2003 (10) TMI 25 - HC - Income Tax

Education institution's s.10(22) tax exemption across multiple years upheld; no activity change, appeal dismissed as no substantial law question.

Where an assessee had consistently been granted exemption under s. 10(22) in earlier and even subsequent assessment years and no change in the nature of ... Exemption under section 10(22) - HELD THAT:- No change in the nature of activities has been pointed out and the assessee has been granted exemption under section 10(22) of the Act not only in respect of the earlier years but subsequent years as well, we are of the opinion that the order of the Tribunal does not involve any substantial question of law. In Radhasoami Satsang v. CIT [1991 (11) TMI 2 - SUPREME COURT], wherein their Lordships of the Supreme Court had observed that though strictly speaking res judicata does not apply to income-tax proceedings but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. These observations squarely apply to the facts in hand. Resultantly, we decline to entertain the appeal and the same is, accordingly, dismissed. Issues:1. Appeal by Revenue under section 260A of the Income-tax Act, 1961 against Tribunal's order granting exemption under section 10(22) to the respondent-assessee.2. Dismissal of Revenue's appeal by Tribunal based on the assessee's consistent educational activities with no profit motive.3. Assailing the Tribunal's order by Revenue on grounds of other activities carried out by the assessee.4. Respondent's consistent exemption under section 10(22) in past and subsequent assessment years.5. Determination of whether the Tribunal's order involves any substantial question of law.Analysis:The High Court of Delhi heard an appeal by the Revenue against the Tribunal's order granting exemption under section 10(22) of the Income-tax Act, 1961 to the respondent-assessee for the assessment year 1991-92. The Tribunal had dismissed the Revenue's appeal, affirming the Commissioner's conclusion that the assessee was entitled to the exemption as it was engaged solely in educational activities without any personal benefit to its members or individuals associated with the society. The Tribunal noted the assessee's consistent compliance with the educational purpose criterion for exemption. The Revenue contended that the Tribunal's findings were incorrect, citing other activities observed by the Assessing Officer in the assessment year. However, the Revenue failed to demonstrate any change in the nature of the assessee's activities compared to previous years.Mr. Kalra, representing the respondent, highlighted the continuous exemption granted under section 10(22) to the assessee even in subsequent assessment years post the present assessment year. The High Court, considering the factual consistency and absence of any substantial change in the assessee's activities, concurred with the Tribunal's decision. The Court referred to the principle laid down in Radhasoami Satsang v. CIT, emphasizing that where a fundamental aspect remains consistent across assessment years and is not challenged, it should not be altered in a subsequent year. This principle was deemed applicable to the case at hand, leading the Court to dismiss the Revenue's appeal as it did not involve any substantial question of law.In conclusion, the High Court declined to entertain the appeal by the Revenue, upholding the Tribunal's order granting exemption under section 10(22) to the respondent-assessee for the assessment year 1991-92 based on the consistent educational activities carried out by the society without any profit motive or deviation from the prescribed criteria for exemption.