Ita/130/2008 Of The Commissioner Of Income Tax v. Shree Vidyadhiraja Vidya Samajam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 12TH NOVEMBER 2008 / 21ST KARTHIKA 1930 I.T.A.No.130 of 2008 ------------------------------------ I.T.A.NO.474/COCH/1999 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH - ORDER DATED 30.04.2003. (ASSESSMENT YEAR 1992-93) .................... APPELLANT/RESPONDENT/REVENUE:- -------------------------------------------------------- THE COMMISSIONER OF INCOME-TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC FOR I.T. RESPONDENT/APPELLANT/ASSESSEE:- --------------------------------------------------------- SHREE VIDYADHIRAJA VIDYA SAMAJAM, CHETTIKULANGARA, THIRUVANANTHAPURAM-1. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 13/11/2008, THE COURT ON 12/11/2008 DELIVERED THE FOLLOWING: H.L.Dattu,C.J. & A.K.Basheer, J. ------------------------------------------- I.T.A.No.130 of 2008 -------------------------------------------- Dated, this the 13[th] November, 2008 H.L.Dattu,C.J. JUDGMENT The assessee is a Society, registered under the provisions ofTravancore Cochin Literary Scientific and Charitable Societies Act. The assesseeruns 16 educational institutions in different parts of the State. (2) For the assessment year 1992-93, the assessee had not filed itsreturn of income before the assessing authority. Therefore, the assessingauthority had issued a notice under Section 148 of the Income Tax Act (“Act”for short). After receipt of the notice, the assessee had filed its return of incomeand also had claimed exemption from payment of tax under Section 10(22) of theAct. (3) The assessing authority has completed the assessments under Section 144 of the Act, denying the exemption claimed by the assessee underSection 10(22) of the Act, on the sole ground that the assessee did not produceenough evidence to prove that the income was exclusively used by the assesseefor the educational purpose. (4) The findings and conclusions reached by the assessingauthority was called in question by the assessee before the first appellateauthority. The first appellate authority's view is, that, the burden is on the assessee to prove that the income of the assessee is primarily used foreducational purpose and since the assessee had not discharged its burden, thethinking of the first appellate authority is, that, the assessing authority is justifiedin passing the assessment order under Section 144 of the Act, denying theexemption claimed by the assessee under Section 10(22) of the Act. (5) The assessee had carried the matter by filing the second appealbefore the Tribunal. The Tribunal is of the view, that, the burden of proof is onthe Department, to prove that the assessee had utilised the income derived fromthe educational institutions for any purpose other than the educational purpose.Since the assessing authority has not discharged its burden, the assessee isentitled to the exemption as provided under Section 10(22) of the Act.(6) Revenue, being aggrieved by the orders so passed by theTribunal, is before us in these appeals. (7) The Revenue has framed the following questions of law forour consideration and decision. They are as under: “1.Whether, on the facts and in the circumstances of thecase and by placing the burden on the Revenue the Tribunal isright in law and fact in holding that “unless it is proved that anyinstitution or society was running for profit making and not foreducational purposes the exemption under section 10(22) cannotbe denied” and is not the finding wrong and to be ignored, thesame being one wrongly placing the burden on the Revenue? 2.Whether, on the facts and in the circumstances of thecase did the assessee discharge the burden of proof that lay on it? (7) The Revenue has framed the following questions of law forour consideration and decision. They are as under: “1.Whether, on the facts and in the circumstances of thecase and by placing the burden on the Revenue the Tribunal isright in law and fact in holding that “unless it is proved that anyinstitution or society was running for profit making and not foreducational purposes the exemption under section 10(22) cannotbe denied” and is not the finding wrong and to be ignored, thesame being one wrongly placing the burden on the Revenue? 2.Whether, on the facts and in the circumstances of thecase did the assessee discharge the burden of proof that lay on it? 3.Whether, on the facts and in the circumstances of thecase the Tribunal is right in law and fact in finding that since theAssessing Officer has not specifically pointed any instance of thefunds of the society being used for any other activity thaneducational activity” and is not the finding in the light ParimsethSeetharamamma (57 ITR 532) wrong and to be ignored in view ofthe same being formed by putting the burden on the Revenue? 4.Whether, on the facts and in the circumstances of thecase, the Tribunal is right in law and fact in holding that the onuswas on the Department to prove that the assessee is indulging inany profit making activity” and is not the approach and theconclusion of the Tribunal vitiated? 5.Whether, on the facts and in the circumstances of thecase, is not for the assessee who claims the exemption to prove thesame and is not the very approach of the Tribunal wrong and theconclusion vitiated and nonest?” (8) It is the case of the assessee, that, it is managing sixteeneducational institutions. It is its further case that the entire income derived isprimarily used for the educational purpose and, therefore, entitled for exemptionunder Section 10(22) of the Act. The assessing authority, while completing theassessment proceedings under Section 144 of the Act, has not stated that theincome of the assessee has been utilised for any purpose other than theeducational purpose. In order to deny the claim/benefit under Section 10(22) ofthe Act, the assessing authority is expected to give a finding that the income of the assessee has been utilised for a purpose other than the educational purpose.In the instant case, the assessing authority merely proceeds on an assumption thatthe assessee has purchased some property sometime in the year 1992-93. (9) The Tribunal, in our opinion, having carefully perused theorders of assessment passed by the assessing authority and the orders passed bythe first appellate authority, has, rightly, reversed those findings and has come tothe conclusion that the income of the assessee is primarily used for theeducational purpose and, therefore, it is entitled for exemption under Section 10(22) of the Act. In our view, the Tribunal has not committed any error,whatsoever, which would call for our interference in this appeal. Therefore,while answering the questions of law framed by the Revenue against theRevenue and in favour of the assessee, we reject this appeal. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-