MANNER THAT THE I NSTITUTION EARNS EXCESS OF INCOME OVER EXPENDITURE YEAR AFTER YEAR. HENCE IT IS RUN WITH A PROFIT MOTIVE. IT IS FULLY A COMMERCIAL EXPLOITATION OF THE INSTITUTE WHICH CANN OT BE EDUCATION. BASED ON THESE OBSERVATIONS, HE CONCLUDED THE ASSESSMENT BY BRINGI NG THE SURPLUS TO TAX AFTER TREATING THE DEVELOPMENT FEES AND 50% OF PERFORMANCE FEES AS REV ENUE RECEIPTS (WHICH WERE NOT ROUTED THROUGH THE INCOME AND EXPENDITURE ACCOUNT B Y THE ASSESSEE). 4.4. THE LD CITA GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER:- THIS ORDER: A Y 1997-98 AND 1998-99 CONCERNING SEC TION 10(22) TREATED AS COVERED BY HONBLE HIGH COURT ORDER IN ASSESSEES C ASE IN INCOME TAX ACT, 1961 NO. 23/2003- IN ASSESSEES FAVOUR; REMAINING OTHER A YS CONCERNING SECTION 10(23C)(IIIAD) TREATED AS ALLOWED FOR STATISTICAL P URPOSES. THUS, AS STATED EARLIER AND AS BRIEFED IN PRECEDING PARA ABOVE, AS THE ISSUE(S) HAD ALREADY BEEN DELIBERATED AND ADJUDICATED BY THE HIG HER APPELLATE FORUMS- BY THE HONBLE ITAT (THOUGH CONFLICTING DECISION FOR DIFFE RENT AYS); AND BY THE HONBLE HIGH COURT IN AYS 1999-00 AND 2000-01 IS PENDING BE FORE THE HONBLE HIGH COURT, AS ARE ALSO APPEALS FOR OTHER AYS IN BET WEEN PENDING BEFORE THE ITAT. I THEREFORE: A. AS REGARDS AYS 1997-98 AND 1998-99 CONCERNING THE T HEN EXTANT SECTION 10(22), I TREAT THE APPEALS AS COVERED IN APPELLANT S FAVOUR BY HONBLE HIGH COURT ORDER IN ASSESSEES CASE IN ITA NO. 23/2003. B. AS REGARDS THE OTHER AYS 2002-03, 2003-04, 2007-08, 2010-11, 2011-12 AND 2012-13, AS THE SECTION 10(23C)(IIIAD) W.E.F. 01.04 .1999 IS IN ESSENCE AND SUBSTANCE THE ERSTWHILE SECTION 10(22), I TREAT THE APPEALS AS ALLOWED FOR STATISTICAL PURPOSES. THE EVENTUAL OUTCOME WILL BE CONSEQUENTIAL WHEN THE HONBLE HIGH COURT DISPOSES THE ITA NO. 65 OF 2009. 7 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US FO R THE ASST YEARS 2002-03 , 2003-04 , 2007-08 , 2010-11 , 2011-12 AND 2012-13. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THOUGH THE ASSESSEE HAD NOT PREFERRED ANY APPEAL FOR THE ABOVEMENTIONED ASST YEARS BEFORE US, THE LD AR ARGUED THAT HE IS ENTITL ED TO MAKE ORAL SUBMISSIONS ON ANY OBSERVATION / ISSUE /GROUND THAT HAS BEEN HELD / DE CIDED AGAINST HIM BY THE LD CITA. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DDIT(E) VS S.K.S.EDUCATIONAL AND SOCIAL TRUST IN ITA NO. 381/KOL/2014 DATED 31.5.2017 WHEREIN IT WAS HELD AS UNDER:- 5. AFTER HEARING THE RIVAL CONTENTIONS, I FIND THA T THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASSISTANT COMMISSIONER OF I NCOME TAX CIRCLE-29, KOLKATA VS. RICKY CHANDRA (SUPRA), HAS AT PARA 7, HELD AS F OLLOWS: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS OF THE CASE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT, MADRAS VS. S. NELLIAPPAN [66 ITR PAGE 722] HAS OBSERVED AS UNDER: IN HEARING AN APPEAL THE TRIBUNAL MAY GIVE LEAVE TO THE ASSESSEE TO URGE GROUNDS NOT SET FORTH IN THE MEMORANDUM OF APPEAL A ND IN DECIDING THE APPEAL THE TRIBUNAL