TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1110
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....he Income Tax Act, 1961 is not available to the educational institutions though the annual receipts of each of the educational institution is less than prescribed limit of Rs. 1.00 crore? B) Whether on the facts and circumstances of the case as strict interpretation is required to be given to sub-clause (iiiad) of Section 10(23C) of the Income Tax Act, 1961 the Hon'ble Tribunal is justified in law in holding that the receipts of both the institutions required to be clubbed, though each of the educational institution is under separate Managing Committees and there is no control of the Appellant?" 3. Essentially both the above questions relate to the interpretation to be given to Section 10 (23C) (iiiad) of the Income Tax Act, 1961. 4. The assessee society has two institutions - (1) Vivekanand College of Education, Kathua, and, (2) Vivekanand Institute of Education, Training & Research, Lakhanpur. Both these institutions individually had aggregate annual receipts of less than Rs. 1 crore in the year in question. However, if the two receipts are clubbed, then they would exceed the sum of Rs. 1 crore, which has been prescribed under Rule 2BC of the Income Tax Rules, 1962, (herein....
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....notice, the assessee society filed a nil return of income which was thereafter assesseed under Section 143 (3) of the said Act and, it is in the course of such assessment that the Assessing officer took the view, which we have already indicated above. That view was over turned by the CIT(A). 9. Being aggrieved, the revenue went in appeal before the Income Tax Appellate Tribunal, which, after considering the arguments on both sides, agreed with the revenue and the Assessing officer and set aside the order of the CIT (A) on this aspect of the matter. Now the assessee society is in appeal against the impugned order dated 13.02.2014 of the Tribunal and the above mentioned questions had been framed for our consideration. 10. We have also pointed out that essentially the two questions can be reduced to one question and, that is, "whether the aggregate annual receipts of the said two institutions are to be clubbed for the purposes of Section 10 (23C) (iiiad) or not? 11. Before we analyze the relevant provisions, it would be necessary to set them out. Section 10 (23C) (iiiad) reads as under:- "10. In computing the total income of a previous year of any person, any income falling within....
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....included in the total income of that person. But, this is not the case here. The reference here is pointedly to the "aggregate annual receipts" of the educational institution. The expression, "educational institution" and "any person" do not refer to the same entity and are distinct and different insofar as Section 10 (23C) (iiiad) of the said Act is concerned. 15. In our view, therefore, where there are more than one such institutions, which are under a particular society or trust, such as the assessee society in the present case, the aggregate annual receipts of each of the educational institutions would have to be considered separately and not together. Thus, if there are two institutions A and B and if the aggregate annual receipts of the Institution A is less than Rs. 1.00 crore, then the income received by a person (such as the assessee society) on behalf of the Institution A, would not be included in the total income of that person (such as the assessee society). At the same time, if the aggregate annual receipts of Institution B exceeds Rs. 1.00 crore, then any income received by any person on behalf of Institution B would be included in the total income of that person. Si....
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....educational institution. Each educational institution is a separate entity controlled under various statutes for various purposes. May be the Management of these educational institutions would be in the hands of the Societies or the Trust, but for all other purposes they are different, independent entities. That is the reason why Section 10 (23)(c) is worded as under: "Any income received by any person on behalf of..." 24. Here "any person" refers to the assesseee and "on behalf of" refers to such institutions. It may be an University, it may be an educational institution, it may be a hospital or other institutions of similar nature. As all such institutions are independent entity and they generate income and when that income is received by the assesseee, it becomes the income in the hand of the assesseee and it is such income which is sought to be excluded while computing the total income of the assesseee under Section 10. The test prescribed under the aforesaid provision is not the income of the educational education. It is the aggregate annual receipts of such educational institution that is prescribed at Rs. 1 crore. Therefore, irrespective of the expenditure incurred by thos....