CIT, CHANDIGARH vs. M/S SIKH EDUCATIONAL SOCIETY

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ITA/838/2008HC Punjab & HaryanaPHHC01080870200803 August 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the order of the ITAT. The Court noted that the assessee relied on a precedent from this Court which held that the term 'Trust' includes any other legal obligation for charitable purposes, as per the explanation to Section 13(1) of the Act. This precedent was also followed in the assessee's own case. The Revenue's contention that exemption under Section 11 could not be allowed if the claim was under Section 10(23C) was not considered by the ITAT or raised in the appeal before the High Court, and thus, could not be permitted to be raised. Consequently, the appeal was dismissed. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue (Commissioner of Income Tax-II, Chandigarh) appealed against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-B, dated June 30, 2008, for the assessment year 2005-06. The assessee, M/s Sikh Education Society, Sector 26, Chandigarh, is an educational institution. The Assessing Officer disallowed exemption under Section 11(2) of the Income Tax Act, 1961, on income from savings bank accounts and Fixed Deposit Receipts, holding that the assessee, being a society registered under the Societies Act, 1860, and not a trust under the Indian Trusts Act, 1882, was not eligible for exemption on income not held under a trust. This disallowance was reversed by the CIT(A) and subsequently by the ITAT.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the ITAT was justified in holding that the mere fact that the assessee was a Society and not a trust would not disentitle it from exemption under Section 11/12 of the Act, without appreciating that the assessee was registered under the Societies Act, 1860, and not under the Indian Trusts Act, 1882, and thus did not qualify for exemption under Section 11(1)(a) of the Act on income derived from property not held under a trust. Assessee's contentions: - Relied on this Court's order dated December 15, 2008, in ITA No. 609 of 2007 (The Commissioner of Income Tax, Panchkula Vs. M/s Haryana C.M. Relief Fund, Chandigarh), which held that the term 'Trust' includes any other legal obligation once the property was for a charitable purpose, in view of the explanation to Section 13(1) of the Act. - This Court's order in the assessee's own case on March 16, 2009, in ITA No. 728 of 2008, followed the aforementioned precedent. Revenue's contentions: - Submitted that the assessee's claim was under Section 10(23C) and therefore, exemption under Section 11 of the Act could not be allowed. - The High Court noted that this point was not raised or considered in the ITAT order or in the appeal filed before the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 12,Section 11(2),Section 11(1)(a),Section 13(1),Section 10(23C)

AI-generated summary — verify with the full judgment below

(1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 3.8.2009 Commissioner of Income Tax-II, Chandigarh ..........Appellant Versus M/s Sikh Education Society, Sector 26, Chandigarh ..........Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Ms. Urvashi Dhugga, Advocate for the appellant. Mr. Rajiv Sharma, Advocate for the respondent. **** ADARSH KUMAR GOEL, J. (Oral)

1.

The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Chandigarh Bench-B dated 30.6.2008 passed in ITA No. 315/Chandi/2008 for the assessment year 2005-06, proposing to raise following substantial question of law:- “Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in holding, that the mere fact that assessee was a Society/other institution and not a trust would not disentitle it from the exemption under section 11/12 of the Act, without appreciating the fact that the assessee was Registered under Societies Act, 1860 and not under Indian Trust Act, 1882 as such does not qualify for exemption u/s 11 (2) (1) (a) of the Income Tax Act, on the income which is derived from the property not held under a trust.”

2.

The assessee is running a educational institution and claimed exemption under Section 11 (2) of the Act in respect of income derived from interest of saving bank account and Fixed Deposit Receipts. The Assessing Officer disallowed the said exemption on the ground that the assessee was only a society and not a trust. This view was reversed by the CIT(A) as well as by the Tribunal.

3.

Learned counsel for the assessee relies upon order of this Court dated 15.12.2008 passed in ITA No. 609 of 2007 (The Commissioner of Income Tax, Panchkula Vs. M/s Haryana C.M. Relief Fund, Chandigarh), wherein, it was held that in view of the explanation to Section 13 (1) of the Act, the term 'Trust', includes any other legal obligation, once the property was for charitable purpose. The said order was followed in the case of the assessee on 16.3.2009 in ITA No. 728 of 2008. 4. Learned counsel for the appellant submitted that claim of the assessee being under Section 10 (23C), exemption under Section 11 of the Act could not be allowed. This is not the point raised or considered in the order of the Tribunal or even in the appeal filed in this Court. Thus, this question cannot be allowed to be raised.

5.

No substantial question of law arises. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 03, 2009

(DAYA CHAUDHARY) pooja JUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No (3)

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