Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 1231 - ITAT BANGALORE

2016 (5) TMI 1231 - ITAT BANGALORE - TMI - Exemption u/s. 10(23C)(iiiab) - Held that:- Assessee society has not fulfilled both the requisite conditions for claiming exemption u/s. 10(23C)(iiiab) of the Act. It neither exists solely for educational purpose, nor was it substantially or wholly financed by the Government. Therefore, the CIT(Appeals) was not correct in holding that the assessee is entitled for exemption u/s. 10(23C)(iiiab) of the act. We accordingly set aside the order of CIT(Appeals .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the AO cannot be held responsible for assessing the assessee under different status. It is also an admitted fact that there would neither be any change in the computation of income nor tax effect, even if the status of the assessee is to be changed from AOP to AJP, because the assessee has already been assessed at the rates applicable to the co-operative societies. It is also noticed from the record that during the AY 2005-06 in the tax computation form, the status of the assessee was shown to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/Bang/2014, 1243/Bang/2015, 1244/Bang/2015, 45/Bang/2015, 46/Bang/2015 - Dated:- 25-5-2016 - Shri Sunil Kumar Yadav, Judicial Member And Shri Abraham P. Geoerge, Accountant Member For the Appellant : Shri S. Ramasubramanian, CA For the Respondent : Dr. P.K. Srihari, Addl. CIT(DR) ORDER Per Sunil Kumar Yadav, Judicial Member These are appeals preferred by the assessee as well as Revenue against the respective order of the CIT(Appeals). Certain common issues are involved in these appeals, therefor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nor an educational institution existing solely for educational purpose, though various grounds are raised in these appeals. 3. During the course of hearing, the ld. DR has invited our attention to judgment of Hon ble Apex Court in the case of Visvesvaraya Technological University v. ACIT, Civil Appeal Nos.4361-4366 of 2016 dated 22.04.2016 in support of his contention that for claiming exemption u/s. 10(23C)(iiiab), the assessee is required to establish that the educational institution or univer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rated in para 3 of the assessment order for the AY 2005-06 under the head Objectives of the federation . He has also invited our attention to the gross receipts appearing at page 7 of assessment order for AY 2005-06, wherefrom it is clearly evident that out of gross receipts of ₹ 6,96,37,994, the amount received by the assessee from the Government is only ₹ 22 lakhs, which is less than 4% of gross receipts. Therefore, it was rightly concluded by the Assessing Officer that assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee was created to impart training to employees of Co-op. Societies, the employees of Dept. of Co-operation and employees of Dept. of Co-op. Audit and also to impart education and training to the members of the potential members, the directors and office bearers of the co-operative societies and the members of the public; meaning thereby that the assessee society was engaged solely in imparting education, therefore, assessee is an educational institution and eligible for exemption u/s. 10( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ore claiming exemption u/s. 10(23C)(iiiab), the assessee is required to establish that it is either university or educational institution existing solely for educational purpose and not for the purpose of profit and it is wholly or substantially financed by the Government. These aspects were examined by the AO in his order after recording the objects of the assessee society. 7. Undisputedly, the assessee is a State Co-operative Federation of co-operative societies and its members are District Co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

progress and to safeguard its interest and also to impart training to the employees of Co-op. Societies, Dept. of Co-operation and Dept. of Co-op. Audit, Govt. of Karnataka. For the sake of reference, we extract the objects of the assessee society as under:- (i) To function as the accredited representative of the cooperative movement in Karnataka State with a view to further its progress and to safeguard its interest in such a way that the benefits of the co-operative movement shall be open to a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the public; (iv) To act as coordinating agency on all matters pertaining to cooperative education and function as a body of experts in matters relating to education; (v) To serve as the exponent of co-operative opinion and function as a focusing centre of non-official opinion on various subjects affecting the movement and for representing it in proper forum and to carry on propaganda and create public opinion on such subjects; (vi) To promote different types of cooperative activity in accordan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

opment of the movement; (ix) To open libraries & reading rooms, to publish or arrange publication, purchase and sale of periodicals, books and pamphlets on literature, in general, and on cooperation, rural development and allied subjects in particular and arrange for the production of audio-visual aids including films, film-strips and documentaries etc. on co-operation and allied subjects and to maintain or cause to be maintained cooperative publicity vans; (x) To arrange for the exhibition .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in various sectors; (xiii) To conduct State Level / National Level Co-operative Conferences, Seminars, Meetings, Workshops, Exhibitions and competitions in Essay writing, Debates etc. among students of High Schools, Colleges and Universities; (xiv) To acquire, purchase, own or dispose of the immovable property by way of sale, lease, exchange or otherwise for the furtherance of the objects of the Federation with approval of the general body; (xv) To promote study and research on problems connecte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

