High Court of KeralaDivision Bench2012-02-16Appeals dismissed; respondent (St. Mary's Semin...

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

Case / Petition Number:ITA Nos. 183/2011 and 184/2011

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: C. N. Ramachandran Nair
Babu Mathew P. Joseph
Judgment Date: 2012-02-16
Court Decision / Holding: The ITA appeals are dismissed; the respondent is held eligible for exemption under section 10(23C)(iiiad) and the Tribunal’s view that the seminary is an 'educational institution' is affirmed.
Final Disposition: Appeals dismissed; respondent (St. Mary's Seminary) is held to be covered by exemption under Sec 10(23C)(iiiad); the Tribunal's order in effect is sustained.

Parties to the Case

Appellants / Petitioners

The Commissioner of Income Tax, Thiruvananthapuram

Respondents

St. Mary's Malankara Seminary, Nalanchira, Trivandrum-695015

Legal Representation & Advocates

Counsels for Petitioners

• SRI P.K.R. MENON, SR. COUNSEL
• SRI JOSE JOSEPH, SC

Case Synopsis & Summary

This is a pair of connected Income Tax Appeals (ITA Nos. 183 and 184 of 2011) before the Kerala High Court, challenging the Tribunal's finding that St. Mary’s Malankara Seminary is an 'educational institution' entitled to exemption under section 10(23C)(iiiad) of the Income Tax Act. The Revenue contends that a seminary’s core activity—training men for priesthood—does not fall within the broad constitutional concept of education and that the Tribunal’s expansive interpretation would extend tax relief to religious institutions beyond conventional schools. The respondent seeks exemption, arguing that the seminary conducts systematic coaching and education for religious service, and that education, including theological training, is a valid form of education under Sec 10(23C)(iiiad). The court notes that education is not defined in the IT Act and looks to case law, including City Montessori School (Regd.) v. Union of India and others (All) for a broad meaning of education and to National Thermal Power Co. Ltd. v. Commissioner of Income Tax (IT) for the principle that a pure question of law can be raised at any stage. It ultimately upholds the respondent’s view, holding that religious instruction in a seminary qualifies as education and an 'educational institution' under Sec 10(23C)(iiiad), and that the alternate ground for exemption could be raised at appeal. The appeals are dismissed with the relief flowing to the respondent.

Provisions of Law Cited

Section 10(23C)(iiiad)Section 11Section 12AArticle 25 of the Constitution

Legal Doctrines & Maxims

Pure question of law can be raised at any stage of the proceedings under the IT Act (National Thermal Power Co. Ltd. v. Commissioner of Income Tax, 229 ITR 383)
Education has a wide connotation including religious instruction; theology taught in universities is part of education, supporting a broad interpretation under Sec 10(23C)(iiiad)
Religious teaching can be education under Sec 10(23C)(iiiad) as interpreted by the Kerala High Court in this case

Submissions & Arguments

Contentions of Appellants / Petitioners

Revenue contends that the term 'educational institution' in Sec 10(23C)(iiiad) cannot be read to include a seminary solely for priestly training, as education should be measured by general educational criteria. They argue that a seminary's core activity—coaching for priesthood—though religious in nature, does not fit within the secular concept of an educational institution under the IT Act, and that extending the exemption would grant tax relief to religious entities beyond ordinary educational bodies. They emphasize that the decision of the Tribunal to treat the seminary as education would dilute the statutory scheme and undermine the requirement of 12A registration and other procedural prerequisites that typically govern exemptions under Sec 11/10(23C). They also contend that the alternate ground based on Sec 10(23C)(iiiad) was not properly raised within the proper stage of assessment and should have been confined to the original grounds rather than permitted at appellate stage; consequently, the Tribunal’s reasoning and the respondents’ claim for exemption under Sec 10(23C)(iiiad) should be confined or struck down.

Contentions of Respondents

St. Mary's Seminary argues that its activities amount to education in the widest sense, comprising long-term theological instruction and practical formation for priesthood. The learning process, spanning nearly a decade, involves systematic coaching in religious studies, liturgy, discipline and pastoral training, which equip students to serve as priests and religious leaders. The respondents contend that religious education falls within the broad statutory concept of 'education' covered by Sec 10(23C)(iiiad) and is consistent with the constitutional protection of religious freedom under Article 25. They assert that the Tribunal’s interpretation aligns with the aims of promoting religious education and the propagation of faith, and that the law does not restrict 'education' to secular subjects. The respondent also highlights that the Supreme Court decision in National Thermal Power Co. Ltd. allows raising pure questions of law at any stage of proceedings, enabling their alternate ground to be adjudicated on appeal. In sum, the Seminary’s curriculum constitutes education, rendering it eligible for exemption, and the Revenue’s objections fail on both factual and legal grounds.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
City Montessori School (Regd.) v. Union of India and others	315 ITR 48 (All)	Positive	Used to support a broad interpretation of 'education' to include religious instruction.
National Thermal Power Co. Ltd. v. Commissioner of Income Tax	229 ITR 383	Positive	Cited for the principle that pure questions of law can be raised at any stage; used to allow the alternate ground.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH** **THURSDAY, THE 16TH DAY OF FEBRUARY 2012/27TH MAGHA 1933** **ITA.No. 183 of 2011 ( ) ---------------------------------** **ITA.384/2009 of I.T.A.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, FOR INCOME TAX** **RESPONDENTAPPELLANT:** **--------------------------------------** **ST.MARY'S MALANKARA SEMINARY, NALANCHIRA.P.O., TRIVANDRUM-695015.** **THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 16-02-2012, ALONG WITH 184/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **AS** ## **ITA.NO.183/2011** ## **APPENDIX** ## **PETITIONER(S) EXHIBITS:** **ANNEXURE A:** **COPY OF THE ORDER U/S 143 (3) OF THE INCOME TAX ACT DT.24.03.2006** **ANNEXURE B: COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DT.10.10.2006.** **ANNEXURE C: COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DT.25.04.2007.** **ANNEXURE D: COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DT.23.03.2009.** **ANNEXURE E: COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DT.10.03.2011.** ## **RESPONDENT'S EXHIBITS: NIL** ## **/TRUE COPY/** ## **P.A.TO JUDGE** ## **AS** **[CR]** ## **C.N. RAMACHANDRAN NAIR & BABU MATHEW P. JOSEPH, JJ.** **---------------------------------------------------I.T. Appeal Nos. 183 & 184 OF 2011 -----------------------------------------------------** **Dated this the 16[th] day of February, 2012** ## **J U D G M E N T** ## Ramachandran Nair, J The question raised in these connected appeals filed by the Revenue against the very same assessee is whether the Tribunal was justified in holding that a “Seminary” teaching students for priesthood is an educational institution entitled to exemption from tax u/s 10(23C)(iiiad) of the Income Tax Act. One additional question raised is whether the Tribunal was justified in holding that the respondent was entitled to claim exemption u/s 10(23C) (iiiad) for the first time at the appellate stage. We have heard the learned Standing Counsel appearing for the appellant and we have also gone through the orders of the Tribunal. ## **I.T.Appeal Nos. 183 & 184 OF 2011 :2 :** 2. The first question raised is whether a seminary coaching and training students for priesthood is an educational institution as referred to in the above provision of the I.T. Act. Educational institution is not defined under the I.T.Act. Therefore, for ascertaining the scope and meaning of “Educational Institution” the Tribunal referred to various decisions, particularly the decision of the Allahabad High Court in **City Montessori School(Regd.) v. Union of India and others reported in (2009) 315 ITR 48(All)** wherein the Court held that education means instruction, schooling or training given to the young in preparation for the work of life. On the facts, there can be no controversy because training for priesthood involves extensive coaching in religious studies making a person fit to perform the duties of the priest which is a profession. Seminary, in this case is run by Malankara Catholic Church at Thiruvananthapuram where several students undergo ## **I.T.Appeal Nos. 183 & 184 OF 2011 :3 :** coaching and training for priesthood. Freedom to practice and propagate religion is a right conferred under Article 25 of the Constitution. Propagation of religion necessarily involves education and training of young generation on religious matters and unless the same is systematically done religious beliefs and practices cannot be carried to future generations. Therefore religious teaching is a right recognized under the Constitution. A person admitted to seminary takes as much as about 10 years to become a qualified priest and the long duration by itself reveals the extensive coaching and training required to become a priest who is a religious practitioner. So much so, there cannot be any controversy that religious teaching is also education within the meaning of the term contained in S.10 (23C)(iiiad) of the I.T.Act. 3. It is well known that 'theology' is a subject taught in western universities and degrees and even Ph.Ds. ## **I.T.Appeal Nos. 183 & 184 OF 2011 :4 :** are awarded in 'theology' by several Universities in Europe. There is nothing to indicate that S.10(23C)(iiiad), requires the educational institutions referred to therein to impart education in any particular subject or in any manner whatsoever. So much so, the term 'education' should enjoy a wide connotation covering all kinds of coaching and training carried on in a systematic manner leading to personality development of an individual. In the case of seminary, students on completion of their studies are made priests who head the churches as religious leaders practising and propagating religion as a profession. So much so, we hold that religious teaching in the seminary is also education and seminary is therefore an “educational institution” entitled for exemption u/s 10 (23C)(iiiad) of the I.T.Act. 4. The next question raised is whether the respondent admittedly a religious institution which is ## **I.T.Appeal Nos. 183 & 184 OF 2011 :5 :** entitled to exemption from tax u/s 11 of the I.T.Act, can claim benefit of exemption under S.10(23C)(iiiad). In this case for want of registration u/s 12A, the respondent forfeited their claim for exemption u/s 11 of the Act. When this happened at the assessment stage, respondent raised an alternate claim for exemption u/s 10(23C)(iiiad) before the first appellate authority who though allowed the claim first, recalled it later. However, in second appeal the Tribunal allowed the claim on merits which is contested by the Revenue in this appeal. 5. The Hon'ble Supreme Court in **National Thermal Power Co. Ltd. v. Commissioner of Income** **Tax. 229 ITR 383** held that a pure question of law can be raised at any stage of the proceedings under the I.T. Act. The ground raised in appeal by the assessee based on 10 (23C)(iiiad) is certainly a pure question of law and on the same facts the issue was found in favour of the respondent. ## **I.T.Appeal Nos. 183 & 184 OF 2011** ## **:6 :** So much so, we feel respondent was rightly found to be eligible to raise the additional and alternate ground of exemption which was found in their favour. We, therefore, answer both the questions in favour of the respondent and dismiss both the appeals. Sd/- **C.N. RAMACHANDRAN NAIR, JUDGE.** **Sd/- BABU MATHEW P. JOSEPH, JUDGE.** ul/- [True copy] P.S. to Judge.