GANDHI COLLEGE OF PHARMACY vs. COMMISSIONER OF INCOME TAX KARNAL AND ANR.

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ITA/210/2010HC Punjab & HaryanaPHHC01093121201029 November 2023Author: MR. JUSTICE GURMEET SINGH SANDHAWALIA,MS. JUSTICE LAPITA BANERJI3 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that a subsequent appeal filed by the assessee before the ITAT (ITA No. 3476/Del/2012) concerning the same issue of exemption under Section 10(23C)(iiiad) for the relevant assessment years had been allowed on February 3, 2017. The ITAT had granted the benefit of exemption to the assessee in that subsequent proceeding. The Court was informed that the revenue had not filed any appeal against this later ITAT decision. Given that the factual aspect of the matter had been adjudicated in favor of the assessee in a subsequent proceeding, and the revenue had not challenged that favorable outcome, the High Court deemed it unnecessary to consider the questions of law raised in the present appeal. Therefore, the appeal was disposed of as having been rendered infructuous.

What were the facts?

The assessee, Gandhi College of Pharmacy, filed an appeal before the Punjab and Haryana High Court against an order of the Income Tax Appellate Tribunal (ITAT) dated June 12, 2009, for Assessment Year 2004-2005. The ITAT's order had dismissed the assessee's appeal against a revisionary order passed by the Commissioner of Income Tax (CIT) under Section 263. The CIT had directed a detailed inquiry into the assessee's claim for exemption under Section 10(23C)(iiiad). Subsequently, the Assessing Officer (AO) denied the exemption of ₹3,04,893/-, holding that the institution existed for profit. This denial was upheld by the CIT. However, a subsequent appeal to the ITAT (ITA No. 3476/Del/2012) for the same issue was allowed on February 3, 2017, granting the exemption. The revenue has not appealed this latter ITAT decision.

What were the issues?

1. Whether the appellant institution is eligible for exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961, as it satisfies all the requirements of the section? 2. Whether the impugned orders erred in revising the AO's order under Section 263 of the Act, as the conditions of Section 263 are not satisfied? 3. Whether an educational institution existing solely for educational purposes is eligible for exemption under Section 10(23C)(iiiad) even if it is not a trust or society? 4. Whether the impugned orders erred in holding that the appellant exists for the purpose of profit, ignoring evidence to the contrary? Assessee's contentions: The assessee argued that it met all the conditions for exemption under Section 10(23C)(iiiad) and that the revisionary order under Section 263 was not justified. It also contended that its existence solely for educational purposes made it eligible for exemption, irrespective of its legal structure (trust or society), and that the finding of it existing for profit was contrary to the evidence. Revenue's contentions: The judgment does not record specific contentions made by the revenue in this appeal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 263

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
Neutral Citation No. 2023:PHHC:151658-DB IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH (207) ITA-210-2010 (O&M) Decided on : 29.11.2023 Gandhi College of Pharmacy ……Appellant(s) Versus Commissioner of Income Tax Karnal and another ……Respondent(s) CORAM : HON'BLE MR.JUSTICE G.S. SANDHAWALIA HON'BLE MS.JUSTICE LAPITA BANERJI Present: Mr. Akshay Bhan, Senior Advocate with Mr. Shantanu Bansal, Advocate and Mr. Yugank Goyal, Advocate for the appellant. Ms. Gauri Neo Rampal Opal, Senior Standing Counsel for the respondents. ***** G.S. Sandhawalia, J. (Oral) The present appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) is directed against the order dated 12.06.2009 (Annexure A-5) passed by the Income Tax Appellate Tribunal, Delhi (for short ‘the Tribunal’) for the Assessment Year 2004-2005. 2. The appeal was admitted on 21.07.2010 to consider the questions of law mentioned in para No.9 of the appeal, which read as under:- “i) Whether in the facts and circumstances of the case, the appellant institution is eligible for exemption under section 10(23C)(iiiad) of the Act as it satisfies all the requirements of the section? ii) Whether in the facts and circumstances of the case, the impugned orders have erred in revising the order of the A.O. under section 263 of the Act as the conditions of Section 263 are not satisfied? NAVEEN NAGPAL 2023.12.01 17:38 I attest to the accuracy and

authenticity of this order/judgment Chandigarh

ITA-210-2010 (O&M)

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iii) Whether in the facts and circumstances of the case, an educational institution existing solely for educational purpose is eligible for exemption under section 10 (23C)(iiiad) even though it may not be a trust or society? iv) Whether in the facts and circumstances of the case, the impugned orders have erred in holding that the appellant exists for the purpose of profit and have ignored categorical evidence which shows that the appellant institution exists solely for educational purpose?

3.

It has been brought to our notice that the Commissioner of Income Tax had passed order dated 24.04.2008 under Section 263 (1) of the Act revising the order of the Assessing Officer dated 27.12.2006 (Annexure A-2) and issued directions to conduct detailed inquiry and collect reliable, cogent and corroborative evidence on the issue of exemption of income under Section 10 (23C) (iiiad) of the Act of the amount which had been claimed for exemption of income. The assessee had challenged the said order by filing the income tax appeal and the Tribunal had dismissed the same on 12.06.2009 (Annexure A-5) alongwith the connected appeal for the assessment year 2003- 2004. 4. It is pointed out that thereafter the Assessing Officer in pursuance to directions issued by the Commissioner came to the conclusion that the assessee’s society solely existed for the purpose of profit and the exemption claimed under Section 10 (23C) (iiiad) of the Act was denied, which was to the tune of `3,04,893/- by passing the assessment order dated 06.08.2009. The matter was then taken to the Commissioner of Income Tax in the appeals, who upheld the denial of the exemption vide order dated 19.03.2012. The matter was then taken to the Tribunal by filing ITA No.3476/Del/2012, which has now been allowed on 03.02.2017. The Tribunal as such has granted the NAVEEN NAGPAL 2023.12.01 17:38 I attest to the accuracy and authenticity of this order/judgment Chandigarh

ITA-210-2010 (O&M)

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benefit and allowed the claim of the assessee for exemption under Section 10 (23C) (iiiad) of the Act.

5.

We are informed that the revenue as such has preferred not to file an appeal against the said order. Resultantly, once on factual aspect the matter has been adjudicated upon and decided in favour of the assessee, we feel that the consideration of the questions referred in para No.9 of the appeal would not be required in the facts and circumstances.

6.

Accordingly, the present appeal is disposed of as having been rendered infructuous.

(G.S. SANDHAWALIA) JUDGE

(LAPITA BANERJI) 29.11.2023

JUDGE Naveen

Whether speaking/reasoned : Yes

Whether Reportable :

No NAVEEN NAGPAL 2023.12.01 17:38 I attest to the accuracy and authenticity of this order/judgment Chandigarh

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