M/S RAM LAL BHASIN PUBLIC SCHOOL, Ludhiana V. Commssioner of Income Tax (Exemptions), Chandigarh

ITA 699/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7098 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-01-2019
• Assessment Year: misc
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: VINAY SHRIVASTAV
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI. N.K. SAINI, VICE PRESIDENT AND SHRI. RAVISH SOOD, JUDICIAL MEMBER ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, NEAR CRPF QUARTHERS, PHASE-I, DISTT. LUDHIANA THE CIT ( E XEMPTIONS ), CHANDIGARH ./PAN NO:AADTS5721K / APPELLANT /RESPONDENT ASSESSEE BY: SHRI ASHWANI KUMAR, CA & SHRI VINAY SHRIVASTAV, CA REVENUE BY: SMT. PARVINDER KAUR, CIT D.R DATE OF HEARING: 15.01.2019 DATE OF PRONOUNCEMENT: 17.01.2019 O R D E R PER N.K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.09.2017 OF THE COMMISSIONER OF INCOME TAX (EXEMP TIONS) CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(E)]. 2. THE ONLY GROUND RAISED IN THE APPEAL READS AS UN DER:- THE ORDER PASSED U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 BY THE LD. CIT (E) CHANDIGARH IS AGAINST LAW A ND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIE D TO HOLD THAT THE APPLICANT SCHOOL DOES NOT QUALIFY FOR EXEMPTION U/S 10(23C) OF THE ACT. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED AN APPLICATION IN FORM NO. 56D FOR GRANT OF EXEMPTION / APPROVAL U/S P A G E | 2 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA 10(23C)(VI) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'I.T. ACT'). THE LD. CIT (E) OBSERVED THAT THE ASSESSEE IS A SCHOOL OF SANA TAM DHARMA PARACHARAK SABHA A SOCIETY REGISTERED IN THE OFFIC E OF REGISTRAR OF JOINT STOCK COMPANIES UNDER SOCIETIES REGISTRATION ACT ON 5.2.1914. THERE WAS NO EVIDENCE OF THE ASSESSEE CLAIMING EXEMPTION U/S 10(23C) (IIIAD) OF THE ACT IN THE PAST. HE ALSO OBSERVED THAT THE A SSESSEE HAD NEVER FILED RETURN OF INCOME BUT THE RETURN OF SABHA HAS BEEN FILED. THE LD. CIT (E) ALSO OBSERVED THAT AN ENTITY CLAIMING APPROVAL U/S 10(23C)(VI) OF THE ACT NEEDS TO MEASURE UP TO THE STRINGENT CONDITIONS OF EXISTING SOLELY FOR EDUCATION AND NOT FOR PROFITS. THE ASSESSEE SU BMITTED TO THE LD. CIT(E) THAT INSTITUTION HAD BEEN CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT TILL FINANCIAL YEAR 2014-15 AND THAT THE AUDIT REPORT IN FORM NO. 10BB FOR FINANCIAL YEAR 2015-16 WAS FURNISHED I N THE CASE OF THE SCHOOL WHICH REVEALED THAT IT HAD CLAIMING EXEMPTI ON U/S 10(23C)(VI) OF THE ACT. HOWEVER, THE LD. CIT (E) WAS OF THE VIEW THAT THE INFORMATION PROVIDED BY THE ASSESSEE WAS NOT RELEVANT AS THE AS SESSEE WAS NOT A SEPARATE ENTITY HAVING A PAN OF ITS OWN AND WHAT HA D BEEN FILED WAS COPIES OF THE INCOME-TAX RETURNS FILED BY THE SOCIE TY. THE LD. CIT(E) HELD THAT EXEMPTION U/S 10(23C)(VI) OF THE ACT WAS ALLOW ABLE TO ANY UNIVERSITY OR ANY OTHER EDUCATIONAL INSTITUTION SOL ELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT AND THAT THE ASSESSEE EVEN THOUGH A SCHOOL WAS NOT REGISTERED AS A SEPARATE EN TITY WITH THE INCOME TAX DEPARTMENT DID NOT HAVE ITS OWN PAN NUMBER AND THAT ITS CLAIM IN THE PAST AND EVIDENCE THEREOF WERE BASED ON ITS EXI STENCE AS A UNIT OF A P A G E | 3 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA SOCIETY. HE, THEREFORE, REJECTED THE APPLICATION MO VED BY THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE EXEMPTION U/S 10(23C) (VI) OF THE ACT IS ALLOWABLE TO A UNIVE RSITY OR EDUCATIONAL INSTITUTION AND NOT TO ANY OTHER ASSESSEE I.E. TRUS T