COMMISSIONER OF INCOME TAX vs. SORABJI NASSARWANJI PARUCK

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ITR/415/1983HC GujaratGJHC24011880198303 December 1996Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE R.BALIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered the referred question in the negative, in favour of the Revenue and against the assessee. The Court relied on its previous decision in CIT vs. Sorabji Nusserwanji Parekh (201 ITR 939) concerning the same assessee for assessment year 1972-73. In that case, the Court had held that the assessee trust, though created to establish schools or colleges for Zoroastrian students, had failed to do so. No educational activity in the sense of normal schooling or actual imparting of knowledge was carried on. The institution was only giving scholarships to needy Parsi students for technical education without control or imparting knowledge. Therefore, the assessee trust was not entitled to total exemption from income tax under Section 10(22). The reference was disposed of accordingly.

What were the facts?

The Commissioner of Income Tax (Revenue) has referred a question of law to the High Court of Gujarat concerning the assessee, Sorabji Nassarwanji Paruck. The assessment years in question are 1977-78 to 1980-81. The appeal challenges an order of the Income Tax Appellate Tribunal (ITAT). The dispute revolves around whether the assessee's income is entitled to exemption under Section 10(22) of the Income Tax Act, 1961. The High Court notes that a similar question for assessment year 1972-73 was decided by a Division Bench of the same court in CIT vs. Sorabji Nusserwanji Parekh (201 ITR 939).

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the income of the assessee was entitled to exemption under subsection (22) of Section 10 of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. The High Court's decision appears to be based on a prior ruling. Revenue's Contention: The Revenue's contention, as inferred from the High Court's response, is that the assessee trust was not entitled to exemption under Section 10(22) because it had not established schools or colleges, nor was it actively imparting education. The trust was merely providing scholarships to needy Parsi students for technical education without retaining control or imparting knowledge.

Which sections of the Income-tax Act were involved?

Section 10(22),Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 415 of 1983

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus SORABJI NASSARWANJI PARUCK -------------------------------------------------------------- Appearance: MR BHARAT J. SHELAT INSTRUCTED BY MR MANISH R BHATT for APPLICANT MRS KETTY A MEHTA for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. Date of decision: 03/12/96

ORAL JUDGEMENT (per R.K. Abichandani, J)

1.

The following question has been referred for the opinion of this Court under Section 256(1) of the Income Tax Act:

1.

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the income of the assessee was entitled to exemption under subsection (22) of Section 10 of the Income Tax Act, 1961?"

2.

The question is directly covered in assessee's 1972-73 (the present case is for assessment years 1977-78 to 1980-81), while answering the identical question referred to it, the High Court held that the assessee trust was created to establish schools or colleges for imparting education to Zoroastrian students but it had not been successful in establishing any school or college, and no educational activity in the sense of normal schooling or actual imparting of knowledge or learning to the students was carried on by the trust. The institution was simply giving scholarships to the needy Parsi students for technical education without keeping any control over such students or without actually imparting any knowledge to them, Therefore, the assessee trust was not entitled to total exemption from income tax under Section 10(22) of the Act. In this view of the matter, the question referred to us is answered in the negative in favour of the revenue and against the assessee. The reference stands disposed of accordingly.

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