THE COMMISSIONER OF INCOME TAX,CALICUT vs. M/S.MUSLIM EDUCATIOANL SOCIETY,CALICUT

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ITA/1711/2009HC KeralaKLHC01026472200904 October 2010Author: HONOURABLE MR.JUSTICE K.SURENDRA MOHAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee, being a charitable institution entitled to exemption under Section 11 as well as Section 10(23C), should not be subjected to separate treatment for unexplained cash credits treated as income under Section 68. The Court found no justification for deviating from the view taken by the Delhi High Court in Director of Income Tax (Exemption) v. Raunaq Education Foundation (2007) 294 ITR 76. Therefore, the appeal filed by the department was dismissed, implying that the cash credits were indeed eligible for exemption. The operative direction was the dismissal of the department's appeal.

What were the facts?

The assessee, M/s. Muslim Educational Society, Calicut, is a charitable institution running educational institutions. The Commissioner of Income Tax, Calicut, is the appellant (revenue), and the assessee is the respondent. The appeal is against an order of the Income Tax Appellate Tribunal, Cochin Bench. The core issue revolves around cash credits treated as income under Section 68 of the Income Tax Act. The assessee had been granted exemption for its entire income, except for the addition made by the Assessing Officer under Section 68. The Tribunal allowed the assessee's claim for exemption on these cash credits.

What were the issues?

1. Whether unexplained cash credits treated as income under Section 68 of the Income Tax Act, 1961, qualify for exemption under Section 10(23C) and Section 11 of the Income Tax Act, 1961. Assessee's Contention: The assessee, being a charitable institution entitled to exemption under Section 11 and Section 10(23C), argued that the cash credits, even if unexplained under Section 68, should also be considered for exemption. Revenue's Contention: The revenue contended that unexplained cash credits added as income under Section 68 should not be eligible for exemption under Section 10(23C) and Section 11.

Which sections of the Income-tax Act were involved?

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

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 C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 4TH OCTOBER 2010 / 12TH ASWINA 1932 ITA.No. 1711 of 2009() ------------------------------- ITA.524/COCH/2008 of INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT ------------------------------------- THE COMMISSIONER OF INCOME TAX, CALICUT. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: -------------------------------------------- M/S. MUSLIM EDUCATIONAL SOCIETY, CALICUT. BY ADV. SRI.ANIL D. NAIR, SMT.NIVEDITA A.KAMATH. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. C.N.RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. ------------------------------------------------------------ I.T.A. NOS: 1711 OF 2009 ----------------------------------------------------------- Dated this the 4th October, 2010.

JUDGMENT Ramachandran Nair, J. The question raised in the department appeal is whether the unexplained cash credits taken as income under Section 68 qualifies for exemption under Section 10 (23C) and Section 11 of the Income Tax Act. We have heard standing counsel for the appellant and counsel appearing for the respondent-assessee. After hearing both sides and after going through the orders we find that assessee is a charitable institution engaged in charity and running of educational institutions. Exemption is also seen granted for the entire income except in regard to the addition made by the Officer under Section 68. Tribunal has allowed the claim following the decision of the Delhi High Court in Director of Income Tax (Exemption) v. Raunaq Education Foundation (Delhi) 294 ITR 76. Since respondent assessee is entitled to exemption both under Section 11 as well as under Section 10(23C) we do not find any justification for separate treatment of unexplained cash credit treated as income under Section 68 of the Income Tax Act.

We do not find any ground to deviate from the view taken by the Delhi High Court in the above case. We therefore dismiss the department appeal. C.N.RAMACHANDRAN NAIR Judge K. SURENDRA MOHAN Judge jj

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