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TMI Blog2013 (10) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ts : Sri E R Indrakumar, Sr. Adv. Sri E I Sanmathi, Adv. For the Respondents : Sri S Parthasarathi, Adv. Sri S Gopalkrishna, Adv. JUDGEMENT:- PER : N Kumar This appeal is by the Revenue against the order dated 21.04.2006 passed by the Tribunal declining to go into the question whether there is an infringement of Section 11(5) of the Income Tax Act, 1961 (for short, hereinafter referred to as 'the Act ) as the Board has already approved the Assessee under Section 10(23C)(vi) of the Act. 2. The Assessee M/s. Manipal Academy of Higher Education (MAHE) filed a return of income on 31.10.2001. The assessee claimed a sum of Rs.212,74,25,714/- as exempt from income tax under Section 10(23C)(vi) of the Act. The Government Notification exempting the assessee s income under Section 10(23C)(vi) of the Act was not produced before the Assessing Officer. Therefore, he proceeded with the assessment on the premise that the Assessee is not having any exemption. He assessed the total income at Rs.47,03,58,078/- and raised a demand for Rs.24,32,30,437/- including interest and surcharge. In the said Assessment Order, he recorded a finding that the assessee had advanced a sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel appearing for the Assessee supported the impugned order. 6. At the time of admission, this Court had framed three substantial questions of law. After hearing the learned counsel appearing for the parties, with their consent, the substantial question of law is reframed as under: Whether the Tribunal was justified in declining to go into the correctness of the finding regarding infringement under Section 11(5) of the Act on the ground that the notification issued granting exemption under Section 10(23C)(vi) of the Act is not withdrawn? 7. The Assessee is a deemed University and it runs several Educational Institutions. The Assessee claims that its income is exempted under Section 10(23C)(vi) of the Act. They did not produce the Notification exempting tax under Section 10(23C)(vi) of the Act. Therefore, the Assessing Authority proceeded with the Assessment on the ground that the Assessee does not have exemption under Section 10(23C)(vi) of the Act. The Assessee also claimed computation of income under Sections 11 and 12 of the Act. The Assessing Authority noticed that the Assessee has made an advance of Rs.37 crores to one P.Dayananda Pai for purchase of proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue preferred an appeal to the Tribunal. 9. The Tribunal after narrating the aforesaid facts was of the view that since the Board has already approved the Institution under Section 10(23C)(vi) of the Act, its income is exempted under the Section since only the prescribed authority has the power to withdraw approval in case there is violation of the condition provided by them. It is not necessary for the Tribunal to record a finding that there has been violation of the conditions while giving approval. Therefore, on merits, the Tribunal refrained from giving any finding regarding infringement of Section 11(5) of the Act as such jurisdiction is with the Board. Therefore, it also held that the Assessee is entitled to the exemption and not liable to pay tax. Section 10(23C)(vi) of the Act reads as under: 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- .. (23C) any income received by any person on behalf of- . (vi) any university or other educational institution existing solely for educational purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the prescribed authority rescinds such an approval, the assessee is entitled to a reasonable opportunity of showing cause against the proposed acts. The third proviso reads as under: Provided also that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution] referred to in subclause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via)- (a) applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and (b) does not invest or deposit its funds, other than- (i) any assets held by the fund, trust or institution [or any university or other educational institution or any hospital or other medical institution] where such assets form part of the corpus of the fund, trust or institution [or any university or other educational institution or any hospital or other medical institution] as on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the conditions stipulated in the exemption order, before it could claim exemption is a matter, which has to be investigated by the Assessing Authority. It is only on the Assessee satisfying the conditions stipulated in the exemption order, it would be entitled to exemption. In the event there is a violation of the terms and conditions of the exemption order, the Assessing Authority would be justified in not extending the benefit of exemption but at the same time the Assessing Authority cannot ignore the order of exemption. Therefore, on enquiry if he is satisfied that the assessee is not entitled to exemption as he has violated the terms and conditions of exemption order, he has to bring the said fact to the notice of the prescribed authority. Thereafter, the prescribed authority is under an obligation to issue a show cause notice to the assessee to show-cause, why the order of exemption should not be rescinded. After hearing the assessee, if the prescribed authority decides to rescind the exemption granted, they are at liberty to pass such an order and a copy of the said order is to be communicated both to the assessee as well as the Assessing Authority. It is on receipt of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot inclined to go into the merits of the case, the proper course would have been to set- aside the order of the authorities, remit the matter back to the Assessing Authority to take note of the exemption and then to see whether the violation of Section 11(5) of the Act is recorded by it earlier, still holds good and then pass appropriate orders in the light of the aforesaid provisions of law. Therefore, the approach of the Tribunal cannot be countenanced and sustained. Therefore, the appropriate course would be to set-aside the order passed by all the authorities, remit the matter back to the Assessing Authority. 13. The Assessing Authority shall on the facts available as on today shall go into the question whether the assessee has violated the terms and conditions subject to which, exemption was granted. If it records a finding that there is violation of Section 11(5) of the Act, then it shall bring the said violation to the notice of the prescribed authority. On such violations being brought to the notice of the prescribed authority, the prescribed authority shall issue a show cause notice to the assessee to show cause why the order of exemption should not be rescinded and afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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