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2016 (5) TMI 881 - MADRAS HIGH COURT

2016 (5) TMI 881 - MADRAS HIGH COURT - TMI - Application of Section 10(22) rejected - Held that:- We do not think that the assessee can take advantage of the etymological meaning of the word 'education' to gain the benefit of Section 10(22). In the philosophical sense, every acquisition of knowledge can be termed as 'education'. One learns even by experience. Every form of entertainment can also be termed as 'education'. That is what is contemplated by Section 10(22). The expression 'educational .....

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f the society of the trust. These objects do not make the institution an educational institution existing solely for educational purposes. Therefore, the second question of law is also answered against the assessee.

Computation of capital gains on the transfer of the school - This question is raised on the basis that the transfer took place on 17.5.1996 and that therefore, it could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98 - He .....

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e SBOA School insisted for a registered sale deed to enable them to get a loan from the State Bank of India, the assessee executed a sale deed. Such a plea was taken for the first time by the assessee, in the miscellaneous petitions under Section 254 for recalling the earlier order. Therefore, we hold on the third substantial question of law that the assessee cannot be allowed to change its stand now. - Decided against the assessee

Rejection of exemption contemplated in terms of Secti .....

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d Writ Petition Nos.37357 and 37358 of 2004 & M.P.Nos.1 and 1 of 2015 - Dated:- 28-3-2016 - Mr.Justice V.RAMASUBRAMANIAN AND Mr.Justice T.MATHIVANAN For the Appellant : Mr.A.S.Sriraman for Mr.S.Sridhar For the Respondent : Mr.J.Narayanaswamy, Sr. Standing Counsel COMMON JUDGMENT V.RAMASUBRAMANIAN, J. Sri Chakra Foundation, which is the assessee, was registered under Section 12A of the Income Tax Act in May 1991, as a society established to run educational institutions. The society purchased a la .....

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e filed by the assessee on 28.1.1997, was processed under Section 143(1)(a) on 23.6.1997. It was selected for scrutiny and a notice under Section 143(2) was issued. Though the Chairman and Managing Trustee of the assessee appeared before the Assessing Officer, they could not produce some documents. They produced xerox copies of some documents, which were found incapable of being verified. 4. Therefore, the Assessing Officer passed an order on 30.3.1999 holding (i) that the trustees were not even .....

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the sale proceeds. Therefore, the Assessing Officer held that the assessee is not entitled to exemption under Section 11. 5. In an appeal filed before the Commissioner (Appeals), the assessee took a plea that they are entitled to exemption at least under Section 10(22). But, the Commissioner of Income Tax (Appeals) found (i) that the assessee did not claim exemption under Section 10(22) (ii) that since the school building and educational premises had been sold, the assessee cannot claim to be ca .....

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of Income Tax (Appeals) dated 17.11.1999, the assessee filed a further appeal to the Income Tax Appellate Tribunal. During the pendency of the said appeal, the Assessing Officer passed a fresh order of assessment, as per the order of remand passed by the Commissioner of Income Tax (Appeals) on 17.11.1999. In the course of the proceedings before the Assessing Officer after remand, the assessee claimed capital loss to the tune of ₹ 38,13,179/- as against the capital loss originally claimed .....

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e Income Tax Appellate Tribunal. 8. Both appeals namely I.T.A.No.266/Mds/2000 arising out of the original remand order and the order of remand passed by the First Appellate Authority and I.T.A.No.322/Mds/2003 arising out of the fresh assessment order and the appeal thereagainst, were taken up together by the Income Tax Appellate Tribunal. By a common order dated 13.10.2003, the Tribunal dismissed both the appeals. 9. Therefore, the assessee has come up with two appeals in T.C.A. Nos.504 and 505 .....

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computation of capital gains on the transfer of school for a slump price in spite of the fact of transfer taking place on 17.5.1996, which could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98 ? (4) Whether the Tribunal is right in rejecting the exemption contemplated in terms of Section 11 of the Act on the facts and in the circumstances of the case ? (5) Whether the Tribunal is correct in confirming the computation of capital gains of the As .....

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e assessee also filed two miscellaneous petitions in M.P.Nos.265/Mds/2003 and 266/Mds/2003 praying for recalling of the common order dated 13.10.2003. These miscellaneous petitions were filed primarily on the ground that the term 'education' should be understood to be of wide import and that the Tribunal committed a mistake in interpreting objects, for which, the assessee was created. The assessee also contended that the judgment of the Supreme Court, by which, the allotment of the land .....

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appeals in T.C.A.Nos.680 and 681 of 2005. 12. On 28.9.2005, T.C.A.Nos.680 and 681 of 2005 were admitted by this Court on the following substantial questions of law : "(1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in allowing the miscellaneous petitions filed by the assessee and recalling its entire order and ordering fresh hearing, though the original appellate orders were passed after carefully considering admitted facts in the c .....

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ircumstances of the case, the Income Tax Appellate Tribunal was right in recalling the entire order exceeding the powers conferred on it under Section 254(2), which permits only amendment of an order passed by it under Section 254(1) with a view to rectifying any mistake apparent from the record and for considering issues involving research and investigation into fresh facts and questions of law not raised at the time of hearing of the appeals?" 13. Despite filing the statutory appeals, the .....

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. It can be seen from the narration of facts that the assessee has come up with two appeals against the original proceedings whereby the assessee was held not entitled to be treated as an educational society. The Department has come up with two appeals and two writ petitions questioning the correctness of the common order of the Tribunal, recalling its earlier order and reopening the proceedings. 16. It would be useful first to deal with the appeals and the writ petitions filed by the Department .....

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Therefore, we shall take up for consideration, the two appeals and the two writ petitions of the Department first for consideration. T.C.A.Nos.680 & 681 of 2005 & W.P.Nos.37357 & 37358 of 2004 : 17. These appeals and writ petitions, as we have pointed out earlier, arise out of a common order passed by the Tribunal, recalling its earlier final order. There are two issues that are required to be considered, one relating to the factual basis to see whether there was a jurisdiction on th .....

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in this case. 19. Sub-Section (2) of Section 254 empowers the Tribunal to amend any order passed by it, with a view to rectify any mistake apparent from the record. But, the power can be exercised only within a period of four years from the date of the order. Moreover, an amendment, which has the effect of enhancing an assessment or otherwise increasing the liability of an assessee, cannot be made, unless an opportunity is given to the assessee. 20. Sub-Section (2) of Section 254 reads as follow .....

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this Sub- Section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard." 21. The power conferred under Section 254(2) has to be understood as follows : (i) It has a power to make an amendment to an order already passed by it (ii) It has a power that could be exercised only for the purpose of rectifying any mistake apparent from the record (iii) it has a power that should be exercised onl .....

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o its notice by the assessee or the Assessing Officer. 23. In other words, if the Tribunal finds a mistake apparent from the record, it has the option of amending or not amending the order already passed. But, if the mistake apparent from the record is brought to its notice by the Assessing Officer or the assessee, the Tribunal should make an amendment. Therefore, the power to make an amendment under Section 254(2) cannot be equated to a power of review, since in a power of review, no party can .....

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f review, but enjoys a limited power of rectification of mistakes apparent from the records. In paragraph 6, the Delhi High Court held that the power available under Section 254(2) is not in the nature of a review, as it is understood in legal parlance. 25. To come to the above conclusion, the Delhi High Court relied upon two of its earlier decisions, one in Ms.Deeksha Suri Vs. I.T.A.T. [(1998) 232 ITR 395 (Delhi)] and the other in Karan & Co. Vs. I.T.A.T. [(2002) 253 ITR 131 (Del)]. In one .....

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tral Government Industrial Tribunal [1981 SCR (2) 341] to the effect that the power of review must be conferred expressly or by necessary implication upon the statutory or quasi judicial authorities and that a Tribunal would have no inherent power of review, the Division Bench of the Delhi High Court held that while exercising the jurisdiction to amend an order on the ground of rectification of a mistake, a Tribunal cannot recall its earlier order. 27. Therefore, it is clear that the order of th .....

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see ceased to carry on the educational activities, was clearly contrary to the facts on record. Hence, it is contended by him that the case would fall within the four corners of Section 254(2). 29. But, the above argument is clearly fallacious. There are two things to Section 254(2). The first is the power and the second is the circumstances, under which, the power could be exercised. The above argument of the learned counsel for the assessee deals with the second aspect alone. It omits to take .....

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led by the Department themselves are sufficient to deal with the issue and these writ petitions are also maintainable in view of the fact that they arise out of an order passed by the Tribunal without any semblance of jurisdiction to do what it did. 31. Therefore, the appeals and the writ petitions filed by the Department are allowed and the common order dated 9.7.2004 passed by the Tribunal in M.P.Nos.265/Mds/2003 and 266/Mds/2003 are set aside. No costs. T.C.A.Nos.504 and 505 of 2005 : 32. The .....

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hall not be included, while computing the total income of a previous year. Under Clause 22 of Section 10, the income of a university or other educational institution existing solely for educational purposes and not for purposes of profit, is to be excluded from the total income of a previous year. 34. Three things are of importance for the application of Section 10(22). They are (i) the assessee should be an educational institution (ii) it must exist solely for educational purposes and (iii) it .....

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ledge can be termed as 'education'. One learns even by experience. Every form of entertainment can also be termed as 'education'. That is what is contemplated by Section 10(22). The expression 'educational institution' is ejusdem generis with the word 'university' appearing in Section 10(22). Therefore, the first question of law is to be answered against the assessee. 37. As a consequence, the second question of law as to whether the interpretation given by the Tr .....

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on of capital gains on the transfer of the school. This question is raised on the basis that the transfer took place on 17.5.1996 and that therefore, it could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98. But, we do not think that the assessee can now be allowed to raise this question of law. In the return of income filed by the assessee in respect of the financial year relevant to the assessment year 1996-97, the assessee showed the sale an .....

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chers to SBOA school with a condition to clear the dues of the Canara Bank and the dues of Shri Ram Capital Trust Private Limited. Since SBOA School insisted for a registered sale deed to enable them to get a loan from the State Bank of India, the assessee executed a sale deed. Such a plea was taken for the first time by the assessee, in the miscellaneous petitions under Section 254 for recalling the earlier order. Therefore, we hold on the third substantial question of law that the assessee can .....

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