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TMI Blog2016 (5) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1996-97, they had sold the property to another trust by name SBOA Educational Trust, the assessee filed a return of income. In the return of income, the assessee claimed long term capital loss to the tune of Rs. 1,07,783/-, due to the sale of the property. 3. The return of income filed by the assessee on 28.1.1997, was processed under Section 143(1)(a) on 23.6.1997. It was selected for scrutiny and a notice under Section 143(2) was issued. Though the Chairman and Managing Trustee of the assessee appeared before the Assessing Officer, they could not produce some documents. They produced xerox copies of some documents, which were found incapable of being verified. 4. Therefore, the Assessing Officer passed an order on 30.3.1999 holding (i) that the trustees were not even empowered under the deed of trust to alienate the property (ii) that no court permission was obtained for the sale of the property and (iii) that since the only activity of the trust was to run educational institution and also since the school has been sold, there was no question of the trust carrying on any charitable activity. The Assessing Officer also found that the trust had borrowed huge amount of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appellate Tribunal. By a common order dated 13.10.2003, the Tribunal dismissed both the appeals. 9. Therefore, the assessee has come up with two appeals in T.C.A. Nos.504 and 505 of 2005 under Section 260A of the Income Tax Act. These appeals were admitted on the following substantial questions of law : "(1) Whether the Tribunal is correct in concluding that the appellant is not entitled to claim relief from taxation in terms of Section 10(22) of the Act ? (2) Whether the Tribunal is correct in concluding upon interpreting the objects that the appellant society does not exist solely for the purpose of education ? (3) Whether the Tribunal is correct in confirming the computation of capital gains on the transfer of school for a slump price in spite of the fact of transfer taking place on 17.5.1996, which could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98 ? (4) Whether the Tribunal is right in rejecting the exemption contemplated in terms of Section 11 of the Act on the facts and in the circumstances of the case ? (5) Whether the Tribunal is correct in confirming the computation of capital gains of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the course of hearing the appeals ? and (3) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in recalling the entire order exceeding the powers conferred on it under Section 254(2), which permits only amendment of an order passed by it under Section 254(1) with a view to rectifying any mistake apparent from the record and for considering issues involving research and investigation into fresh facts and questions of law not raised at the time of hearing of the appeals?" 13. Despite filing the statutory appeals, the Department also filed two writ petitions in W.P.Nos.37357 and 37358 of 2004, challenging the common order passed by the Tribunal on 9.7.2004 in M.P.Nos.265/Mds/2003 and 266/Mds/2003 on the ground that the said order of recall was completely without jurisdiction. Hence, all the tax case appeals and the writ petitions were tagged together for disposal. 14. We have heard Mr.A.S.Sriraman, learned counsel for the assessee and Mr.J.Narayanaswamy, learned Senior Standing Counsel for the Department. 15. It can be seen from the narration of facts that the assessee has come up with two appeals against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub- Section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this Sub- Section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard." 21. The power conferred under Section 254(2) has to be understood as follows : (i) It has a power to make an amendment to an order already passed by it (ii) It has a power that could be exercised only for the purpose of rectifying any mistake apparent from the record (iii) it has a power that should be exercised only within four years form the date of the order and (iv) the power can be exercised both suo motu as well as at the instance of the assessee. 22. The power under Section 254(2) cannot be equated to a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressly or by necessary implication upon the statutory or quasi judicial authorities and that a Tribunal would have no inherent power of review, the Division Bench of the Delhi High Court held that while exercising the jurisdiction to amend an order on the ground of rectification of a mistake, a Tribunal cannot recall its earlier order. 27. Therefore, it is clear that the order of the Tribunal in M.P.Nos.265/ Mds/2003 and 266/Mds/2003 dated 9.7.2004 recalling its earlier order, is clearly without jurisdiction. 28. However, it is contended by the learned counsel for the assessee that there was a mistake apparent from the record in the original order of the Tribunal. According to the learned counsel, the Assessing Officer has taxed the income earned from the educational activities undertaken by the assessee and that therefore, finding that after the school was sold, the assessee ceased to carry on the educational activities, was clearly contrary to the facts on record. Hence, it is contended by him that the case would fall within the four corners of Section 254(2). 29. But, the above argument is clearly fallacious. There are two things to Section 254(2). The first is the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sports education. Therefore, they claim that the income fall within Section 10(22). 36. But, we do not think that the assessee can take advantage of the etymological meaning of the word 'education' to gain the benefit of Section 10(22). In the philosophical sense, every acquisition of knowledge can be termed as 'education'. One learns even by experience. Every form of entertainment can also be termed as 'education'. That is what is contemplated by Section 10(22). The expression 'educational institution' is ejusdem generis with the word 'university' appearing in Section 10(22). Therefore, the first question of law is to be answered against the assessee. 37. As a consequence, the second question of law as to whether the interpretation given by the Tribunal to the objects clause of the assessee, was correct or not, should also be answered against the assessee. The bylaws of every society or the deed of trust of every trust contains innumerable clauses relating to the objects of the society of the trust. These objects do not make the institution an educational institution existing solely for educational purposes. Therefore, the second questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold away the school and what was carried on by them later do not qualify, they cannot claim exemption under Section 11. Therefore, the fourth question of law is also answered against the assessee. 42. The fifth question of law relates to the computation of capital gains by the Assessing Officer. The grievance of the assessee is that the Assessing Officer overlooked the evidence for incurring liabilities. The arguments made in this regard are actually on facts and not on law. Therefore, the fifth question is not really a substantial question of law, but only a question revolving around the appreciation of evidence. So long as the appreciation of evidence is not perverse, the said question does not arise. 43. The sixth question of law relates to the alleged failure of the Assessing Officer, in the second round of proceedings, to comply with a direction issued by the First Appellate Authority in the first round of proceedings. Unfortunately, in the second round of proceedings, neither the First Appellate Authority nor the Tribunal thought that the Assessing Officer failed in the second round to comply with the direction issued in the first round by the First Appellate Authority. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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