board from time to time; (xviii) To advise the Government on matters relating to cooperative movement from time to time; (xix) To supervise and inspect the work of the Dist. Co-op Unions and represent their interest; (xx) To advance interest free loan and subsidy to District Coop. Unions for construction of new buildings depending upon the financial position, the budget allocation and the capacity to pay of the Federation, (xxi) To discharge such functions and such duties as the State Government .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntal to or conducive to the attainment of the above objectives. 8. From a careful perusal of the objects of assessee society, we find that one of the object of the assessee society may be to impart training to employees of co-operative societies, employees of Department of Cooperation and employees of Department of Co-operative Audit and also to impart education and training to members, directors and office bearers of co-operative societies; but from a careful perusal of Income & Expenditure .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has rightly held that assessee does not exist solely for educational purpose and not for the purpose of profit. 9. So far as the funding from the Government is concerned, it is also evident from the assessment order that the main fund comes from its members and not from the State Govt. and having analysed the details of receipts which is available at page 7 of the assessment order, the AO has held that out of gross receipts of ₹ 6,96,37,994 in AY 2005-06, the assessee has received from the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/s. 10(23C)(iiiab) of the Act. Moreover, the Hon ble Apex Court has categorically held in the case of Visvesvaraya Technological University v. ACIT (supra) that for claiming exemption u/s. 10(23C)(iiiab) of the act, the assessee is required to fulfill both the conditions and if it fails to satisfy any one of them, assessee is not entitled for exemption u/s. 10(23C)(iiiab) of the Act. The relevant portion of the judgment of the Hon ble Apex Court is extracted hereunder:- 10. The above would requi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dvanced is that fees of all kinds collected within the four corners of the provisions of Section 23 of the VTU Act must be taken to be receipts from sources of finance provided by the Government. Such receipts, it is urged, are from sources statutorily prescribed. The rates of such fees are fixed by the Fee Committee of the University or by authorized Government Agencies (in cases of Common Entrance Test). It is, therefore, contended that such receipts must be understood to be funds made availab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rement under Section 10(23C)(iiiab), 10(23C)(iiiad) and 10(23C)(vi). However, in cases of Universities covered by Section 10(23C)(iiiab) funding must be wholly or substantially by the Government whereas in cases of universities covered by Section 10(23C)(iiiad) the aggregate annual receipts should not exceed the amount as may be prescribed. Universities covered by Section 10(23C)(vi) are those other than mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which are required to be specifica .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o read Section 10 (23c) (vi) to be dealing with Private Universities whose gross receipts exceeds Rupees One Crore. Receipts by way of fee collection of different kinds continue to a major source of income for all Universities including Private Universities. Levy and collection of fees is invariably an exercise under the provisions of the Statute constituting the University. In such a situation, if collection of fees is to be understood to be amounting to funding by the Government merely because .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be direct grants/contributions from governmental sources and not fees collected under the statute. The view of the Delhi High Court in Mother Diary Fruit & Vegetable Private Limited vs. Hatim Ali & Anr.[(2015) 217 DLT 470] which had been brought to the notice of the Court has to be understood in the context of the definition of 'public authority' as specified in Section 2(h)(d)(ii) of the Right to Information Act, 2005 which is in the following terms: (h) "public authority&q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mmissioner of Income-tax, Bangalore vs. Indian Institute of Management (2014) 49 Taxmann.com 136 (Karnataka), particularly, the view expressed that the expression "wholly or substantially financed by the Government' as appearing in Section 10(23C) cannot be confined to annual grants and must include the value of the land made available by the Government. In the present case the High Court in paragraph 53 of the impugned judgment has recorded that even if the value of the land allotted t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the land made available; the investment by the Government in the buildings and other infrastructure and the expenses incurred in running the institution must all be taken together while deciding whether the institution is wholly or substantially financed by the Government. The situation before us, on facts, is different leading to the irresistible conclusion that the appellant University does not satisfy the second requirement spelt out by Section 10 (23c) (iiiab) of the Act. The appellant Univ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erefore, the CIT(Appeals) was not correct in holding that the assessee is entitled for exemption u/s. 10(23C)(iiiab) of the act. We accordingly set aside the order of CIT(Appeals) and restore the order of Assessing Officer in this regard. ITA Nos.1243, 1244, 45 & 46/Bang/2015 11. These appeals are preferred by the assessee assailing the order of CIT(Appeals) on the following common grounds and for the sake of reference, we extract the grounds raised in ITA No.1243/B/2015:- 1. That the order .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

