Commissioner of Income Tax, Thiruvananthapuram v. St. Mary's Malankara Seminary

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **THURSDAY, THE 23RD DAY OF JANUARY 2014/3RD MAGHA, 1935** ## **ITA.No. 185 of 2011 ( )** **-----------------------ITA. NO.386/COCH/2009 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH.** **....** **APPELLANT/RESPONDENT:** **-----------------------------------------** **THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM.** **BY ADVS.SRI.P.K.R.MENON, SR. COUNSEL, GOI (TAXES). SRI.JOSE JOSEPH, SC, INCOME TAX.** **RESPONDENT/APPELLANT:** **-----------------------------------------** **ST. MARY'S MALANKARA SEMINARY, NALANCHIRA P.O., THIRUVANANTHAPURAM, PIN-695 015.** **BY ADVS. SRI.ANIL D. NAIR, SRI.J.R.PREM NAVAZ, SMT.NIVEDITA A.KAMATH, SRI.R.SREEJITH.** **THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **rs.** ## **ITA.No. 185 of 2011** ## **APPENDIX** ## **PETITIONER'S ANNEXURES:-** **ANNEXURE A COPY OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 19/11/2007. ANNEXURE B COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/03/2009.** **ANNEXURE C COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 10/03/2011.** ## **RESPONDENT'S ANNEXURES:NIL.** ## **//TRUE COPY//** ## **P.A. TO JUDGE** **rs.** ## **Manjula Chellur, C.J. & Alexander Thomas, J.** - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 185 OF 2011 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 23[rd] day of January, 2014 ## **JUDGMENT** ## **Manjula Chellur, C.J.** This appeal pertains to assessment year 2005-06. The Revenue is before us challenging the orders of the Tribunal. The opinion of the Assessing Officer that total tax and interest payable by the assessee would be `23,80,404/taking gross income of the assessee as per the computation of income given by the assessee at `1,20,96,858/- is the subject of controversy. 2. The issue that came up for consideration before the Assessing Officer was whether the assessee was justified in claiming the status of a trust. Ultimately as there was no registration under Section 12A of the Income Tax Act, so far as the assessee is concerned, the Assessing Officer opined that the assessee is an association of persons and not a trust as claimed by them. The assessment was completed treating the assessee as an association of persons, ultimately computing the tax and interest payable at `23,80,404/-. ITA No. 185 of 2011 -:2:- 3. Aggrieved by the same assessee approached the Commissioner of Income Tax(Appeals)[for short 'CIT(Appeals)'], not only for the assessment year in question but also assessment years 2003-04 and 2004-05. While considering the main issue, all the three years came to be taken up together by virtue of a common order by the Tribunal. So far as 2003-04, it is apparent that assessee was entitled for exemption under Section 10(23C) (iiiad) and the Assessing Officer was given a direction to modify the assessment orders giving exemption to the appellant. This came to be challenged before the Tribunal and the Tribunal allowed the appeal by remanding back the matter to the First Appellate Authority to reconsider the same. In that context all the three assessment years came to be taken up together. 4. The application of assessee for registration under Section 12A of the Act was rejected by the Assessing Officer. Assessee claimed that it was entitled for registration under Section 12A as the training imparted in the 'Seminary' amounts to education, therefore, they have to be treated as a Trust running educational institution. The First Appellate Authority ITA No. 185 of 2011 ## -:3:- rejected the contention of the appellant/assessee opining that the training programme undertaken by the assessee cannot be treated as an educational programme in order to give the status of an educational institution. This came to be challenged before the Tribunal by the assessee and the Tribunal opined that it is an educational institution and Tribunal held the said issue against the revenue opining that the training programme undertaken by the assessee is also education and therefore Section 12A registration has to be extended. The Tribunal after referring to the benefit enjoyed by the assessee i.e., exemption under Section 10(23C)(iiiad) for the earlier years and subsequent to 01.04.2005 opined that only for the relevant three assessment years including the present assessment year the assessee was put to difficulties by rejecting the registration. Opining that it was totally erroneous and unjustifiable, ultimately held the assessee was entitled for registration so far as the present assessment year also under Section 12A. 5. So far as book limit extension of `1Crore in particular, for the assessment year 2005-06, the Tribunal after ITA No. 185 of 2011 -:4:- referring to the statement of computation of income for the year ended with 31.03.2005, opined, the total receipt comes to `95,90,170.83 which includes interest on deposits and voluntary contribution. There is no dispute so far as this aspect of the matter is concerned. There is also reference to `17,00,000/shown as income under other head in the statement of computation of income. The reading of entire paragraph 8 with reference to `17 lakhs, we feel, probably the Tribunal opined that the amount of `17 lakhs shown under the other income head cannot be added to the receipts. We are unable to understand what exactly the Tribunal meant by making a statement that 'no man can make profit of himself'. However, the Tribunal has not explained what exactly this `17 lakhs amounts to. Except saying, it cannot be part of the receipt, but why it cannot be part of receipts, we are unable to understand what exactly went in the mind of the Tribunal is not indicated. 6. Then coming to registration under Section 12A, now it is settled position by virtue of a judgment of this Court reported in **Commissioner of Income Tax v. St.Mary's** ITA No. 185 of 2011 -:5:- **Malankara Seminary** [348 ITR 69] that imparting training to students in Seminary is also education and it is also with reference to very same respondent/assessee. In the light of settled position, we need not ponder much over the issue or the controversy regarding the registration under Section 12A to be given to the respondent/assessee. Now the only controversy remains for consideration is whether Section 12A registration should be given for the assessment 2005-06. Apparently registration under Section 12A came into force with effect from 01.04.2005, therefore it would be applicable to the assessment year 2006-07. So far as 2005-06, there was no registration under Section 12A. Then one has to see whether receipts and other amounts cross beyond the limit of `1 Crore in order to obtain Section 12A registration or within one Crore so that automatically they get exemption as educational institution under Section 10(23C) (iiiad) of the Act. In order to consider this issue, the factual situation has to be ascertained. 7. From reading of the orders of Assessing Officer, CIT (Appeals) and Tribunal, we are not having clear picture what this ITA No. 185 of 2011 -:6:- amount of `17 lakhs represents. If `17 lakhs is not counted as receipts, the total receipt would come within one Crore. If `17 lakhs is added, it crosses one Crore. Thus if this `17 lakhs is added, the entire scenario would change. In the absence of any particulars before us, we are of the opinion, the matter deserves to be remanded back to the Tribunal for clarification what exactly this `17 lakhs would indicate and why it should be either included in receipts or excluded from receipts. So far as `95,90,170.83, it is admitted that the receipts are interest on deposits and voluntary contribution. The Tribunal need not reopen the issue pertaining to `95,90,170.83. It has to consider the source of `17 lakhs alone so as to consider the controversy under Section 10 (23C)(iiiad) of the Act. Accordingly, the appeal is partly allowed. **Manjula Chellur, Chief Justice.** **Alexander Thomas, Judge.** ttb ITA No. 185 of 2011 -:7:-