IT APPEAL NO.2053 (MDS.) OF 2014 AND 1819 & 1820 (MDS.) OF 2016
[ASSESSMENT YEARS 2010-11 AND 2012-13]

N.R.S. GANESAN, JUDICIAL MEMBER 
AND ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

S. Sridhar, Advocate for the Appellant. 
Shiva Srinivas, JCIT for the Respondent.

ORDER

1. These are appeals filed by the assessee, of which first one is directed against the order dated 29.05.2014 of the Commissioner of Income Tax (Appeals)-II, Coimbatore, second one is directed against the order dated 30.03.2015 of the Commissioner of Income Tax (Appeals)-2, Coimbatore and the third one is directed against the order dated 06.05.2016 of the Chief Commissioner of Income Tax, Coimbatore.

Appeal in I.T.A. No. 2053/Mds/2014 is taken up first for disposal.
2. Grounds taken by the assessee is reproduced hereunder:—

3. Facts apropos are that the assessee, a trust evidenced by a Trust Deed dated 09.09.1992, is engaged in running educational institutions. For the impugned assessment year, it had claimed exemption under Section 10(23C) of the Income-tax Act, 1961 (in short 'the Act'). Assessee was running the following institutions:—

4. The receipts and income from above institutions, during the relevant previous year, were as under:—

Assessing Officer was of the opinion that a claim under Section 10(23C) of the Act could be allowed only if gross receipts during the relevant previous year was less than Rs. 1 Crore. As per the A.O., if the gross receipt exceeded that amount, it was required for the assessee to obtain an approval as prescribed under Section 10(23C)(vi) of the Act from the Chief Commissioner of Income Tax. Since assessee had not obtained such approval, as per the A.O., it was not eligible to claim exemption under Section 10(23C) of the Act. When this was put to the notice of the assessee, reply of the assessee was that such exemption was allowed by the Assessing Officer for assessment year 2007-08. As per the assessee, it had filed application seeking such approval in Form 56D on 26.10.2006 with the Commissioner of Income Tax-III, Coimbatore. Further, as per the assessee, by virtue of CBDT circular No. 7/2010 dated 27.10.2010, once an approval under Section 10(23C) of the Act was granted, it was to be considered perpetual till it was withdrawn. However, the Assessing Officer was not impressed by the above arguments. According to him, mere filing of application in Form No. 56D would not make the assessee ipso facto eligible for claiming the exemption. Further as per the Ld. A.O., in the scrutiny assessment for assessment year 2007-08, question whether the assessee had obtained approval under Section 10(23C) of the Act was never considered. He held that assessee had failed to satisfy the tests laid down under Section 10(23C) of the Act in sofar as approval was not obtained from the competent authority despite receipts exceeding Rs. 1 Crore. Claim of exemption was denied. Total income was fixed at Rs. 1,01,81,782/- and tax levied thereon.

5. Aggrieved, the assessee moved in appeal before the CIT (Appeals). Argument of the assessee was that it had filed an application on 16.11.2005 for assessment year 2005-06 and on 25.10.2006 for assessment year 2006-07 for approval under Section 10(23C) (vi) of the Act. According to the assessee, since the said applications were still to be processed by the Department, tax exemption claimed could not be denied. However, the CIT (Appeals) was not impressed by the above argument. According to him, though the assessee had filed an application for approval under Section 10(23C)(vi) of the Act on 25.10.2006 for assessment year 2006-07, it had not followed up on such application. Ld. CIT (Appeals) also noted that the assessee never sought registration under Section 12A of the Act for claiming exemption under Section 11 of the Act as well. Further, as per the Ld. CIT (Appeals), the Chief Commissioner of Income Tax had vide order dated 24.06.2013, rejected the application filed by the assessee for approval under Section 10(23C)(vi) of the Act. He thus confirmed the order of the A.O.

6. Now before us, the Ld. A.R., strongly assailing the orders of the lower authorities, submitted that assessee had obtained registration under Section 12AA of the Act on 28.07.2015. Copy of the order of the Commissioner of Income Tax (Exemptions), Chennai in this regard was placed on record. According to him, by virtue of first proviso to Section 12A(2) of the Act, a registration granted would apply for all assessment years, proceedings of which were pending before the Assessing Officer. According to him, though there were no proceeding directly pending before the Assessing Officer for the impugned assessment year, as on the date on which the assessee was granted registration under Section 12AA of the Act, appeals for the impugned assessment year were alive. According to him, processing of appeals could be considered only as continuation of the proceedings before the Assessing Officer. Thus, according to him, assessee had to be given exemption under Section 11 of the Act since it was saved by the first proviso to Section 12A(2) of the Act. In any case, according to him, application for approval under Section 10(23C)(vi) of the Act filed for assessment year 2006-07, was disposed of by the Chief Commissioner of Income Tax after more than six years and hence, the application had to be deemed as allowed within a reasonable period. Reliance was placed on the decision of Calcutta Bench of this Tribunal in the case of Sree Sree Ramkrishna Samity v. Dy. CIT [2016] 156 ITD 646/[2015] 64 taxmann.con 330.

