St. Mary's Malankara Seminary, Trivandrum V. ADIT (Excemption), Trivandrum

ITA 386/COCH/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81353 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 29-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: C B M WARRIER
• Section: 12A

Judgement Text

1 ITA NO. 386/COCH/2009 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. 386/COCH/2009 (ASSESSMENT YEAR 2005-06) ST.MARYS MLANKARA SEMINARY VS DDIT (EXEMPTIO N) NALANCHIRA PO, TRIVANDRUM TRIVANDRUM PAN : AADTS6378N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CBM WARRIER RESPONDENT BY : SHRI M ANIL KUMAR, CIT SMT. LATHA V KUMAR, JR DR DATE OF HEARING : 05-08-2014 DATE OF PRONOUNCEMENT : 17-10-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE WAS EARLIER DISPOSED O F BY A COMMON ORDER DATED 10-03-2011. HOWEVER, THE REVENUE FILED AN APPEAL BEFORE THE HIGH COURT IN ITA. NO.185 OF 2011. THE HIGH COURT BY A JUDGMENT DATED 23-01-2014 REMANDED BACK THE MATTER WITH THE FOLLOW ING OBSERVATIONS: 6. THEN COMING TO REGISTRATION UNDER SECTION 12A, NOW IT IS SETTLED POSITION BY VIRTUE OF A JUDGMENT OF THIS COURT REPORTED IN COMMISSIONER OF INCOME TAX V. ST.MARYS MALANKARA SEMINARY [348 ITR 69] THAT IMPARTING TRAINING TO 2 ITA NO. 386/COCH/2009 STUDENTS IN SEMINARY IS ALSO EDUCATION AND IT IS AL SO WITH REFERENCE TO VERY SAME RESPONDENT / ASSESSEE. IN T HE LIGHT OF SETTLED POSITION, WE NEED NOT PONDER MUCH OVER THE ISSUE OR THE CONTROVERSY REGARDING THE REGISTRATION UNDER SE CTION 12A TO BE GIVEN TO THE RESPONDENT / ASSESSEE. NOW THE O NLY CONTROVERSY REMAINS FOR CONSIDERATION IS WHETHER SE CTION 12A REGISTRATION SHOULD BE GIVEN FOR THE ASSESSMENT 200 5-06. APPARENTLY REGISTRATION UNDER SECTION 12A CAME INTO FORCE WITH EFFECT FROM 01.04.2005, THEREFORE IT WOULD BE APPLI CABLE TO THE ASSESSMENT YEAR 2006-07. SO FAR AS 2005-06, THERE WAS NO REGISTRATION UNDER SECTION 12A. THEN ONE HAS TO SE E WHETHER RECEIPTS AND OTHER AMOUNTS CROSS BEYOND THE LIMIT O F RS.1 CRORE IN ORDER TO OBTAIN SECTION 12A REGISTRATION O R WITHIN ONE CRORE SO THAT AUTOMATICALLY THEY GET EXEMPTION AS E DUCATIONAL INSTITUTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT . IN ORDER TO CONSIDER THIS ISSUE, THE FACTUAL SITUATION HAS TO B E ASCERTAINED. 