Income Tax Appellate Tribunal - Chennai
Sengamala Thayar Educational Trust, ... vs Assessee on 7 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI V. DURGA RAO, JUDICIAL MEMBER
I.T.A. Nos. 1813, 1814, 1815 & 1816/Mds/2010
(Assessment Years : 1999-2000, 2001-02, 2002-03 & 2003-04)
M/s Sengamala Thayar The Assistant Commissioner of
Educational Trust, Income Tax,
No.1, Main Road, v. Central Circle II(4),
Sundarakottai Post, Chennai - 600 034.
Mannargudi.
PAN : AAATS 2328 F
(Appellant) (Respondent)
I.T.A. Nos. 1741, 1742 & 1743/Mds/2010
(Assessment Years : 1998-99 to 2000-01)
The Assistant Commissioner M/s Sengamala Thayar
of Income Tax, Educational Trust,
Central Circle II(4), v. No.1, Main Road,
Chennai - 600 034. Sundarakottai Post, Mannargudi.
(Appellant) (Respondent)
Assessee by : Shri T. Vasudevan, Advocate
Revenue by : Shri Pragati Kumar, CIT-DR
Date of Hearing : 07.03.2013
Date of Pronouncement : 04.04.2013
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
Of the above appeals, I.T.A. Nos. 1813 to 1816/Mds/2010 have been filed by the assessee, whereas, appeals in I.T.A. Nos. 1741 to 1743/Mds/2010 have been filed by the Revenue.
2 I.T.A. Nos. 1813 to 1816/Mds/2010
I.T.A. Nos. 1741 to 1743/Mds/2010
2. Grievance raised by the Revenue in its appeals for assessment years 1998-99 and 2000-01 are that assessee was granted exemption under Section 10(22) of Income-tax Act, 1961 (in short 'the Act') by the CIT(Appeals). As per Revenue, assessee was not eligible for such exemption and for assessment year 2000-01, the said Section as such was not in the statute. In these appeals, Revenue has raised one more grievance regarding relief given by the CIT(Appeals) towards agricultural income of the assessee. Grievance of the Revenue in its appeal for assessment year 1999- 2000 is only regarding the relief given on agricultural income.
3. As against the above, assessee in its appeals for assessment years 1999-2000, 2001-02, 2002-03 and 2003-04 is aggrieved on denial of exemption claimed by it under Section 10(23C)(vi) of the Act. As per the assessee, it had filed applications for approval under Section 10(23C)(vi), but, the said applications were not disposed by the concerned authority and it was denied the exemption sought. Assessee has alternatively pleaded that the matter had to be considered afresh by the Assessing Officer, based on the outcome of its application for approval filed under Section 10(23C)(vi) of the Act. 3 I.T.A. Nos. 1813 to 1816/Mds/2010
I.T.A. Nos. 1741 to 1743/Mds/2010
4. Facts apropos are that assessee is a public charitable Trust created under a deed of Trust by one Smt. V. Krishnaveni Ammal. Objects of the Trust, as per Trust deed placed at paper-book pages 1 to 8 read as under:-
(a) To advance and promote Education and Women in college and University Level initially starting a Women's college at Mannargudi.
(b) To take on lease, acquire, construct and maintain the necessary buildings or structures for the aforesaid educational institutions.
(c) To establish and award scholarships, stipends, grant financial and other assistance, make available books and other study materials, requisites, etc., to deserving or poor pupils, and give prizes, medals and the like to pupils who stand out with distinction.
(d) To establish libraries, reading rooms and the like for the dissemination of knowledge;
(e) To construct and run choultries, community halls etc., for the stay of the public and the celebration of marriages, holding of conferences, seminars, and other public functions, and make these available, either free or at nominal charges;
(f) To provide for medical relief by constructing or contributing for the construction of hospitals, wards, dispensaries, nursing homes, etc., and to provide for the necessary equipments, medicines personnel and the like;
(g) To provide relief to the poor and needy with food, clothing and shelter, and arrange for the relief of persons in distress due to flood, damage, earthquake, fire, pestilence, riots and civil commotions;
(h) To run such institutions and to do all such acts, deeds, and things as may be conductive to the attainment of the above objects;
and (ii) To undertake and carry out any other object of general public utility.