7. Per contra, the Ld. Departmental Representative submitted that assessee had neither got approval under Section 10(23C) of the Act nor registration under Section 12A of the Act for the impugned assessment year. As per the Ld. D.R., assessee was therefore, not eligible for claiming exemption under either Section 10(23C) or under Sections 11 and 12 of the Act.

8. We have perused the orders and heard the rival contentions. During the previous year relevant to impugned assessment year, assessee was not having approval as required under Section 10(23C)(vi) of the Act. It may be true that the assessee had moved an application for such approval for assessment year 2006-07 on 25.10.2006 and the application was still to be disposed of. This in our opinion, would not mean that for the impugned assessment year, assessee was having a valid approval under the said Section for claiming exemption. Further the Ld. CIT (Appeals) has specifically noted that assessee's application for approval under Section 10(23C)(vi) of the Act stood rejected by the CCIT by his order dated 24.06.2013. As to the claim of the assessee that registration under Section 12AA of the Act granted to it by Chief Commissioner of Income Tax on 28.07.2015 was relevant for the impugned assessment year also, it is required to have a look at sub-section (2) of Section 12A of the Act, which has been relied on by the Ld. A.R.:—

"12A. (1) . . . . . . . . . . . . . . .. . . . . . .. . . . . . . . . .

(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made.

Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year :

Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year :

Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA."

First proviso, in our opinion, can be brought into application only for the years where assessment proceedings are pending before the Assessing Officer as of the date of grant of registration under Section 12AA of the Act. Admittedly, on 28.07.2015, when the registration under Section 12AA of the Act was granted to the assessee, no proceedings were pending before the Assessing Officer for the impugned assessment year since assessment had reached a completion. No doubt, assessee's counsel had placed strong reliance on the decision of Calcutta Bench of this Tribunal in the case of Sree Sree Ramkrishna Samity (supra). However, in the said case, proceeding for reassessment for the relevant assessment year was still pending before the Assessing Officer and the Bench had relied on the definition of "assessment" as given under Section 2(8) of the Act by virtue of which a reassessment was also made a part of assessment. In our opinion, the said decision would not help the assessee since admittedly no proceedings were pending before the Assessing Officer for the impugned assessment, as on the date of grant of the registration under Section 12AA of the Act. The plain words used in first proviso "for which assessment proceedings are pending before the Assessing Officer" does not give any room for the type of interpretation canvassed by the Ld. A.R. Appeal proceeding cannot be equated as proceeding pending before the Assessing Officer. While interpreting a taxing statute, courts cannot travel beyond the words therein if its meaning is plain and unambiguous. Thus we are not inclined to accept the line of argument taken by Ld. A.R.

9. However, a question does remain as to whether Section 10(23C) of the Act has been correctly applied in the case of the assessee. At this juncture, it is required to have a careful reading of Section 10(23C) of the Act. The relevant clauses under which the income of an educational institution can be treated as exempt under Section 10(23C) of the Act are given in sub-clause (iiiad) and (vi). Both these sub-clauses are reproduced hereunder:—

"10(23C) any income received by any person on behalf of—
(i) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iii) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iiia) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iiiab) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iiiac) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(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 ; or

(iiiae) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(iv) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(v) . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 ;"

10. What is exempt is income received by a person on behalf of a university or other educational institution. Here, the income has been received by the assessee on behalf of five different educational institutions, which have been listed by us at para 4 above. Blanket exemption is available where receipts of such university or educational institution do not exceed the amount of annual receipt which has been prescribed. Admittedly, the prescribed limit was Rs. 1 Crore for the impugned assessment year. If we take each of the educational institution separately, only in the case of PKD Matric Higher Secondary School, the receipt has exceeded Rs. 1 Crore. Annual receipts of all other institutions were less than the threshold amount of Rs. 1 Crore. In our opinion, lower authorities had not applied Section 10(23C) of the Act in respect of these educational institutions, which has gross receipts less than Rs. 1 Crore. The question whether each educational institution could be considered separately for applying the threshold annual receipt of Rs. 1 Crore, which was applicable for the impugned assessment year, has not been considered by any of the lower authorities in the proper perspective. In our opinion, the matter therefore, requires a fresh look by the A.O. Though the assessee is not eligible for exemption under Section 11 of the Act, the question whether it could claim exemption under Section 10(23C) of the Act in the case of these institutions which had gross receipts below the threshold limit requires a fresh look. Therefore, we set aside the orders of the lower authorities and remit the issue regarding application of Section 10(23C) of the Act back to the A.O. for consideration afresh, in accordance with law.

