PUSHPAGIRI MEDICAL SOCIETY vs. THE DEUTY COMMISSIONER OF INCOME TAX

ITA/21/2012HC KeralaKLHC01023943201224 September 2018Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON5 pages
AI SummaryDismissed

What were the facts?

The assessee, Pushpagiri Medical Society, an institution registered under Section 11 of the Income Tax Act, 1961, and eligible for exemption under Section 10(23C), is in appeal against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The Assessing Officer (AO) added certain amounts received from parishioners as unexplained cash credit under Section 68 of the IT Act, deeming it income. The First Appellate Authority confirmed the AO's order. The ITAT also confirmed the addition of the deposit as unexplained cash credit under Section 68. The assessee had also raised a question regarding its entitlement to exemption under Section 10(23C) for the assessment year 2001-02.

What did the High Court hold?

The High Court noted that the assessee had suffered a loss in the assessment year 2001-02 and the unexplained cash credit was set off against this loss. The Tribunal had confirmed the addition under Section 68. However, the Court found that the issue of whether the cash credit could be set off against the loss was not critical. The Court opined that the decision in Commissioner of Income Tax v. Kerala Sponge Iron Ltd. might not be applicable as there was an exemption allowed under Section 10(23C). The Court declined to engage in an academic exercise regarding the set-off of cash credit against loss, as it would have no tax effect on the assessee either way. Therefore, the Court confirmed the order of the Tribunal and declined to answer the question of law raised by the assessee. The appeal was dismissed.

What were the issues?

1. Whether the Tribunal erred in confirming the addition of unexplained cash credits under Section 68 of the Income Tax Act, 1961, as income of the assessee? Assessee's contentions: The assessee argued that it was entitled to exemption under Section 10(23C) by virtue of its registration under Section 11. It relied on the judgment in Commissioner of Income Tax v. Muslim Educational Society (ITA No.1711/2009, dated 04.10.2010), where unexplained cash found to be eligible for exemption under Section 10(23C) was considered. Revenue's contentions: The revenue's Senior Counsel submitted that a Division Bench of the High Court in Commissioner of Income Tax v. Kerala Sponge Iron Ltd. [(2016) 285 CTR 198] held that unexplained cash credit cannot be set off against loss or depreciation.

Which sections of the Income-tax Act were involved?

Section 11,Section 10(23C),Section 68

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY ,THE 24TH DAY OF SEPTEMBER 2018 / 2ND ASWINA, 1940 ITA.No. 21 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 565/2009 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 22-09-2011 FOR ASSESSMENT YEAR 2001-02 APPELLANT/S: PUSHPAGIRI MEDICAL SOCIETY THIRUVALLA BY ADV. SRI.V.ABRAHAM MARKOS RESPONDENT/S: THE DEUTY COMMISSIONER OF INCOME TAX CIRCLE-1, THIRUVALLA- 689101. BY ADVS. SRI.JOSE JOSEPH SC FOR INCOME TAX SRI.P.K.R.MENON SR.COUNSEL GOITAXES THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24.09.2018, ALONG WITH ITA.41/2012, ITA.43/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA Nos.21,41 & 43/2012 ::2:: I.T.A Nos.21/2012, 41/2012 & 43/2012

J U D G M E N T Vinod Chandran, J The assessee is in appeal from the order of the Tribunal raising certain questions of law. The brief facts to be noticed are that the assessee an institution registered under Section 11 of the Income Tax Act, 1961 (for brevity “the I.T Act” only) eligible for exemption under Section 10(23C), was found to have received certain amounts from the Parishioners. The asses

The order continues below.

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