Assessee was running a women's college at Mannargudi. The said college is affiliated to Bharathidasan University. It seems the college 4 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 is also having approval of All India Council for Technical Education (AICTE). Returns were being filed by the assessee from assessment year 1995-96 onwards inter alia claiming exemption under Section 10(22) / 10(23C)(vi) of the Act. For assessment years 1995-96 and 1996-97, it seems assessee's claim for exemption under Section 10(22) was accepted. However, during the course of assessment proceedings for assessment year 1998-99, assessee was required to explain why it should be given exemption claimed under Section 10(22) on account of substantial surplus. As per the A.O., the surplus proved that assessee was carrying out activities for the purpose of profit. Reply of the assessee was that it was existing solely for the purpose of education and not for the purpose of profit. As per assessee, an educational institution existing solely for the purpose of education would not loose its exemption just for a reason that surplus resulted incidentally from the lawful activities carried on by it. Further submission of the assessee was that the entire surplus was applied towards objects by way of capital expenditure for expansion of the infrastructure of the college. However, the Assessing Officer was not impressed. He made a study of income and surplus of the assessee for assessment years 1998-99 to 2003-04, which read as under:- 5 I.T.A. Nos. 1813 to 1816/Mds/2010
I.T.A. Nos. 1741 to 1743/Mds/2010 Receipt Surplus % of surplus to receipt 1998-99 49,32,565/- 12,58,465/- 25.51 1999-2000 1,33,16,884/- 87,84,178/- 65.96 2000-01 98,31,601/- 53,41,849/- 54.33 2002-03 1,41,94,675/- 71,47,402/- 50.35 2003-04 1,82,75,218/- 83,19,533/- 45.52 Based on the above data, Assessing Officer came to a conclusion that intention of making profit was clear. As per the Assessing Officer, assessee would not have collected fees unless there was an intention to make profits. Therefore, according to him, surplus was not incidental to the activities of the assessee. He, therefore, denied it exemption claimed under Section 10(22) for assessment year 1998- 99 and exemption claimed under Section 10(23C)(vi) for other years.
5. Assessee had also claimed agricultural income for assessment years 1998-99, 1999-2000, 2000-01 and 2003-04 at ` 2,14,250/-, ` 10,30,560/-, ` 10,62,950/- and ` 2,04,401/- respectively. Claim of the assessee was that it owned 50 acres of land and agricultural activities were carried on therein. A certificate from VAO was also produced in support. However, the Assessing Officer was of the opinion that assessee could not produce any bill for sale of agricultural produce, nor for purchase of agricultural inputs. He, therefore, accepted the claim only to the extent of ` 1 lakh for these years and made an 6 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 addition of the balance sum under the head income from other sources.
6. Assessee moved in appeals before CIT(Appeals) for all the years. Argument of the assessee was that its main object was advancement and promotion of education of women and the other objects were all incidental to the said object. As per assessee, the Trust deed itself declared its intention of not carrying on any activities for earning any profit. Assessee also pointed out that college run by assessee was affiliated to Bharathidasan University and approved by AICTE. Further, as per assessee, for earlier assessment years 1995- 96 and 1996-97, it was granted such exemption by the Assessing Officer. Assessee's collections were fees from students and donations from philanthropists and well-wishers. As per assessee, Income & Expenditure statement filed clearly revealed that it was not involved in any other activity than education. Reliance was also laced on CBDT's Circular F.No.194/16-1711(A1). Further, as per assessee, Assessing Officer computed the surplus percentage without considering the capital expenditure incurred by it. If the capital expenditure was also considered, then there were no surplus whatsoever for any years. Capital expenditure incurred was for construction of building for college, purchasing computer for college, 7 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 furniture and lab equipments for college, and books for library of the college. Without such infrastructure, it would not be possible for it to carry out educational activities effectively.
7. Based on the above submissions, CIT(Appeals) allowed assessee's appeals for assessment years 1998-99 and 2000-01. According to him, it was difficult to agree with A.O.'s view that the institution was running with a profit motive. There was nothing on record to show that any activities were carried out other than education. The surplus was not diverted to any personal benefit of trustees. Taking this view, he held that for assessment years 1998- 99 and 2000-01, assessee was eligible for exemption under Section 10(22) of the Act.
