Companies may accept deposits without deposit insurance contract till 31-03-2018 or till the availability of deposit insurance product, whichever is earlier
TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION:(i)]
Government of India
Ministry of Corpora Affairs
New Delhi, dated, the May, 2017
G.S.R._(E). – In exercise of the powers conferred by sections 73 and 76 read with sub-section (1) and sub-section (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Acceptance of Deposits) Rules, 2014, namely:-
1. (1) These rules may be called the Companies (Acceptance of Deposits) Amendment Rules, 2017 (2) They shall come into force on the date of their publication in the Official Gazette.
2. ln the Companies (Acceptance of Deposits) Rules, 2014 (hereinafter referred to as the principal rules),-
(a) In rule 2, in sub-rule (1), in clause (c), in sub-clause (xviii), after the words “Domestic Venture Capital Funds “the words”, Infrastructure Investment Trusts” shall be inserted.
(b) in rule 5, in sub-rule (1), for the proviso, the following proviso shall be substituted, namely:-
“Provided that the companies may accept deposits without deposit insurance contract till the 31st March, 2018 or till the availability of deposit insurance product, whichever is earlier.”.
[File No. 1/8/2013-CL-V]
(Amardeep Singh Bhatia) joint Secretary to the Government of lndia
Election Commission to hold challenge to EVMs tempering for EVM used in elections or that EVMs can be tampered despite Technical/Administrative Safeguard
Election Commission of India
Meeting of all Political Parties on issues related to EVM/VVPAT and other Electoral reforms
The Election Commission held a meeting with all recognised National and State Political parties today at Constitution Club, New Delhi to discuss the following issues:
(i) EVMs and VVPATs. (ii) Making Bribery in Elections a Cognizable Offence. (iii) Disqualification on Framing of Charges for the Offence of Bribery in Elections (iv) Suggestions on VVPAT Recount Rules.
07 National Parties and 35 State Parties attended the meeting.
In his inaugural address, Chief Election Commissioner Dr. Nasim Zaidi, underlined the contribution of all political parties and stated that systemic improvements and progressive measures aimed at improving the electoral processes and systems have been evolved by the Commission in cooperation with all political parties.
CEC referred the queries raised by some political parties about the incidents of alleged EVM manipulation at Bhind and Dholpur during the recently concluded Bye-elections, and reiterated that baseless perceptions were generated about these incidents and there was no case of biased vote results.
Commission highlighted the wide range of technical, administrative protocol and procedural safeguards that fortify the EVMs and VVPATs against any sort of manipulation or tampering. He said that Commission is open to hear suggestions on how to further improve integrity and credibility of EVMs.
CEC also informed the political representatives that the Commission will hold a challenge and offer opportunity to political parties to demonstrate that EVMs used in the recently concluded Assemblies elections were tampered OR that EVMs can be tampered even under the laid down Technical & Administrative Safeguards.
CEC stated that the Commission will ensure 100% coverage of VVPATs in all future election to the Parliament and State Assembly Elections. That VVPATs slips of a percentage of EVMs to be determined by ECI will be counted. ECI will soon evolve a framework in this regard. To make the election process more transparent, the Commission has made proposal for electoral reforms on misuse of money power and bribery during elections. The Commission has also made proposal for amendments in the Income Tax Act and in the RP Act, 1951, for enhancing transparency in the funding of political parties.
Dr. Nasim Zaidi urged the political parties to ensure their continuous and qualitative participation at all crucial preparatory steps for elections like FLC, Randomization of EVM/VVPAT/Polling personnel, EVM Preparation/candidate setting, Mock Poll, EVM Sealing etc. CEC also stressed that continuous involvement is the shared responsibility of all the stakeholders including the political parties.
CEC conveyed neutral stand and equidistance of ECI from all political parties as it has no favourite which has enhanced India’s reputation in the eyes of Global Community.
