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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 ..... 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 question of law is also answered against the assessee. Computation of capital gains on the transfer of the school - This question is raised on the basis that the transfer took place on 17.5.1996 and that therefore, it could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98 - Held that:- All that the assessee claimed even in their miscellaneous petitions under Section 254(2) was that the assessee was compelled to sell the school to the SBOA Trust, since they were unable to meet their obligations to the Canara Bank. In the miscellaneous petitions, the assessee further claimed that they handed over the school with all the students and teachers to SBOA school with a condition to clear the dues of the Canara Bank and the dues of Shri Ram Capital Trust Private Limited. Since SBOA School insisted for a registered sale deed to enable them to get a loan from the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 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 money from a private finance company and that no new capital asset was also acquired out of the sale proceeds. Therefore, the Assessing Officer held that the assessee is not entitled to exemption under Section 11. 5. In an appeal filed before the Commissioner (Appeals), the assessee took a plea that they are entitled to exemption at least under Section 10(22). But, the Commissioner of Income Tax (Appeals) found (i) that the assessee did not claim exemption under Section 10(22) (ii) that since the school building and educational premises had been sold, the assessee cannot claim to be carrying on educational activity merely with a swimming pool, etc. and (iii) that the assessee did not even provide details of expenditure with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Officer overlooking the evidence for incurring liabilities claimed as deduction in the said computation, which were placed on record ? and (6) Whether the Tribunal is correct in not considering the competence of the Assessing Officer in the second round of proceedings while affirming the action on the computation in reworking the capital gains without noticing the direction of the First Appellate Authority given in the first round proceedings? 10. After filing statutory appeals, the assessee also filed two miscellaneous petitions in M.P.Nos.265/Mds/2003 and 266/Mds/2003 praying for recalling of the common order dated 13.10.2003. These miscellaneous petitions were filed primarily on the ground that the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 original proceedings whereby the assessee was held not entitled to be treated as an educational society. The Department has come up with two appeals and two writ petitions questioning the correctness of the common order of the Tribunal, recalling its earlier order and reopening the proceedings. 16. It would be useful first to deal with the appeals and the writ petitions filed by the Department, as they arise out of the exercise of jurisdiction by the Tribunal under Section 254. If the Department succeeds in their two appeals and the two writ petitions, the appeals filed by the assessee against the original proceedings would survive for adjudication. But, if the Department fails in their two appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 power of review available to a civil court under Section 114 or Order XLVII of the Civil Procedure Code. This is clear from one thing that is borne out by Section 254(2). The last portion of Section 254(2) makes it clear that the Tribunal shall make such amendment, if the mistake is brought to its notice by the assessee or the Assessing Officer. 23. In other words, if the Tribunal finds a mistake apparent from the record, it has the option of amending or not amending the order already passed. But, if the mistake apparent from the record is brought to its notice by the Assessing Officer or the assessee, the Tribunal should make an amendment. Therefore, the power to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. 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 and the second is the circumstances, under which, the power could be exercised. The above argument of the learned counsel for the assessee deals with the second aspect alone. It omits to take note of the first aspect. If the Tribunal does not have the power to recall its earlier order, if the Tribunal does not have the power to erase its previous order in total and if the Tribunal does not have the power to obliterate its previous order in entirety, the question as to whether there was a mistake apparent from the record or not, does not arise. 30. We have not chosen to answer the questions of law raised in T.C.A.Nos.680 and 681 of 2005 for the simple reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion 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 question of law is also answered against the assessee. 38. The third question of law relates to the computation of capital gains on the transfer of the school. This question is raised on the basis that the transfer took place on 17.5.1996 and that therefore, it could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98. But, we do not think that the assessee can now be allowed to raise this question of law. In the return of income filed by the assessee in respect of the financial year relevant to the assessment year 1996-97, the assessee showed the sale and also claimed a capital loss. If this had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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