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TMI Blog2014 (4) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts during the financial year 2003-04 at Rs. 51,86,887/-being the annual and recurring income of the assessee - The sale proceeds of land and bonds which are capital receipts in nature, are not recurring income and are once in a lifetime – Relying upon Commissioner of Income-tax Versus St. Mary's Malankara Seminary [2012 (3) TMI 263 - KERALA HIGH COURT] - CIT (A) has rightly classified the annual receipts and granted exemption to the assessee u/s 10(23C)(iiiad) of the Act - thus, the assessee is an educational institution and the annual receipt of the assessee is below Rs. 1.00 crore and eligible for deduction u/s 10(23C)(iiiad) of the Act – Decided against Revenue. - ITA No. 1800/Mds/2012 - - - Dated:- 28-10-2013 - Dr.O.K. Narayanan And V. Durga Rao, JJ. For the Appellant : Guru Bhashyam For the Respondent : D. Anand and S. Rifaur Rahman ORDER:- PER : V. DURGA RAO This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) XII, Chennai dated 18.06.2012 relevant to the assessment year 2004-05. 2. Brief facts of the case are that the assessee, Madarasa-E-Bhakhiyath-Us-Salihath, was established in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer came to the conclusion that the assessee trust is not pursuing activities which are solely educational purpose. 3. The Assessing Officer has further observed that during the year the assessee has gross revenue receipts of Rs. 51,86,887/- and capital gains of Rs. 2.00 crores totaling to Rs. 2,51,86,887/-. Since assessee's annual income is above Rs. 1.00 crore, the Assessing Officer has held that the assessee is not eligible for exemption under section 10(23C) (iiiad) and by treating the assessee as an AOP, taxed the income of the assessee. 4. The assessee carried the matter in appeal before the ld. CIT(Appeals). 5. It was submitted before the ld. CIT (Appeals) that the assessee trust is not required to be registered under section 12A of the Income Tax Act. The assessee is running Arabic College and imparting education to all the students and the institution is aged 118 years old committed for education. It was further submitted that the Assessing Officer has wrongly classified the assessee as not existed purely for educational purpose. The sale of a immovable property is once in a lifetime receipt and it would not recur every year, which cannot be termed as annual receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally financed by the Government; or (iiiac) .;or (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; or (iiiae) to (iv) ;or (v) any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be notified by Central Government in the Official Gazette, having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof; (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority; or (via) ..: The next contention of the Assessing Officer is that the assessee has incurred certain expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities. Therefore, the assessee is eligible for exemption of its income u/s.l0(23C)(iiiad) of the Act. It is also important to mention here that the assessee, with the same set of objects, by-laws and activities, applied for recognition u/s.l0(23C)(vi) of the Act before the Chief Commissioner of Income-tax-III, Chennai, when the assessee's annual income exceeded Rs. l crore during the Financial Year 2007-08. The Chief Commissioner of Income-tax vide her order in C.No. CCIT-III/51/10(23C)(vi)/08-09 dated 30.03.2009 approved the assessee u/s.l0(23C)(vi), from A.Y.2008-09 onwards. This clearly shows that the assessee's activities during the Financial Year 2007-08, which are akin to the activities in all the earlier years, constituted solely educational activities. Regarding the sale proceeds of land and bonds of Rs. 2,00,00,000/-and Rs. 69,13,717/-, respectively, the assessee has utilized Rs. 2,50,00,000/- towards the purchase of a property (by way of advance paid) from Prestige Estates Projects Private Limited. Hence, the said advance of Rs. 2.5 crores amounts to application of income and the sale proceeds of Rs. 2 crores and Rs. 69,13,717/- forms source of income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is not eligible for claiming deduction under section 10(23C)(iiiad) of the Act. He also relied on the decision in the case of CIT v. East India Charitable Trust 206 ITR 152 (Cal), Ramalingam Charities v. CIT 243 CTR (Mad) 307. 8. On the other hand, the ld. Counsel for the assessee has submitted that the assessee is a very old educational institution, which was established only for the purpose of education and the assessee purchases some Quran books does not mean that the assessee is not an educational institution and reading Quran is also an education and it is part and parcel of the curriculum. Further, the ld. Counsel for the assessee has submitted that the Chief Commissioner of Income Tax - III, Chennai has accepted the same as an educational activity while granting recognition under section 10(23C)(vi) of the Act from the assessment year 2008-09 onwards vide C.No. CCIT-III/51/10(23C)(vi)/08-09 dated 30.03.2009. Therefore, the assessee is an educational institution for the purpose of exemption under section 10(23C)(iiiad) of the Act. He has also submitted that the assessee has sold one of the old properties and received capital receipts and the same was invested in the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... code of conduct to maintain the discipline to achieve ultimate object of education. 10. For the very same activities of the assessee, the Chief Commissioner of Income Tax-III, Chennai has accepted the assessee as an educational institution while granting recognition under section 10(23C)(vi) of the Act from the assessment year 2008-09 onwards vide C.No. CCIT-III/51/10(23C)(vi)/08-09 dated 30.03.2009. The ld. CIT(A) has also considered the same and reversed the findings of the Assessing Officer and held that the assessee is an educational institution. After careful consideration of the facts, we also find that the assessee is an educational institution and 12A registration is not required for the relevant assessment year and eligible to claim exemption under section 10(23C)(iiiad) of the Act. 11. So far as monetary limitation provided under section 10(23C)(iiiad) is concerned, the assessee has received annual receipt by way of rent of Rs. 51,86,887/-, which is below Rs. 1.00 crore. In so far as other receipts i.e. sale proceeds from land and bonds received by the assessee of Rs. 2.00 crores is concerned, those items were purchased by the assessee long back and sold in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled for exemption under section 10(23C)(iiiad) of the Act. Further, in the case of Param Hans Swami Uma Bharti Mission v. (supra), the Delhi Bench of ITAT has observed that the assessee has claimed exemption under section 10(23C)(iiiad) of the Act and the Assessing Officer has held that interest on FDRs received by the assessee is a annual income and denied exemption and the ld. CIT (Appeals) confirmed the same. However, the Tribunal has held that the total income of the society running that school or university is not to be considered under section 10(23C)(iiiad) of the Act. Income from interest on FDRs was an additional income of society and cannot be considered to be part of annual receipts of the school and the assessee was eligible for exemption under section 10(23C)(iiiad) as annual school receipts did not exceed Rs. 1.00 crore. 13. After careful consideration of the entire facts, circumstances, case law relied on by the ld. Counsel for the assessee and strongly supporting the view of the ld. CIT(Appeals), we are of the opinion that the assessee is an educational institution and the annual receipt of the assessee is below Rs. 1.00 crore and eligible for deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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