OR SOCIETY. IT WAS FURTHER STATED THAT THE ASSESSEE TRUST IS RUNNING E DUCATIONAL INSTITUTION IN THE NAME OF RAM LAL BHASIN PUBLIC SCHOOL AND I N ITS INCOME-TAX RETURNS EARLIER WAS USED TO CLAIM EXEMPTION U/S 10( 23C)(IIIAD) OF THE ACT TILL THE ASSESSMENT YEAR 2015-16 AND FOR THE YEAR U NDER CONSIDERATION THE ASSESSEE SCHOOL FILED AN APPLICATION FOR EXEMP TION IN FORM NO. 56D IN ACCORDANCE WITH RULE 2CA(2) OF THE INCOME TAX RU LES AND NO PAN IS REQUIRED FOR CLAIMING THE EXEMPTION U/S 10(23C)(IV) OF THE ACT. THE RELIANCE WAS PLACED ON THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT, CENTRAL CIRCLE-1(3) VS CH ILDREN EDUCATION SOCIETY REPORTED AT 358 ITR 373 / 34 TAXMANN.COM 28 5 (KARNATAKA). 5. IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SU PPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(E) AND REITERA TED THE OBSERVATIONS MADE IN THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE FURNISH ED ITS APPLICATION IN P A G E | 4 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA FORM NO. 56D OF THE ACT IN ACCORDANCE WITH RULE 2CA (2) OF THE INCOME TAX RULES, 1962. TO RESOLVE THE PRESENT CONTROVERS Y, IT IS RELEVANT TO DISCUSS THE PROVISIONS CONTAINED IN SECTION 10(23C) (VI) OF THE ACT, WHICH READS AS UNDER:- SEC. 10. IN COMPUTING THE TOTAL INCOME OF A PREVI OUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FO LLOWING CLAUSES SHALL NOT BE INCLUDED 10 (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF .... (VI) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUT ION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (IIIAB) OR SUB-CLAUSE (IIIAD) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY; OR ..... 7. FROM THE AFORESAID PROVISIONS IT IS CLEAR THAT F OR CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT, THE ENTITY MUST BE AN UNIVERSITY OR OTHER EDUCATIONAL INSTITUTE EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT OF THE PURPOSES OF PROFIT. IN THE PRESENT C ASE IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A SCHOOL WHICH IS AFFILIATED T O THE COUNCIL FOR THE INDIA SCHOOL CERTIFICATE OF EXAMINATION (ISCE), CO PY OF WHICH IS PLACED ON THE RECORD. IT IS ALSO NOT THE CASE OF THE DEPAR TMENT THAT THE ASSESSEE SCHOOL WAS EXISTING FOR THE PURPOSE OF THE PROFIT. ON A SIMILAR ISSUE, THE HON'BLE KARNATAKA HIGH COURT IN CIT AND ANOTHER VS CHILDREN EDUCATION SOCIETY (2013) 358 ITR 373 HAS HELD AS UNDER:- CLAUSE (22) OF SECTION 10 WAS DELETED WITH EFFECT FROM APRIL 1, 1999. THE PROVISIONS ARE NOW SUBSTITUTED U NDER (23C) OF SECTION 10. BY THE AMENDED PROVISIONS WHAT IS INTENDED TO BE DONE IS THAT WHERE ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR E DUCATION P A G E | 5 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA PURPOSE AND NOT FOR PURPOSES OF PROFIT, IT WHOLLY O R SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME OF SUCH EDUCATIONAL INSTITUTION IN THE HANDS OF THE ASSESSEE, IS NOT INCLUDED IN THE TOTAL INCOME O F THE ASSESSEE. THE NEXT EXEMPTION IS CONTAINED IN SUB-CL AUSE (IIIAD) IN THE CASE OF ANY UNIVERSITY OR OTHER EDUC ATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT, IF THE AGGREGATE ANN UAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUT ION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. CLAUSE (VI) MAKES IT CLEAR THAT EVEN IF EDUCATIONAL INSTITUTION DO NO FALL UNDER EITHER OF THOSE TWO CATEGORIES SUCH EDUCATIONAL INSTITUTIONS ARE AL SO ENTITLED TO THE EXEMPTION, PROVIDED SUCH INSTITUTIO NS ARE APPROVED BY THE PRESCRIBED AUTHORITY. THEREFORE, AL L THE THREE PROVISIONS APPLY UNDER THREE DIFFERENT SPHERE S. ....... EACH EDUCATIONAL INSTITUTION IS A SEPARATE ENTITY CONTROLLED UNDER VARIOUS STATUTES FOR VARIOUS PURPO SES. THE MANAGEMENT OF THESE EDUCATIONAL INSTITUTIONS MA Y BE IN THE HANDS OF THE SOCIETIES OR THE TRUST, BUT FOR ALL OTHER PURPOSES THEY ARE DIFFERENT, INDEPENDENT ENTI TIES. 