Ita/235/2009 Of The Director Of Income-Tax v. Dhamapakasha Rajakarya Prasakta

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATBD THIS THER 1 DAY OF JANUARY, 2015 PRESENT THR HON' BLE MR. JUSTICK N.KUMAR ANT) THR HON' BLE MR. JUSTICEK B. VEBRAPPA ITA No.235/ 200 C/ w ITA Nos.232/ 2009, 237/ 2009, 2251/2 ITA No.235/2009: BBRITIWE 1.)THR DIRBCTOR OF INCOME-TAX. EXEMPTIONS, C.R. BUILDING, QUEENS ROAD, BANGALORE oOTHE DY. DIRECTOR OF INCOME-TAX (EXMP),C.R. BUILDING,C.R. BUILDING, QUEENS ROAD, BANGALORE ... APPBLLANT (BY SRI K.V. ARAVIND, ADVOCATE) ANT) DHAMAPAKASHA RAJAKARYA PRASAKTA>B.M. SREENIVASAIAH EDUCATIONAL TRUST, P.B. NO.1908,BULL TEMPLE ROAD,BANGALORE ~.. RESPONDE (BY SRI G. SARANGAN SENIOR COUNSEL FOR)oRI BALARAM R. RAO) THIS ITA IS FILED UNDER SECTION 260-A OFTHE INCOME TAX ACT, 1961 ARISING OUT OF ORDER|DATED)21.11.2008|PASSEDIN|ITA|NO.640/BANG/2008 FOR THE ASSESSMENT YEAR 2003-04, PRAYING TO FORMULATE THE SUBSTANTIAL)QUESTIONS OF LAW STATED THEREIN AND TO)ALLOW THR APPEAL AND SBT ASIDE THE ORDERS|PASSEDBY|THE.ITAT,BANGALORE|IN|ITANo.640/BANG/2008DATED|21.11.2008|ANT)CONFIRM.THEORDEROFTHEAPPBRLLATECOMMISSIONER AND CONFKIRMINGTHR ORDERPASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (EXMP),CIRCLE-17(1),.BANGALORE,INTHEINTEREST OF JUSTICE AND EOUITY.— ITA No.232 /200 BRHTIWHR Ll.THER DIRECTOR OF INCOME-TAX EXEMPTIONS, © C.R. BUILDING,QUEENS ROAD,BANGALOREQUEENS ROAD,BANGALORE oOTHE DY. DIRECTOR OF INCOME-TAX (EXMP), C.R. BUILDING, QUEENS ROAD,BANGALORE ... APPELLANTS (BY SRI K.V. ARAVIND, ADVOCATE) AN) DHAMAPAKASHA RAJAKARYA PRASAKTA>B.M. SREENIVASAIAH EDUCATIONAL TRUST, P.B. NO.1908,|BULL TEMPLE ROAD,BANGALORE _ RESPONDENT (BY SRI G. SARANGAN SENIOR COUNSEL,FOR SRI BALARAM R. RAO)| THIS ITA IS FILED UNDER SECTION 260-A OFTHE INCOME TAX ACT, 1961 ARISING OUT OF ORDER)DATED|21.11.2008|PASSEDIN|ITANO.641/BANG/2008 FOR THE ASSESSMENT YEAR 2005-O06, PRAYING TO FORMULATE THE SUBSTANTIALQUESTIONS OF LAW STATED THEREIN AND TO)ALLOW THER APPEAL AND SHIT ASIDE THE ORDERPASSEDBY|THEITAT,BANGALORE|TN|ITANo.641/BANG/2008DATED|21.11.2008|AND,CONFIRM.THEORDEROFTHEAPPBRLLATECOMMISSIONBR AND CONFIRMING|THR ORDERPASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (EXMP),CIRCLE-17(1),.BANGALORE,INTHEINTEREST OF JUSTICE AND EQUITY. ITA No.237/2009 BRHTIWHR Ll.THER DIRECTOR OF INCOME-TAXEXEMPTIONS, C.R. BUILDING, QUEENS ROAD,BANGALORE iaTHE DY. DIRECTOR OF INCOME-TAX (EXMP),C.R. BUILDING, QUEENS ROAD,BANGALOREC.R. BUILDING, QUEENS ROAD,BANGALORE ... APPBLLANTS (BY SRI K.V. ARAVIND, ADVOCATE) AND DHAMAPAKASHA RAJAKARYA PRASAKTA>B.M. SREENIVASAIAH EDUCATIONAL TRUST, P.B. NO.1908,BULL TEMPLE ROAD,BANGALORE _ RESPONDENT (BY SRI G. SARANGAN SENIOR COUNSEL,FOR SRI BALARAM R. RAO) THIS [TA IS FILED UNDER SEKBKCTION 2J60-ATHE INCOME TAX ACT, 1961 ARISING OUT OF ORDER|DATED|21.11.2008|PASSEDIN|ITANO.629/BANG/2008 FOR THE ASSESSMENT YEAR 2003-04, PRAYING TO FORMULATE THE SUBSTANTIAL)QUESTIONS OF LAW STATED THEREIN AND TO)ALLOW THR APPEAL AND SBT ASIDE THE ORDERS|PASSEDBY|THEITAT,BANGALORE|IN|ITANo.629/BANG/2008—DATED|21.11.2008|ANT)CONFIRM.THEORDEROFTHEAPPBRLLATECOMMISSIONBR AND CONFIRMING|THR ORDERPASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, (EXMP),CIRCLE-17(1),BANGALORE,INTHEINTEREST OF JUSTICE AND EQUITY. ITA No.251/2009 BEITWERE 1.)THR DIRBCTOR OF INCOME-TAX. EXEMPTIONS, C.R. BUILDING, QUEENS ROAD, BANGALORE iaTHE DY. DIRECTOR OF INCOME-TAX (EXMP), C.R. BUILDING, QUEENS ROAD, BANGALORE ... APPBLLANTS (BY SRI K.V. ARAVIND, ADVOCATE) ANT) DHAMAPAKASHA RAJAKARYA PRASAKTA>B.M. SREENIVASAIAH EDUCATIONAL TRUST, P.B. NO.1908,|BULL TEMPLE ROAD,BANGALORE _ RESPONDENT (BY SRI G. SARANGAN SENIOR COUNSEL,oRI BALARAM R. RAO) THIS [TA IS FILED UNDER SEKBKCTION 2J60-ATHE INCOME TAX ACT, 1961 ARISING OUT OF ORDER|DATED 21.11.2008 PASSED IN ITA NO. 630/BNG/2008—FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO)FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED THEREIN AND TO ALLOW THE APPBAL AND|SET ASIDE THE ORDERS PASSED BY THE ITAT, ITA No.251/2009 BEITWERE 1.)THR DIRBCTOR OF INCOME-TAX. EXEMPTIONS, C.R. BUILDING, QUEENS ROAD, BANGALORE iaTHE DY. DIRECTOR OF INCOME-TAX (EXMP), C.R. BUILDING, QUEENS ROAD, BANGALORE ... APPBLLANTS (BY SRI K.V. ARAVIND, ADVOCATE) ANT) DHAMAPAKASHA RAJAKARYA PRASAKTA>B.M. SREENIVASAIAH EDUCATIONAL TRUST, P.B. NO.1908,|BULL TEMPLE ROAD,BANGALORE _ RESPONDENT (BY SRI G. SARANGAN SENIOR COUNSEL,oRI BALARAM R. RAO) THIS [TA IS FILED UNDER SEKBKCTION 2J60-ATHE INCOME TAX ACT, 1961 ARISING OUT OF ORDER|DATED 21.11.2008 PASSED IN ITA NO. 630/BNG/2008—FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO)FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED THEREIN AND TO ALLOW THE APPBAL AND|SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALOREIN|ITANo.630/BNG/2008DATHD.21.11.2008 AND CONFIRM THR ORDER OF THE!APPBLLATH COMMISSIONBR AND CONFIRM THE!ORDER PASSED BY THR DEBEPULY DIRECIOR OINCOME TAX, (EXMP), CIRCLE-17(1), BANGALORE, IN-THE INTEREST OF JUSTICE AND EQUITY. THERESE INCOMB TAX APPEALS COMING ON FOHEARING THIS DAY, N. KUMAR J., DELIVERED THE)FOLLOWING: JUDGMENT The revenue has preterred these appeals againstthe order passed by the Tribunal dismissing the appealfiled by the revenue and allowing the appeal filed by theassessee and granting relief to the assessee. Theimpugned order relates to the assessment years 2003-2004 & 2005-2006, where a common order is passed. —As the question involved is the same, the appeals aretaken up for consideration together and disposed of as.the other two appeals also arise out of the same order. oD TheaSSCSSFCE1S|runningnumberot educational institutions. The assessee filed its return otf income. The Assessing Officer under Section 143(3) ofthe Income-Tax Act, 1961 (hereinaiter referred to as theAct) has held that the assessee is not entitled to thebenefit claimed under Section 11 of the Act. He did not|go into the question of exclusion benefit claimed by theassessee under Section 10(23C)(iliab) of the Act. © 3.|Aggrieved by the said order the assesseepreferred an appeal to the Commissioner of Income-Tax(Appeals). The Appellate Commissioner set aside theorder of the Assessing Authority refusing the grantunder Section 11 of the Act and granted the relief to theassessee, but he declined to grant the relief undersection 10(23C)(iliab) of the Act. | a |Agerieved by the said order, both theassessee aS well as the revenue preferred two appealseach. The Tribunal by its impugned order has set asidethe order passed by the Appellate Commissioner holding that the assessee is not entitled to the benefit under|section 10(23C)(iliab) of the Act and allowed the appeals.filed by the assessee. It dismissed the appeals ofrevenue on the ground that, once a benefit is grantedunder Section 10(23C)(iiiab) of the Act, the assessee isalso entitled to the benefit under Section 11 =andthereforetherevenue’s appealsWETEdismissed. —Agegrieved by the impugned order, these appeals arefiled.. 5Insofar as the claim of the assessee under|section 10(23C)(iliab) of the Act is concerned, thematerial on record discloses that the Government has|financed the institutions and their share is roughlyabout 25%. It is not in dispute that the assessee iscarrying on its activities oF imparting education. It isnot existing for the sake of profit making. When 25% ofthe finance to the assessee institutions flows from the| Government it constitutes the substantial finance and|therefore it has satisfied all the legal requirementsprovided under Section 10(23C)(iiiab) of the Act. In fact,this Court had occasion to consider the said question inthe case oftCOMMISSIONER OF INCOME TAX ANDANOTHER V. INDIAN INSTITUTE OF MANAGEMENTreported in(2015) 370 ITR 81 (KARN)and a finance to)the extent of more than 10% oft the total finance wouldconstitute substantial finance and therefore the findingrecorded by the Tribunal that the assessee is entitled tothe benefit exempted under Section 10(23C)(itiab) of theAct cannot be found fault with. Government it constitutes the substantial finance and|therefore it has satisfied all the legal requirementsprovided under Section 10(23C)(iiiab) of the Act. In fact,this Court had occasion to consider the said question inthe case oftCOMMISSIONER OF INCOME TAX ANDANOTHER V. INDIAN INSTITUTE OF MANAGEMENTreported in(2015) 370 ITR 81 (KARN)and a finance to)the extent of more than 10% oft the total finance wouldconstitute substantial finance and therefore the findingrecorded by the Tribunal that the assessee is entitled tothe benefit exempted under Section 10(23C)(itiab) of theAct cannot be found fault with. 6.|In the light of the aforesaid findings, in ourview it is unnecessary to go into the question whetherthe Assessing Authorities were justified in reopening theassessment and there was. sufficient reasons andwhether the assessee is entitled to the benefit under| section 11 of the Act also. Accordingly, we pass thefollowing: | ORDER Appeals are dismissed.Parties to bear their own costs. The question, whether once a benefit undersection 10(23C)(il1ab) of the Act is granted, the grant ofexemption under Section 11 of the Act is attracted ornot is not gone into. It shall be decided as and when.occasion arises before the appropriate Court. Therefore,the finding of the Tribunal to that extent is kept open tobe agitated in an appropriate forum and it will not actas precedent in the future assessment. | Sbs* od/-JUDGE| od/-/ JUDGE