8. For assessment year 1999-2000, however, the CIT(Appeals) held that the condition specified in Section 10(23C)(vi) was not complied with. According to him, since assessee's gross income exceeded ` 1 Crore, it was required to get an approval from DGIT / CCIT. Though application for such approval was made by the assessee, it was not disposed of. As per ld. CIT(Appeals), unless assessee was having approval under Section 10(23C)(vi), its claim for deduction under that section could not be allowed. Same view 8 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 was taken by the ld. CIT(Appeals) for assessment year 2001-02, 2002-03 and 2003-04 also. However, for these three years, ld. CIT(Appeals) also noted that DGIT (I), Chennai, had in his letter F.No.2097(7)/08-09 dated 7th September, 2009, mentioned that assessee's application was filed after 1.4.2006 and therefore, it could not be given approval sought by it for any period prior to assessment year 2009-10. Nevertheless, he directed the Assessing Officer to allow the claim of depreciation to the assessee for all these years.
9. Insofar as the claim of the assessee on agricultural income was concerned, ld. CIT(Appeals) was of the opinion that the VAO certificate was good enough and the disallowances were not called for. He, therefore, accepted the claim of agricultural income and deleted the disallowances made by the A.O.
10. Now before us, assessee is in appeal against denial of exemption under Section 10(23C)(vi) for assessment year 1999- 2000, 2001-02, 2002-03 and 2003-04. As against this, Revenue is against acceptance of assessee's claim for exemption under Section 10(22) for the years 1998-99 and 2000-01 as also the acceptance of the claim of agricultural income for assessment year 1998-99, 1999- 2000 and 2000-01.
9 I.T.A. Nos. 1813 to 1816/Mds/2010
I.T.A. Nos. 1741 to 1743/Mds/2010
11. Learned A.R., strongly supporting assessee's claim for exemption, submitted that it was denied such relief for various years only due to the reason that it was not having the approval mentioned under Section 10(23C)(vi) of the Act. According to him, assessee had filed application for assessment years 1999-2000, 2001-02, 2002-03 and 2003-04 before CIT, Chennai on 30th March, 2004, 25th March, 2004, 26th May, 2004 and 22nd August, 2004 respectively. For assessment year 2000-01, as per the learned A.R., gross receipts were less than ` 1 Crore and therefore, assessee's claim for exemption fell under Section 10(23C)(iiiad) and not 10(23C)(vi) of the Act. According to him, applications for approval under Section 10(23C)(vi) were not disposed of by the concerned authorities despite considerable delay. Learned A.R. pointed out that assessee had on 22nd January, 2005 sent a reminder to the DGIT (I) and requested for early disposal of its applications. Nevertheless, no response was received from Department. In such a situation, according to him, to deny the exemption claimed under Section 10(23C)(vi) only for a reason that assessee was not having the approval specified therein, was unjustified. Reliance was also placed on 9th proviso to Section 10(23C) wherein a period of twelve months was specified for 10 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 disposing of application preferred by an assessee under Section 10(23C)(vi) of the Act. According to him, though the said proviso applied to applications preferred after 13.7.2006, the time limit mentioned therein applied even for applications preferred prior to that date. The applications ought have been disposed of at least before 14th July, 2006, where such applications were preferred prior to 13.7.2006 considering the spirit of this proviso. Concerned authority having not done that, it had to be deemed that assessee was having the approval mentioned under Section 10(23C)(vi) of the Act.
12. On merits, learned A.R. submitted that assessee was existing solely for the purpose of education. According to him, Section 10(22), which was applicable upto and including 1998-99, clearly exempted income of a university or other educational institution, existing solely for education purposes and not for purpose of profit. As per learned A.R., there could not be any dispute that assessee was existing solely for education purpose. Surplus generated was only incidental. Such surplus was entirely utilized for improving the infrastructure. Reliance was once again placed on the CBDT Circular F.No.194/16-1711(A1). According to him, only if surplus was diverted for any personal use of trustees or related parties could the income of an education institution be subjected to tax. Income of the assessee 11 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 were only from collection of fees from students and donations received from philanthropists and well-wishers. Reliance was placed on the decision of Hon'ble Bombay High Court in the case of Tolani Education Society v. DDIT(E) dated 31st January, 2013 in Writ Petition No.1167 of 2012, decision of Hon'ble Delhi High Court in the case of St. Lawrence Educational Society v. CIT dated 4th February, 2011 in W.P.(C) 1254/2010 & W.P.(C) 2463/2010, decision of Hon'ble Punjab and Haryana High Court in the case of Pinegrove International Charitable Trust v. Union of India (327 ITR 73) and that of Bangalore Bench of the Tribunal in the case of ADIT(E) v. National Institute for Rural Banking dated 24th July, 2012 in I.T.A. No. 923/Bang/2011.
