Himachal Pradesh Board of School Education, Kangra V. ITO, Kangra

ITA 405/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68506 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-04-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI
• Keywords: Assessment record; Condonation of delay
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACOCUNTANT MEMBER ITA NO. 405/CHD/2012 ASSESSMENT YEAR : 2006-07 HIMACHAL PRADESH BOARD OF SCHOOL EDUCATION VS. THE ITO THROUGH ITS SECRETARY, DHARMSHALA KANGRA DISTRICT. KANGRA PAN NO. AAAJH0373H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VAIDYA RESPONDENT BY : SMT. JYOTI DATE OF HEARING : 09/09/2013 DATE OF PRONOUNCEMENT : 13/09/2013 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) SHIMLA DATED 28.2.2012 FOR ASSESSMENT YEAR 2006-07. 2. THE APPEAL OF THE ASSESSEE WAS EARLIER DISMISSED IN DEFAULT VIDE ORDER DATED 29.4.2013. HOWEVER, THE SAID ORDER WAS RECALL ED IN ALLOWING MISC. APPLICATION FILED BY THE ASSESSEE AND APPEAL OF THE ASSESSEE WAS RE-FIXED FOR HEARING ON MERITS. 3. THE ASSESSEE HAS RAISED NUMBER OF GROUNDS OF AP PEAL. THE ASSESSEE WAS HOWEVER DIRECTED TO FILE THE CONCISE GROUNDS OF APPEAL WHICH WAS ALSO NOT COMPLIED WITH AND AGAIN LARGE NUMBERS OF GROUND S HAVE BEEN RAISED IN THE AMENDED GROUNDS OF APPEAL. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ALL THE GROUNDS OF APPEAL, THE ASSESSEE HAS MADE A CLAIM OF DEDUCTION / EXEMPTION U/S 10(23C) (IIIAB) OF THE I.T. ACT. 2 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSI NG OFFICER PASSED ORDER U/S 143(3) OF THE ACT BY REOPENING OF THE ASSESSMEN T AS THE ASSESSEE BOARD HAS SHOWN A PROFIT OF RS. 12,24,21,993/- BUT HAS NO T FILED ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS, T HEREFORE, APPARENT THAT THE ABOVE INCOME OF RUPEES APPROX 12 CRORES HAS ESCAPED ASSESSMENT . THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS BEEN INCORPORATED UNDER THE HIMACHAL PRADESH BOARD OF SCHOOL EDUCATION ACT, 196 8. THE BOARD HAS BEEN ESTABLISHED FOR PUBLICATION OF BOOKS UPTO SECONDARY LEVEL, PUBLICATION OF SYLLABUS FOR VARIOUS CLASSES AND CONDUCT OF EXAMINA TION AT VARIOUS LEVELS. THE ASSESSEE ON THE SAME CLAIMED ITS INCOME EXEMPT U/S 10(23C)(IIIAB) OF THE INCOME TAX ACT AS THE SAID INCOME HAS ARISEN ON ACC OUNT OF ACTIVITIES OF THE BOARD FOR EDUCATIONAL PURPOSES. THE ASSESSING OFFI CER NOTED THAT THOUGH THE INCOME OF THE ASSESSEE HAS BEEN CLAIMED AS EXEMPT U /S 10(23C)(IIIAB) OF THE INCOME TAX ACT IN THE RETURN, BUT DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSEE INFORMED THE ASSESSING OFFICER THAT IT HAS APPLIED FOR EXEMPTION OF ITS INCOME BY FILING A REQUISITE APPLICATION U/S 10 2(23C)(VI) OF THE INCOME TAX ACT BEFORE THE CHIEF COMMISSIONER OF INCOME TAX , SHIMLA AS THE GROSS RECEIPTS OF THE ASSESSEE FOR THE ASSESSMENT YEAR UN DER APPEAL WAS MORE THAN RS. 1 CRORES. IT WAS FURTHER PLEADED THAT INSTITUT