Mangalore Jesuit Educational Society, Mangalore v. ACIT, Mangalore

CO 42/BANG/2009 | 2005-2006
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 4221123 RSA 2009
Bench Bangalore
Appeal Number CO 42/BANG/2009
Duration Of Justice 6 month(s) 5 day(s)
Appellant Mangalore Jesuit Educational Society, Mangalore
Respondent ACIT, Mangalore
Appeal Type Cross Objection
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 22-01-2010
Date Of Final Hearing 03-11-2009
Next Hearing Date 03-11-2009
Assessment Year 2005-2006
Appeal Filed On 17-07-2009
Judgment Text
ITA.526 & CO.42/B/09 PAGE - 1 IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B' BEFORE SHRI. K. P. T. THANGAL VICE PRESIDENT AND SHRI. A. MOHAN ALANKAMONY ACCOUNTANT MEMBER I.T.A.NO.526/BANG/2009 (ASSESSMENT YEAR : 2005-06 ) ASSISTANT COMMISSIONER OF INCOME TAX OFFICER CIRCLE -1(1) BANGALORE .. APPELLANT V. M/S. THE MANGALORE JESUIT EDUCATIONAL SOCIETY ST. ALOYSIUS COLLEGE FATHER'S RESIDENCE L.H.H.ROAD MANGALORE .. RESPONDENT CROSS OBJECTION NO.42/BANG/2009 (IN I.T.A.NO.526/BANG/2009) (ASSESSMENT YEAR : 2005-06 ) (BY THE ASSESSEE) APPELLANT BY : SMT. SWATHI S.PATIL RESPONDENT BY : SHRI. S. PARTHASARATHI O R D E R PER K. P. T. THANGAL VICE PRESIDENT : THE ONLY GROUND OF OBJECTION BY THE REVENUE IN ITS APPEAL IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) ALLOWING EXEMPTION CLAIMED BY THE ASSESSEE U/S.11(1)(A) OF T HE ACT. ITA.526 & CO.42/B/09 PAGE - 2 2. THE FACTS LEADING TO THE DISPUTE BRIEFLY IS AS U NDER. THE ASSESSEE FILED THE RETURN ON 29.10.2005 DECLARING N IL INCOME FOR THE ASSESSMENT YEAR 2005-06 AFTER CLAIMING EXEMPTION U/ S.11 ON THE ENTIRE INCOME OF RS.12 94 30 348/-. THE RETURN WA S PROCESSED U/S.143(1). SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSEE WAS ASKED TO GIVE THE DETAILS REGARDING TH E NAMES OF INSTITUTIONS RUN BY THE ASSESSEE TRUST OBJECT OF T HE TRUST ACTIVITY DONE DURING THE YEAR EXPENSES TOWARDS HOUSE FACSI CONT RIBUTION MISCELLANEOUS CONTRIBUTION GONZAGA BUILDING ETC. THE ASSESSEE IS REGISTERED UNDER MYSORE SOCIETIES REGISTRATION ACT 1960 AND GOT REGISTRATION U/S.12A OF THE INCOME TAX ACT 1961. ITS OBJECTS MAINLY ARE TO TAKE OVER AND ADMINISTER THE INSTITUTIONS RU N BY THE CATHOLIC PRIESTS AND BROTHERS (OTHERWISE CALLED JESUITS) BE LONGING TO THE RELIGIOUS ORDER KNOWN AS THE SOCIETY OF JESUS; TO S UPPORT AND TO PROMOTE THE ADVANCEMENT OF EDUCATIONAL ACTIVITIES O F INSTITUTIONS PRIMARILY FOR CHILDREN OF THE CATHOLIC COMMUNITY IN ACCORDANCE WITH TEACHING OF THE CATHOLIC CHURCH AS MENTIONED IN THE CODE OF CANON LAW. THE OTHER OBJECTIVES ARE TO INTRODUCE ADOPT AND FOLLOW SUCH PLANS AS ARE CONDUCIVE TO THE SPIRITUAL MORAL INT ELLECTUAL AND CULTURAL GROWTH OF CATHOLIC STUDENTS. HENCE FROM THE ABOVE OBJECTS THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE IS ENGAGED IN CHARITABLE ACTIVITIES AS WELL AS RELIGIOUS ACTIV ITIES AND ALSO APPLIED ITA.526 & CO.42/B/09 PAGE - 3 THE INCOME FOR BOTH CHARITABLE AND RELIGIOUS PURPOS ES AND CLAIMED EXEMPTION. THE ASSESSING OFFICER FROM THE PAYMENT AND RECEIPTS STATEMENT CAME TO THE CONCLUSION THAT THE ASSESSEE IS DERIVING INCOME FROM PROPERTY HELD BY TRUST/SOCIETY BUT SUCH INCOME HAS NOT BEEN APPLIED ONLY FOR CHARITABLE PURPOSE OR ONLY RELIGIO US PURPOSE. IN OTHER WORDS THE ASSESSEE APPLIED IT PARTLY FOR REL IGIOUS PURPOSE AND PARTLY FOR CHARITABLE PURPOSE. HENCE THE ASSESSIN G OFFICER HELD AS PER SECTION 11(1)(A) HAVING BOTH CHARITABLE AND RE LIGIOUS ACTIVITY ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION W.E.F.1.4.1 962. RELYING UPON VARIOUS JUDGEMENTS OF DIFFERENT HIGH COURTS I.E. COMMISSIONER OF INCOME-TAX V. SOCIAL SERVICE CENTRE (250 ITR 39) (A P); DIRECTOR OF ITC (EXEMPTION ) V. INSTITUTE OF FRANCISCAN CLARIST SISTER OF MOST BLESSED SACRAM (196 CTR 852); AND ITO V. JESUIT MAD URAI PROVINCE. HOWEVER THE ASSESSING OFFICER DISTINGUISHED THE CA SE AND HE HELD THAT FROM THESE DECISIONS IT IS NOT CLEAR AS TO WHE THER THE WHOLLY CHARITABLE/RELIGIOUS PURPOSE OR PARTLY CHARITABLE/P ARTY RELIGIOUS IS ENTITLED FOR EXEMPTION. HE OBSERVED THAT IN THE DE CISION OF THE JAMMU AND KASHMIR HIGH COURT IN THE CASE OF GULAM M OHIDEEN TRUST V. COMMISSIONER OF INCOME-TAX (248 ITR 587) THE INCOME OF THE TRUST WOULD NOT BE EXEMPT U/S.11 OF THE ACT BEC AUSE THE LAW SETTLED THAT IF THERE ARE SEVERAL OBJECTS OF THE TR UST SOME OF WHICH ARE CHARITABLE AND SOME NON-CHARITABLE AND THE TRUSTEE S HAD THE DISCRETION ITA.526 & CO.42/B/09 PAGE - 4 TO APPLY THE INCOME TO ANY OF THE OBJECTS THE WHOL E TRUST WOULD FAIL AND NO PART OF THE INCOME WOULD BE EXEMPTED. IN TH E LIGHT OF THE ABOVE DECISION AND THE REASON STATED THEREIN THE AS SESSING OFFICER HELD THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION AND TAXED THE ENTIRE INCOME. AGGRIEVED BY THE ABOVE ASSESSEE CARRIED T HE MATTER BEFORE THE COMMISSIONER OF INCOME-TAX(A). 