THE COMMISSIONER OF INCOME TAX vs. M/S.ISLAMIC ACADEMY OF EDUCATION

This appeal has been ADMITTED on the following questions of law:

Whether the Appellate Authorities were correct in not appreciating that the investment made by the assessee in the shares of M/s. Yenepoya Institute of Medical Science and Research (P) Ltd., exceeded 5% of the share capital of this Private Limited company, earlier known as Karnataka Hotels Pvt. Ltd., if the investments of persons mentioned in section 13(3)(d) and also of “relative” of trustees/authors etc., as per Explanation 1 below Section 13(7) of the Act are taken into consideration?

Whether the Appellate Authorities were right in law in holding that “borrowed capital” needs to be taken into consideration while deciding whether shares held by the trust exceeds 5% of the share capital of the company or not?

Whether the Appellate Authorities were correct in law in upholding the orders of CIT(A), and deleting the addition of Rs.1,28,25,400/- even though the assessee has not filed audit report in Form No.10B as required u/s.12A(b) of the Act and did not produce the account books and particulars called for u/s.142(1) of the Act at the time of assessment and also in view of several discrepancies in accounts and seizure of unexplained cash in search conducted u/s.132 on 21.09.2005?”

Learned counsel for the parties have jointly submitted that the first question involved in this appeal is covered

For the reasons given in the aforesaid judgment, the first question of law is decided in favour of the assessee and against the revenue.

Learned counsel for the parties have further agreed that the second and third questions are covered by the decision of this Court rendered in the case of the Commissioner of Income- Tax –vs- Islamic Academy of Education in ITA No.86/2008 decided on 03.06.2014. As such, for the reasons given in the aforesaid judgment, the aforesaid two questions-2 and 3 are also decided in favour of the assessee and against the revenue.

As regards the fourth question, learned counsel for the parties do not dispute the fact that the question in this regard has been decided by the Tribunal without considering the facts of

Learned counsel for the parties thus submit that the fourth question of law raised in the appeal may be remanded back to the Tribunal for fresh adjudication after hearing it as de novo. As such, without expressing any opinion with regard to question No.4, it is directed that the Tribunal shall reconsider the said issue and pass fresh orders in accordance with law without being influenced by the order passed with regard to grant of registration under Section 12A of the Act.