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The Commissioner Of Income-Tax vs Shree Vidayadhiraja Vidya … on 29 October, 2008

Kerala High Court
The Commissioner Of Income-Tax vs Shree Vidayadhiraja Vidya … on 29 October, 2008
       

  

  

 
 
  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.
                     -------------------------------------------
                            I.T.A.No.118 of 2008
                    --------------------------------------------
                      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
vku/-

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