Case Law Details
CIT Vs Bharati Vidyapeeth (Bombay High Court);
The only argument is, namely, if the Revenue succeeds in the Appeal challenging the order of the Tribunal restoring assessee’s registration, then it may be open for the Revenue to tax its income and by holding that both Sections 11 and 12 of the IT Act have no application thereto. We do not think that such ifs and buts would permit the Revenue to get over a presently binding order of the Tribunal. That order of restoration of registration binds the Revenue. That order has not been quashed and set aside by this Court. The Appeal is merely admitted. To our mind, the question as proposed in the present matter is not a substantial question of law. So long as the law does not oblige entertaining of an Appeal of the Revenue proposing the above question, we do not think we should entertain it. There is a difference and vast as it is, between an order being subjected to challenge and the challenge having succeeded. In the later case, the order is wiped out because then it is quashed and set aside. Today, a challenge is merely pending. That cannot be equated to the challenge succeeding. That hurdle is yet to be crossed. If that is not crossed, the initial order of restoration of registration continues to bind the Revenue. As a result of the above discussion, we do not find that the questions proposed are substantial questions of law. The Appeal is dismissed but without any order as to costs.
Full Text of the High Court Judgment / Order is as follows:-
1. This Appeal of the Revenue challenges the order passed by the Income Tax Appellate Tribunal dated 21st March, 2014.
2. We would have to refer to some basic facts so as to give an ultimate answer to the submission of the Revenue’s counsel.
3. The respondent assessee had, at the relevant time, claimed that it was founded through a deed of trust on 10th May, 1964 to propagate education in various fields in modern India, and particularly in Maharashtra. It obtained certificate of registration under Section 12A of the Income Tax Act, 1961 (for short, “the IT Act”) from the Commissioner of Income Tax, Pune on 13th September, 1973. There have been numerous educational and allied institutions in diverse fields set up and are regularly functioning. Even a deemed university is set up since the granting of registration. The exemption from payment of taxes on income gained by them under Sections 11 and 12 of the IT Act has thus been enjoyed in terms of this registration.
4. For the assessment year in question, namely, the assessment year 2008-2009, a return of income was filed showing taxable income as nil. During the course of assessment proceedings, the Assessing Officer noted that the trust is maintained by a Board of Trustees. He observed that the registration of the trust has been cancelled by the commissioner of Income Tax, Pune under Section 12AA(3) by order dated 8th November, 2007. Since the registration has been cancelled, the Assessing Officer was of the opinion that the assessee is to be treated like any other assessee and cannot take assistance of the above two legal provisions. Relying upon his findings for the assessment years 2006-2007 and 2007-2008, the assessment was finalized treating the assessee as an Association Of Persons.
5. A show-cause notice was issued by the Assessing Officer dated 6th December, 2010 calling upon the assessee why its income should not be brought to tax in the above terms.
6. The Assessing Officer, on receipt of an explanation, was not satisfied and proceeded to pass his order.
7. Aggrieved by that and by cancellation of registration, the assessee approached the Income Tax Appellate Tribunal, Bench at Pune. The Tribunal was pleased to allow its Appeal and cancel the order of the Commissioner of Income Tax. It restored the registration of the assessee as a charitable trust.
8. Therefore, the assessee contended that the exemption under Section 11 has to be allowed on restoration of such registration.
9. It is in these circumstances that the Assessing Officer’s order was set aside by the Commissioner of Income Tax (Appeals). Thereafter, that order of the Commissioner of Income Tax (Appeals) dated 24th November, 2011 came to be challenged by the Revenue in the subject Appeal before the Tribunal, which has been dismissed by the impugned order.
10. The questions of law termed as substantial have been proposed in the following words:
(i) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Income Tax Appellate Tribunal was justified in relying on its decision for restoration of registration u/s. 12A without appreciating that department has filed an appeal before the Hon’ble High Court in respect of the said decision?
(ii) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Income Tax Appellate Tribunal was justified in holding that the disallowance of 15% of total income u/s 11(1) of the Act (Rs.30,98,09,448/), disallowance of capital expenditure claimed as deduction from other earmarked funds (Rs.19,44,03,517/), addition of Rs.20,00,000/ made to the corpus fund and disallowance of capital expenditure of Rs.15,16,76,304/ claimed as application of income were not required to be adjudicated as the assessee was held to be entitled to the benefit of exemption u/s 11 of the Income Tax Act, 1961 for the reasons given in the A.Y. 2006-2007 & A.Y.2007-2008 when such finding of the Hon’ble Tribunal has already been appealed against before this Hon’ble Court?
11. It is conceded that unless the Revenue gets over the difficulty it faces insofar as question no. (i) as is reproduced is concerned, there is no occasion for it to argue that question no.(ii) is a substantial question of law. We repeatedly asked Mr. Walve as to how the Revenue has framed and proposed the above question no.(i), how does it arise in the facts and circumstances of the present case and from the order of the Tribunal? Merely because the Revenue has challenged the order passed by the Tribunal restoring assessee’s registration under Section 12A of the IT Act and that Appeal is admitted and pending means we must, as of right or course, entertain this Appeal, was our specific query. Which principle of law will enable the Revenue to urge that the order of the Tribunal should be interfered with, has not been clarified. The only argument is, namely, if the Revenue succeeds in the Appeal challenging the order of the Tribunal restoring assessee’s registration, then it may be open for the Revenue to tax its income and by holding that both Sections 11 and 12 of the IT Act have no application thereto. We do not think that such ifs and buts would permit the Revenue to get over a presently binding order of the Tribunal. That order of restoration of registration binds the Revenue. That order has not been quashed and set aside by this Court. The Appeal is merely admitted. To our mind, the question as proposed in the present matter is not a substantial question of law. So long as the law does not oblige entertaining of an Appeal of the Revenue proposing the above question, we do not think we should entertain it. There is a difference and vast as it is, between an order being subjected to challenge and the challenge having succeeded. In the later case, the order is wiped out because then it is quashed and set aside. Today, a challenge is merely pending. That cannot be equated to the challenge succeeding. That hurdle is yet to be crossed. If that is not crossed, the initial order of restoration of registration continues to bind the Revenue. As a result of the above discussion, we do not find that the questions proposed are substantial questions of law. The Appeal is dismissed but without any order as to costs.