A detailed presentation on EVM was presented by Shri. Sudeep Jain, Director General of ECI explaining therein its secured design feature, development process, stakeholders’ participation at various levels, and administrative processes making the EVMs secure.
Representatives of the political parties presented their views & suggestions on each of the agenda items.
Commission assured the political parties that their concerns & apprehensions regarding EVMs have been taken note of and would be duly considered & addressed through forthcoming challenge and further necessary actions. In respect of other Electoral Reforms, their views/suggestions would be examined and further action would be initiated appropriately.
Order quashed for not deciding objections to reopening u/s 147. The objections filed by the assessee were not decide in the set aside proceedings.
ABCAUS Case Law Citation: ABCAUS 1241 (2017) (05) ITAT
The Grievance: The appellant assessee was aggrieved by the order passed by the Assessing Officer (‘AO’) without deciding objections filed by the assessee for initiation reassessment proceedings AO’) u/s 69B of the Income Tax Act, 1961 (‘the Act’) ignoring that 50% of the amount was invested by the wife of assessee.
Assessment Year : 2003-04 and 2004-05 Date/Month of Pronouncement: May, 2017
Important Case Laws Cited relied upon: M/s. Shiva Rubber Industries vs. ITO
Brief Facts of the Case: For both the years, the assessee had challenged the orders framing reassessment without complying with the mandatory conditions of section 147 to 151 and alleged that the directions of the Tribunal had not been complied with by the AO in set aside proceedings.
Earlier the assessment order(s) for both the assessment years were set aside and matter was restored to Assessing Officer by ITAT. The Assessing Officer was directed to decide objections of assessee u/s 147/148 of the Act and decide the addition on merits afresh. The assessee filed objections u/s 147/148 before AO in set aside proceedings which were not adjudicated by the AO. Thus the assessee alleged that the order of ITAT was disobeyed.
Observations made by the Tribunal: The Tribunal observed that in the earlier first round proceedings before ITAT, the Tribunal while deciding the departmental appeal and cross objections of assessee had restored the matter back to the file of Assessing Officer to re-deciding objections of the assessee u/s 147 and addition on merit.
The assessee did file objections to the reopening of the assessment before Assessing Officer. However Assessing Officer did not decide the objections of the assessee in the set aside proceedings. Therefore the reassessment orders wa liable to be quashed.
It was observed that the issue was covered in favour of the assessee in the case of M/s. Shiva Rubber Industries vs. ITO.
Held: ITAT quash the reassessment proceedings for both the year and the addition made therein.
Wife share in house purchased from savings and stridhan accepted by deleting addition made u/s 69B as unexplained investment – ITAT
ABCAUS Case Law Citation: ABCAUS 1240 (2017) (05) ITAT
The Grievance: The appellant assessee was aggrieved by the order passed by the CIT(A) in confirming the disallowance made by the Assessing Officer (‘AO’) u/s 69B of the Income Tax Act, 1961 (‘the Act’) ignoring that 50% of the amount was invested by the wife of assessee.
Assessment Year : 2009-10 Date/Month of Pronouncement: May, 2017
Brief Facts of the Case: The assessee had declared an income of Rs. 1,84,410/- from petty business activities wherein books of accounts had not been maintained. The AO required the assessee to explain the investment of Rs.15 lacs in the purchase of house property. The assessee stated that the property in question was purchased jointly with his wife as per copy of deed filed. As regards source of investment made in the property, the assessee submitted that the house property was in joint name and wife of the assessee had contributed 50% i.e.; Rs.7,50,000/- cash out of past savings and current years income/capital.
The AO did not believe the explanation furnished and concluded that the explanation was not substantiated and remain unexplained. Consequently the AO made addition of Rs.15,00,000/- u/s 69B as unexplained investment in the hand of the assessee and initiated penalty proceedings u/s 271(l)(c) separately.