have held that the amount received from the Co-operative Societies u/s 57(2A) of Cooperative Societies Act 1959 is not liable to tax as it diverted at source in view of the statutory obligations cast under Cooperative Societies Act 1959. Additional Grounds: 1) That the learned lower authorities erred in law and on facts in assessing the appeal in the status of "Co-operative Society" and not in the status of "Artificial Juridical Person". 2) That the learned lower authorities .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of 621 days and ITA No.1244/B/2015 is of 1446 days. For condonation of delay in filing of the appeals, the assessee has filed applications stating therein that initially the assessee was under a bonafide belief that it need not take any further action, except to defend the order of CIT(Appeals) before the Tribunal, if the Department files an appeal. But, after the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Children s Education Society, 358 ITR 373 (Kar) in whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee during the course of hearing. We, however, examined the contents of the applications and are of the view that the assessee has not raised any dispute with regard to the status of the assessee before the lower authorities. The lower authorities have assessed the assessee in the same status in which the return of income was filed. Therefore, after the judgment of the Hon'ble jurisdictional High Court, no cause of action has arisen in favour of assessee to file the present appeal. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e in the applications for condonation of delay, we hold that these appeals are barred by limitation, therefore, not admitted for hearing. 14. We, however, adjudicate the issues involved in these appeals as the same are also raised in other appeals which are filed in time. 15. In the remaining appeals, the assessee has raised an additional ground with regard to non-adjudication of the claim of assessee u/s. 80P(2)(d) of the Act. This ground was specifically raised before the CIT(Appeals) in these .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tive Societies Act, 1959 from various co-operative societies. Though this ground was also raised before the CIT(Appeals) in its appeals, but it also remained to be unadjudicated by the CIT(Appeals), because the CIT(Appeals) has mainly dwelt upon the issue of claim of exemption u/s. 10(23C)(iiiab) of the Act. Therefore, this issue is restored to the CIT(Appeals) with a direction to adjudicate this ground by passing a reasoned order after affording opportunity of being heard to the assessee. 17. D .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed as Artificial Juridical Person (AJP). Though this ground was not raised before any of the lower authorities, but the ld. counsel for the assessee has pleaded that even in that situation, assessee can raise additional ground before the Tribunal. In support of his contention, he has placed reliance upon the judgment of Hon ble Apex Court in the case of CIT v. National Thermal Power Corporation, 229 ITR 383. It was further contended that if the assessee is to be assessed as AJP and the AO has as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al. During the course of hearing, the ld. counsel for the assessee candidly admitted that assessee society was taxed at the rates of co-operative societies and there would not be any change in tax effect or computation of income, even if the assessee is to be assessed as AJP. The ld. counsel for the assessee further contended that since as per the judgment of Hon'ble jurisdictional High Court in the case of CIT v. Children s Education Society (supra), co-operative societies are to be assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has never raised this objection either before the AO or before the first appellate authority. For the first time, the assessee has raised this additional ground before the Tribunal to unsettle the assessment framed by the AO. The ld. DR further contended that there will be no change either in the computation of income or in the tax liability. Under the garb of change of status, the assessee tries to get the assessment declared as bad, which is not permissible at this stage. The ld. DR further co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tax liability would be effected, even if the status is changed, as the assessee society was charged to tax at the rates applicable to co-operative societies. Therefore, this ground was raised with an ulterior motive. 20. Having carefully examined the orders of lower authorities in light of the rival submissions, we find that despite directions, original returns of income are not filed produced before us. From the records available for the AY 2005-06, we find that the status of assessee was show .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ble to the co-operative societies. It is also noticed from the record that during the AY 2005-06 in the tax computation form, the status of the assessee was shown to be AJP, meaning thereby in the income tax computation form, the AO has assessed the assessee in the status of AJP. Therefore, no grievance of the assessee is left out in the AY 2005-06. For the remaining assessment years, the assessee has not filed the income tax computation form issued by the AO. Therefore, in the absence of this i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version