C I T JAIPUR vs. M/S MAHIMA SHIKSHA SAMITI

ITA/271/2011HC RajasthanRJHC02001449201001 August 20177 pages
AI SummaryDismissed

What were the facts?

The appeal was filed by the Commissioner of Income Tax (CIT), Jaipur-II, against an order of the Income Tax Appellate Tribunal (ITAT) which had dismissed the department's appeal. The assessee is M/s Mahima Shiksha Samiti. The core of the dispute revolves around the applicability of Section 60 of the Income Tax Act, 1961, concerning a referred society, Ankur Udhodhak Samiti, which was reportedly not filing income tax returns and was not registered under Section 12A of the Act. The High Court noted that the issue was squarely covered by its previous decision in a similar case between the same parties.

What did the High Court hold?

The High Court held that all issues were required to be answered in favour of the assessee and against the Department. The Court's reasoning was based on its previous decision in a similar case between the same parties and the reliance placed by the assessee on Supreme Court judgments. The Court referred to *Queen’s Education Society vs. CIT* and *Chief Commissioner of Income Tax, Chandigarh vs. St. Peter’s Education Society*, which held that surplus funds ploughed back for educational purposes are not to be considered profit, and the institution exists solely for educational purposes. The Court also cited its own decision in *Jhunjhunu Academy Sammittee Vs. Income Tax Officer Jhunjhunu*, which reiterated that surplus funds for sustaining educational activities do not amount to profit and are eligible for exemption. Consequently, the appeal filed by the Department was dismissed.

What were the issues?

1. Whether, on the facts and circumstances of the case, the ITAT was justified in holding that the provisions of Section 60 of the Income Tax Act, 1961, cannot be invoked, despite the referred society (Ankur Udhodhak Samiti) not filing returns of income and not being registered under Section 12A of the Act? Assessee's Contention: The assessee relied on the ITAT's observations that the legislature allows fiscal incentives to charitable institutions that reinvest their earnings for charitable purposes. The assessee argued that registration under Section 12A signifies the charitable nature of the institution and that the Assessing Officer cannot question the charitable purpose once registration is granted, as this power rests with the Commissioner. The assessee also cited decisions like *Deputy Commissioner Income-Tax v. Cosmopolitan Education Society* and *Queen’s Education Society vs. CIT* to support the claim that surplus funds ploughed back for educational purposes do not constitute profit and are eligible for exemption. Revenue's Contention: The revenue's primary contention, as framed in the question of law, is that Section 60 should be invoked because the referred society was not filing returns and was not registered under Section 12A.

Which sections of the Income-tax Act were involved?

Section 60,Section 12A,Section 11,Section 10(23C)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 271 / 2011 Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus M/S Mahima Shiksha Samiti, A-18, Santi Path, Tilak Marg, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur For Respondent(s) : Mr. Sanjay Jhanwar _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH

Order 01/08/2017

1.

By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the department.

2.

This court while admitting the matter framed the following question of law:- “Whether on the facts and circumstances of the case, the ITAT was justified in holding that the provisions of Section 60 of Income Tax Act, 1961 cannot be invoked in the present case despite the fact that the referred society, i.e. Ankur Udhodhak Samiti was not filing returns of income and was not registered under Section 12A of the Act.”

3.

Counsel for the respondent contended that the issue now squarely covered by the decision of this

The order continues below.

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