ION HAS NOT BEEN ESTABLISHED FOR ANY PROFIT MOTIVE FOR WHICH THERE IS NO DOUBT. THE ASSESSING OFFICER FURTHER NOTED THAT INCOME COULD BE EXEMPT IF IT FUL FILS CERTAIN CONDITIONS OF THE PROVISIONS OF THE ACT. IN THE ASSESSMENT YEAR UNDER APPEAL, IT WAS FOUND THAT ASSESSEE HAS ADVANCED ITS INCOME TO THE STATE GOVERNMENT, THEREFORE, ASSESSEE CANNOT CLAIM ITS INCOME AS EXEMPT AND THE INCOME OF THE ASSESSEE WAS COMPUTED ACCORDINGLY BY MAKING ITS INCOME TAXAB LE. 5. THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT A SSESSEE BOARD WAS ESTABLISHED FOR PUBLICATION OF BOOKS UP TO SECONDAR Y LEVEL, PUBLICATION OF 3 SYLLABUS FOR VARIOUS CLASSES AND CONDUCT OF EXAMINA TIONS AT VARIOUS LEVELS ETC. IT WAS ARGUED THAT INCOME OF THE BOARD BELONGS TO THE STATE GOVERNMENT AND THAT ITS INCOME WAS EXEMPT U/S 10(23C)(IIIAB) O F THE ACT WHICH HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER. IT WAS SUB MITTED THAT ALTERNATIVELY THE ASSESSEE MADE A CLAIM OF EXCEPTION U/S 10(23C)( VI) OF INCOME TAX ACT WHICH THE CHIEF COMMISSIONER HAS ALREADY GRANTED. I T WAS ALSO PLEADED THAT THE INSTITUTION HAS NOT BEEN ESTABLISHED FOR ANY PR OFIT MOTIVE. 6. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, D ISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDING IN PARA 5.2 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER:- 5.2 THE RIVAL SUBMISSIONS HAVE BEEN CAREFULLY CONS IDERED. IT IS NOTED THAT THE APPELLANT BOARD HAD APPLIED FOR G RANT OF EXEMPTION U/S 10(23C)(VI) AND THE SAID EXEMPTION WA S GRANTED BY THE CCIT, SHIMLA W.E.F. ASSESSMENT YEAR 2009-10. THE APPELLANTS REQUEST FOR THE CONDONATION OF DELAY IN FILING THE APPLICATION FOR APPROVAL U/S 10(23C) (VI) AND FOR G RANT OF EXEMPTION W.E.F. A.Y. 2005-06 HAS BEEN REJECTED BY THE CCIT, SHIMLA. THEREFORE THERE IS NO STRENGTH IN THE APPEL LANTS ARGUMENT THAT IT SHOULD BE GRANTED EXEMPTION U/S 10 (23C)(VI) OF THE ACT. SIMULTANEOUSLY THE APPELLANT CLAIMING EXEM PTION U/S 10(23C) (IIIAB). THUS THE APPELLANT IS TRYING TO TA KE BENEFIT OF THE PROVISIONS OF TWO DIFFERENT SECTIONS OF THE ACT AT THE SAME TIME. IT IS, HOWEVER, NOTED THAT THE CLAIM OF THEN APPELLANT U/S 10(23C)(IIAB) IS OTHERWISE ALSO NOT LEGALLY SUSTAIN ABLE. AS PER THE PROVISIONS OF SECTION 10(23C)(IIIAB), THE CONCE RNED UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION MUST BE WHOLLY AND SUBSTANTIALLY FINANCED BY THE GOVT. AS PER THE ASSE SSMENT RECORD OF THE APPELLANT, IT HAD NEVER BEEN FINANCED BY THE GOVT. DURING THE PERIOD A.Y. 2004-05 TO A.Y. 2010-11. IT HAS BEE N GENERATING ITS OWN INCOME FROM SALE OF BOOKS AND ON ACCOUNT OF REGISTRATION FEES. THE AID FROM THE STATE GOVT. TO THE APPELLANT IS NIL. IT HAS BEEN WRONGLY MENTIONED BY THE LD. A. O. IN THE 4 ASSESSMENT ORDER THAT THERE IS NO DOUBT THAT ASSES SEE BOARD IS FINANCED AND CONTROLLED BY THE STATE GOVT.. IN FAC T, IN THE YEAR UNDER APPEAL, THE APPELLANT BOARD HAS TRANSFERRED A N AMOUNT OF RS. 5 CRORES TO THE H.P. GOVT. FROM ITS OWN INCOME. IT IS FURTHER NOTED THAT THE APPELLANT BOARD IS NOT DIRECTLY CONT ROLLED BY THE STATE GOVT., BUT IS GOVERNED UNDER A SEPARATE HIMAC HAL PRADESH BOARD OF SCHOOL EDUCATION ACT, 1968. ON THE GIVEN F ACTS OF THE CASE, IT IS ALSO EVIDENT THAT THE APPELLANT BOARD D OES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES. IT IS, IN FACT, EA RNING HUGE PROFITS. ONCE IT IS ESTABLISHED THAT THE APPELLANT BOARD HAD GENERATED SURPLUS AND PROFITS, IT IS IMMATERIAL WHE THER OR NOT THE PROFIT MOTIVE EXISTED IN THE APPELLANTS OBJECT IVES. THE RECEIPT OF INCOME IN THE HANDS OF THE APPELLANT IS TAXABLE AND, THEREFORE, THE ACTION OF THE LD. A.O. DOES NOT CALL FOR ANY INTERFERENCE. THE ADDITION OF RS. 12,24,21,993/- TO THE TAXABLE INCOME OF THE APPELLANT IS, THEREFORE, UPHELD, AS T HE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION UNDER ANY OF THE PROVISI ONS OF THE INCOME-TAX ACT. IN THE RESULT, THE APPEAL OF THE APPELLANT IS DISM ISSED. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEES CLAIM OF EXEMPTION OF INCOME IS ESTABLISHED U/S 10(23C)(IIIA B) OF THE I.T.ACT. HE HAS REFERRED TO LETTER DATED 22.2.2010 FILED BEFORE THE LD. CIT(A) TO SHOW THAT FINANCIAL ASSISTANCE HAVE BEEN RECEIVED BY THE ASSE SSEE INSTITUTION FROM THE GOVERNMENT OF HIMACHAL PRADESH BOARD OF SCHOOL EDUC ATION AFTER ASSESSMENT YEAR 2000-01 AND IN ASSESSMENT YEAR UNDE R APPEAL IT HAS RECEIVED ASSISTANCE OF RS. 5.60 CRORES. HE HAS RELIED UPON THE UNREPORTED DECISIONS OF HON'BLE PATNA HIGH COURT IN THE CASE OF BIHAR STAT E TEST BOOK PUBLISING CORPORATION LTD V CIT AND ORDER OF ITAT BANGALORE BENCH IN THE CASE OF ASST. DIRECTOR OF INCOME-TAX (EXEMPTIONS) V KARNATA KA TEST BOOK SOCIETY (ITA NO. 892/BANG/2011 FOR ASSESSMENT YEAR 2007-08) . 5 8. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW AND HAVE SUBMITTED THAT THE ASSESSEE HAS NOT FULFILLED THE C ONDITIONS OF SECTION 10(23C)(IIIAB) OF THE INCOME TAX ACT, THEREFORE, TH E CLAIM OF THE ASSESSEE HAS BEEN RIGHTLY REJECTED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 10 (23C)(IIIAB) OF THE INCOME T AX ACT PROVIDES AS UNDER:- 10(23C) [(IIIAB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT; OR (IIIAC) 10. THE CONDITION OF THE ABOVE PROVISION WOULD SHOW THAT UNIVERSITY AND OTHER EDUCATIONAL INSTITUTIONS MUST EXIST SOLELY FO R EDUCATION PURPOSES AND NOT FOR THE PURPOSES OF PROFITS AND WHICH IS WHOLLY AND SUBSTANTIALLY FINANCED BY THE GOVERNMENT. THE ASSESSING OFFICER HAS GIVEN A SPECIFIC FINDING AGAINST THE ASSESSEE THAT IN THE ASSESSMENT YEAR UN DER APPEAL, THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS OF THE ABOVE PROVI SION. IT WAS ALSO FOUND THAT IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE H AS ADVANCED ITS INCOME TO THE STATE GOVERNMENT. THE LD. CCIT SHIMLA HAS GRAN TED APPROVAL U/S 10(23C) (VI) OF THE INCOME TAX ACT TO THE ASSESSEE AOP FROM THE ASSESSMENT YEAR 2009-10 ONWARDS SUBJECT TO CERTAIN CONDITIONS, THEREFORE, THE SAME WOULD NOT APPLY TO THE ASSESSMENT YEAR UNDER APPEAL I.E. 2006-07. THE LD. CIT(A) ON EXAMINATION OF THE ASSESSMENT RECORD ALSO FOUND THAT ASSESSEE HAD NEVER BEEN FINANCED BY THE GOVERNMENT DURING THE AS SESSMENT YEAR IN APPEAL AND OTHER YEARS. IT WAS ALSO FOUND THAT ASSESSEE H AS BEEN GENERATING ITS OWN INCOME FROM SALE OF BOOKS AND ON ACCOUNT OF REGIST RATION FEES. THE LD. 6 CIT(A) THEREFORE, ON EXAMINATION OF THE RECORDS FOU ND THAT THE AID FROM THE STATE GOVERNMENT TO THE ASSESSEE IS NIL AND IT WAS WRONGLY MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE BOARD IS FINANCED AND CONTROLLED BY THE STATE GOVERNMENT. I N FACT, IN THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE BOARD HAS TRANSFERR ED AND AMOUNT OF RS. 5 CRORES TO THE HIMACHAL PRADESH GOVERNMENT FROM ITS OWN INCOME. IT WAS ALSO NOTED FROM THE RECORD THAT ASSESSEE BOARD IS NOT DIRECTLY CONTROLLED BY THE STATE GOVT. BUT IS GOVERNED UNDER THE SEPARATE HIMACHAL PRADESH BOARD OF SCHOOL EDUCATION ACT, 1968. THE LD. CIT(A), THER EFORE, FOUND THAT ASSESSEE DOES NOT EXIST SOLELY FOR EDUCATIONAL PURP OSES. IT IS IN FACT EARNING HUGE PROFITS AND HAS SURPLUS INCOME AND PROFITS. TH E FINDING OF THE FACT RECORDED BY LD. CIT(A) CLEARLY SUGGESTS THAT ASSESS EE DID NOT HAVE FULFILL THE TERMS AND CONDITIONS OF SECTION 10(23C)(IIIAB) OF T HE I.T.ACT. THE APPEAL WAS ADJOURNED MANY TIMES BUT THE ASSESSEE DID NOT T AKE ANY STEPS TO PRODUCE ANY EVIDENCE BEFORE THE TRIBUNAL TO CONTRADICT THE FINDINGS OF FACT RECORDED BY LD. CIT(A) IN THE IMPUGNED ORDER. EVEN DURING THE COURSE OF ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE WAS SPECIFICALLY REQUI RED TO POINT OUT ANY ERROR IN THE ORDER OF LD. CIT(A) ON THE BASIS OF EVIDENCE OR MATERIAL ON RECORD BUT IT WAS STATED THAT NO EVIDENCE OR MATERIAL HAS BEEN FILED ON RECORD TO CONTRADICT THE ABOVE FINDING OF FACT RECORDED BY LD . CIT(A). THE LD. COUNSEL FOR THE ASSESSEE ONLY RELIED UPON THE TWO U NREPORTED JUDGMENTS AS ABOVE, HOWEVER, THE SAID JUDGMENTS COULD NOT BE CON SIDERED FAVORABLE IN FAVOUR OF THE ASSESSEE IN THE ABSENCE OF ANY EVIDEN CE OR MATERIAL ON RECORD IN FAVOUR OF THE ASSESSEE. THUS, THE FINDINGS OF FACT RECORDED BY LD. CIT(A) ABOVE HAVE NOT BEEN REBUTTED THROUGH ANY MATERIAL, THEREFORE, WE CONCLUDE THAT ASSESSEE MISERABLY FAILED TO SATISFY THE REQUI REMENT OF SECTION 10(23C)(IIIAB) OF THE INCOME TAX ACT IN THE ASSESSM ENT YEAR UNDER APPEAL. 7 11. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(A) IN REJECTING THE CLAIM OF THE ASSESSE E U/S 10(23C) (IIIAB) OF THE I.T. ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/09/2013 SD/- SD/- (T.R. SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH SEPTEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER, (ASSISTANT REGISTRAR) ITAT, CHANDIGARH 8