11. In the result, appeal of the assessee is treated as partly allowed for statistical purposes.

12. Now, we take up appeal of the assessee in I.T.A. No. 1820/Mds/2016.

13. Grounds taken by the assessee for this assessment year is similar to what has been taken by it for assessment year 2010-11. Assessee was denied exemption under Section 10(23C) of the Act as well as exemption under Section 11 of the Act. The income and receipts of the assessee from various institutions run by it, for the relevant previous year, were as under:—

We are of the opinion that directions given by us for assessment year 2010-11 at para 10 above will squarely applicable here also. Similar directions are given for assessment year 2012-13 also.

14. Appeal of the assessee is treated as partly allowed for statistical purposes.

15. Now, we take up appeal of the assessee in I.T.A. No. 1819/Mds/2016.

16. In this appeal, the assessee assails rejection of its review petition against denial of approval sought under Section 10(23C)(vi) of the Act.

17. Facts apropos are that assessee had filed an application in Form 56D on 28.09.2012 seeking approval under Section 10(23C)(vi) of the Act. The said application was rejected by the Chief Commissioner of Income Tax vide his order dated 24.06.2013. Reason for rejection of application was that the Trust Deed did not have a clause mentioning the non-profitable status of the assessee. Thereafter, the assessee moved a review petition on 28.04.2014. The Ld. CCIT rejected the review petition noting that there was no provision under the Act for review of an order passed under Section 10(23C)(vi) of the Act.

18. Now before us, the Ld. A.R. submitted that review petition filed by the assessee had to be considered as a rectification application under Section 154 of the Act. As per the Ld. A.R., under Section 154 of the Act, it was possible to rectify a mistake apparent from record. The mistake could be in any order passed by any income-tax authority. As per the Ld. A.R., there was a clear mistake of law committed by the Ld. CCIT when he rejected the application filed by the assessee under Section 10(23C)(vi) of the Act. According to him, it was not necessary to mention specifically that the institution was not running for the purpose of profit, in the Trust Deed. Thus, according to him, when a mistake which was apparent on record, was sought to be rectified by the assessee through a review petition, without citing any reason, the petition could not have been rejected by the Ld. CCIT.

19. Per contra, the Ld. D.R. submitted that an order passed by prescribed authority under sub-section (vi) and (via) of Section 10(23C) of the Act was made appealable only from 01.06.2015. According to him, clause (f) was introduced to Section 253(1) of the Act by Finance Act, 2015 with effect from 01.06.2015 and prior to that date, the order of the prescribed authority under the said clause was not appealable. As per the Ld. D.R., the assessee was trying to circumvent the Section by relying on a review petition which was rightly rejected by the Ld. CCIT.

20. We have perused the orders and heard the rival contentions. Clause (f) of Section 253(1) of the Act, whereby order of the prescribed authority under sub-clause (vi) and (via) of Section 10(23C) of the Act was made appealable, was introduced by Finance Act, 2015 with effect from 01.06.2015. Prior to that, the list of orders which were appealable before the Appellate Tribunal, mentioned in Section 253(1) of the Act did not have in it an order passed under sub-clauses (vi) and (via) of Section 10(23C) of the Act. Contention of the Ld. A.R. is that the review petition filed by the assessee before the Ld. CCIT was only an application for rectification under Section 154 of the Act. Even if we presume that this is only an application for rectification of mistake, such mistake which can be rectified under Section 154 of the Act, is one which is glaring and apparent. Order dated 24.06.2013 passed under Section 10(23C)(vi) of the Act, on which the review petition was filed, had specifically stated that the application was being rejected for non-mentioning of non-profit nature of the institutions run by the assessee in its Trust deed. We cannot say that no reason was cited by the Ld. CCIT, or the reason cited was perverse. Thus the order was not, in our opinion, amenable to a rectification proceeding under Section 154 of the Act. There was no mistake which was glaring enough, which could have been rectified under Section 154 of the Act. Viewed in any manner, we are of the opinion that the appeal of the assessee has no merits. Such appeal stands dismissed.

21. To sum up result, assessee's appeal in I.T.A. No. 2053/Mds/2014 and I.T.A. No. 1820/Mds/2016 are partly allowed for statistical purposes whereas its appeal in I.T.A. No. 1819/Mds/2016 is dismissed.