2008 (2) TMI 946 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction and Competency of Chief CIT
2. Requirement of Approval for Financial Years with Receipts Below Rs. 1 Crore
3. Legality of Consolidated Order for Multiple Financial Years

Summary:

1. Jurisdiction and Competency of Chief CIT:
The petitioner, an educational institution, challenged the order dated 2-2-2007 by the Chief CIT, Orissa, Bhubaneswar, rejecting their application for approval u/s 10(23C)(vi) of the Income-tax Act, 1961. The petitioner argued that the Chief CIT lacked jurisdiction for the financial years 1998-99 to 2000-01, as the prescribed authority during this period was the CBDT. The court agreed, stating that only the statute could vest jurisdiction and the Chief CIT had no authority to deal with applications for these years. The applications for these years should have been transmitted to the CBDT.

2. Requirement of Approval for Financial Years with Receipts Below Rs. 1 Crore:
The petitioner contended that no approval was necessary for the financial years 2003-04, 2004-05, and 2005-06 since their aggregate receipts were below Rs. 1 crore, as prescribed under rule 2BC of the Income-tax Rules, 1962. The court upheld this argument, noting that the annual gross receipts for these years were indeed below the prescribed limit, and thus, no approval was required under section 10(23C) of the Income-tax Act.

3. Legality of Consolidated Order for Multiple Financial Years:
The petitioner argued that the Chief CIT's consolidated order for the financial years 1998-99 to 2005-06 was illegal, as each year's application should be evaluated individually. The court agreed, referencing the Supreme Court's decision in Aditanar Educational Institution v. Addl. CIT, which emphasized that the availability of exemption should be evaluated each year. The court concluded that the Chief CIT's consolidated order was without jurisdiction and authority of law.

Conclusion:
The writ petition was allowed, and the impugned order dated 2-2-2007 was quashed. The matter was remitted back to the Chief CIT with directions to send the applications for the financial years 1998-99 and 1999-2000 to the CBDT and to deal with the applications for 2001-02 and 2002-03 in accordance with law. No action was required for the financial years 2003-04, 2004-05, and 2005-06 as no approval was necessary. The court refrained from making any observations on the merits of the case, focusing solely on jurisdiction and maintainability.