13. Per contra, learned D.R. submitted that in the first place, CIT(Appeals), had for assessment year 2000-01, allowed assessee's claim under Section 10(22) when the said sub-section was not in the statute at all. As per learned D.R., surplus generated by the assessee over the years was increasing tremendously. Profit motive in the activities undertaken was pregnant. Assessee was receiving substantial donations. According to him, these donations might have been linked with the admissions given to the students in the institution. Assessee was not having approval under Section 12 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 10(23C)(vi) of the Act, though its receipts exceeded ` 1 Crore. Section 10(23C)(vi) came into statute from 1.4.1999 through Finance (No.2) Act, 1998. Assessee had moved its application for such approval only on 30th March, 2004. Therefore, it could not now say that substantial delay was there on the part of the Department in disposing of such application, when laxity was there on in its own part. Assessee had not filed such application within a reasonable time. Having not done so, even if an approval is received, it would not relate back to earlier years. According to him, when assessee was not having the approval required under Section 10(23C)(vi), denial of exemption was correctly done. In any case, according to him, finding of the ld. CIT(Appeals) for assessment years 1998-99 and 2000-01 that assessee was existing solely for the purpose of education was incorrect. Assessee could not say that it was existing solely for the purpose of education when it had received donations and fees resulting in substantial surplus. According to him, the case laws relied on by the assessee would not help it because in all such cases concerned assessees were existing solely for the purpose of education.
13 I.T.A. Nos. 1813 to 1816/Mds/2010
I.T.A. Nos. 1741 to 1743/Mds/2010
14. We have perused the orders and heard the rival submissions. Claim of the assessee is that its income was exempted under Section 10(22) upto and including assessment year 1998-99, and thereafter under Section 10(23C)(vi) of the Act except for assessment year 2000-01for which it claims exemption under Section 10(23C)(iiiad). These Sections are reproduced hereunder for brevity:-
"10(22) Any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profits;"
"10(23C)(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;"
Any income received by any person on behalf of -
"10(23C)(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."
15. Objects of the assessee have been reproduced by us at para 4 above. There is nothing in these objects to show that any one of them is having primacy over others. The order in which objects have been placed one under the other, is a clear indicator regarding the priorities to be followed by the Trust. No doubt it has not been 14 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 mentioned that objects (e),(f),(g), & (h) are incidental to objects mentioned at (a),(b),(c) & (d). Nevertheless, objects mentioned at
(a),(b),(c) & (d) are all undoubtedly educational, whereas, objects mentioned at (e),(f),(g) & (h) were charitable. Power given to the Board of Trustees under clause (6) of the Trust deed dated 6.6.1994 specifies that they are holding and managing the Trust properties in fulfillment of the objects of the Trust set out in the Trust deed. Nevertheless, what we have to decide in the context of a claim of exemption under Section 10(22) or 10(23C)(iiiad) or 10(23C)(vi) is whether the institution for which such claim is preferred, is existing solely for educational purpose and not for the purpose of profit. Terminology used in these sections make it amply clear that it is an exemption for an institution and not for the person running the institution. What is required for claiming exemption is satisfaction of two primary conditions. One is that it should be existing solely for educational purpose and the second is that it should be existing not for the purpose of profit. In other words, both these conditions had to be satisfied. The most important part which is noted is that in the case of Section 10(22), income of university or other educational institution, which satisfied the above criteria, is exempt. In the case of Section 10(23C)(iiiad) and 10(23C)(vi), income received by any 15 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 person on behalf of a university or other educational institution which satisfied the above criteria is exempt. Though there is subtle difference between these two, the substance is that such exemption is to be seen institution wise and not assessee-wise. Thus what is to be resolved is whether the institution was existing solely for educational purposes and not for the purpose of profit and not whether the person who was running or owning the institution solely existed for educational purpose. Exemption is given to the income of the institution and not to the income of the person or organization running the institution. The question whether the person who was receiving the income or running the educational institution was existing solely for educational purpose and not for purpose of profit may not be always relevant while deciding such an issue. Exemption claimed by the assessee here is in relation to a college named "Sengamala Thayar Educational Trust Women's College" run by it. The college was affiliated to Bharathidasan University. Admittedly, it also had approval of AICTE. In our opinion, the college which is the institution here can only be considered as existing solely for educational purpose, whatever be the objects of the Trust running it. Now the question is whether the above Women's College was functioning without any intention to make profit. In this regard, 16 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 activities of the college as mentioned in Form No.56D filed by the assessee for getting approval under Section 10(23C)(vi) is very relevant and pertinent part of such application is reproduced hereunder:-
"The main objective of the trust is to promote an educational institution at University Level for Women in Mannargudi. With that sole motive, the trust started a college at 1, Main Road, Sundarakottai Post, Mannargudi Taluk, Thanjavur District, Tamil Nadu during the financial year 1994-95.