In appeal before the First appellate authority (FAA) which was CIT(A), the assessee submitted that the purchase of the said property had been financed by a housing loan of Rs. 20 lacs. The house was purchased in the joint name alongwith his wife. It was accepted that payment of Rs. 15 lacs was made in cash however, the assessee paid only Rs. 7.5 lacs from available sources and the remaining 50% was paid by his wife who too was a tax payer over the years i.e. F.Y. 2002-03 onward. Her share of the payment was made by her savings out of her income and Stridhan etc. Apart from that it was also argued that since both the husband and wife were running petty business and continuously filed income tax returns and as per chart filed and had been regularly making drawings for expenses over ten years and also had savings in the form of cash of the assessee and his wife from FY 2001-02 till FY 2007-08. However, the arguments and submissions did not find favour with the CIT(A) who confirmed the addition .
Aggrieved with the order of the CIT(A), the assessee was in appeal before the ITAT.
Contentions of the appellant assessee: The assessee challenged the conclusion of the CIT(A) stating that the explanation offered had been arbitrarily rejected and ignoring the fact that admittedly both the husband and the wife had regularly been assessed to tax over the years. Thus the insistence of the department to sustain the entire addition in the hands of the assessee it was not justified. Part of the investment had been made by the assesse’s wife who was on independent assessee in her own right.
Observations made by the Tribunal: It was found that the CIT(A) had failed to give any finding as to why the explanation of the assessee that half the funds for meeting the cost of investment of Rs.7. 50 Lacs was financed by his wife should not be accepted.
It was observed that as per the findings of the CIT(A), the assessee’s wife was also returning income from petty business and this fact has been accepted by the CIT(A) also. It was a fact that the bank before advancing the loan necessarily has seen the assessee and his wife’s capacity to repay back the loan with interest over the years based on their liquidity position and past savings. However the CIT(A) had doubted the fact as to how the concerned lady could have such high savings to the extent claimed. It was presumed by him based on no fact that the drawings and savings necessarily must have been spent elsewhere. However no material had been relied upon to dismiss the claim of the assessee. The finding of the CIT(A) did not make any reference to any supporting fact or evidence and thus was open to the challenge of being arbitrary and thus unsustainable.
The Tribunal touched upon the socio-economic realities and aspirations of a lower middle-class or middle-class Indian family and opined that the explanation offered consistently before the tax authorities supported by evidence should had been considered keeping in mind the socio-economic realities and aspirations of a lower middle-class or middle-class Indian family to purchase and own at least one residential house during their life time.
It was further observed that the emotional decision taken to fulfill this overwhelmingly compelling need of owning at least one family residential house at times is often not a decision based on sound prudent financial planning. Like decisions of Indian families often to rashly overspend on marriages of children as a status symbol to impress the society. The decision to buy a family home are equally emotional decisions driven by family pride. The reality of this social dictum of false status boosting family pride can be well understood in the context of the social mileu where repeatedly Indian families, at times willingly still put themselves in crippling financial indebtedness against all sound financial advise towards this so called necessary wish fulfillment.
The Tribunal opined that the tax authorities could not blindly dictate what the earning couple should necessarily save, the tax authorities are expected to be alive to the needs and expectations of aspirational India where both spouses are willing to earn and save making sacrifices on a personal level in order to contribute to fulfilling their life’s dream of owning a family house. The wife too can be an equal contributer from her own life savings and earnings. In such a scenario, the explanation offered that the wife who admittedly was a taxpayer for over 5 years and as per the consistent explanation before the tax authorities, she accepted and acknowledged that she gave her entire life savings including Stridhan, should have been considered and accepted keeping the realities of the social mileu to which the taxpayer belonged. If the explanation still had to be rejected it should have been rejected on facts and evidences. The explanation could not have been outrightly rejected without ascribing any reasons whatsoever.
The ITAT found that the property as per record was in the joint name of the husband and wife and the bank loan was also in their joint name. It opined that the explanation of the taxpayer that half of the amount was paid by his wife where she was an independent taxpayer in her own right deserves to be accepted and consequently the assessee in those peculiar facts and circumstances could not be saddled with the addition of Rs. 7.50 which had been owned up by the wife. Accordingly the ITAT accepted the explanation that the wife contributed Rs. 7.50 Lacs from her past savings and her Stridhan.
