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26-03-2019, Tata Institute of Social, Section 260-A, 14,HIGH COURT OF BOMBAY

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4 months 3 weeks ago #8914 by amit
Section - 260-A, 14, 147, 10(23C)(iiiab), 12-A
Order Date - 26-03-2019
Favouring - Partly
Court - HIGH COURT OF BOMBAY
Appellant - DIT
Respondent - Tata Institute of Social Science
Justice - AKIL KURESHI & M.S.SANKLECHA, JJ.
Citation - 319Taxpundit432
Appeal No. - INCOME TAX APPEAL NO. 1179 OF 2013
Asstt. Year - 2007-08

Order

PER : M.S. Sanklecha,J.

These three Appeals under Section 260­A of the Income Tax Act, 1961 (the Act), challenge the two orders of the Income Tax Appellate Tribunal (the Tribunal) dated 26th September, 2012 and 16th September, 2015. The impugned order dated 26th September, 2012 relates to Assessment Year 2007­08 being Income Tax Appeal No.1179 of 2013. The impugned order dated 16th September, 2015 is a common order of the Tribunal, relating to Assessment Years 2004­05 and 2006­07. Thus the two appeals being Income Tax Appeal No.1321 of 2016 and 1322 of 2016 are in respect of Assessment Year 2006­07 and 2004­05 respectively.

2 On 12th February, 2019 Income Tax Appeal No.1322 of 2016 relating to Assessment Year 2004­05 was on board for admission. The following questions of law were urged in the appeal for our consideration :­

“(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal justified in confirming the order of the CIT(A) and directing the AO to allow exemption u/s. 10(23C) (iiiab) of the Act without appreciating the fact that the assessee is not wholly or substantially financed by the Govt. in view of explanation to sub section (1) of section 14 of the Comptroller and Auditor General (Duties, Powers and Conditions of Services) Act, 1971 as the total Govt. grant during the year is less that 75% of the total expenditure of the assessee?

(b) Whether on the facts and circumstances of the case, the Tribunal was correct in holding Assessment under Section 147 of the Act in law?”

3 At that time, it was pointed out to us that, identical question of law had been raised by the Revenue in Income Tax Appeal No.1321 of 2016 relating to Assessment Year 2006­07, arising out of the common impugned order dated 16th September,2015, urging identical question of law for our consideration. We were also informed that an identical question as referred in (a) above on merits, was a subject matter of Income Tax Appeal No. 1179 of 2013 and admitted on 3rd April, 2013.

4 It was submitted on behalf of the respondent that the issue

(a) raised herein above being the major issue in all the these appeals, would now stand concluded in view of amendment made to Section 10(23C) (iiiab) of the Act by an addition of Explanation thereto. This amendment has clarified / explained the expression “substantially financed” in Section 10(23C) (iiiab) of the Act and was brought into the Act by the Finance No.2 Act of 2014 w.e.f. 1st April. 2015. In the above view, on 12th February, 2019 as agreed by the parties, we passed an order, directing the listing of Income Tax Appeal No.1322 of 2016 along with Income Tax Appeal Nos. 1179 of 2013 and 1321 of 2016, involving same question on merits for final disposal. This as the controversy appeared to be within a very narrow compass.

5 On 4th March, 2019, the three Appeals as directed, came up for hearing. We first took up Income Tax Appeal Nos. 1321 of 2016 and 1322 of 2016 (Assessment Years 2004­05 and 2006­07) filed by the Revenue for consideration. As identical questions of law were already admitted (save time bar) in Income Tax Appeal No. 1179 of 2013, on 2nd April, 2013, we admitted both the appeals on the following identical substantial questions of law:­

“(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal justified in confirming the order of the CIT(A) and directing the AO to allow exemption u/s. 10(23C) (iiiab) of the Act without appreciating the fact that the assessee is not wholly or substantially financed by the Govt. in view of explanation to sub section (1) of section 14 of the Comptroller and Auditor General (Duties, Powers and Conditions of Services) Act, 1971 as the total Govt. grant during the year is less that 75% of the total expenditure of the assessee?

(b) Whether on the facts and circumstances of the case, the Tribunal was correct in holding Assessment under Section 147 of the Act in law?”

6 It was an agreed between the parties that we immediately take up all the three appeals for final disposal Therefore, we took up the three appeals for final disposal in chronological order i.e. relating to the year of the appeal in this Court:­

7 Income Tax Appeal No. 1179 of 2013­ (A.Y. 2007­08):­

(i) This Appeal by the Revenue, was admitted on 2nd April, 2013 on the following substantial question of law:­

“(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal justified in confirming the order of the CIT A) and directing the AO to allow exemption u/s. 10(23C) (iiiab) of the Act without appreciating the fact that the assessee is not wholly or substantially financed by the Govt. in view of explanation to sub section (1) of section 14 of the Comptroller and Auditor General (Duties, Powers and Conditions of Services) Act, 1971 as the total Govt. grant during the year is less that 75% of the total expenditure of the assessee?

(b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that A.O. erred in importing the provision of another legislation in deciding whether the Assessee is substantially financed or not when the provision of the Income Tax Act is silent on the issue?”

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