IS NOT RESTRICTED TO THE LEAVE OF THE TRIBUNAL (HEAD NOTE). FURTHER, IN NTPC CASE (SUPRA), HON'BLE SUPRE ME COURT OBSERVED AS UNDER: THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE T HE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSE SSEE IN ACCORDANCE WITH LAW. .. THERE IS NO REASON TO RESTRICT THE POWER OF T HE TRIBUNAL U/S 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). BOTH THE ASSES SEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/ CROSS OB JECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING QUESTION OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES A RISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) IS TOO NARROW A V IEW TO TAKE OF THE POWERS OF THE TRIBUNAL. 8 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALL OW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHI CH ARE ON RECORDS IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF A N ASSESSEE. 7.1. WE FIND THAT THE GROUND RAISED BY THE ASSESSE E AT THE TIME OF HEARING IS PURELY LEGAL BEING IMPINGING UPON THE ASSESSING OFFICERS JURISDICTION WHILE ISSUING INTIMATION AND, THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT(SUPRA), WE ENTERTAIN THE SAME . 6. RESPECTFULLY FOLLOWING THE SAME, WE ADMIT THIS L EGAL ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE. 6.1. RESPECTFULLY FOLLOWING THE SAME, WE ACCEPT THE ARGUMENTS OF THE LD AR SINCE THE FINAL DECISION OF THE LD CITA CREATES SOME AMBIGUIT Y AS IT STATES THAT THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. WE FIND THAT TH IS TRIBUNAL HAD TREATED THE ASSESSEE SOCIETY AS AN EDUCATIONAL INSTITUTION EXISTING SOLE LY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IN ITA NOS. 1728 TO 1731/CAL/199 9 & ITA NOS. 519 TO 522/CAL/1999 DATED 11.7.2002 FOR ASST YEARS 1986-87 TO 1993-94 R ESPECTIVELY. IT WAS FURTHER HELD THAT ALL OTHER POINTS REGARDING RECEIPT OF SALARY ETC AR E NOT IMPORTANT AND IN ANY WAY, THEY DO NOT PROVE THAT THE SOCIETY FOR THOSE REASONS CAN BE TERMED AS A BUSINESS ORGANIZATION OF EITHER SMT MAMATA SHANKAR GHOSH OR SRI CHANDRADOY G HOSH. IT FURTHER HELD THAT THEY HAVE MERELY WORKED AS TEACHER AND CHOREOGRAPHER AND AS SIGNATORY TO THE MEMORANDUM OF ASSOCIATION AND THEY ARE RUNNING THE ORGANIZATIO N. IT WAS HELD THAT THEY OFCOURSE RECEIVED SALARY AND OBTAINED CERTAIN BENEFITS BUT T HAT IS BECAUSE THAT THEY HAVE WORKED FOR THE SOCIETY. ACCORDINGLY IT WAS HELD THAT THE ASS ESSEE SOCIETY COULD NOT BE CONSIDERED AS A BUSINESS ORGANIZATION. WE FIND THAT AGAINST TH IS ORDER , THE REVENUE HAD PREFERRED FURTHER APPEAL BEFORE THE HONBLE CALCUTTA HIGH COU RT WHICH WAS DISMISSED VIDE ORDER IN ITA NO. 23 OF 2003 DATED 14.8.2006 ON THE GROUND TH AT NO SUBSTANTIAL QUESTION OF LAW WAS INVOLVED IN THE SAID APPEALS. IT IS ALREADY W ELL SETTLED THAT EVENTHOUGH THE HONBLE CALCUTTA HIGH COURT HAD HELD THAT NO SUBSTANTIAL QU ESTION OF LAW WAS INVOLVED IN THESE APPEALS, IT TANTAMOUNTS TO EXERCISE OF THE APPELLAT E POWERS BY THE HONBLE HIGH COURT 9 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 AND THE TRIBUNAL ORDER STANDS CONFIRMED AND THE ORD ER OF THE LOWER AUTHORITIES GETS MERGED WITH THE ORDER OF THE HONBLE HIGH COURT. WE WOULD LIKE TO PLACE RELIANCE IN THIS REGARD ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA IND USTRIES LTD VS DCIT REPORTED IN (2006) 283 ITR 402 (GUJ) WHEREIN IT WAS HELD THAT :- EFFECT OF DISMISSAL OF A TAX APPEAL BY HIGH COURT HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. WHILE HEARING AN APPEAL, EVEN FOR DECIDING WHETHER A SUBSTANTIAL QUESTION OF LAW ARISES OR NOT FROM THE ORDER OF THE TRIBUNAL, THE H IGH COURT DOES NOT EXERCISE EITHER ORIGINAL JURISDICTION OR THE JURISDICTION TO ISSUE WRITS. ON A PLAIN READING OF SECTION 260A, INCLUSIVE OF SUB-SECTIONS OF THE SAID SECTION, THE ONLY JURISDICTION AND POWERS THAT THE HIGH COURT CAN EXERCISE ARE TO HEAR AN APPEAL. THE HIGH COURT DOES NOT HAVE ANY POWERS UNDER THE STATUTE TO GRANT ANY LEAVE AS SUCH FOR FILING AN APPEAL. AN AGGRIEVED PERSON HAS THE RIGHT , STATUTORILY PROVIDED, OF FILING AN APPEAL. THE RULES FRAMED BY THE COURT DESCRIBE S UCH AN APPEAL AS A TAX APPEAL TO DISTINGUISH THE SAME FROM OTHER APPEALS, LIKE FIRST APPEAL AND SECOND APPEAL. IN FACT, AN APPEAL GETS FILED WITH THE REGI STRY OF THE HIGH COURT AS A MATTER OF FACT AND THE PERSON FILING THE APPEAL IS NOT REQUIRED TO SEEK ANY LEAVE FROM ANY AUTHORITY, MUCH LESS THE HIGH COURT, PRIOR TO FILING OF THE APPEAL. THE PROVISIONS OF THE ACT, WITH SPECIAL REFERENCE TO SE CTION 260A, DO NOT REQUIRE ANY SUCH PRIOR PERMISSION. THEREFORE, THE ONLY JURISDIC TION THAT THE HIGH COURT EXERCISES UNDER SECTION 260A IS THE APPELLATE JURIS DICTION. MERELY BECAUSE THE HIGH COURT DECIDED IN THE FIRST INSTANCE, WHETHER O R NOT, A SUBSTANTIAL QUESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL, IT CAN NOT BE STATED THAT THE HIGH COURT DOES NOT EXERCISE THE APPELLATE POWERS OR THA T NO APPEAL LIES, OR THAT THERE IS NO DECISION ON APPEAL, WHEN THE HIGH COURT DISMI SSES AN APPEAL HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDE R OF THE TRIBUNAL . THEREFORE, IT IS NOT POSSIBLE TO BIFURCATE THE JURISDICTION OR POWERS AVAILABLE TO THE HIGH COURT WHILE DEALING WITH AN APPEAL UNDER SECTION 26 0A. THE VIEW EXPRESSED BY THE TRIBUNAL THAT THERE WAS NO DECISION ON APPEAL, WHEN THE HIGH COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL WHEN THE HIGH COURT DISMISSAL ON APPEAL, WAS NOT A CORRECT READIN G OF LAW. [PARAS 11 AND 12] THE CONTENTION THAT THE POWERS EXERCISED BY THE HIG H COURT AT THE STAGE OF ADMISSION OF APPEAL ARE AKIN TO POWERS EXERCISED BY THE APEX COURT UNDER ARTICLE 136 DESERVED TO BE REJECTED. AS FAR AS THE PROVISIO NS OF SECTION 260A ARE CONCERNED, THERE IS NO SUCH DICHOTOMY OF POWERS. NO R DOES THE COURT HAVE ANY POWERS WHICH CAN BE EQUATED WITH THE POWERS EXERCIS ED BY THE SUPREME COURT UNDER ARTICLE 136. THE ONLY JURISDICTION THAT THE H IGH COURT HAS, WHILE HEARING THE