ITO, Ward 1(1), Aurangabad V. Water and Land Management Institute, Aurangabad

ITA 419/PUN/2013

• Counselvise Citation: 41924514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: R K KHANDELWAL; J N SINGH
• Keywords: Charitable institution
• Section: 143(3); 12A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.419/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, WARD 1(1), AURANGABAD. . APPELLANT VS. WATER AND LAND MANAGEMENT INSTITUTE, KANCHANWADI, WALMI CAMPUS, PAITHAN ROAD, AURANGABAD 431 005. PAN : AAATW1740R . RESPONDENT DEPARTMENT BY : MR. S. P. WALIMBE ASSESSEE BY : MR. J.N. SINGH & MR. R.K. KHANDELWAL DATE OF HEARING : 23-06-2014 DATE OF PRONOUNCEMENT : 25-06-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABA D DATED 04.12.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 16.1 2.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE HAS ASSAILED THE ORD ER OF THE CIT(A) BY RAISING THE FOLLOWING TWO GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (APPEALS) ERRED IN COMING TO THE CONCLUSION THAT TH E ASSESSEE IS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (APPEALS) ERRED IN COMING TO THE CONCLUSION THAT TH E ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE INCOM E-TAX ACT, 1961. ITA NO.419/PN/2013 A.Y. : 2009-10 3. BRIEFLY PUT THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN HOLDING THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. 4. IN BRIEF, THE FACTS ARE THAT THE RESPONDENT-ASSE SSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. THE MAIN OBJECTS OF THE TRUST, AS MANIFESTED IN ITS MEM ORANDUM OF ASSOCIATION, HAVE BEEN REPRODUCED BY THE CIT(A) IN PARA 7.3 OF H IS ORDER. IN TERMS OF THE SAME, IT IS SEEN THAT THE TRUST HAS BEEN ESTABLISHE D FOR THE PURPOSE OF PROMOTING ADVANCEMENT OF SCIENCE AND ACQUISITION OF SCIENTIFIC KNOWLEDGE BY PROVIDING INSTRUCTIONS AND TRAINING IN VARIOUS BRAN CHES OF SCIENCE AND IN PARTICULAR IN WATER MANAGEMENT AND LAND DEVELOPMENT FOR IRRIGATION AND AGRICULTURE. THE CIT(A) HAS ALSO NOTICED THE INFOR MATION ON ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE VIZ. TRAINING PROGRAMME S IN THE FIELD OF WATER MANAGEMENT IN VARIOUS YEARS; DETAILS OF WOMEN FARME RS TRAINED; AND, VARIOUS OTHER TRAINING PROGRAMMES CONDUCED BY THE ASSESSEE TRUST. THE CIT(A) ALSO NOTICED THAT ASSESSEE TRUST WAS SUBSTANTIALLY FINAN CED BY THE STATE GOVERNMENT, TO THE TUNE OF ALMOST 90% OF ITS GROSS RECEIPT, IN TERMS OF A TABULATION CONTAINED IN PARA 5 OF THE IMPUGNED ORDE R. FOR ALL THE ABOVE REASONS, THE CIT(A) CONCLUDED THAT ASSESSEE WAS ENG AGED IN THE ACTIVITY OF IMPARTING EDUCATION AND SINCE IT WAS SUBSTANTIALLY FINANCED OUT OF THE GOVERNMENTAL SOURCES; AND, ACCORDINGLY HE HELD THE ASSESSEE ENTITLED TO EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. AGAINST T HE AFORESAID CONCLUSION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE CONTENDED THAT THE ASSESS EE DID NOT CLAIM EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT EITHER IN T HE RETURN OF INCOME OR IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSI NG OFFICER. THEREFORE, THE CIT(A) ERRED IN ADMITTING SUCH FRESH CLAIM. AP ART THEREFROM, THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE AS SESSEE HAD DECLARED A ITA NO.419/PN/2013 A.Y. : 2009-10 SURPLUS IN ITS INCOME & EXPENDITURE ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR WHICH AMOUNTED TO RS.2,12,43,608/- AND IN THE ABSEN CE OF ANY REGISTRATION WITH THE COMMISSIONER OF INCOME TAX U/S 12A OF THE ACT, THE ASSESSING OFFICER HELD THE ENTIRE AMOUNT TAXABLE AT MAXIMUM M ARGINAL RATE. 6. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE AP PEARING FOR THE RESPONDENT-ASSESSEE HAS DEFENDED THE ORDER OF THE C IT(A) BY POINTING OUT THAT THOUGH THE ASSESSEE HAD CLAIMED IN THE RETURN OF INCOME THAT THE SURPLUS WAS EXEMPT FROM TAX, THE CLAIM FOR EXEMPTION U/S 10 (23C)(IIIAB) OF THE ACT WAS SPECIFICALLY RAISED BEFORE THE CIT(A). IT WAS POIN TED OUT THAT THE SAID CLAIM HAS BEEN ADMITTED BY THE CIT(A) AFTER ALLOWING THE ASSE SSING OFFICER DUE OPPORTUNITY BY INVITING HIS COMMENTS AND THE CIT(A) HAS CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSING OFFICER, AND ONL Y THEREAFTER ALLOWED THE CLAIM OF THE ASSESSEE. IT WAS THEREFORE CONTENDED THAT THE CIT(A) MADE NO MISTAKE IN ADMITTING THE CLAIM FOR EXEMPTION U/S 10 (23C)(IIIAB) OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT CASE, THE CIT(A) HAS FOUND THE ASSESSEE AS BEING EL IGIBLE FOR RELIEF U/S 10(23C)(IIIAB) OF THE ACT. NOTABLY, SECTION 10(23C )(IIIAB) OF THE ACT PRESCRIBES THAT ANY INCOME OF ANY UNIVERSITY OR OTHER EDUCATIO NAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSE OF PROF IT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, SHALL BE EXEMPT. IN OTHER WORDS, IN ORDER TO BE ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIA B) OF THE ACT, AN ASSESSEE BY WAY OF A UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIO N SHOULD EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AND FURTHER THAT IT SHALL BE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. THE CASE MADE OUT BY THE CIT(A) IS THAT THE ASSESSEE-TRUST HAS CARRIED O UT VARIOUS TRAINING PROGRAMMES IN THE FIELD OF WATER MANAGEMENT, TRAINI NG OF THE FARMERS, ETC.. THUS, AS PER THE CIT(A), ASSESSEE-TRUST IS CARRYING ON ACTIVITY OF IMPARTING EDUCATION TO FARMERS AND OTHERS IN RESPECT OF WATER MANAGEMENT AND OTHER ITA NO.419/PN/2013 A.Y. : 2009-10 RELEVANT ISSUES. ANOTHER OBSERVATION OF THE CIT(A) IS THAT THE ACTIVITIES OF THE ASSESSEE-TRUST ARE SUBSTANTIALLY MET OUT OF THE GOV ERNMENT GRANTS. AS PER THE CIT(A), FOR VARIOUS ASSESSMENT YEARS STARTING F ROM 2003-04 TO 2010-11 AS PER THE TABULATION IN PARA 5 OF THE IMPUGNED ORDER, THE GRANTS RECEIVED FROM THE GOVERNMENT, CONSTITUTE ALMOST 90% OF THE TOTAL RECEIPTS. ON ACCOUNT OF THE AFORESAID TWIN FACTORS, THE CIT(A) CONCLUDED TH AT ASSESSEE IS AS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AND THAT IT WAS SUBSTANTIALLY FI NANCED BY THE GOVERNMENT; AND WAS THUS, ELIGIBLE FOR EXEMPTION U/S 10(23C)(II IAB) OF THE ACT. IN THE COURSE OF HEARING, THE LEARNED DEPARTMENTAL REPRESE NTATIVE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO CONTROVERT THE AFORESAID FACTUAL FINDINGS OF THE CIT(A). THE ONLY POINT RAISED FOR CONSIDERATION IS THAT THE CLAIM FOR EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT WAS NEITHER RAISED IN THE RETURN OF INCOME AND NOR IN THE COURSE OF ASSESSMENT PROCEEDINGS. BE THAT A S IT MAY, IT IS QUITE CLEAR THAT AN APPELLATE AUTHORITY IS ENTITLED TO ADMIT FR ESH CLAIMS WHICH WERE NOT MADE BEFORE THE ASSESSING OFFICER SO LONG AS THEY I NVOLVE A POINT OF LAW AND DOES NOT REQUIRE ANY FRESH INVESTIGATION OF FACTS. IN THE PRESENT CASE, WE FIND THAT THE CIT(A) HAS DEEMED IT FIT TO ADMIT SUCH ADD ITIONAL CLAIM BUT BEFORE DOING SO HE ALLOWED THE ASSESSING OFFICER AN OPPORT UNITY TO PUT-FORTH HIS SAY. IN-FACT, THE CIT(A) HAS CONSIDERED ALL THE OBJECTIO NS PUT-FORTH BY THE ASSESSING OFFICER NOT ONLY AGAINST THE ADMISSION OF SUCH FRES H CLAIM BUT ALSO IN RELATION TO THE MERITS OF THE CLAIM. WE FIND NO REASONS TO INT ERFERE WITH THE CONCLUSION OF THE CIT(A), WHICH ARE FAIR AND PROPER. IN-FACT, TH E CIT(A) MADE NO MISTAKE IN ADMITTING THE SAID FRESH CLAIM OF THE ASSESSEE HAVI NG REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, (1998) 229 ITR 383. PERTINENTLY, THE ISSUE RELATING TO THE EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT IS A PURE POINT OF LAW WHICH HAS BEEN ADJUDICATED BY THE CIT(A) ON THE BAS IS OF FACTS ON RECORD AND IT DID NOT REQUIRE ANY FRESH INVESTIGATION OF THE F ACTS. THEREFORE, WE FIND NO ERROR ON THE PART OF THE CIT(A) ON THIS ASPECT. ITA NO.419/PN/2013 A.Y. : 2009-10 8. IN SO FAR AS THE PLEA RAISED BY THE LEARNED DEPA RTMENTAL REPRESENTATIVE BEFORE US THAT ASSESSEE WAS NOT ENGAGED IN RUNNING OF A SCHOOL OR COLLEGE SO AS TO FALL WITHIN THE PURVIEW OF SECTION 10(23C)(II IAB) OF THE ACT IS CONCERNED, THE SAME, IN OUR VIEW, IS UNTENABLE. IN OUR CONSID ERED OPINION, SO LONG AS THE SOLE PURPOSE OF AN INSTITUTION IS FOR EDUCATIONAL P URPOSES AND NOT FOR THE PURPOSES OF PROFIT AND IT IS WHOLLY OR SUBSTANTIALL Y FINANCED BY THE GOVERNMENT, THE EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT WOULD N OT BE LOST MERELY BECAUSE IT IS NOT RUNNING A FORMAL SCHOOL OR UNIVERSITY PER SE . THE MEANING OF THE EXPRESSION EDUCATIONAL PURPOSES CONTAINED IN SECT ION 10(23C)(IIIAB) OF THE ACT, IN OUR VIEW, CANNOT BE CONFINED TO A SCHOOL OR COLLEGE PER SE BUT WOULD ALSO INCLUDE IN ITS PURVIEW ANY INSTITUTION WHICH I S ENGAGED IN IMPARTING INSTRUCTION, TRAINING OR EDUCATION IN A PARTICULAR FIELD. THE ASSESSEE-TRUST IS ENGAGED IN IMPARTING INSTRUCTION OR TRAINING IN WAT ER AND LAND MANAGEMENT FOR IRRIGATION AND AGRICULTURE PURPOSES AND THE RELATED RESEARCH PROGRAMMES, ETC.. THE CIT(A) HAS ALSO EMPHASIZED THAT ASSESSEE IS ENG AGED IN ADVANCEMENT OF SCIENCE AND ACQUISITION OF SCIENTIFIC KNOWLEDGE, TR AINING AND RESEARCH PROGRAMME IN IRRIGATION AND AGRICULTURE FOR THE FAR MERS, ETC.. THUS, THE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE FALL W ITHIN THE EXPRESSION EDUCATIONAL PURPOSES; AND, IN OUR VIEW, THE CIT(A ) MADE NO MISTAKE IN ALLOWING RELIEF TO THE ASSESSEE U/S 10(23C)(IIIAB) OF THE ACT. THUS, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND THE REVENUE FAILS IN THIS APPEAL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JUNE, 2014. SUJEET ITA NO.419/PN/2013 A.Y. : 2009-10 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE