TaxTMI 
TaxTMI 
2016 (5) TMI 1231
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.... has erred in allowing exemption u/s. 10(23C)(iiiab) of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] without appreciating the fact that assessee society was neither an university nor an educational institution existing solely for educational purpose, though various grounds are raised in these appeals. 3. During the course of hearing, the ld. DR has invited our attention to judgment of Hon'ble Apex Court in the case of Visvesvaraya Technological University v. ACIT, Civil Appeal Nos.4361-4366 of 2016 dated 22.04.2016 in support of his contention that for claiming exemption u/s. 10(23C)(iiiab), the assessee is required to establish that the educational institution or university existed solely for educational purpose and not for the purpose of profit and which is wholly or substantially financed by the Government. Until and unless both the conditions are fulfilled, exemption u/s. 10(23C)(iiiab) would not be available to the assessee. 4. Besides, the ld. DR has invited our attention to the objects of the assessee society with the submission that the objects of the assessee Federation are not educational in nature. The main functions of the assessee society was e....
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.... the assessee is a State Co-operative Federation of co-operative societies and its members are District Co-operative Unions, Apex Federal Co-operative Society, Co-operative Spinning Mills, Cooperative Sugar Factories, Co-operative Societies whose area of operation is more than districts but extends upto State and Co-operative Societies registered under Multi State Co-operative Societies and whose Had Office is located in the State of Karnataka. The main objects of the assessee are to function as the accredited representative of the co-operative movement in Karnataka State with a view to further its progress and to safeguard its interest and also to impart training to the employees of Co-op. Societies, Dept. of Co-operation and Dept. of Co-op. Audit, Govt. of Karnataka. For the sake of reference, we extract the objects of the assessee society as under:- "(i) To function as the accredited representative of the cooperative movement in Karnataka State with a view to further its progress and to safeguard its interest in such a way that the benefits of the co-operative movement shall be open to all irrespective of caste, creed and religion; (ii) To propagate co-operativ....
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....) To develop inter-co-operative relationship and help the coordinated functioning of the co-operative movement in various sectors; (xiii) To conduct State Level / National Level Co-operative Conferences, Seminars, Meetings, Workshops, Exhibitions and competitions in Essay writing, Debates etc. among students of High Schools, Colleges and Universities; (xiv) To acquire, purchase, own or dispose of the immovable property by way of sale, lease, exchange or otherwise for the furtherance of the objects of the Federation with approval of the general body; (xv) To promote study and research on problems connected with rural development in general and cooperation in particular and to conduct socio-economic surveys of rural and urban areas and to take up consultancy work, valuation etc., (xvi) To establish printing press for printing of books, journals, periodicals and newspapers, including text books, magazines. other books and other requirements of cooperatives; (xvii) To raise funds including corpus fund and administer the funds so raised according to these bye-laws and subsidiary rules framed by the board from time to time; (xviii) To....
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....r, the AO has held that out of gross receipts of Rs. 6,96,37,994 in AY 2005-06, the assessee has received from the Government Rs. 22 lakhs, which is less than 4% of the gross receipts. Therefore, it cannot be said that the assessee is wholly or substantially financed by the Government. This evidences of fact have not been rebutted by the CIT(Appeals) while allowing exemption u/s. 10(23C)(iiiab) of the Act. Moreover, during the course of hearing of these appeals, the assessee has not placed any evidence on record to substantiate that it has fulfilled both the requisite conditions for claiming exemption u/s. 10(23C)(iiiab) of the Act. Moreover, the Hon'ble Apex Court has categorically held in the case of Visvesvaraya Technological University v. ACIT (supra) that for claiming exemption u/s. 10(23C)(iiiab) of the act, the assessee is required to fulfill both the conditions and if it fails to satisfy any one of them, assessee is not entitled for exemption u/s. 10(23C)(iiiab) of the Act. The relevant portion of the judgment of the Hon'ble Apex Court is extracted hereunder:- "10. The above would require the Court to go into the further question as to whether the appellant Univers....
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...., it is possible to read Section 10 (23c) (vi) to be dealing with Private Universities whose gross receipts exceeds Rupees One Crore. Receipts by way of fee collection of different kinds continue to a major source of income for all Universities including Private Universities. Levy and collection of fees is invariably an exercise under the provisions of the Statute constituting the University. In such a situation, if collection of fees is to be understood to be amounting to funding by the Government merely because collection of such fees is empowered by the Statute, all such receipts by way of fees may become eligible to claim exemption under Section 10 (23c) (iiiab). Such a result which would virtually render the provisions of the other two Sub-sections nugatory cannot be understood to have been intended by the Legislature and must, therefore, be avoided. 13. It will, therefore, be more appropriate to hold that funds received from the Government contemplated under Section 10(23c)(iiiab) of the Act must be direct grants/contributions from governmental sources and not fees collected under the statute. The view of the Delhi High Court in Mother Diary Fruit & Vegetable Private....
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....stantially financed by the Government so as to be entitled to exemption from payment of tax under the Act." 10. In light of the aforesaid judgment and legal proposition observed hereinbefore, we are of the considered view that assessee society has not fulfilled both the requisite conditions for claiming exemption u/s. 10(23C)(iiiab) of the Act. It neither exists solely for educational purpose, nor was it substantially or wholly financed by the Government. Therefore, the CIT(Appeals) was not correct in holding that the assessee is entitled for exemption u/s. 10(23C)(iiiab) of the act. We accordingly set aside the order of CIT(Appeals) and restore the order of Assessing Officer in this regard. ITA Nos.1243, 1244, 45 & 46/Bang/2015 11. These appeals are preferred by the assessee assailing the order of CIT(Appeals) on the following common grounds and for the sake of reference, we extract the grounds raised in ITA No.1243/B/2015:- 1. "That the order of the learned Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and against the facts and circumstances of the case. 2. That the learned....
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....applications and are of the view that the assessee has not raised any dispute with regard to the status of the assessee before the lower authorities. The lower authorities have assessed the assessee in the same status in which the return of income was filed. Therefore, after the judgment of the Hon'ble jurisdictional High Court, no cause of action has arisen in favour of assessee to file the present appeal. Moreover, it was for the assessee to decide as to whether appeal is to be filed against the order of CIT(Appeals) or not in the prescribed period. If it does not do so, the assessee cannot take shelter of judgment of Hon'ble jurisdictional High Court in which certain proposition of law is laid down in certain circumstances. Since the delay in filing these appeals was intentional, it cannot be called that under bonafide belief, the assessee could not file the appeals in time. Finding no force in the applications for condonation of delay, we hold that these appeals are barred by limitation, therefore, not admitted for hearing. 14. We, however, adjudicate the issues involved in these appeals as the same are also raised in other appeals which are filed in time. 15. In ....
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....nal in the case of Ziaulla Sheriff v. ACIT, 316 ITR (AT) 92 (ITAT Bang). 18. During the course of hearing, the ld. counsel for the assessee has admitted that in the return of income it never claimed to be the Artificial Juridical Person (AJP) against the status. Copies of returns of income are not filed before us for our perusal. During the course of hearing, the ld. counsel for the assessee candidly admitted that assessee society was taxed at the rates of co-operative societies and there would not be any change in tax effect or computation of income, even if the assessee is to be assessed as AJP. The ld. counsel for the assessee further contended that since as per the judgment of Hon'ble jurisdictional High Court in the case of CIT v. Children's Education Society (supra), co-operative societies are to be assessed as AJP, the assessee should be assessed as such and the assessment framed in the status of AOP deserves to be quashed and fresh assessment should be made in the hands of the assessee as an AJP. 19. The ld. DR, on the other hand, has contended that assessee has never claimed it to be AJP against its status. It filed return in the status of a Co-operative Society ....