7. FROM READING OF THE ORDERS OF ASSESSING OFFICER , CIT(APPEALS) AND TRIBUNAL, WE ARE NOT HAVING CLEAR PICTURE WHAT THIS AMOUNT OF RS.17 LAKHS REPRESENTS. IF RS. 17 LAKHS IS NOT COUNTED AS RECEIPTS, THE TOTAL RECEIPT WOULD CO ME WITHIN ONE CRORE. IF RS.17 LAKHS IS ADDED, IT CROSSES ONE CRORE. THUS IF THIS RS.17 LAKHS IS ADDED, THE ENTIRE SCENA RIO WOULD CHANGE. IN THE ABSENCE OF ANY PARTICULARS BEFORE U S, WE ARE OF THE OPINION, THE MATTER DESERVES TO BE REMANDED BAC K TO THE TRIBUNAL FOR CLARIFICATION WHAT EXACTLY THIS RS.17 LAKHS WOULD INDICATE AND WHY IT SHOULD BE EITHER INCLUDED IN RE CEIPTS OR EXCLUDED FROM RECEIPTS. SO FAR AS RS.05,90,170.83, IT IS ADMITTED THAT THE RECEIPTS ARE INTEREST ON DEPOSITS AND 3 ITA NO. 386/COCH/2009 VOLUNTARY CONTRIBUTION. THE TRIBUNAL NEED NOT REOP EN THE ISSUE PERTAINING TO RS.95,90,170.83. IT HAS TO CON SIDER THE SOURCE OF RS.17 LAKHS ALONE SO AS TO CONSIDER THE C ONTROVERSY UNDER SECTION 10(23C)(IIIAD) OF THE ACT. ACCORDING LY, THE APPEAL IS PARTLY ALLOWED. 2. IN VIEW OF THE ABOVE, THIS TRIBUNAL HAS TO EXAMI NE THE SOURCE OF RECEIPT OF RS.17 LAKHS AND WHETHER IT WOULD FORM PA RT OF THE RECEIPT OF THE ASSESSEE INSTITUTION OR NOT? 3. SHRI CBM WARRIER, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE, ST.MARYS MALANKARA SEMINARY IS AN EDUCATIONAL INSTITUTION IMPARTING TRAINING PRIMARILY TO THE STU DENTS TO PRIESTHOOD. THE ASSESSEE IS CONDUCTING THREE YEAR DEGREE COURSE IN PHILOSOPHY AND FOUR YEAR DEGREE COURSE IN THEOLOGY. THE ASSESSEE RECEI VED RS.17,09,825.35 AS DETAILED BELOW: CULTIVATION INCOME 4,80,165.00 SALE PROCEEDS OF BAKERY ITEM, MILK ETC 1,77,865.00 TELEPHONE COLLECTION 45,091.00 PHOTOSTAT COLLECTION 58,200.00 MISSION SUNDAY COLLECTION 17,687.00 PERSONAL EXPENSE OF STUDENTS REMITTED BY DIOCESES 6,58,753.35 MISCELLANEOUS INCOME 950.00 4 ITA NO. 386/COCH/2009 OFFERING BOX COLLECTION 1,613.00 FEE FOR ISSUING CERTIFICATE 600.00 SUBSIDY FOR BIOGAS PLANT 22,000.00 SALE PROCEEDS OF VEHICLES & ASSETS 246,900.00 17,09,824.35 ACCORDING TO THE LD.REPRESENTATIVE, THESE RECEIPTS DO NOT PERTAIN TO CONDUCTING EDUCATION BY THE INSTITUTION. THESE ARE ALL, ACCORDING TO THE LD.REPRESENTATIVE, NOT CONNECTED WITH INSTITUTION B UT RECEIVED BY THE ASSESSEE. THEREFORE, THIS HAS TO BE EXCLUDED FROM THE TOTAL RECEIPT FOR THE PURPOSE OF SECTION 10(23C)(IIIAD) OF THE ACT. ONCE RS.17,09,824.35 IS EXCLUDED AS OBSERVED BY THE KERALA HIGH COURT, THE TOTAL RECEIPT IS LESS THAN RS.1 CRORE, THEREFORE, THE ASSESSEE IS ENTITLE D FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT FOR THE ASSESSMENT YEAR 2 005-06. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISI ON OF THE DELHI BENCH OF THIS TRIBUNAL IN PARAM HANS SWAMI UMA BHARTI MISSIO N VS ACIT (2013) 140 ITD 429 (DEL) AND THE JUDGMENT OF THE KARNATAKA HIGH COURT IN CIT & ANR VS CHILDRENS EDUCATION SOCIETY (2013) 358 ITR 373 (KARN) 4. WE HEARD SHRI M. ANIL KUMAR, THE LD.DR ALSO. AC CORDING TO THE LD.DR, THE INCOME RECEIVED BY ANY PERSON ON BEHALF OF AN EDUCATIONAL INSTITUTION HAS TO BE TREATED AS TOTAL INCOME. IN THIS CASE, THE ASSESSEE ITSELF CLAIMS TO BE AN EDUCATIONAL INSTITUTION AND THE HIGH COURT BY 5 ITA NO. 386/COCH/2009 JUDGMENT IN CIT VS ST. MARYS MALANKARA SEMINARY 34 8 ITR 69 FOUND THAT THE ASSESSEE ITSELF IS AN INSTITUTION AND ENTITLED FOR REGISTRATION. HOWEVER, NO REGISTRATION WAS GRANTED FOR THE ASSESSMENT YEAR 2005-06. WHEN THE ASSESSEE HIMSELF CLAIMS TO BE AN EDUCATIONAL INSTIT UTION, THE ENTIRE RECEIPT SHALL BE TAKEN FOR THE PURPOSE OF COMPUTING THE ANN UAL RECEIPT. ONCE THE ANNUAL RECEIPT EXCEEDED RS.1 CRORE, ACCORDING TO TH E LD.DR, THE ASSESSEE IS NOT ENTITLED FOR ANY EXEMPTION U/S 10(23C)(IIIAD ) OF THE ACT OF THE ACT SINCE THE APPROVAL OF THE CHIEF COMMISSIONER OF INC OME-TAX PRESCRIBED UNDER THE ACT IS NOT OBTAINED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HIGH COURT SPECIFICALLY REMANDED BACK THE MATTER TO CONSIDER THE SOURCE OF RS. 17,09,824.35 AND WHETHER IT WILL FORM PART OF THE TOTAL RECEIPT OF T HE ASSESSEE OR NOT? THE CONTENTION OF THE ASSESSEE IS THAT THE INCOME OF RS .17,09,824.35 IS NOT FROM EDUCATIONAL ACTIVITY, THEREFORE, IT CANNOT FOR M PART OF THE ANNUAL RECEIPT OF THE ASSESSEE. THE LD.REPRESENTATIVE FOR THE ASSESSEE PLACING RELIANCE ON THE JUDGMENT OF THE KARNATAKA HIGH COUR T IN CIT & ANR VS CHILDRENS EDUCATION SOCIETY (2013) 358 ITR 373 (KA RN) CONTENDED THAT THE EDUCATIONAL INSTITUTION IS A SEPARATE ENTITY, THERE FORE, THE INSTITUTION SHOULD BE TAKEN SEPARATELY FOR THE PURPOSE OF COMPUTING TH E ANNUAL RECEIPT. ACCORDING TO THE LD.REPRESENTATIVE, THE RECEIPT OF RS.17,09,824.35 IS NOT 6 ITA NO. 386/COCH/2009 FROM EDUCATIONAL ACTIVITY, THEREFORE, IT CANNOT FOR M PART OF THE ANNUAL RECEIPT OF THE INSTITUTION. THE LD.RPERESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF THE DELHI BENCH OF THIS TRIBUNAL IN PARAM HANS SWAMI UMA BHARTI MISSION VS ACIT (2013) 140 ITD 429 (DEL) AND SUBMITTED THAT THE INTEREST ON FIXED DEPOSIT WAS FOUND TO BE NOT T HE INCOME OF THE SCHOOL. THE TRIBUNAL FOUND THAT THE TOTAL INCOME OF THE SOC IETY IS NOT TO BE CONSIDERED U/S 10(23C)(IIIAD) OF THE ACT. THE TRIB UNAL FOUND THAT INCOME ON INTEREST FROM FDR WAS AN ADDITIONAL INCOME OF SO CIETY, THEREFORE, IT CANNOT BE CONSIDERED TO BE PART OF THE ANNUAL RECEI PT OF THE SCHOOL. IN THE CASE BEFORE US, THE ASSESSEE ITSELF WAS CONSIDERING IT AS AN EDUCATIONAL INSTITUTION AND NOT AS TWO DIFFERENT ENTITIES. IN THE CASE BEFORE THE DELHI BENCH OF THIS TRIBUNAL, THE INSTITUTION OF SCHOOL I S DIFFERENT AND THE SOCIETY WAS CONSIDERED TO BE DIFFERENT. THE FIXED DEPOSIT WAS MADE BY THE SOCIETY WHICH WAS RUNNING THE INSTITUTION. THEREFORE, THE TRIBUNAL FOUND THAT THE INTEREST RECEIVED BY THE SOCIETY WILL NOT FORM PART OF THE ANNUAL RECEIPT OF THE EDUCATIONAL INSTITUTION. IN THE CASE BEFORE US , THE ASSESSEE ITSELF IS AN EDUCATIONAL INSTITUTION AND THE AMOUNT OF RS. 17,09 ,824.35 IS RECEIVED BY THE ASSESSEE ITSELF AS AN EDUCATIONAL INSTITUTION. THE STATEMENT OF INCOME DISCLOSED BY THE ASSESSEE, COPY OF WHICH IS AVAILAB LE AT PAGE 43 SHOWS HE ASSESSEE RECEIVED THE ENTIRE AMOUNT. NO INCOME WAS RECEIVED BY THE SCHOOL. IN FACT, THE ASSESSEE ITSELF IS CONSIDERED AS AN EDUCATIONAL INSTITUTION / SCHOOL. HAD THE ASSESSEE TREATED THE SOCIETY AND SCHOOL 7 ITA NO. 386/COCH/2009 DIFFERENTLY AND MAINTAINED SEPARATE BOOKS OF ACCOUN T, THE MATTER WOULD STAND ON DIFFERENT FOOTING. SINCE THE ASSESSEE IT SELF IS CONSIDERED TO BE AN EDUCATIONAL INSTITUTION, THE ENTIRE RECEIPT OF RS. 17,96,858.35 IS THE RECEIPT OF THE ASSESSEE INSTITUTION ITSELF. THEREFORE, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE RECEIVED THE A MOUNT OF RS.17,09,824.35 AS AN EDUCATIONAL INSTITUTION. EVE N THOUGH THESE RECEIPTS ARE NOT FROM THE ACTIVITY OF CONDUCTING EDUCATIONAL INSTITUTION, SINCE THE ASSESSEE RECEIVED THE INCOME AS AN EDUCATIONAL INST ITUTION IT WOULD FORM PART OF THE ANNUAL RECEIPT. THEREFORE, THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE ANNUAL RECEIPT OF THE ASSESSEE EXC EEDED RS.1 CRORE, HENCE THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/ S 10(23C)(IIIAD) OF THE ACT. 6. WE HAVE ALSO GONE THROUGH THE JUDGMENT OF THE KA RNATAKA HIGH COURT IN CHILDRENS EDUCATION SOCIETY (SUPRA). IN THE CASE BEFORE THE KARNATAKA HIGH COURT THE ASSESSEE WAS RUNNING SEVER AL INSTITUTIONS, AND SOME OF THEM RECEIVED FUNDS FROM GOVERNMENT. HOWEV ER, IN THE CASE BEFORE US, THE ONE INSTITUTION IS ASSESSEE ITSELF. NO OTHER INSTITUTION IS RUN BY THE ASSESSEE. THEREFORE, THE JUDGMENT OF THE KA RNATAKA HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE CASE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DIS MISSED. 8 ITA NO. 386/COCH/2009 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH OCTOBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 17 TH OCTOBER, 2014 PK/- COPY TO: 1. ST. MARYS MALANKARA SEMINARY, NALANCHIRA P.O., TRIVANDRUM 695 015 2. DDIT (EXEMPTIONS), TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH