Ita/185/2011 Of The Commissioner Of Income Tax v. St.mary's Malankara Seminary

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS THURSDAY, THE 23RD DAY OF JANUARY 2014/3RD MAGHA, 1935 ITA.No. 185 of 2011 ( ) ------------------------ ITA. NO.386/COCH/2009 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH. .... APPELLANT/RESPONDENT: ----------------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADVS.SRI.P.K.R.MENON, SR. COUNSEL, GOI (TAXES). SRI.JOSE JOSEPH, SC, INCOME TAX. RESPONDENT/APPELLANT: ----------------------------------------- ST. MARY'S MALANKARA SEMINARY, NALANCHIRA P.O., THIRUVANANTHAPURAM, PIN-695 015. BY ADVS. SRI.ANIL D. NAIR, SRI.J.R.PREM NAVAZ, SMT.NIVEDITA A.KAMATH, SRI.R.SREEJITH. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 185 of 2011 APPENDIX PETITIONER'S ANNEXURES:- ANNEXURE ACOPY OF THE ORDER U/S 143(3) OF THE INCOME TAX ACTDATED 19/11/2007. ANNEXURE BCOPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/03/2009. ANNEXURE CCOPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 10/03/2011. RESPONDENT'S ANNEXURES:- NIL. //TRUE COPY// P.A. TO JUDGE rs. Manjula Chellur, C.J. & Alexander Thomas, J.- - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 185 OF 2011 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 23[rd] day of January, 2014 Manjula Chellur, C.J. JUDGMENT This appeal pertains to assessment year 2005-06. The Revenue is before us challenging the orders of theTribunal. The opinion of the Assessing Officer that total taxand interest payable by the assessee would be `23,80,404/-taking gross income of the assessee as per the computation ofincome given by the assessee at `1,20,96,858/- is the subjectof controversy. 2. The issue that came up for consideration beforethe Assessing Officer was whether the assessee was justified inclaiming the status of a trust. Ultimately as there was noregistration under Section 12A of the Income Tax Act, so far asthe assessee is concerned, the Assessing Officer opined thatthe assessee is an association of persons and not a trust asclaimed by them. The assessment was completed treating theassessee as an association of persons, ultimately computingthe tax and interest payable at `23,80,404/-. ITA No. 185 of 2011 3. Aggrieved by the same assessee approached theCommissioner of Income Tax(Appeals)[for short 'CIT(Appeals)'],not only for the assessment year in question but also assessmentyears 2003-04 and 2004-05. While considering the main issue,all the three years came to be taken up together by virtue of acommon order by the Tribunal. So far as 2003-04, it is apparentthat assessee was entitled for exemption under Section 10(23C)(iiiad) and the Assessing Officer was given a direction to modifythe assessment orders giving exemption to the appellant. Thiscame to be challenged before the Tribunal and the Tribunalallowed the appeal by remanding back the matter to the FirstAppellate Authority to reconsider the same. In that context allthe three assessment years came to be taken up together. 4. The application of assessee for registration underSection 12A of the Act was rejected by the Assessing Officer.Assessee claimed that it was entitled for registration underSection 12A as the training imparted in the 'Seminary' amountsto education, therefore, they have to be treated as a Trustrunning educational institution. The First Appellate Authority 4. The application of assessee for registration underSection 12A of the Act was rejected by the Assessing Officer.Assessee claimed that it was entitled for registration underSection 12A as the training imparted in the 'Seminary' amountsto education, therefore, they have to be treated as a Trustrunning educational institution. The First Appellate Authority rejected the contention of the appellant/assessee opining that thetraining programme undertaken by the assessee cannot betreated as an educational programme in order to give the statusof an educational institution. This came to be challenged beforethe Tribunal by the assessee and the Tribunal opined that it is aneducational institution and Tribunal held the said issue againstthe revenue opining that the training programme undertaken bythe assessee is also education and therefore Section 12Aregistration has to be extended. The Tribunal after referring tothe benefit enjoyed by the assessee i.e., exemption underSection 10(23C)(iiiad) for the earlier years and subsequent to01.04.2005 opined that only for the relevant three assessmentyears including the present assessment year the assessee wasput to difficulties by rejecting the registration. Opining that itwas totally erroneous and unjustifiable, ultimately held theassessee was entitled for registration so far as the presentassessment year also under Section 12A. 5. So far as book limit extension of `1Crore inparticular, for the assessment year 2005-06, the Tribunal after referring to the statement of computation of income for the yearended with 31.03.2005, opined, the total receipt comes to`95,90,170.83 which includes interest on deposits and voluntarycontribution. There is no dispute so far as this aspect of thematter is concerned. There is also reference to `17,00,000/-shown as income under other head in the statement ofcomputation of income. The reading of entire paragraph 8 withreference to `17 lakhs, we feel, probably the Tribunal opined thatthe amount of `17 lakhs shown under the other income headcannot be added to the receipts. We are unable to understandwhat exactly the Tribunal meant by making a statement that 'noman can make profit of himself'. However, the Tribunal has notexplained what exactly this `17 lakhs amounts to. Except saying,it cannot be part of the receipt, but why it cannot be part ofreceipts, we are unable to understand what exactly went in themind of the Tribunal is not indicated. 6. Then coming to registration under Section 12A,now it is settled position by virtue of a judgment of this Courtreported in Commissioner of Income Tax v. St.Mary's ITA No. 185 of 2011 Malankara Seminary[348 ITR 69] that imparting training tostudents in Seminary is also education and it is also withreference to very same respondent/assessee. In the light ofsettled position, we need not ponder much over the issue or thecontroversy regarding the registration under Section 12A to begiven to the respondent/assessee. Now the only controversyremains for consideration is whether Section 12A registrationshould be given for the assessment 2005-06. Apparentlyregistration under Section 12A came into force with effect from01.04.2005, therefore it would be applicable to the assessmentyear 2006-07. So far as 2005-06, there was no registrationunder Section 12A. Then one has to see whether receipts andother amounts cross beyond the limit of `1 Crore in order toobtain Section 12A registration or within one Crore so thatautomatically they get exemption as educational institution underSection 10(23C) (iiiad) of the Act. In order to consider this issue,the factual situation has to be ascertained. 7. From reading of the orders of Assessing Officer, CIT(Appeals) and Tribunal, we are not having clear picture what this ITA No. 185 of 2011 -:6:- 7. From reading of the orders of Assessing Officer, CIT(Appeals) and Tribunal, we are not having clear picture what this ITA No. 185 of 2011 -:6:- amount of `17 lakhs represents. If `17 lakhs is not counted asreceipts, the total receipt would come within one Crore. If`17 lakhs is added, it crosses one Crore. Thus if this `17 lakhs isadded, the entire scenario would change. In the absence of anyparticulars before us, we are of the opinion, the matter deservesto be remanded back to the Tribunal for clarification what exactlythis `17 lakhs would indicate and why it should be either includedin receipts or excluded from receipts. So far as `95,90,170.83, itis admitted that the receipts are interest on deposits andvoluntary contribution. The Tribunal need not reopen the issuepertaining to `95,90,170.83. It has to consider the source of `17lakhs alone so as to consider the controversy under Section 10(23C)(iiiad) of the Act. Accordingly, the appeal is partly allowed. Manjula Chellur, Chief Justice. Alexander Thomas, Judge. ITA No. 185 of 2011