9911796707
TMI Blog2014 (2) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... number of Institutions such as Fr. Muller General Hospital, Fr. Muller Medical College, Fr.Muller Homeopathy Medical College, Pharmaceutical Division, St.Johns Leprosy Hospital, Rehabilitation Unit and Father Muller College of Nursing. The assessee- Trust claimed exemption under Section 11 of the Act. For the assessment year 2000-01 and 2001-02, the assessee filed 'Nil' return of income on 31-10-2001 claiming exemption of income. On the basis of tax evasion petition received by the Additional Commissioner of Income Tax, an enquiry was conducted and notice under Section 148 of the Act was issued for both assessment years. During the course of enquiry, the Assessing Officer noticed that the assessee-Trust had advanced a sum of Rs.30,00,000/- during the assessment year 2000-01 and a sum of Rs.50,00,000/- during the assessment year 2001-02 respectively to M/s. Janamadhyama Prakashana Limited which was running Kannada daily known as JANAVAHINI. Before the Assessing Officer, the assessee has contended that the said amount was advanced to M/s.Janamadhyama Prakashana for the purpose of advertisement, printing and publicity of the programmes of the Trust. The Assessing Officer on verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order passed by the Commissioner of Income Tax is contrary to Section 164(2) of the Act and the entire income of the respondent-assessee cannot be assessed. The Tribunal also held that invoking of power under Section 263 is contrary to law and every error committed by the Assessing Authority cannot be corrected by invoking Section 263 of the Act. Accordingly set aside the order passed by the Commissioner of Income Tax and restored the order passed by the Assessing Officer. The revenue being aggrieved by the order passed by the Tribunal, filed this appeal. 4. The appeal was admitted to consider the following substantial questions of law: (i) Whether the Tribunal was correct in holding that when two view are possible and if one view is taken b the Assessing Officer the same cannot be set aside by the Commissioner of Income Tax exercising the power under Section 263 when the said view is prejudicial to the interest of the revenue? (ii) Whether the Tribunal is correct in holding that when a part of income is held to be violative of the provisions of Section 13(1)(d) only to the said extent maximum marginal rate of tax is to be levied and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht for dismissal of the appeal. 7. We have carefully considered the arguments addressed by the learned counsel for the parties and perused the orders impugned in these appeals. 8. The records clearly disclose that the respondentassessee is administering number of institutions and it had obtained exemption under Section 11 and 12 of the Act. The assessee filed Nil return of income for the aforesaid assessment years. On the basis of the tax evasion petition, an enquiry was conducted and during the course of assessment proceedings, the Assessing Officer noticed that the respondent-Trust advanced a sum of Rs.30,00,000/- during the assessment year 2000-01 and advanced another sum of Rs.50,00,000/- during the assessment year 2001-02 to M/s.Janamadhyama Prakashana Limited, which was running a Kannada daily known as "Janavahini". In the balance sheet of the respondent-Trust, the said amounts were mentioned under the head known as "loans and advances". The Charitable Institution, advancing loan amount to M/s.Janamadhyama Prakashana Limited and obtaining exemption in payment of income tax is in violation of Section 11(5) of the Act. As per Section 13(1)(d), income of the Trust shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, by the order of the Assessing Authority if the lawful revenue to the State has not been realized or cannot be realized, as the said order is prejudicial to the interest of the Revenue and also erroneous, he gets jurisdiction to interfere with the said order under Section 263. Therefore, for attracting Section 263, the condition precedent is (a) the order of Assessing Officer sought to be revised is erroneous and (b) it is prejudicial to the interest of the Revenue. If one of them is absent, i.e., if the order of the Income tax officer is erroneous but is not prejudicial to the Revenue, recourse cannot be had to Section 263(1) of the Act. The satisfaction of both the conditions stipulated in the Section is sine quo non for the Commissioner to exercise his jurisdiction under Section 263. 10. We respectfully agree with the order passed by the Division Bench of this Court. The law declared by the Hon'ble Supreme Court made it very clear that if one of the requirements for satisfaction of taking action under Section 263 of the Act is absent, then recourse cannot be made to Section 263 of the Act. The Commissioner cannot invoke his revisional power to correct each and ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate. Therefore, reading the above two phrases shows that the legislature has clearly indicated its mind in the proviso to s.164(2) when it categorically refers to forfeiture of exemption for breach of s.13(1)(d), resulting in levy of maximum marginal rate of tax only to that part of the income which has for forfeited exemption. It does not refer to the entire income being subjected to maximum marginal rate of tax. This interpretation is also supported by Circular No.387, dt. 6th July, 1984. Vide the said Circular, it has been laid down in para 28.6 that where a trust contravenes s.13(1)(d), the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provision and not to the entire income. There is a vital difference between eligibility for exemption and withdrawal of exemption/forfeiture of exemption for contravention of the provisions of law. These two concepts are different. They have different consequences. In the circumstances, there is merit in the contention of the assessee that in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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