TMI Blog2014 (12) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... rough formal systems of course, curricula, examination and awarding degrees is also education for the purpose of section 2(15) or 10(23C) - each unit maintains separate accounts of its receipts and payments and Income-Expenditure and is duly audited by Chartered Accountant - The Arts, Science and Commerce departments of the Serampore College is approved by the UGC and funded by Govt. like all other colleges under the University of Calcutta - accounts of these 4 units of “The Serampore College” are separately audited, and a consolidated financial statement is prepared and looked into for the purpose of taxation under the provisions of the Act considering ‘The Serampore College’ as one and sole taxable entity - “The Serampore College”, although this consists of 4 units but a single taxable entity, whether under the name of “The Serampore College” or “The Senate of Serampore”, both are one and the same - the AO is directed to treat the assessee as sole taxable unit/entity. Entitlement for exemption u/s 10(23C)(iiiab) – Held that:- Assessee contended that the Serampore College exists solely for the purpose of Education and not for the purpose of profit - Even if running of an instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case the assessee be held to not to be a taxable entity and hence the assessment order passed on the assessee be cancelled. 3. For that in the facts and circumstances of the case the assessee cannot be assessed to tax merely because it filed a return of income though it was not a taxable entity. Second common issue raised by assessee in these appeals is, that, whether assessee is entitled to exemption u/s 10(23C)(iiiab) of the Act or not. For this assessee raised following ground no 4: 4. Without prejudice to above and in the facts and circumstances of the case the assessee be entitled to exemption u/s. 10(23C)(iiiab) of the IT Act 1961 and accordingly the entire income of the assessee be held to be exempt u/s 10(23C)(iiiab) of the IT Act 1961. 3. Brief facts relating to above two inter connected issues are that the assessee is an educational institute, which does not exist for profit. The AO in assessment order noted the fact that it is a theological university established to promote piety and learning, particularly among the native Christian population of India. The Serampore College is a university incorporated by the Royal Charter of 1818. The Seramp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s. 10(23C) (Via) of the Act on 11-11-2009 before CCIT Kolkata-X. The CCIT Kolkata-X asked for report from the AO and the AO after examine the audited accounts for the FY 2003-04 to 2008-09, forwarded its finding to CCIT Kolkata-X on 05-10-2010. In view of the report of AO, CCIT Kolkata-X rejected the application of the assessee, Senate of Serampore College vide his order No.CCITX/ 10(23C)/2/2010-11/1910-14 dated 25-11-2010. Thereafter the AO issued notice u/s 148 of the Act dated 01-02-2011 for the AYs 2009-10, 2010-11, 2006-07 and 2004-05, for the reason that in each of the year there is excess of income over expenditure as per the audited Income and Expenditure account. In the present year, the assessee s excess of income over expenditure as per audited Income and Expenditure of account was to the tune of ₹ 64,39,213/-. According to AO, even the exemption application u/s 10(23C)(Via) of the Act was also rejected by the CCIT Kolkata-X vide order dated 25-11-2010. Before the AO during the course of assessment proceedings the assessee filed detailed written submissions, which are reproduced in the assessment order, claiming that Senate of Serampore College is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackground, functions and activities of the appellant and submitted that the appellant (Senate of Serampore College) is a part of the Serampore College which was incorporated by the Royal Charter dated 23/02/1827 and subsequently supplemented by the Serampore College Act, 1918. The entire properties are vested in the Serampore College and the Council and the Senate of Serampore is not as taxable entity and thus not liable to be assessed to tax. He further submitted that on consolidation of the income expenditure accounts of the four Units of Serampore College for the relevant financial year it would be evident that more than 53% of the gross income was financed by the Government of India as per UGC norms for educational purposes discharged by the four Units of Serampore College for their activities and projects and, therefore, the college including the appellant is covered by sec.10(23C)(iiiab) of the Act and thus eligible for blanket exemption. In support of the submissions, reliance was placed on some of the judicial pronouncements which are mentioned in the written compilation extracted above. 7. I have heard the Ld. A/R, gone through the written submission and perused the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO has no hierarchical power or jurisdiction to disobey or disregard such order. Therefore, in my considered opinion, this ground of the appellant being redundant is dismissed. 8. The appellant also agitates that the income of the appellant is not chargeable to tax as per provisions of the Constitution of India as well as Income-tax Act, 1961. The Ld. A/R submitted that an assessee cannot be taxed merely because he had in ignorance of law surrendered to the jurisdiction of the assessing authority and/or filed return of income. It is not in dispute that the appellant (Senate of Serampore College) is a very old institution and accounts are being audited regularly. The appellant is not an individual or layman, rather the institution is run and guided by a body or council. Therefore, the stand of the appellant on ignorance of law is not consumable on the facts and circumstances of the case. Moreover, the appellant before the AO has made a submission (para-5 of the assessment order) for exemption u/s. 10(23C)(iiiab) of the Act that Senate of Serampore College (Unit II) is unaided by Government, whereas as per subclause (iiiab) reproduced above, any university or other education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and funded by Govt. like all other colleges under the University of Calcutta. It was brought to our notice by Ld. Counsel for the assessee that, though, all accounts of these 4 units of The Serampore College are separately audited, a consolidated financial statement is required to be prepared and looked into for the purpose of taxation under the provisions of the Act considering The Serampore College as one and sole taxable entity. In our view, The Serampore College the entity, as per Serampore College Act 1918, exists for nearly two centuries as an educational institution catering to theological and general education. The college imparts formal education on different streams and subjects for public at large. Even religions or philosophical educations through formal systems of course, curricula, examination and awarding degrees is also education for the purpose of section 2(15) or 10(23C) of the Act. In view of the facts and circumstances of the case as discussed above, we are of the view that each unit maintains separate accounts of its receipts and payments and Income-Expenditure and is duly audited by Chartered Accountant. The Arts, Science and Commerce departments of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government or not? In case the finding comes that the college is financed substantially, then it is covered by the section 10(23C) (iiiab) of Act and is eligible for exemption. The Serampore College will then legally be covered by Section 10(23C) (iiiab) of the Act for its entire income including income of Senate of Serampore College . The CIT (A) as well as the AO has not examined the claim of the assessee as regards to the source of finance i.e. substantially financing by the Government or not, so as to eligibility of the claim of exemption u/s 10(23C)(iiiab) of the Act, even though CCIT rejected the application for registration u/s 10(23C)(via) of the Act. The CIT (A) as well as the AO, both, totally failed to consider whether the assessee is covered u/s 10(23C)(iiib) of Act or not, as both were duty bound to consider the claim and examine the same. The mere rejection of application 10(23C)(via) of the Act cannot be reason to reject the claim of exemption u/s. 10(23C)(iiib) of the Act. Ld counsel for the assessee relied on the proposition laid down by Hon ble Bombay High Court in the case of CIT V Parle Plastics Ltd. And Another(2011) 332 ITR 63(Bom)-Panaji Bench and referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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