TMI Blog2016 (5) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 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 information, we cannot hold conclusively that assessee was not finally assessed in the status of AJP in the income tax computation form. - ITA Nos. 1159/Bang/2011, 381/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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In light of these facts, the AO has rightly denied the benefit of exemption u/s. exemption u/s. 10(23C)(iiiab) of the Act to the assessee; but the ld. CIT(Appeals) having ignored these facts has allowed the exemption to the assessee. 5. The ld. counsel for the assessee, on the other hand, has placed heavy reliance upon the order of CIT(Appeals). Besides, it was also contended that as per clause (iii) of the objects of the assessee society, 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(23C)(iiiab) of the Act. 6. Having carefully examined the orders of authorities in light of the rival submissions and judgment of the Hon ble Apex Court in the case of Visvesvaraya Technological University v. ACIT (supra), we find that for claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 accordance with the plans of cooperative development and to strengthen the existing societies in the State by providing assistance and guidance technical and otherwise. (vii) To bring about coordination among different types of cooperative organizations in the State for their mutual benefit; (viii) To cooperate with the National Cooperative Union of India and implement to the extent possible the policies adopted by the National Cooperative Union of India and the Indian Cooperative Congress for the development 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s outside the State and outside the country, if need be, to enable the co-operators of the State to have a first hand knowledge of the co-operative development in such places; (xxiii) To conduct examinations for the purpose of recruitment and promotion of the employees of the co-operative societies, if required; (xxiv) To generally undertake all such other activities as are incidental 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 account, we find that expenditure was incurred under different heads not to impart education to the members of different co-operative societies. The details of Income Expenditure are available at pages 31 to 41 of compilation of the assessee. Therefore, in light of these facts, it cannot be said tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 available by the Government as contemplated by the provisions of Section 10 (23c) (iiiab) of the Act. 11. Universities and Educational Institutions entitled to exemption under the Act have been categorized under three different heads, namely, those covered by Section 10(23C)(iiiab); Section 10(23C)(iiiad) and 10(23C)(vi) of the Act. The requirement of the University or the educational institution existing solely for educational purposes and not for purposes of profit is the consistent requirement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-Government Organization substantially financed, directly or indirectly by funds provided by the appropriate Government. 14. Reliance has been placed on the judgment of the High Court of Karnataka in Commissioner 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 to the University (114 acres) is taken into account the total funding of the University by the Government would be around 4% - 5% of its total receipt. That apart what was held by the High Court in the above case, while repelling the contention of the Revenue that the exemption under Section 10(23c) (iiiab) of the Act for a particular assessment year must be judged in the context of receipt of annual grants from the Government in that particular year, is that apart from annual grants the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of Co-operative Society and not in the status of Artificial Juridical Person . 2) That the learned lower authorities ought to have held that the interest received from Co-operative Banks is exempt u/s 80P(2)(d) of the Act. Each of the above is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore, to add, delete, modify or otherwise amend all or any of the above grounds either before or during the hearing. 12. Out of these appeals, two appeals bearing Nos. ITA 1243 1244/Bang/2015 are filed late. Delay in filing of ITA No.1243/B/2015 is 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 which it was held that society registered under a statute is to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... education fund u/s. 57(2A) of Karnataka Co-operative 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. During the course of hearing of these appeals, the assessee has also raised one more additional ground with regard to status in which it is to be assessed. In this regard, the ld. counsel for the assessee has admitted during the course of hearing that it has shown its status as Cooperative Society in its return of income before the AO and it was also assessed as the same, whereas as per the judgment of CIT v. Children s Education Society, 358 ITR 373 (Kar), co-operative societies are to be assessed as Artificial Juridical Person (AJP). Though this ground was not raised before any of the lower authorities, but the ld. counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. National Thermal Power Corporation (supra) are different. In that case the claim of assessee was under adjudication before the AO, though he has offered it to tax. But in the instant case, the assessee has never raised any claim with regard to status of AJP. Moreover in that case, the computation of income would be changed if the claim of assessee is allowed which would effect the tax liability. But in the instant case, neither the computation nor the 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 shown to be co-operative society. The AO has shown the same status of the assessee in the assessment order on the basis of status shown in the return of income, therefore the AO cannot be held responsible for assessing the assessee under diff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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