In the first year the trust started the college with five under graduate degree courses (B.A. Economics, B.B.A., B.Com., B.Sc. Computer Science & B.Sc. Mathematics) with 14 teaching staffs and 4 non-teaching staff with 155 students in a small building of small area with five partitions for each group. The Trust confined its activities only to develop that college and thereby help the society by providing all the women a better standard of education.
With this objective, the trust started introducing more courses like B.Sc. Biochemistry, B.Sc. Micro Biology, Nutrition and Dietitian and similar courses and the college started consolidating there from. More students joined the institution and were benefitted. With the increase in the participation and great support from the students and their parents and people of that area the trust was able to provide better infrastructure and hostel complex for the students and also provide transportation facilities etc., Besides academical development, the trust also educated and motivated the students of the college to engage them in serving the society in many ways. Every year the trust is giving scholarships to students those who are bright and poorest. The trust is providing boarding and hostel facilities only with service motive and not running it as a profit or income centre. The Trust 17 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 is not collecting any fixed sum for providing such facilities. The students of the college were encouraged to form a Club to do services like volunteering in Polio eradicating programme and creating environmental awareness in the minds of the people and helping the poor people. They are also providing basic education to some poorest students through joint & collective effort. The students of the college were motivated to participate in all blood donation camps and programmes. The students of the college with joint effect had constructed a water tank for an institution for the benefit of the society.
The Trust having witnessed people's change of attitude towards the importance of education has introduced further Under- graduate course & Post-graduate courses in Bio Chemistry, Micro Biology, Information Technology and Food Service Management course, Mathematics etc., The strength of the college students as on 31st March 1999 was 1230 and the strength of the teaching staff was 55 and non- teaching staff was 5 and is running in a two storey big building complex.
The Trust has accomplished the following:
1) Donations Received during the financial year 2000-01 - ` 60,66,000/-
2) Provide Education for 1230 students doing variouscourses.
3) We have 55 teaching faculties and 5 non-teaching staff.
4) We provide better infrastructure, which is conducive for learning and lab & hostel facilities to students by making regular contributions every year."
16. Revenue has not rebutted any of the above averments made by the assessee. That the sole institution run by the Trust was the Women's College and the college was only for the purpose of pursuing educational activities, is thus apodeictic. Ld. CIT(Appeals) 18 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 in his orders for 1998-99 and 2000-01, has worked out the application of funds of the assessee for the previous years relevant to those years. These are reproduced hereunder:-
For assessment year 1998-99 -
Nature of expenditure/investments Amount (` `.) Revenue expenditure as per I&E Account 36,74,099 Capital expenditure
- Building for college 13,59,751
- College bus 1,00,000
- Computers 3,08,855
- Furniture & fittings 3,48,146
- Lab equipments 4,62,440
- Books 3,94,887 Fixed deposits - AICTE 4,00,000 Total application 70,48,168 Gross receipts 49,32,565 Excess application 21,15,613 For assessment year 2000-01 -
Nature of expenditure/investments Amount (` `.) Revenue expenditure as per I&E Account 44,89,751 Capital expenditure
- College bus 3,20,000
- Lab equipments 7,05,346
- Books 2,23,085
- Building 14,60,684
- Computers 2,05,000
- Generator 3,00,000 Repayment of Term loan 11,51,911 Total application 88,55,777 Gross receipts 98,31,601 Surplus 9,75,824 19 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 For assessment year 2000-01, even after meeting the capital outgoes, there was a surplus of ` 9.75 lakhs, whereas, for assessment year 1998-99, there was a deficit. For assessment year 2000-01, gross receipts were less than ` 1 Crores as well. Also there is no finding by the A.O. that there were any substantial surplus after meeting the capital expenditures. There is considerable strength in the contention of the learned A.R. that the surplus had to be seen, after application of the income both on revenue field as well as capital field, so long as it was not used for the personal benefit of any interested parties and so long as the capital outlay was to improve the infrastructure facilities of the college. Without improving infrastructure facilities, and upgrading the available facilities in tune with the overall technological development, an educational institution will become obsolete. As held by Hon'ble Apex Court in the case of American Hotel and Lodging Association Educational Institute v.
CBDT (301 ITR 86), even if one of the objects enabled an institution to undertake a commercial activity, it would be disentitled for an exemption under Section 10(22) of the Act. However, mere existence of profit/surplus will not disqualify an institution from claiming an exemption if the sole purpose of its existence was not profit making 20 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 but for pursuing educational activities. The test is restricted to the character and nature of the income. For deciding the character, it is not necessary to look at the profit of each year. As long as surplus was utilized for its own infrastructure development, we cannot say that a college, which was recognized by the university and working within the regulations of university and AICTE, existed for making profit. In taking this view, we are roboranted by the decision of Hon'ble Bombay High Court in the case of Tolani Education Society v. Dy. DIT(E) (351 ITR 184).
17. Coming to the aspect of pendency of the applications preferred under Section 10(23C)(vi) of the Act, it is true that the applications were filed with considerable delay by the assessee. Application for assessment year 1999-2000, which was the last one, was preferred only on 30th March, 2004. However, it is also true that the said applications were not disposed of. Assessee had preferred separate applications for each year and all these applications were filed prior to 13.7.2006, on which date 9th proviso to Section 10(23C)(vi) came into statute. Said 9th proviso is reproduced hereunder:-
Provided also that where an application under first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, 21 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 every notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under [sub-clause (iv) or sub-clause (v) or] sub- clause (vi) or sub-clause (via) shall be granted or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received.
There is much strength in the argument of the assessee that 9th proviso, though it stipulated time limit for dealing with an application filed after 13.7.2006, applications prior to that date could not be treated differently. The applications having been filed prior to 13.7.2006 and having not been disposed, the approval sought has to be deemed as allowed. Where enabling words under a statute give a power which prima facie might be exercised or not, but if the object for which the power is conferred is for the purpose of effectuating a right, there may be a duty cast upon the donee of the power to exercise it for the benefit of those who have that rights, when required on their behalf, as observed by Lord Blackbun in the case of Julius v.
Bishop of Oxford (1880) 5.App.Case.214 (HL). Assessee cannot be put on peril due to the non-exercise of powers by the authority even after the authority was reminded of the pending application. Order dated 7.9.2009 of DGI bearing Number 2097/7/08, relied on by the CIT(Appeals) for denying the exemption sought under Section 10(23C)(vi) for assessment year 2001-02 to 2003-04, pertained to a 22 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 later year viz. assessment year 2005-06 and not for any of the impugned assessment year. This will not absolve the Revenue from the perils of its failure to deal with the applications for approval filed by the assessee for earlier years, prior to 13.7.2006. We are therefore of the opinion that the assessee could not have been denied exemption for the income of the Women's College run by it, under Section 10(22) for assessment year 1998-99 and Section 10(23C)(vi) for assessment years other than assessment year 2000-
01. As for assessment year 2000-01, assessee was eligible for such exemption under Section 10(23C)(iiiad), its gross receipts being less than ` 1 Crore. Just because the CIT(Appeals) relied on old Section 10(22) for giving such benefit, will not be a good enough reason to interfere with his order, since the essential criteria for qualifying for a claim under both these Sections were one and the same.
18. Insofar as the claim of the Revenue that relief of agricultural income was unjustly allowed to assessee, we are unable to appreciate. Assessee was having 50 acres of land and the agricultural income was supported by VAO certificate. Claim at the maximum was only ` 10,62,950/- for 50 acres. In our opinion, this cannot be considered to be an abnormally high amount. Ld. 23 I.T.A. Nos. 1813 to 1816/Mds/2010 I.T.A. Nos. 1741 to 1743/Mds/2010 CIT(Appeals) rightly deleted the additions made on these agricultural income.
19. In the result, we dismiss the appeals of Revenue and allow the appeals filed by the assessee.
Order was pronounced in the Court on Thursday, the 4th of April, 2013, at Chennai.
sd/- sd/-
(V.Durga Rao) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 4th April, 2013.
Kri.
Copy to: (1) Assessee
(2) Assessing Officer
(3) CIT(A)-II, Chennai-34
(4) CIT, Central-II, Chennai
(5) D.R.
(6) Guard file