ITO, Salem V. M/s. Kalaimahal Educational Trust, Rasipuram

ITA 792/CHNY/2011

• Counselvise Citation: 79221714 RSA 2011
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A.NOS. 790, 791, 792 & 793/MDS/2011 (ASSESSMENT YEARS : 2005-06, 2006-07, 2007-08 AND 2008-09) THE INCOME-TAX OFFICER, WARD-II(2), NO.3, GANDHI ROAD, SALEM-7. VS. M/S. KALAIMAHAL EDUCATIONAL TRUST, NO.19-A, ANGELS COLONY, SWAMI SIVANANDHA SALAI, RASIPURAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.B.NAIK, IRS, COMMIS SIONER OF INCOME-TAX RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 1 ST DECEMBER, 2011 DATE OF PRONOUNCEMENT : 12 TH DECEMBER, 2011 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THESE FOUR APPEALS ARE FILED BY THE REVENUE. THE R ELEVANT ASSESSMENT YEARS ARE 2005-06, 2006-07, 2007-08 AND 2008-09. THE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER P ASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), SALEM ON 15.2.2011. ITA 790 TO 793/11 :- 2 -: THE ASSESSMENTS IN THESE CASES HAVE BEEN COMPLETED UNDER SEC.143(3) READ WITH SEC.147 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS A TRUST RUNNING A SCHOOL AT RASI PURAM. THE ASSESSEE-TRUST DOES NOT HAVE REGISTRATION UNDER SEC.12AA AS FAR AS THE IMPUGNED ASSESSMENT YEARS ARE CONCERNED. THEREFORE, THE ASSESSING OFFICER DID NOT APPLY THE PROVISIONS OF SECTIONS 11 & 12 IN FAVOUR OF THE ASSESSEE. THE S URPLUS INCOME WAS BROUGHT TO TAX IN ALL THE FOUR ASSESSMENT YEARS . 3. IN FIRST APPEALS, THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THE ASSESSEE IS ALTERNATIVELY ENTITLED F OR THE BENEFITS OF SEC.10(23C)(IIID). HE FOUND THAT THE GROSS RECEIPT S FOR ALL THE IMPUGNED ASSESSMENT YEARS DID NOT EXCEED ` ONE CRORE PER ANNUM. THEREFORE, WITHOUT ANY OTHER STATUTORY FORM ALITY THE ASSESSEE IS ENTITLED FOR EXEMPTION OF ITS INCOME, A S THE ASSESSEE- TRUST IS SOLELY ENGAGED IN THE ACTIVITY OF EDUCATIO N. THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO FOUND THA T THE ASSESSEE-TRUST HAS NOT APPLIED ITS INCOME FOR ANY O THER PURPOSES OTHER THAN RUNNING EDUCATIONAL INSTITUTION. THE CO MMISSIONER OF INCOME-TAX (APPEALS) ALLOWED THE APPEALS OF THE ASS ESSEE UNDER SEC.10(23C)(IIID). ITA 790 TO 793/11 :- 3 -: 4. THE REVENUE IS AGGRIEVED AND THEREFORE, THESE AP PEALS BEFORE US. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER : 2. THE CIT(A) ERRED IN GRANTING EXEMPTION U/S.10(23C)(IIID) OF THE IT ACT, WHICH WAS NOT AT A LL CLAIMED BY THE ASSESSEE TRUST WHILE FILING RETURN O F INCOME AND ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE CIT(A) FAILED TO FOLLOW RATIO OF DECISION IN GOETZ (INDIA) LTD. VS. CIT 284 ITR 323( SC) RENDERED BY APEX COURT WHEREIN COURT HELD THAT A.O. WAS JUSTIFIED IN REJECTING THE CLAIM WHICH WAS NOT MADE IN THE RETURN OF INCOME. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT ASSESSEE TRUST HAS NOT CLAIMED EXEMPTION U/S.10(23C)(IIID) IN THE RETURN OF INCOME, IT IS AL SO EVIDENT FROM THE ASSESSEE TRUSTS REVISION PETITION U/S.154 DATED 14.07.2010. 4. THE CIT(A) HAS FAILED TO APPRECIATE THAT THE TR UST MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES & JUDI CIALLY IT HAS BEEN HELD THAT SOLELY MEANS EXCLUSIVELY AND NOT PRIMARILY. ITA 790 TO 793/11 :- 4 -: 5. THE LEARNED CIT(A) HAS FAILED TO FOLLOW THE DEC ISION OF THE ITAT IN THE CASE OF AIMAN EDUCATIONAL AND WELFARE SOCIETY, TRICHY-21, ITA NO.1729/MDS/2009 DT . 31.03.2009 WHERE IN THE ITAT HAS FOLLOWED THE RAJASTHAN HIGH COURT DECISION AND HELD THAT TRUST HAVING MIXED OBJECTS ARE NOT ENTITLED FOR EXEMPTION U/S.10(23C). 6. THE LEARNED CIT(A) HAS FAILED TO NOTICE THAT TH E ASSESSEE TRUST HAVE MIXED OBJECTS AND THEREFORE THE CIT(A) OUGHT TO HAVE HELD THAT THE TRUST IS NOT ELI GIBLE FOR EXEMPTION U/S.10(23C)(IIID). 5. WE HEARD SHRI R.B.NAIK, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE AND SHRI G. BA SKAR, THE COUNSEL APPEARING FOR THE RESPONDENT-ASSESSEE. 6. THERE IS NO DISPUTE REGARDING THE NON ELIGIBILIT Y OF THE ASSESSEE-TRUST FOR THE BENEFITS OF SECTIONS 11 & 12 AS THE TRUST HAS NOT BEEN REGISTERED UNDER SEC.12AA. 7. THE DISPUTE IS ONLY IN RESPECT OF THE POINT WHET HER THE ASSESSEE COULD HAVE ENJOYED THE BENEFITS OF SEC.10( 23C)(IIID) FOR THE IMPUGNED ASSESSMENT YEARS. THE LAW PROVIDES TH AT THE INSTITUTIONS SOLELY ENGAGED FOR THE PURPOSE OF EDUC ATION ARE ITA 790 TO 793/11 :- 5 -: ENTITLED FOR EXEMPTION UNDER SEC.10(23C)(IIID). TH ERE IS A DISTINCTION BETWEEN THE INSTITUTIONS HAVING A TOTAL GROSS RECEIPTS BELOW ` ONE CRORE AND EXCEEDING ` ONE CRORE. IN CASE THE INSTITUTIONS HAVING GROSS RECEIPTS LESS THAN ` ONE CRORE, NO FURTHER FORMALITY IS CALLED FOR AS SEC.10(23C)(IIID) STRAIG HTAWAY GRANTS EXEMPTION ON THE BASIS OF ACTIVITIES CARRIED ON BY THOSE INSTITUTIONS. REGULATORY PROVISIONS PLAY A ROLE ON LY IN CASES WHERE THE GROSS RECEIPTS ARE MORE THAN ` ONE CRORE WHERE AUDIT AND OTHER REQUIREMENTS ARE TO BE SATISFIED. IN THE CAS E OF THE PRESENT ASSESSEE, FOR ALL THE ASSESSMENT YEARS, GROSS RECEI PTS ARE LESS THAN ` ONE CRORE. IT IS ALSO EVIDENT ON RECORD THAT THE SOLE ACTIVITY CARRIED ON BY THE ASSESSEE IS THAT OF RUNNING AN ED UCATIONAL INSTITUTION. THEREFORE, IT IS ONLY JUST AND FAIR T O HOLD THAT THE ASSESSEE IS ENTITLED FOR THE BENEFITS OF SEC.10(23C )(IIID). AN ARGUMENT WAS URGED IN THE COURSE OF HEARING OF APPE AL THAT THE CLAIM UNDER SEC.10(23C(IIID) WAS NOT MADE BEFORE TH E ASSESSING AUTHORITY AND THEREFORE, THE COMMISSIONER OF INCOME -TAX (APPEALS) OUGHT NOT HAVE CONSIDERED THE ISSUE FOR T HE FIRST TIME. THE RECORDS SHOW THAT THE ASSESSEE HAS MENTIONED IN ITS STATEMENT OF COMPUTATION OF INCOME THAT THE ASSESSE E IS ENTITLED ITA 790 TO 793/11 :- 6 -: FOR EXEMPTION UNDER SEC.10(23C)(IIID). THEREFORE, IT IS TO BE SEEN THAT THE ASSESSEE HAS ALREADY MADE THE CLAIM UNDER SEC.10(23C)(IIID) OF THE INCOME-TAX ACT, 1961. 8. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THERE IS NO GROUND FOR US TO INTERFERE WI TH THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). 9. IN RESULT, THESE APPEALS FILED BY THE REVENUE AR E DISMISSED. ORDERS PRONOUNCED ON MONDAY, THE 12 TH OF DECEMBER, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 12 TH DECEMBER, 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR