ORDER–Exemption allowed under s. 10(22).
Ratio :
Where assessee’s claim for exemption under section 10(22) had already been sustained by the High Court for earlier and subsequent year, the assessing officer was justified in granting exemption under section 10(22), therefore, there could not be a subject-matter of revision under section 263.
Held :
The Commissioner was not correct in holding that the claim for exemption of the assessee has to be decided with reference to section 13(1)(bb) of the Act. The Income Tax Officer should have given reasons for the grant of exemption. Since he has failed to do so, the Commissioner proceeded on the basis that the assessee had not claimed exemption under section 10(22) of the Act. Whatever may be, when the assessee claimed exemption under section 10(22) of the Act before the Commissioner at the time of exercise of his revisional powers, he should have examined the question whether the claim of the assessee under section 10(22) of the Act was justified or not. The Tribunal, though upheld the order of the Commissioner, did not decide the eligibility of the assessee’s claim for exemption under section 10(22) of the Act. However, the assessee’s claim for exemption under section 10(22) of the Act for an earlier assessment year 1978-79 and for a subsequent assessment year 1982-83 was examined by the Tribunal and that order of the Tribunal was the subject-matter for tax case reference. The Tribunal referred to its earlier order of the assessment years 1979-80, 1977-78, 1980-81 and 1981-82 and held that the assessee would be entitled to the benefit of exemption under section 10(22) of the Act. The High Court sustained the order for the Tribunal by holding that assessee was entitled to exemption under section 10(22) of the Act.
In view of this judgment of the High Court there was no error in the order of the Income Tax Officer granting exemption and when the order was not erroneous, it could not be a subject-matter of revision under section 263 of the Act by the Commissioner. Therefore, there was no case for revision and the order of the Tribunal upholding the order of the Commissioner on the question of jurisdiction was also not sustainable.
Application Also to current assessment year.
Dt. Judg. :
12-6-1998
A.Y. :
1978-79.
Income Tax Act 1961 s.263
Revision under s. 263–ERRONEOUS AND PREJUDICIAL ORDER–Exemption allowed under s. 10(22).
Ratio :
Where assessee’s claim for exemption under section 10(22) had already been sustained by the High Court for earlier and subsequent year, the assessing officer was justified in granting exemption under section 10(22), therefore, there could not be a subject-matter of revision under section 263.
Held :
The Commissioner was not correct in holding that the claim for exemption of the assessee has to be decided with reference to section 13(1)(bb) of the Act. The Income Tax Officer should have given reasons for the grant of exemption. Since he has failed to do so, the Commissioner proceeded on the basis that the assessee had not claimed exemption under section 10(22) of the Act. Whatever may be, when the assessee claimed exemption under section 10(22) of the Act before the Commissioner at the time of exercise of his revisional powers, he should have examined the question whether the claim of the assessee under section 10(22) of the Act was justified or not. The Tribunal, though upheld the order of the Commissioner, did not decide the eligibility of the assessee’s claim for exemption under section 10(22) of the Act. However, the assessee’s claim for exemption under section 10(22) of the Act for an earlier assessment year 1978-79 and for a subsequent assessment year 1982-83 was examined by the Tribunal and that order of the Tribunal was the subject-matter for tax case reference. The Tribunal referred to its earlier order of the assessment years 1979-80, 1977-78, 1980-81 and 1981-82 and held that the assessee would be entitled to the benefit of exemption under section 10(22) of the Act. The High Court sustained the order for the Tribunal by holding that assessee was entitled to exemption under section 10(22) of the Act.
In view of this judgment of the High Court there was no error in the order of the Income Tax Officer granting exemption and when the order was not erroneous, it could not be a subject-matter of revision under section 263 of the Act by the Commissioner. Therefore, there was no case for revision and the order of the Tribunal upholding the order of the Commissioner on the question of jurisdiction was also not sustainable.
Application Also to current assessment year.
Income Tax Act 1961 s.263
In the Madras High Court N. V. Balasubramanian & P. Thangavel, JJ.
Income Tax Act, 1961, Section 263
Counsel: P.P.S. Janarthana Raja, for the Assessee C.V. Rajan, for the Revenue
JUDGMENT
M. V. Balasubramanian, J.
At the instance of the assessee, the Tribunal has referred the following question of law for our consideration under section 256(1) of the Income Tax Act, 1961 (hereinafter to be referred to as ‘the Act’), in relation to the assessment of its income for the assessment year 1978-79:
“Whether, on the facts and in the circumstances of the case, the Commissioner was right in assuming the jurisdiction under section 263 and exercising it?”
2. The assessee is a charitable trust running some educational institutions. The assessee filed its nil return for the assessment year 1978-79. The Income Tax Officer determined the income as per the income and expenditure statement and the balance sheet and declared the assessee as not liable to tax. The Commissioner, Madurai, in exercising his powers conferred upon him under section 263 of the Act revised the order of the Income Tax Officer on the ground that the claim for exemption of the assessee should be tested with reference to section 13(1)(bb) of the Act and the claim of exemption under section 10(22) of the Act was not at all taken before the Income Tax Officer at the time of assessment proceedings. The Commissioner, therefore, set aside the order of the Income Tax Officer with a direction to the Income Tax Officer to pass a fresh order after giving a reasonable opportunity to the assessee to put forth the claim for exemption under section 11 of the Act and also under section 10(22) of the Act. The Tribunal, on appeal by the assessee, held that the Commissioner has rightly assumed his jurisdiction and he was justified in setting aside the order of assessment. The assessee has challenged the order of the Tribunal and the question of law earlier set out has been referred to for our consideration.
3. We are of the opinion that the Commissioner was not correct in holding that the claim for exemption of the assessee has to be decided with reference to section 13(1)(bb) of the Act. We have seen the order of assessment passed by the Income Tax Officer. It is not clear from the order of the Income Tax Officer what is the provision of law under which he granted exemption. The Income Tax Officer should have given reasons for the grant of exemption. Since he has failed to do so, the Commissioner proceeded on the basis that the assessee had not claimed exemption under section 10(22) of the Act. Whatever may be, when the assessee claimed exemption under section 10(22) of the Act before the Commissioner at the time of exercise of his revisional powers, he should have examined the question whether the claim of the assessee under section 10(22) of the Act was justified or not. The Tribunal, though upheld the order of the Commissioner, did not decide the eligibility of the assessee’s claim for exemption under section 10(22) of the Act. However, the assessee’s claim for exemption under section 10(22) of the Act for an earlier assessment year 1978-79 and for a subsequent assessment year 1982-83 was examined by the Tribunal and that order of the Tribunal was the subject-matter of tax case reference in Tax Case Nos. 842 and 843 of 1991 [reported as CIT v. Kshatriya Girls’ School Management Board (1998)101 Taxman 555 (Mad). The Tribunal referred to its earlier order for the assessment years 1979-80, 1977-78, 1980~81 and 1981-82 and held that the assessee would be entitled to the benefit of exemption under section 10(22) of the Act. That order of the Tribunal rendered for the assessment years 1978-79 and 1982-83, as already noticed, was the subject-matter of Tax Case Nos. 842 and 843 of 1991 since reported as CIT v. Kshatriya -Girls School Management Board (supra), and we have by judgment of even date upheld the view of the Tribunal holding that the Tribunal was right in holding that the assessee is entitled to exemption under section 10(22) of the Act.
4. In view of our Judgment in Tax Case Nos. 842 and 843 of 1991 of even date, we must hold that there are no errors in the order of the Income Tax Officer granting exemption and when the order is not erroneous, it cannot be a subject-matter of revision under section 263 of the Act by the Commissioner. Therefore, there is no case for revision and the order of the Tribunal upholding the order of the Commissioner on the question of jurisdiction is also not sustainable.
5. Accordingly, we answer the question of law referred to us in the negative and in favour of the assessee. However, in the circumstances of the case, there will be no order as to costs.