PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S. MAHATHMA GANDHI VIDYAPEETHA TRUST

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ITA/470/2019HC KarnatakaKAHC01024738201919 June 2023Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court noted that Question No. 2 did not arise for consideration, and this was not disputed by the Revenue. Regarding Question No. 3, the assessee's submission that it was covered by the High Court's decision in Kammavari Sangham and I.T.A.No.554/2018 was not disputed by the Revenue. Similarly, for Question No. 1, the Revenue conceded that it was also covered by the same decisions. Consequently, both Questions No. 1 and 3 were answered in favour of the assessee and against the Revenue. The operative direction was to dismiss the appeals. No costs were awarded.

What were the facts?

The Revenue has filed three appeals (ITA Nos. 468, 470, and 472 of 2019) before the High Court of Karnataka, challenging an order dated February 15, 2019, passed by the Income Tax Appellate Tribunal (ITAT). The appeals pertain to Assessment Years 2012-13 to 2014-15. The assessee is M/s. Mahathma Gandhi Vidyapeetha Trust. The appeals were admitted to consider two questions of law. The ITAT's order was challenged by the Principal Commissioner of Income Tax (Exemptions) and the Deputy Commissioner of Income Tax (E), Circle-1, both based in Bengaluru.

What were the issues?

The High Court admitted two questions of law for consideration: 1. Whether the Tribunal was correct in holding that there was no surplus to deny exemption under Section 11 of the Income Tax Act, 1961, despite the assessee having a net surplus before and after allowing depreciation for Assessment Years 2012-13, 2013-14, and 2014-15. 2. Whether the Tribunal was correct in allowing exemption under Section 11 on expenses incurred for travel outside India, given that charitable activities must be performed in India and such expenses lack nexus with Indian charitable activities. Additionally, a third question of law was considered: 3. Whether the Tribunal was correct in allowing exemption under Sections 11 and 12 of the Act when the assessee collected more than the notified fees for management quota seats, in the guise of voluntary contributions/corpus fund, which was proven by the assessee's own submissions. Assessee's Contentions: - Question No. 2 does not arise for consideration. - Question No. 3 is covered by this Court's decision in Kammavari Sangham vs. Deputy Director of Income-tax (Exemptions) and I.T.A.No.554/2018. - The authorities below found no surplus and, in fact, a deficit concerning the educational institutions. Revenue's Contentions: - Question No. 1 is relevant for consideration. - The authorities below did not consider the aspect of depreciation, leading to no clear finding of fact. - It is not disputed that both Questions No. 1 and 3 are covered by the decisions in Kammavari Sangham and I.T.A.No.554/2018.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2023:KHC:21220 ITA No. 468 of 2019 C/W ITA No. 470 of 2019 ITA No. 472 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF JUNE, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 468 OF 2019 C/W INCOME TAX APPEAL NO. 470 OF 2019 INCOME TAX APPEAL NO. 472 OF 2019 BETWEEN: 1. PRINCIPAL COMMISSIONER OF INCOME TAX (EXEMPTIONS), UNITY BUILDING ANNEXE MISSION ROAD, BANGALORE-560 027 2. DEPUTY COMMISSIONER INCOME TAX (E) , CIRCLE-1 6TH FLOOR, UNITY BUILDING BENGALURU

…APPELLANTS

(COMMON IN ALL APPEALS) (BY SRI. SANMATHI E I., STANDING COUNSEL) AND: M/S. MAHATHMA GANDHI VIDYAPEETHA TRUST SAVIGE MALLESWARA GHILLS KUMARASWAMY LAYOUT BENGALURU-560078

…RESPONDENT

(COMMON IN ALL APPEALS) (BY SRI. SHANKAR A. SR.ADV. FOR SRI. GURUMURTHY M.,ADVOCATE) ITA NO. 468 OF 2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 15.02.2019 PASSED IN ITA NO.2707/BANG/2017 FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. Digitally signed by MALA K N Location: HIGH COURT OF KARNATAKA

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NC: 2023:KHC:21220 ITA No. 468 of 2019 C/W ITA No. 470 of 2019 ITA No. 472 of 2019 ITA NO. 470 OF 2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 15.02.2019 PASSED IN ITA NO.2708/BANG/2017 FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT.

ITA NO. 472 OF 2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 15.02.2019 PASSED IN ITA NO.2709/BANG/2017 FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT.

THESE APPEALS, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT These three appeals by the Revenue challenging the order dated February 15, 2019 in I.T.A.Nos.2707 to 2709/Bang/2017 passed by the ITAT1 for Assessment Years 2012-13 to 2014-15, have been admitted to consider following two questions of law: "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that there was no surplus which could be considered by the assessing authority to deny exemption under section 11 of the Act though the assessee had a net surplus before allowing depreciation and after allowing depreciation for the AYs 2012-13, 2013-14 and 2014-15?” 1 Income Tax Appellate Tribunal 'C' Bench, Bangalore

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NC: 2023:KHC:21220 ITA No. 468 of 2019 C/W ITA No. 470 of 2019 ITA No. 472 of 2019 2. Whether on the facts and in circumstances of the case, the Tribunal is right in law in allowing the exemption under section 11 of the Act on the expenses incurred for travel outside India without appreciating that exemption under section 11 can be allowed only if the charitable activity is performed in India and said expenses has no nexus with any charitable activity performed in India?.” 2. Heard Shri.E.I.Sanmathi, learned Standing Counsel for the Revenue and Shri.A.Shankar, learned Senior Advocate for respondent/assessee. 3. Shri. Sanmathi for the Revenue rightly submitted that the question No.1 referred in Memorandum of Appeals is relevant for consideration of these appeals. Accordingly, the said question considered as question No.3 in these appeals, and it reads as follows: "Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in allowing assessee's claim of exemption under section 11 and 12 of the Act though the assessee has collected more than the fee declared or notifies in respect of NRI/NRI sponsored and others quota i.e., Management Quota in the garb of voluntary contributions/corpus fund and this

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NC: 2023:KHC:21220 ITA No. 468 of 2019 C/W ITA No. 470 of 2019 ITA No. 472 of 2019 fact of collecting more than the fee notified has been proved without any dispute in as much as the assessee itself furnishing the details"? 4. Shri Shankar, learned Senior Advocate submitted that question No.2 does not arise for consideration in these appeals. Same is not disputed by Shri.Sanmathi. 5. Shri Shankar further submitted that question No.3 is covered by the decision of this Court in Kammavari Sangham -vs- Deputy Director of income-tax (Exemptions)2 and I.T.A.No.554/2018 decided on 05.06.2023. The said submission is also not disputed by Shri Sanmathi. 6. Shri Shankar submitted that the authorities below have recorded a finding of fact that there was no surplus and in fact, there was deficit insofar as the Educational Institutions are concerned. 2 (2023) 146 taxmann.com 367 (Karnataka)

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NC: 2023:KHC:21220 ITA No. 468 of 2019 C/W ITA No. 470 of 2019 ITA No. 472 of 2019 7. In reply, Shri Sanmathi submitted that the authorities below have not considered the aspect of depreciation. Therefore, there is no clear finding of fact. However, it is not disputed that both questions No.1 and 3 are covered by the decisions in Kammavari Sangham and I.T.A.No.554/2018 (supra). 8. In view of the above, these appeals are dismissed. Questions No.1 and 3 are answered in favour of the assessee and against the Revenue. 9. Question No.2 does not arise for consideration. No costs.

SD/- JUDGE SD/- JUDGE KNM List No.: 1 Sl No.: 37

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