COMMISSIONER OF INCOME TAX vs. M/S CHOUHAN EDUCATION SOCIETY

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ITA/192/2009HC Madhya PradeshMPHC01037426200920 February 20183 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. It noted that identical issues in other appeals (I.T.A. No. 199/2009 and I.T.A. No. 188/2009) against the same respondents had already been dismissed by the Court on 05.04.2016. The Court found that the grants received by the societies were for the creation of capital assets, such as buildings and equipment, and were used for that purpose. Consequently, these were held to be capital receipts and not income, making them not taxable. The Court found no error in the concurrent findings of the Commissioner (Appeals) and the Income Tax Appellate Tribunal and concluded that no substantial question of law arose, warranting dismissal of the appeal.

What were the facts?

The appeals were filed by the Revenue against the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The assessee societies received grants-in-aid from the government and utilized them for creating capital assets such as school buildings, girls' hostels, and equipment. The Assessing Officer treated these grants as income and assessed them for tax. However, the Commissioner (Appeals) and the Tribunal held that the grants were for the creation of capital assets and were therefore capital receipts, not taxable income. The present appeal, I.T.A. No. 192/2009, concerns the same respondent and raises identical questions of law as other appeals previously dismissed by the High Court.

What were the issues?

1. Whether the grants received by the assessee societies from the government, utilized for creating capital assets like buildings and equipment, constitute taxable income or are capital receipts not liable to tax, under the Income Tax Act, 1961. Assessee's Contention: The grants were received for the specific purpose of creating capital assets and were utilized as such. Therefore, they are capital in nature and not income, hence not taxable. Revenue's Contention: The Assessing Officer treated the grants as income and assessed them for tax. The High Court was to decide if the lower authorities erred in treating these grants as capital receipts.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

THE HIGH COURT OF MADHYA PRADESH I.T.A. No. 192/2009 (Commissioner of Income Tax Vs. M/s Chouhan Education Society) Jabalpur, Dated: 20-02-2018 Shri Sanjay Lal, learned counsel for the appellant. I.A. No. 6359/2014 for exemption from filing certified copy of the impugned order is allowed for the reasons mentioned therein namely that the certified copy has already been filed along with I.T.A. No. 199/2009. Heard on the question of admission. It is informed that I.T.A. No.199/2009 and I.T.A. No. 188/2009 filed by the Revenue against the same respondents raising same and identical question of law has been dismissed by this Court on 05.04.2016. The order passed by this Court in I.T.A. No. 188/2009 and I.T.A. No. 199/2009 on 05.04.2016 is in the following terms : “In all these cases, appeals filed under Section 260-A of the Income Tax Act, Revenue has called in question concurrent orders passed by the Commissioner Appeals and the Income Tax Appellate Tribunal in the matter of upholding certain deletions granted by the Commissioner Appeals. 2. Facts in all the cases go to show that the Societies in question namely the Assessee received various grants in aid from the government and utilized the grants for the purpose of creating capital assets like construction of School Building, Girls Hostels or purchase of Equipments for use in the institute. The assessing officer treated the grant to be income and assessed it for tax, however, the Commissioner Appeal and the Appellate Tribunal found that the grants were received from the government by the society for creation of capital assets like Building and other Equipments and as the same has been used for the said purpose only and it is a capital assets, not income, therefore, not taxable. It was held that the aid received is in the nature of capital asset, is capital revenue and not income, therefore, the finding of the learned assessing officer has been interfered with. In doing so, no error had been committed by the learned Authorities warranting consideration the concurrent finding recorded by the Commissioner and the Income Tax Appellate Tribunal are in accordance with the requirement of law. We see no substantial question involved warranting consideration. 3. Accordingly, appeals are dismissed.” In view of the aforesaid, as identical issue has already been rejected by this Court, we do not find any substantial question of law arising for entertaining the present appeal, which is dismissed in similar terms as the order passed in I.T.A. No.188/2009 and I.T.A. No.199/2009. (R.S. Jha)

(Nandita Dubey) Judge Judge b Digitally signed by BHARTI GADGE Date: 2018.02.21 11:09:59 +05'30'

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