Qua the remaining amount of Rs. 7.50 lacs the issue was remanded and set aside back to the file of the CIT(A) with direction to examine the taxpayer’s claim in regard to the payment of Rs.7.50 Lacs by the assessee out of his past savings.
Held: The impugned order to for a limited extent set aside back to CIT(A) with the direction to pass a speaking order in accordance with law. . The explanation qua his wife for the remaining portion for the reasons given hereinabove was accepted.
Quoting Aadhaar Number for PAN Linking exemptions u/s 139AA. Provisions not to apply to super senior citizen and other specified categories
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION No. 37/2017
New Delhi, the 11th May, 2017
S.O. 1513 (E).—In exercise of the powers conferred by sub-section (3) of section 139AA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that the provisions of section 139AA shall not apply to an individual who does not possess the Aadhaar number or the Enrolment ID and is:-
(i) residing in the States of Assam, Jammu and Kashmir and Meghalaya;
(ii) a non-resident as per the Income-tax Act, 1961;
(iii) of the age of eighty years or more at any time during the previous year;
(iv) not a citizen of India.
2. This notification shall come into force with effect from the 1st day of July, 2017.
NHAI Masala Bond Launched at London Stock Exchange
The Union Minister of Road Transport & Highways and Shipping Shri. Nitin Gadkari yesterday launched the NHAI Masala Bond issue at the London Stock Exchange. The NHAI issue witnessed an overwhelming response from a wide range of investors, some of them being first timers to participate in the Masala Bond market. The initial benchmarked issue of INR 1500 crore was upsized to INR 3000 crore by yesterday 3.00 PM (GMT) at a price yielding 7.30% annually in view of the highly positive response from the investor market. The transaction marks the largest ever 5 year issuance and the largest inaugural transaction in Masala Bond market. Some of the leading investors were still showing interest in the NHAI issue who may be brought into the fold in the near future.
It is interesting to note that the NHAI Masala Bond issue has attracted investors from across the spectrum with Asia contributing 60% of the subscription and the balance 40% coming from Europe. Further, 61% of the amount comes from the Fund Managers or Insurance, 18% from the Banks and 21% from the private banks. The spectrum of investors shows bright prospects of the Masala Bond as an instrument of raising rupee denominated resources internationally. On this occasion London Stock Exchange presented a Memento to Shri Nitin Gadkari.
Shri Gadkari started the day’s trading at LSE yesterday, and also addressed the media at India House, London. Shri Gadkari also visited Ambedkar House, where Dr B R Ambedkar stayed during his student days at London School of Economics.
Printing and distribution of text books is connected to education and not advancement of any other object of General Public Utility of the definition of the term charitable purpose u/s 2 (15) – Delhi High Court
ABCAUS Case Law Citation: ABCAUS 1239 (2017) (05) HC
The Grievance: The appellant assessee was aggrieved by the common order passed by the Income Tax Appellate Tribunal (‘ITAT’) confirming the order of the Assessing Officer (‘AO’)disallowing the benefit of exemption u/s 11 of the Income tax Act, 1961 (‘the Act’) to the assessee.
The Question framed for determination: (i) Whether ITAT was correct in law and on facts in setting aside the order passed by CIT (A) and thereby denying exemption to the Assessee under Sections 11 and 12 of the Income Tax Act?
(ii) Whether the ITAT was correct in law and on facts in holding that the activities carried out by the Assessee fall under the 4th limb i.e., “the advancement of any other object of General Public Utility” of the definition of the term “charitable purpose” under Section 2 (15) of the Act and not under the 2nd limb “education”?
(iii) Whether ITAT could re-examine the issue already decided by it vide order dated 30.09.1980 in favour of the Assessee for AY 1975- 76 and 1976-77, without referring the same to the large Bench particularly when there is no change in the activities carried out by the Assessee throughout these years?
