C I T vs. ARVIND BHARTIYA VIDHYALA SAMIT

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ITA/176/2008HC RajasthanRJHC02005467200801 February 20175 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was covered by its previous decisions and a binding order from the Central Board of Direct Taxes (CBDT). The CBDT, in its order dated March 16, 2007, had approved that any income received on behalf of "Arvind Bhatri Vidyalala Samiti, Ambabari, Jaipur-302023" shall not be included in the total income, subject to specified conditions. This approval was applicable for Assessment Year 1999-2000 and onwards. The Court noted that in a previous case, the revenue's counsel agreed that the CBDT order was binding and entitled the assessee to exemption. Therefore, the assessee was held entitled to exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The Tribunal had already affirmed the order of the CIT(A) which had allowed the exemption. The issue was answered in favour of the assessee.

What were the facts?

The appellant, CIT, challenged an order of the ITAT that allowed an appeal of the assessee, Arvind Bhartiya Vidhyala Samit, reversing the orders of the AO and CIT(A). The High Court admitted the appeal and framed a question of law. The appellant argued that the exemption under Section 10(23C) should not have been granted. The respondent contended that the issue was covered by previous decisions of the High Court concerning the same assessee. The judgment also referred to a previous High Court decision where the department conceded that an order by the Central Board of Direct Taxes (CBDT) granting exemption under Section 10(23C)(vi) was binding.

What were the issues?

1. Whether, in the facts and circumstances of the case, the ITAT has not acted perversely and illegally in allowing the exemption under Section 10(23C) to the assessee? Assessee's Contention: The respondent (assessee) argued that the issue is squarely covered by this Court's previous decisions in Tax Appeal No. 236/2009 & 404/2011, decided on August 21, 2012, and by another bench in Income Tax Appeal No. 215/2004, decided on November 15, 2016. They also pointed to a binding CBDT order granting exemption. Revenue's Contention: The appellant (revenue) contended that the Tribunal committed an error in allowing the appeal and that the benefits required under Section 10(23C) should not have been granted. They argued that the orders of the CIT(A) and AO should be confirmed.

Which sections of the Income-tax Act were involved?

Section 10(23C),Section 10(23C)(vi),Section 11(5),Section 288(2)

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. 176 / 2008 C I T ----Appellant Versus Arvind Bhartiya Vidhyala Samit ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur For Respondent(s) : Mr. L.L. Gupta _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR

Judgment 01/02/2017

1.

By way of this appeal, the appellant has assailed the judgment & order of the Tribunal whereby the Tribunal has allowed

the appeal of the assessee and reversed the order of the AO as well as CIT(A).

2.

This Court while admitting the matter on 20th October, 2008 framed the following question of law:- “Whether in the facts and circumstances of the case the ITAT has not acted perversely and illegally in allowing the exemption u/s 10(23C) to the assessee?”

3.

Counsel for the appellant Mr. R.B. Mathur contended that the Tribunal has seriously committed an error in allowing the appeal preferred by the assessee inasmuch as benefits which are (2 of 5) [ITA-176/2008] required to be granted under Section 10 (23C) would not be granted to the assessee.

4.

In that view of the matter, he contended that the order of CIT(A) and AO is required to be confirmed.

5.

However, Mr. Gupta contended that the issue is now squarely covered by the decision of this Court in the case of same assessee in Tax Appeal No. 236/2009 & 404/2011 decided on 21st August, 2012. 6. The same view is also followed by the another bench in Income Tax Appeal No. 215/2004 decided on 15th November, 2016, wherein it has been held as under:- “Initially, learned counsel for the appellant argued that the orders passed by Commissioner of Income Tax (Appeals) as well as Income Tax Appellate Tribunal are bad in law, the Assessing Officer was right in declining the exemption to assessee under Section 10(23C)(vi) of the Act of 1961. However, when the learned counsel for the respondent pointed out that exemption under Section 10(23C) (vi) of the Act has been granted to the assessee/respondent by the Central Board of Direct Taxes vide order dated 16th March, 2007, which is applicable for Assessment Year 1999- 2000 and onwards, nothing remains to be decided in the present appeals, learned counsel for the appellant also agreed that order of Central Board of Direct Taxes is binding on the department and in view of order passed by Central Board of Direct Taxes, the assessee is entitled for exemption under the provisions of the Act. The order of Central Board of Direct Taxes dated 16th March, 2007 is reproduced as under:- “P.No.197/115/2006-ITA, I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 16th March, 2007

(3 of 5) [ITA-176/2008] ORDER In exercise of powers conferred by the sub clause (vi) of the clause(23C) of Section 10 of the income tax Act, 1961(43 of 1961), the Central Board of Direct Taxes hereby approves that any income received by any person on behalf of “Arvind Bhatri Vidyalala

Samiti,

Ambabari,

Jaipur-302023” (hereinafter the “Institution”) shall not be included in the total income of such person as assesseable, subject to the following conditions: a) the institution will apply its income, or accumulate for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its Income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; b) the institution will not invest or deposit its fund (other than voluntary contribution received and maintained in the form of jewellery, furniture, etc.) for any period during the previous years relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modes specified in sub-section (5) of the section 11; c) this approval will not apply in relation to any income being profits and gains of business, unless the business is incidental to the attainment of the objectives of the institution and spaate books of account are maintained in respect of such business; d) the institution will regularly file its return of income before the income tax authority in accordance witH the provisions of the income tax Act, 1961; e) that in the event of dissolution of the institution, its surplus and the assets will be given to an organization with similar objectives. (f) the institution will continue to be exist solely for educational purpose.

(4 of 5) [ITA-176/2008] g) The institute will get its accounts audited by an accountant as defined in Explanation below sub section (2) of section 288 and furnish along with the return of income. The report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

2.

This order is applicable only to the recipients of income on behalf of the institution and not to any other receipt or income of such recipients. Taxability or, otherwise of the Income of the Institution would be separately considered as per the provisions of the Income tax Act, 1961;

3.

This order is applicable for Assessment Year 1999-2000 and onwards.

4.

The above order is liable to be rescinded by the Central Government, if it is subsequently found that the activities of the institution are not genuine or if they are not carried out in accordance with all or any of the conditions subject to which it was notified.

5.

This order is in super-cession of the earlier order no.197/115/2006-ITA-I dated 07.02.2007. (DEEPAK GARG) Under Secretary to the Govt. of India Copy to:- i) “Arvind Bharti Vidyalaya Samiti, Ambabari, Jaipur-302023” ii) The CCIT, Jaipur iii) The CIT-II Jaipur iv) The Director of income Tax, (RSP&PR), New Delhi. v) Guard File.

(5 of 5) [ITA-176/2008] (DEEPAK GARG) Under Secretary to the Govt. of India” In view of above order passed by the Central Board of Direct Taxes, the assessee/respondent is held entitled for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. Learned Tribunal has already affirmed the order of Commissioner of Income Tax (Appeals), who had allowed the exemption to the assessee/respondent, while allowing the appeal of the assessee.

7.

Therefore, the issue is answered in favour of the assessee and against the department.

The appeal stands dismissed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. A.Sharma/106

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