'ANY PERSON' IN SECTION 10(23C) REFERS TO THE ASSES SEE AND 'ON BEHALF OF' REFERS TO SUCH INSTITUTION. IT M AY BE AN UNIVERSITY, IT MAY BE AN EDUCATIONAL INSTITUTION , IT MAY BE A HOSPITAL OR OTHER INSTITUTIONS OF SIMILAR NATURE. AS ALL SUCH INSTITUTIONS ARE INDEPENDENT ENTITIES A ND THEY GENERATE INCOME WHEN THAT INCOME IS RECEIVED B Y THE ASSESSEE, IT BECOMES THE INCOME IN THE HANDS OF THE ASSESSEE AND IT IS SUCH INCOME WHICH IS SOUGHT TO B E EXCLUDED WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 10. THE TEST PRESCRIBED UNDE R THE PROVISION IS NOT THE INCOME OF THE EDUCATIONAL EDUCATION. IT IS THE AGGREGATE ANNUAL RECEIPTS OF S UCH EDUCATIONAL INSTITUTION THAT IS PRESCRIBED AT RS. 1 CRORE. THEREFORE, THE EXPRESSION 'AGGREGATE ANNUAL RECEIPT S' HAS TO BE UNDERSTOOD IN THE CONTEXT IN WHICH IT IS USED AND THE PURPOSE FOR WHICH THE PROVISION WAS INSERTE D, KEEPING IN MIND, THE SCHEME OF THE ACT. THEREFORE, IN THE CASE OF AN ASSESSEE RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, IF ANY OF THEM IS WHOLLY OR SUBSTANTI ALLY P A G E | 6 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA FINANCED BY THE GOVERNMENT, THEN THE INCOME FROM SU CH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDED WHILE COMPUTING ITS TOTAL INCOME. SIMILARL Y, INCOME FROM EACH EDUCATIONAL INSTITUTION IF IT IS N OT RECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANN UAL RECEIPTS DO NOT EXCEED RS. 1 CRORE RECEIVED BY THE ASSESSEE, IS ALSO NOT INCLUDED WHILE COMPUTING THE ANNUAL TOTAL INCOME OF THE ASSESSEE. THE AGGREGATE ANNUAL RECEIPTS OF OTHER EDUCATIONAL INSTITUTION ME ANS, THE TOTAL ANNUAL RECEIPTS OF EACH EDUCATIONAL INSTITUTION. IT HAS FURTHER BEEN HELD THAT ........ (II) THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE EXEMPTION IN TERMS OF PROVISIONS OF SECTION 10(23C) (IIIAD) WAS AVAILABLE TO THE ASSESSEE AS ANNUAL REC EIPTS OF EACH OF THE INSTITUTIONS OF THE ASSESSEE WAS LES S THAN THE PRESCRIBED LIMIT UNDER THE PROVISION . 8. WE, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASE ARE OF THE VIEW THAT WHE N THE ASSESSEE WAS RUNNING A SCHOOL FOR EDUCATIONAL PURPOSES AND NOT F OR EARNING PROFIT, THEN IT WAS ENTITLED TO THE EXEMPTION U/S 10(23C)(V I) OF THE ACT. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND DIRECT THE LD. CIT(E) TO ALLOW THE EXEMPTION / APPROVAL CLAIMED BY THE ASSES SEE U/S 10(23C) (VI) OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.01.2019 SD/- SD/- ( RAVISH SOOD) ( N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT PLACE : JALANDHAR; DATED 17 .01.2019 RKK P A G E | 7 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. DR, ITAT, CAMP BENCH, JALANDHAR 6. / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , /ITAT, CAMP BENCH, JALANDHAR P A G E | 8 ITA NO. 699/ASR/2017 M/S RAM LAL BHASIN PUBLIC SCHOOL, DISTT. LUDHIANA SR.NO. DETAILS DATE INITIALS DESIGNATIO N 1 DRAFT DICTATED ON 1 5 . 1 . 1 9 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1 6 . 1 . 1 9 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS 17.1.19 SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON 17.1.19 SR.PS/PS 7 FILE SENT TO THE BENCH CLERK 17.1.19 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER