Case Law Details
PCIT Vs Kunhitharuvai Memorial Charitable Trust (Kerala High Court)
The Kerala High Court recently adjudicated on appeals by the Income Tax Department against Kunhitharuvai Memorial Charitable Trust. The appeals contested the orders of the Income Tax Appellate Tribunal concerning assessments from 2006-07 to 2012-13 under the Income Tax Act.
The Trust, established in 1999 and registered under Section 12A/12AA of the IT Act since 2002, operates educational institutions. A search in 2011 led the Income Tax Department to initiate proceedings questioning the Trust’s tax exemptions and making income additions for certain assessment years. Appeals followed, with the First Appellate Authority partially upholding the additions but deleting them for 2008-09. Subsequently, the Income Tax Appellate Tribunal affirmed the Trust’s exemption status, prompting no appeal from the Revenue.
The High Court’s focus was on the monetary limits for appeals as per Circulars issued by the Central Board of Direct Taxes. It noted that appeals for assessment years 2006-07 to 2010-11 fell below the Rs.1 crore threshold and were dismissed accordingly. For 2011-12 and 2012-13, where the tax effect exceeded Rs.1 crore, the Tribunal’s findings favoring the Trust’s exemption status meant the Trust was not liable for tax on the additional income claimed by the Revenue.
The Court cited Circulars directing tax appeals based on monetary limits, underscoring that despite the higher tax effect in later years, the fundamental issue of the Trust’s exemption under Section 12AA had been settled in previous decisions.
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