3. AMONG THE UNDISPUTED FACTS IT WAS CONTENDED BEF ORE THE COMMISSIONER OF INCOME-TAX(A) RELYING ON THE DECISI ON OF THE TRIBUNAL OF COCHIN BENCH IN THE CASE OF CALICUT ISL AMIC CULTURAL SOCIETY V. ACIT IN ITA NOS.641 & 729 (COCH)/2006 T HE COMMISSIONER OF INCOME-TAX(A) HELD THAT WHERE THE T RUST HAD MIXED BOTH CHARITABLE AND RELIGIOUS OBJECTS IN ONE ENTITY THEN THE TRUST IS ENTITLED FOR EXEMPTION. AGGRIEVED BY THE ABOVE ORD ER REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE PRODUCED A THIRD MEMBER ORDER OF THE TRIBUNAL IN ITA NO.457/CO CH/2007 AND ITA NO.128/COCH/2007 DT.22.9.2009 FOR THE ASSESSM ENT YEAR 2003- 04 IN THE CASE OF THE SOCIETY OF PRESENTATION SIST ERS AND WAYANAD MUSLIM ORPHANAGE MUTTIL RESPECTIVELY. COPY OF THE ORDER IS PLACED ON RECORD. ON A DIFFERENCE OF OPINION THE THIRD M EMBER DECIDED THE ITA.526 & CO.42/B/09 PAGE - 5 ISSUE IN ASSESSEE'S FAVOUR. THE QUESTIONS REFERRED TO BEFORE THE THIRD MEMBER READS AS UNDER : '1. WHETHER THE ASSESSEES 'WHO ARE CARRYING ON CHARITABLE AND RELIGIOUS ACTIVITIES ENTITLED FOR T HE BENEFITS OF SECTION 11 FOR THE ASSESSMENT YEAR 2003-04 IN RE SPECT OF INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WH OLLY FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE LIGHT OF THE EXPRESSION PROVIDED BY THE ACT IN SECTION 11(1)(A) AS 'INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOL LY FOR CHARITABLE OR RELIGIOUS PURPOSES' 2. WHETHER AFTER 1.4.2962 CAN THERE BE A MIXED TRUST ? 3. WHETHER THE CONSTRUCTION OF DOME CHAPEL OR CONVENT ETC. AMOUNTS TO RELIGIOUS PURPOSE OR IT I S SIMPLY AN OBJECT OF GENERAL PURLIC UTILITY ?' AFTER DISCUSSING THE ISSUE IN DETAIL THE TRIBUNAL H ELD THAT IN THE CASE OF A PRIVATE TRUST WITH AN OBJECT TO SERVE A PARTIC ULAR COMMUNITY THE TRUST IS HIT BY THE PROVISIONS OF SECTION 13(1)(B). ON THE OTHER HAND A PUBLIC CHARITABLE TRUST WITH AN OBJECT NOT TO SERVE A PARTICULAR COMMUNITY CONSTRUCTION OF CHAPELS CHURCHES MAINT ENANCE AND CONSTRUCTION OF MOSQUES AND MADRASSAS ARE PUBLIC CH ARITABLE PURPOSE AND THEREFORE THE THIRD MEMBER DECIDED THE ISSUE IN ASSESSEE'S FAVOUR AND HELD SUCH ASSESSEES WITH MIXED OBJECTS VIZ. PARTLY RELIGIONS AND PARTLY CHARITABLE ARE ENTITLED FOR EX EMPTION U/S.11(1)(A). ITA.526 & CO.42/B/09 PAGE - 6 5. IN THE LIGHT OF THE ABOVE DECISION WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.11(1)(A). THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE. 6. COMING TO THE CROSS OBJECTION IT IS ONLY IN SUP PORT OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). WE DISMISS T HE SAME AS INFRUCTUOUS. 7. IN THE RESULT APPEAL BY THE REVENUE IS DISMISSE D AND THE CROSS OBJECTION BY THE ASSESSEE IS DISMISSED. ORDER PRON OUNCED IN OPEN COURT ON 22ND DAY OF JANUARY 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (K. P. T. THANGAL) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED : 22ND JANUARY 2010 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF ITAT NEW DELHI 7. GF ITAT BANGALORE