Assessment Year : 2006-07, 2007-08, 2008-09 and 2009-10 Date/Month of Pronouncement: May, 2017
Important Case Laws Cited relied upon: Sole Trustee Loka Shikshana Trust v. Commissioner of Income Tax ; ACIT v. Surat City Gymkhana (2008) 300 ITR 214 (SC) ; ACIT v. Surat Art Silk Cloth Manufacturers Association (1980) 2 SCC 31 ; Aditanar Education Institution v. ACIT (1997) 3 SCC 346 ; ACIT v. Thanthi Trust (2001) 247 ITR 785 (SC) ; Oxford University Press v. Commissioner of Income Tax (2001) 247 ITR 658 (SC) ; Nachimuthu Industrial Association v. CIT (1999) 235 ITR 190 (SC) ; Assam Text Book Production & Publication Corporation Limited v. CIT (2009) 319 ITR 317 (SC) ; CIT v. Rajasthan State Text Book Board (2000) 244 CTR 667 (Raj) ; Secondary Board of Education v. ITO (1972) 86 ITR 408 (Ori) ; Hiralal Bhagwati v. CIT (2000) 246 ITR 188 (Guj) ; Institution of Chartered Accountants of India v. Director General of Income Tax (Exemptions) (2012) 347 ITR 99 (Del) ; Parashuram Pottery Works Ltd. v. Income Tax Officer (1977) 106 ITR 1 (SC)
Brief Facts of the Case: The appellant assessee was a society registered under the Societies Registration Act, 1860 since 1970. It was set up by the Government to ensure timely supply of prescribed text books at fair prices to school students and to improve the quality of primary and secondary school education in schools.
The assessee was engaged in printing and publication of text books for Class I to VIII of Government Schools, Municipal Corporation of Delhi (‘MCD’) schools, New Delhi Municipal Council (‘NDMC’) Schools and Delhi Cantonment Schools. The books were provided at subsidized rates by the Assessee. There was nominal profit to school students and wholesale dealers. The Assessee was also distributing free books, reading material and school bags to needy students.
The Assessee was attached to the Directorate of Education, GNCTD. Its activities are administered by the Board of Directors (‘BoD’) comprising of seven officers of the Directorate of Education in an ex-officio capacity and two members nominated by the Lieutenant Governor of Delhi. The Director of Education was the Chairman of the Assessee Society.
The Assessee was registered as charitable under Section 12A(a) of the Act since 1973 and continuously from AY 1971-72 to AY 2005-06 the assessee enjoyed the benefit of exemption.
However, for AY 2006-07, the AO called upon the Assessee to explain why the activity of publication and sale/purchase of books should not be treated as business activity. Secondly, the assessee was asked whether it was maintaining books of accounts as mandated by Section 11(4A) of the Act. The approach of the AO was to consider the Assessee as a ‘General Public Utility.’ Referring to the decision of the Supreme Court, the AO observed that since the assessee was earning huge profit margins of about 35.15%, the activity of publication and sale of books could not be said to be a ‘charitable activity’. Accordingly, the AO treated the income from the sale and publication of books as taxable for each of the AYs in question.
Aggrieved by the above order, the assessee filed appeals before the CIT (A) who reversed the AO‟s decision.
However, for the subsequent AYs, the AO continued to deny the exemption The CIT(A) by the corresponding orders allowed the assessee’s appeals and restored the exemption.
Aggrieved by the above orders of the CIT (A), the Revenue went in appeal before the ITAT which by a common order allowed the appeals of the Revenue by denying exemption to the assessee. ITAT held that activity of the Assessee was prima facie in the nature of a business activity of sale and purchase of books. The books had been sold at a huge profit margin about 40% which showed that the Assessee was engaged in the activities of earning profit. Also, it observed that the Assessee had made accumulation in excess and “without specifying any purpose” and “was not wholly for the charitable purpose. Accordingly, it was held that the activities of the Assessee society are in the nature of business and not charitable purpose.