APPEAL, FILED UNDER SECTION 260A IS THE APPELLA TE JURISDICTION, IT HAS NO DISCRETIONARY JURISDICTION WHICH WOULD PERMIT THE H IGH COURT TO PREVENT A PARTY 10 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 FROM FILING AN APPEAL. THERE IS NO PROVISION WHICH REQUIRES SEEKING OF LEAVE TO FILE AN APPEAL, NOR IS THERE ANY PROVISION OR RULE WHERE BY THE HIGH COURT CAN GRANT OR REFUSE LEAVE TO FILE AN APPEAL. AS A MATTER OF FACT THAT THE APPEALS ARE FILED WITH THE REGISTRY, AND AFTER COMPLETION OF THE NECESSARY FORMALITIES, INCLUDING COMPLIANCE WITH THE RULES OF THE HIGH COURT, THE AP PEAL IS NUMBERED AS SUCH AND IS PLACED FOR HEARING ONLY AS AN APPEAL, WHEREAS BE FORE THE APEX COURT WHAT IS PLACED AT THE INITIAL STAGE IS A SPECIAL LEAVE PETI TION SEEKING PERMISSION TO FILE APPEAL. IN ABSENCE OF ANY SUCH POWERS BEING AVAILAB LE TO THE HIGH COURT UNDER SECTION 260A, THE HIGH COURT CANNOT PREVENT ANY PAR TY FROM FILING OF APPEAL AND HAS TO HEAR THE APPEAL ITSELF WHEN THE SAME IS NOTI FIED FOR HEARING [PARAS 14 AND 15] IN CASE WHERE AN ORDER OF A SUBORDINATE FORUM IS CA RRIED IN APPEAL, THE APPELLATE COURT MAY - (I) REVERSE THE ORDER UNDER APPEAL, (II ) MODIFY THE ORDER UNDER APPEAL, (III) MERELY DISMISS THE APPEAL AND, THUS, CONFIRM THE ORDER UNDER APPEAL WITHOUT ANY MODIFICATION. THE APEX COURT HAS LAID DOWN THAT IN ALL THE THREE EVENTUALITIES IT IS THE APPELLATE DECISION ALONE WHICH SUBSISTS A ND IS OPERATIVE AND CAPABLE OF ENFORCEMENT. THAT THERE IS NO DIFFERENCE IN PRINCIP LE AND IT IS NOT POSSIBLE TO DRAW ANY DISTINCTION BETWEEN THE FIRST TWO KINDS OF ORDE RS MADE BY THE APPELLATE AUTHORITY AND THE THIRD KIND OF ORDER MADE BY THE A PPELLATE AUTHORITY. IN LAW THE TERMS AFFIRM AND CONFIRM ARE SYNONYMOUS. BOTH T HE TERMS DENOTE NOTIFICATION OF A JUDGMENT. THEREFORE, THE VIEW EXPRESSED BY THE TRIBUNAL IN THE IMPUGNED ORDER THAT WHEN THE HIGH COURT DISMISSES THE APPEAL BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES, THE HIGH COURT DOES NOT RENDER ANY DECISION IS AN INCORRECT PROPOSITION AND COULD NOT BE ACCEPTED. [PARAS 16 AND 17] WHEN ON TALKS OF MERGER OF A JUDGMENT, ORDER OR A D ECISION OF A SUBORDINATE COURT OR FORUM INTO THE JUDGMENT, ORDER OR DECISION OF A SUPERIOR COURT OR FORUM THE MERGER MAY BE OF THE ENTIRE ORDER, I.E., THE REASONS AND THE CONCLUSION, OR ONLY A PART, VIZ., ONLY THE CONCLUSION BY A DIFFERENT PROCESS OF REAS ONING. IN THAT EVENT WHAT MERGES IS THE OPERATIVE PART AFTER THE CONFIRM ATION, REVERSAL OR MODIFICATION, BUT IN ANY EVENT, THE ORDER OF THE LOWER COURT OR T HE FORUM DOES NOT HAVE ANY INDEPENDENT EXISTENCE THEREAFTER. THIS WOULD BE A M ERGER IN A CASE WHERE THE REASONING OF THE SUBORDINATE FORUM IS EITHER EXPRES SLY NOT APPROVED, OR A DIFFERENT REASONING IS GIVEN BY THE SUPREME COURT OR FORUM. H OWEVER, IN A CASE WHERE THE SUPERIOR COURT EITHER ADOPTS OR REITERATES THE REAS ONING, OR RECORDS AN EXPRESS APPROVAL OF THE REASONING, THE MERGER IS IN RELATIO N TO BOTH THE OPERATIVE PART AND