IN THE HIGH COURT OF KERALA AT ERNAKULAM
ITA.No. 118 of 2008()
1. THE COMMISSIONER OF INCOME-TAX,
... Petitioner
Vs
1. SHREE VIDAYADHIRAJA VIDYA SAMAJAM,
... Respondent
For Petitioner :SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES)
For Respondent : No Appearance
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :29/10/2008
O R D E R
H.L.Dattu,C.J. & A.K.Basheer, J.
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I.T.A.No.118 of 2008
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Dated, this the 29th October, 2008
JUDGMENT
H.L.Dattu,C.J.
The assessee is a Society, registered under the provisions of
Travancore Cochin Literary Scientific and Charitable Societies Act. The
assessee runs 16 educational institutions in different parts of the State.
(2) For the assessment year 1988-89, the assessee had not
filed its return of income before the assessing authority. Therefore, the
assessing authority had issued a notice under Section 148 of the Income Tax
Act (“Act” for short). After receipt of the notice, the assessee had filed its
return of income and also had claimed exemption from payment of tax under
Section 10(22) of the Act.
(3) The assessing authority has completed the assessments
under Section 144 of the Act, denying the exemption claimed by the
assessee under Section 10(22) of the Act, on the sole ground that the
assessee did not produce enough evidence to prove that the income was
exclusively used by the assessee for the educational purpose.
(4) The findings and conclusions reached by the assessing
authority was called in question by the assessee before the first appellate
authority. The first appellate authority’s view is, that, the burden is on the
I.T.A.No.118 of 2008 – 2 –
assessee to prove that the income of the assessee is primarily used for
educational purpose and since the assessee had not discharged its burden, the
thinking of the first appellate authority is, that, the assessing authority is
justified in passing the assessment order under Section 144 of the Act,
denying the exemption claimed by the assessee under Section 10(22) of the
Act.
(5) The assessee had carried the matter by filing the second
appeal before the Tribunal. The Tribunal is of the view, that, the burden of
proof is on the Department, to prove that the assessee had utilised the
income derived from the educational institutions for any purpose other than
the educational purpose. Since the assessing authority has not discharged its
burden, the assessee is entitled to the exemption as provided under Section
10(22) of the Act.
(6) Revenue, being aggrieved by the orders so passed by the
Tribunal, is before us in these appeals.
(7) The Revenue has framed the following questions of law
for our consideration and decision. They are as under:
“1. Whether, on the facts and in the circumstances
of the case and by placing the burden on the Revenue the
Tribunal is right in law and fact in holding that “unless it is
proved that any institution or society was running for profit
making and not for educational purposes the exemption under
I.T.A.No.118 of 2008 – 3 –
section 10(22) cannot be denied” and is not the finding wrong
and to be ignored, the same being one wrongly placing the
burden on the Revenue?
2. Whether, on the facts and in the circumstances
of the case did the assessee discharge the burden of proof that
lay on it?
3. Whether, on the facts and in the circumstances
of the case the Tribunal is right in law and fact in finding that
since the Assessing Officer has not specifically pointed any
instance of the funds of the society being used for any other
activity than educational activity” and is not the finding in the
light Parimseth Seetharamamma (57 ITR 532) wrong and to
be ignored in view of the same being formed by putting the
burden on the Revenue?
4. Whether, on the facts and in the circumstances
of the case, the Tribunal is right in law and fact in holding
that the onus was on the Department to prove that the
assessee is indulging in any profit making activity” and is not
the approach and the conclusion of the Tribunal vitiated?
5. Whether, on the facts and in the circumstances
of the case, is not for the assessee who claims the exemption
to prove the same and is not the very approach of the
Tribunal wrong and the conclusion vitiated and nonest?”
6. Whether, on the facts and in the circumstances
of the case the Tribunal is right in law and fact in holding that
“the assessee’s receipts are exempt as the assessee is an
institution existing solely for educational purposes and not for
the purpose of profit? And is not the above finding perverse?
I.T.A.No.118 of 2008 – 4 –
7. Whether, on the facts and in the circumstances
of the case the Tribunal is right in law and fact in not holding
that Assessing Officer is right in estimating the income of the
assessee as a percentage of the gross receipts and estimating
and excluding a part of the donations from that of building
fund as no evidence was produced?
8. Whether, on the facts and in the circumstances
of the case the Tribunal is right in law and fact in not holding
that Assessing Officer is right in estimating the income of the
assessee as a percentage of its receipts when the accounts are
found to be defective and reliable?
9. Whether, on the facts and in the circumstances
of the case the Tribunal is right in law and fact in not holding
that the Commissioner of Income Tax (Appeals) is wrong in
directing to adopt the book results of the assessee, as against
estimating the income as a percentage of the gross receipts
when the books were found to be defective and not reliable?”
(8) It is the case of the assessee, that, it is managing sixteen
educational institutions. It is its further case that the entire income derived is
primarily used for the educational purpose and, therefore, entitled for
exemption under Section 10(22) of the Act. The assessing authority, while
completing the assessment proceedings under Section 144 of the Act, has
not stated that the income of the assessee has been utilised for any purpose
other than the educational purpose. In order to deny the claim/benefit under
Section 10(22) of the Act, the assessing authority is expected to give a
I.T.A.No.118 of 2008 – 5 –
finding that the income of the assessee has been utilised for a purpose other
than the educational purpose. In the instant case, the assessing authority
merely proceeds on an assumption that the assessee has purchased some
property sometime in the year 1992-93.
(9) The Tribunal, in our opinion, having carefully perused the
orders of assessment passed by the assessing authority and the orders passed
by the first appellate authority, has, rightly, reversed those findings and has
come to the conclusion that the income of the assessee is primarily used for
the educational purpose and, therefore, it is entitled for exemption under
Section 10(22) of the Act. In our view, the Tribunal has not committed any
error, whatsoever, which would call for our interference in this appeal.
Therefore, while answering the questions of law framed by the Revenue
against the Revenue and in favour of the assessee, we reject this appeal.
Ordered accordingly.
H.L.Dattu
Chief Justice
A.K.Basheer
Judge
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