Case Law Details
DPS Society Vs UOI (Delhi High Court)
The Delhi High Court allowed writ petitions challenging orders dated 26.02.2009 whereby exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 was withdrawn for assessment years 2002-03 to 2007-08. The withdrawal followed an earlier order dated 30.04.2008 for assessment year 2008-09. Counsel for the petitioner submitted that the earlier order had already been set aside by the High Court in a judgment dated 03.04.2018, which held that charging franchise fees for schools run under the society’s aegis was merely an incidental activity and could not be treated as business income. It was also noted that the Special Leave Petition against that judgment had been rejected by the Supreme Court. The petitioner argued that the facts in the present writ petitions were identical and therefore deserved similar relief. The Revenue’s counsel did not dispute this position of fact and law. In view of the earlier binding judgment, the Court allowed the writ petitions, quashed the impugned orders dated 26.02.2009, and directed the respondents to pass consequential orders in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COU.RT
1. These writ petitions have been filed against order(s) dated 26.02.2009 passed by respondent no.5, whereby the exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 (hereinafter referred to as “The Act of 1961”) for assessment year 2005-06 to 2007-2008 in W.P.(C) 9847/2009 and AY 2002-03 to 2004-05 in W.P.(C) 9848/2009 has been withdrawn following the order dated 30.04.2008 passed by the respondent no. 5 himself for the AY 2008-09.
2. Learned counsel for the petitioner at the outset submitted that against the said order dated 13.04.2008, the petitioner had preferred a writ petition, which was allowed by this Court in the case of DIT (Exemption) v. Delhi Public Society decided on 03.04.2018 reported in 2018 (403) ITR 49 Delhi. and, SLP thereagainst has been rejected by Hon’ble the Supreme Court.
3. He submitted that vide its judgment dated 03.04.2018, this Court has categorically recorded a finding that the charging of franchise fees for various schools being run under the aegis of the society was only incidental activity and for this reason the society cannot be said to be business income.
4. Learned counsel submitted that all the facts are identical and therefore, these writ petitions also deserve to be allowed.
5. Mr. Gaurav Gupta, learned Senior Standing Counsel, was not in a position to dispute the aforesaid position of fact and law.
6. In view of what we have noticed hereinabove, the writ petitions are allowed and the impugned order(s) dated 26.02.2009 passed by the respondent no.5 are hereby quashed and set aside.
7. The respondents are directed to do the needful consequent to quashment of the order dated 26.02.2009 and pass consequential order in accordance with law.
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