THE REASONS. [PARA 18] THE NET EFFECT IS THAT THE ORDER OF THE SUBORDINATE COURT OR THE FORUM MERGES WITH THE ORDER OF THE SUPERIOR COURT OR FORUM AND HAS NO INDEPENDENT EXISTENCE IN RELATION TO THE ISSUE WHICH WAS CARRIED BEFORE THE APPELLATE COURT OR FORUM. IF THE 11 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 MERGER IS ISSUE SPECIFIC, THERE IS FUSION OF THE OR DERS ONLY TO THAT LIMITED EXTENT. THAT IS THE REASON WHY PRINCIPLE OF MERGER IS STATE D TO BE NEITHER RIGID NOR OF UNIVERSAL APPLICATION. THEREFORE, IT CANNOT BE SUCC ESSFULLY CONTENDED THAT IN THE LATTER SITUATION, I.E., WHERE THE APPELLATE COURT OR THE FORUM MERELY ACCOR DS APPROVAL TO THE REASONING OF THE LOWER COURT OR FOR UM, THERE IS NO DECISION OF THE APPELLATE COURT OR FORUM. [PARA 19] THE DOCTRINE OF MERGER IS FOUNDED ON PRINCIPLE OF P ROPRIETY IN THE HIERARCHY OF JUSTICE DELIVERY SYSTEM, THE UNDERLYING LOGIC BEING THAT THERE CANNOT BE MORE THAN ONE OPERATIVE ORDER GOVERNING SAME SUBJECT-MATTER A T A GIVEN POINT OF TIME. THE ONLY CAVEAT TO THE DOCTRINE OF THE MERGER IS THAT T HE CONTENT OR THE SUBJECT-MATTER OF CHALLENGE BEFORE THE SUPERIOR FORUM HAS TO BE BO RNE IN MIND. [PARA 20] IN A CASE WHERE THE APPEAL IS DISMISSED ON ACCOUNT OF - ( I ) BEING BARRED BY LIMITATION, ( II ) BEING DEFECTIVE IN NATURE, ( III ) THE APPELLANT HAVING NO LOCUS STANDI TO PREFER APPEAL, IT CANNOT BE STATED THAT THERE IS MERGER OF THE ORDER OF THE SUBORDINATE FORUM IN THE ORDER OF THE SUPERIOR FORU M. THE REASON IS: THERE IS NO ORDER MADE BY THE SUPERIOR FORUM, I.E., ON MERITS, THE CONTROVERSY BETWEEN THE PARTIES HAS NOT BEEN GONE INTO BY THE APPELLATE FOR UM. BUT, IN A CASE WHERE THE HIGH COURT COMES TO THE CONCLUSION THAT NO SUBSTANT IAL QUESTION OF LAW ARISES ON A PARTICULAR ISSUE, IT CANNOT BE STATED THAT WHEN T HE APPEAL IS DISMISSED BY THE HIGH COURT, THE SUBJECT-MATTER OF THE CONTROVERSY B ETWEEN THE PARTIES HAS NOT BEEN DEALT WITH BY THE HIGH COURT. [PARA 22] IN THE LIGHT OF ABOVE AND MORE PARTICULARLY ON APPL ICATION OF THE DOCTRINE OF MERGER, THE SUBMISSION THAT UNLESS A SUBSTANTIAL QU ESTION OF LAW IS FORMULATED THERE CAN BE NO DECISION OF THE HIGH COURT UNDER SE CTION 260A IS AN INCORRECT PROPOSITION. [PARA 24] THE EFFECT OF DISMISSAL OF TAX APPEAL BY THE HIGH C OURT HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IS THAT THE ORDER OF THE TRI BUNAL ON THE ISSUE WHICH WAS AGITATED BY THE ASSESSEE BEFORE THE HIGH COURT STAN DS MERGED IN THE ORDER OF THE HIGH COURT, AND FOR ALL INTENTS AND PURPOSES IT IS THE DECISION OF THE HIGH COURT WHICH IS OPERATIVE AND WHICH IS CAPABLE OF BEING GI VEN EFFECT TO. IT WAS NOT OPEN TO ANY PERSON TO CONTEND THAT THERE WAS NO DECISION OF THE HIGH COURT AND THE SUBORDINATE FORUM WAS ENTITLED TO TAKE A CONTRARY V IEW THAN THE ONE ADOPTED IN THE EARLIER PROCEEDINGS WHICH HAVE BEEN AFFIRMED BY THE HIGH COURT BY A PROCESS OF DISMISSAL OF THE APPEAL SIMPLICITER. [PARA 26] 12 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 6.2. WE FIND THAT THE ACTIVITIES OF THE ASSESSEE SO CIETY DURING THE YEARS UNDER APPEAL BEFORE US AT PRESENT WERE ONE AND THE SAME AS THAT OF THOSE DECIDED BY THIS TRIBUNAL IN THE AFORESAID YEARS, WHICH HAS BEEN LATER CONFIRMED BY THE HONBLE CALCUTTA HIGH COURT . HENCE RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEARS 1986-87 TO 1993-94 DATE D 11.7.2002 , WHICH HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT, AND IN VIEW OF THE FACT THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CAS E DURING THE YEARS UNDER APPEAL, WE HOLD THAT THE ASSESSEE SOCIETY IS AN EDUCATIONAL IN STITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT ENTITLED FO R EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT AS THE AGGREGATE ANNUAL RECEIPTS IN EACH OF THE YEARS UNDER APPEAL WERE LESS THAN RS 1 CRORE. ACCORDINGLY, THE GROUNDS RAISED BY THE REV ENUE FOR THE ASST YEARS 2002-03 , 2003-04 , 2007-08 , 2010-11 , 2011-12 & 2012-13 , A RE DISMISSED. 7. NOW LET US COME TO THE ASSESSEE APPEAL FOR THE A SST YEAR 2006-07 IN ITA NO. 1300/KOL/2010. FOR THE ASST YEAR 2006-07, THE LD AO, THOUGH PLACED THE FACT THAT THE EARLIER YEARS DECISION FOR THE ASST YEARS 1986-87 T O 1993-94 WERE DECIDED IN FAVOUR OF THE ASSESSEE, OBSERVED THAT FOR THE ASST YEAR 1999- 2000, THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE ASSESSEE. HE ALSO OBSERVED IN HI S ORDER THAT THE APPEAL PREFERRED BY THE ASSESSEE AGAINST THE SAID TRIBUNAL ORDER FOR ASST Y EAR 1999-2000 WAS PENDING IN HONBLE CALCUTTA HIGH COURT. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTION EXISTING FOR PROFIT AND ACCORDINGLY BROUGHT THE SUR PLUS TO TAXATION. THIS ACTION OF THE LD AO WAS APPROVED BY THE LD CITA. AGGRIEVED, THE ASS ESSEE IS IN APPEAL BEFORE US. WE FIND THAT THIS ISSUE HAD ALREADY BEEN SETTLED IN FA VOUR OF THE ASSESSEE VIDE PRECEDING PARAGRAPHS FOR THE OTHER ASSESSMENT YEARS AND THE D ECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR THE ASST YEAR 2006-07 ALSO AS THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY THE GROUND S RAISED FOR THE ASST YEAR 2006-07 ARE ALLOWED. 13 ITA NOS.1300/KOL/2010, 2131-2137/KOL/2016-MAMATA SH ANKAR BALLET TROUPE- A.YS.2006-07, 1998-99, 2002-03 ,2003-04,2007-08,2010-11 TO 2012-13 8. TO SUM UP, ITA NO. ASSESSMENT YEAR APPEAL TYPE RESULT 1300/KOL/2010 2006-07 ASSESSEE ALLOWED 2131/KOL/2016 1998-99 REVENUE DISMISSED 2132/KOL/2016 2002-03 REVENUE DISMISSED 2133/KOL/2016 2003-04 REVENUE DISMISSED 2134/KOL/2016 2007-08 REVENUE DISMISSED 2135/KOL/2016 2010-11 REVENUE DISMISSED 2136/KOL/2016 2011-12 REVENUE DISMISSED 2137/KOL/2016 2012-13 REVENUE DISMISSED ORDER PRONOUNCED IN THE COURT ON 02. 08.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02.08.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. MAMATA SHANKAR BALLET TROUPE, 21A, HINDUSTHAN RO AD, KOLKATA-700029 2. DDIT(EXEMPTION)-II, KOLKATA 3. ITO(E), WD-1(4), KOLKATA 3..C.I.T.(A)-XIV, KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S