M/S MARIMALLAPPAS CHARITIES V. THE DY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)

ITA/644/2016

AI Insights

The case involves M/s. Marimallappa's Charities, which appealed against the order of the Income Tax Appellate Tribunal (ITAT) that had reversed the decision of the Commissioner of Income Tax (Appeals), Mysore. The ITAT had held that the voluntary contributions received by the appellant were in the nature of capitation fees and thus taxable, which the appellant contested. The High Court examined whether the Assessing Officer and appellate forums had the jurisdiction to adjudicate the genuineness of the receipts by the trust, and whether the Tribunal was correct in law in reversing the Commissioner of Income Tax (Appeals)'s order. The court found that these issues had been previously addressed in favor of similar trusts in earlier cases, leading to the decision to allow the appeal and quash the ITAT's order.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 764676 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-11-2020
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME-TAX Vs. ADICHUNCHANGIRI MASAMSTANA MUTT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: M VEERABHADRAIAH
• Keywords: Assessment Year 2010-2011; Capitation Fees; Income Tax; Taxability; Voluntary contributions
• Section: 11; 12AA; 12A; 13; 12; 2(24)(iia); 260-A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF NOVEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.644 OF 2016 BETWEEN: M/S. MARIMALLAPPA'S CHARITIES NARAYANASHASTRI ROAD MYSORE-570 001 REPRESENTED BY ITS HON. SECRETARY ...APPELLANT (BY SRI M. VEERABHADRAIAH, ADVOCATE) AND: 1. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1) MYSORE VISHWESHWARANAGAR NO.55/1, SHILPASHREE BUILDING OPPOSITE TO STERLING TALKIES MYSORE-570 087. 2. THE COMMISSIONER OF INCOME TAX MYSORE VISHWESHWARANAGAR NO.55/1, SHILPASHREE BUILDING OPPOSITE TO STERLING TALKIES MYSORE-570 087. …RESPONDENTS (BY SRI JEEVAN J. NEERALGI, ADVOCATE) 2 THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 24-06-2016 PASSED IN ITA NO.675/BANG/2014, FOR THE ASSESSMENT YEAR 2010-2011, PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BENGALURU DATED 24-06-2016 PASSED IN ITA NO.675/BANG/2014 FOR THE YEAR 2010-2011, CONSEQUENTLY SET ASIDE THE ASSESSMENT ORDER DATED 29/01/2013 FOR THE YEAR 2010-2011 CONFIRMING ORDER DATED 12-08-2013 PASSED IN ITA NO.95/CIT(A)MYS/2012-13 RELATING TO ASSESSMENT YEAR 2010-2011. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr.M.Veerabhadraiah, learned counsel for the assessee. Mr.Jeevan J.Neerlagi, learned counsel for the revenue. 2. This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment Year 3 2010-11. The appeal was admitted by a Bench of this Court vide order dated 25.10.2017 on the following substantial questions of law: a) Whether the Assessing Officer and appellate forums have jurisdiction to adjudicate the genuineness of the receipts by the trust which is vested with the Commissioner under Sections 12A and 12AA of the IT Act especially when Sections 12(1) and 2(24)(iia) of the IT Act deems all income received by the assessee Trust to the rigor of Sections 11, 12 and 13 of the IT Act? b) Whether the Tribunal is correct in law in reversing the well reasoned order of the Commissioner of Income Tax (Appeals) Mysore for the Year 2010-2011 and holding that the voluntary contributions received by the appellant are in the nature of capitation fees and therefore taxable in the hands of the appellant on the facts and circumstances of the case? 4 3. When the matter was taken up today, learned counsel for the assessee submitted that the aforesaid substantial questions of law have already been answered against the revenue by a Bench of this Court in 'COMMISSIONER OF INCOME-TAX Vs. ADICHUNCHANGIRI MASAMSTANA MUTT' passed in ITA No.800/2009 and aforesaid decision was followed by another division bench of this Court in ITA No.52/2012 vide judgment dated 14.01.2019. The aforesaid submission could not be disputed by the learned counsel for the revenue. 4. For the reasons assigned in the aforementioned judgments passed by two Division Benches of this Court, the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue. 5 5. In the result, the order of the Income Tax Appellate Tribunal insofar as it pertains to the Assessment Year 2010-11, is hereby quashed. Accordingly, the appeal is allowed. Sd/- JUDGE Sd/- JUDGE RV "