ST JOSEPHS FCC PROVINCE THALASSERY, vs. THE INCOME TAX OFFICER,

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WP(C)/12460/2023HC KeralaKLHC01027504202312 October 2023Bench: HONOURABLE MR. JUSTICE D. K. SINGH5 pages
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What did the High Court hold?

The High Court held that there was a mistake apparent on the face of the record. The Assessing Officer had erroneously included the previous year's balance of Rs. 9,45,475.96 while computing the total receipts for Assessment Year 2016-17. Since this inclusion led to an incorrect determination of the aggregate annual receipts, the impugned orders (Exts.P5 and P6) were found to be incorrect. The Court reasoned that if this amount was excluded, the petitioner's receipts for AY 2016-17 would likely fall below the Rs. 1 crore threshold for exemption under Section 10(23C)(iiiad). Therefore, the orders were set aside. The ratio decidendi is that previous year's closing balances should not be included as current year's receipts when calculating aggregate annual receipts for the purpose of exemption under Section 10(23C)(iiiad). The Court set aside the impugned orders and allowed the writ petition.

What were the facts?

The petitioner, St Josephs FCC Province Thalassery, filed a writ petition challenging an order dated March 22, 2023, passed by the Income Tax Officer, Exemption Ward, Kannur. The order determined the petitioner's turnover for Assessment Year 2016-17 to be Rs. 1,02,85,571/- and deemed it a fit case for issuing a notice under Section 148 of the Income Tax Act, 1961. The petitioner sought exemption under Section 10(23C)(iiiad) of the Act, which provides exemption if aggregate annual receipts do not exceed Rs. 1 crore for educational institutions not for profit. The petitioner contended that the turnover figure included Rs. 9,45,475.96 from the previous year's bank deposits and cash on hand, which should be excluded.

What were the issues?

1. Whether the Assessing Officer erred in including Rs. 9,45,475.96, representing previous year's bank deposits and cash on hand, in the aggregate annual receipts for Assessment Year 2016-17, thereby exceeding the Rs. 1 crore threshold for exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that the aggregate annual receipts for AY 2016-17 would be less than Rs. 1 crore if the previous year's balance of Rs. 9,45,475.96 (including bank deposits and cash at hand) was excluded, as it did not represent receipts of the current year. Revenue's Contention: The Revenue, through its Standing Counsel, did not dispute the fact that the determined figure of Rs. 1,02,85,571/- included the previous year's balance of Rs. 9,45,475.96.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 12TH DAY OF OCTOBER 2023 / 20TH ASWINA, 1945 WP(C) NO. 12460 OF 2023 PETITIONER/S:

ST JOSEPHS FCC PROVINCE THALASSERY, JYOTHI BHAVAN, MELECHOVVA, KANNUR-670006, REPRESENTED BY ITS PROVINCIAL SUPERIOR SR. NOBLE.

BY ADVS. S.ARUN RAJ; ARJUN S.RAJ; C.T.SUJA RESPONDENT/S:

1 THE INCOME TAX OFFICER, EXEMPTION WARD, AAYAKAR BHAVAN, KANNUR-670006 2 THE COMMISSIONER OF INCOME TAX (EXEMPTION), 2ND FLOOR, SANJUAN TOWERS, OLD RAILWAY STATION ROAD, ERNAKULAM, COCHIN 682018 3 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (EXEMPTION), 25TH FLOOR, E-2, BLOCK, PRATHYAKSH KAR BHAWAN CIVIC CENTRE, JAWAHARLAL NEHRU MARG, NEW DELHI - 110002 4 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE -673001

BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA

CHRISTOPHER ABRAHAM-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No.12460/2023

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J U D G M E N T

The present writ petition has been filed by the petitioner assessee impugning the order dated 22.03.2023 (Ext.P5) passed by the Income Tax Officer, Exemption Ward, Kannur, whereby the petitioner’s turnover as per the receipts and payments statement has been taken to be Rs.1,02,85,571/- for the Assessment Year 2016-17, and found it to be a fit case for issuing of notice under Section 148 of the Income Tax Act, 1961. Section 10(23C)(iiiad) of the Income Tax Act 1961, at the relevant time, provided that any income received by a person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and if the aggregate annual receipts did not exceed Rs. 1 crore, it should be exempted from payment of income tax.

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2.

Learned Counsel for the petitioner submits that the annual receipt taken by the Assessing Officer of Rs.1,02,85,571/- would include bank deposits of the previous year of Rs.9,45,475.96, including some cash at hand. He, therefore, submits that if this Rs.9,45,475.96 is excluded, which is not the receipt of the current year, the annual receipt for the Assessment Year 2016-17 would be less than Rs. 1 crore.

3.

Mr Christopher Abraham, learned Standing Counsel for the Revenue, does not dispute the fact that Rs.1,02,85,571/- include the deposit balance of the previous year of Rs.9,45,475.96.

4.

Since there is a mistake apparent on the face of the record as the Assessing Officer has taken the previous year's balance into account while computing the total receipt in the Assessment Year 2016-17, the orders impugned (Exts.P5 and P6) appear to be incorrect. Therefore, the same are set aside.

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The present writ petition, therefore, stands allowed.

Sd/- DINESH KUMAR SINGH JUDGE

jjj

W.P.(C) No.12460/2023

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APPENDIX OF WP(C) 12460/2023

PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE ORDER DATED 31-5-2018 ISSUED UNDER SECTION 12AA OF THE IT ACT BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOCHI, THE 2ND RESPONDENT Exhibit P2 A TRUE COPY OF THE NOTICE DATED 15-2-2023 UNDER SECTION 148A(B) OF IT ACT FOR THE AY 2016-17 ISSUED BY THE 1ST RESPONDENT. Exhibit P3 A TRUE COPY OF THE REPLY DATED 22-2-2023 FILED BY THE PETITIONER IN RESPONSE TO EXHIBIT P-2 NOTICE Exhibit P4 A TRUE COPY OF THE AUDITED STATEMENT FOR THE YEAR ENDED 31ST MARCH 2016 OF ST JOSEPHS HIGH SCHOOL, PUSHPAGIRI, TALIMPARAMBA, SUBMITTED AS ANNEXURE A IN EXHIBIT P-3 REPLY LETTER. Exhibit P5 A TRUE COPY OF ORDER DATED 22-3-2023 PASSED UNDER SECTION 148 A (D) OF THE IT ACT FOR THE AY 2016-17 Exhibit P6 A TRUE COPY OF THE NOTICE DATED 22-3-2023 UNDER SECTION148 OF THE IT ACT ISSUED BY THE 1ST RESPONDENT FOR THE AY 2016-17

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