Contentions of the appellant Assessee: It was contended that the assessee’s income was derived from activity that constituted ‘charitable purpose’ which included ‘education’. It was submitted that the ITAT had erred in affirming the view of the AO that the income was from ’trade, commerce or business’ and therefore, within the ambit of ‘general public utility’.
It was submitted that once the registration of a trust under Section 12A of the Act is given, the AO could not thereafter make a further probe into the purposes of the entity.
Also, that the rule of consistency should also apply as from AY 1974-75 till 2005-06, exemption had been granted to the Appellant and with absolutely no change of circumstances there was no occasion for a different approach to be taken for the AYs in question.
Observations made by the High Court:
Whether printing and distribution of text books amounted to ‘education’?
The Court first considered the question of the interpretation placed on the word “education‟ as occurring in Section 2(15) of the Act. It was observed that the exclusive activity of the assessee was the publication and printing of text books and their distribution to Government schools and schools of the MCD, NDMC, etc. This activity had continued uninterruptedly since the time of its inception, i.e., from AY 1971-72 onwards. The fact that the assessee was a non-profit organisation was not in dispute. Its essential activities were administered by the BODs comprising of officers of the Government of India as well as GNCTD, in its ex officio capacity. The textbooks are provided by the Assessee to the students at subsidized rates. Even the textbooks books, reading materials and school bags were being distributed free to deserving students. The essential activity of the Assessee was connected with „education‟ and nothing else.
Hon’ble Delhi High Court opined that the preparation and distribution of text books certainly contributes to the process of training and development of the mind and the character of students. There does not have to be a physical school for an institution to be eligible for exemption. What is important is the activity. It has to be intrinsically connected to ‘education’.
Referring to the Hon’ble Supreme Court judgment, the Court observed that the in the said case where facts were quite identical, the Apex Court disagreeing with the High Court held that the aim of the assessee was to implement the State’s policy on education.
Hon’ble Delhi High Court took note of the following views expressed by the Hon’ble Supreme Court and High Courts:
Rajasthan High Court in Rajasthan State Text Book Board Concurred by Supreme Court in Assam State Text Book …. “It is not disputed before us that the aims and objects of the Tamil Nadu Text Book Society and those of the Respondent-Assessee are almost identical. It is also not shown to us that the surplus amount, if any, of the Respondent-Assessee, is used for any other purpose or distributed to other members. The Commissioner of Income-tax (Appeals) as well as the Tribunal have noticed that even if some amount remains surplus, that is utilised only for the purposes of education. Thus, having regard to the concurrent findings of fact recorded by the Commissioner of Income-tax (Appeals) and the Tribunal and also taking note of the letter of the Central Board of Direct Taxes itself, it is not possible for us to say that the order of the Tribunal is erroneous in any way. In this way, no question of law arises for consideration much less a substantial question of law.”
Supreme Court in Assam State Text Book Production and Publication Corporation Limited “Following the judgement of the Rajasthan High Court, we are of the view that, in this case, the High Court, in its impugned judgement, has not considered the historical background in which the Corporation came to be constituted; secondly, the High Court ought to have considered the source of funding, the share-holding pattern and aspects, such as return on Investment; thirdly, it has not considered the letters issued by C.B.D.T. which are referred to in the judgement of the Rajasthan High Court granting benefit of exemption to various Board/Societies in the country under Section 10(22) of the Act; fourthly, it has failed to consider the judgements mentioned hereinabove; and lastly, it has failed to consider the letter of the Central Government dated 9th July, 1973, to the effect that all Statecontrolled Educational Committee(s)/Board(s) have been constituted to implement the educational policy of the State(s); consequently, they should be treated as educational institution.”
Institute of Chartered Accountants of India v. DGIT – Delhi High Court “…….whether the Petitioner-Institute could be denied exemption in view of the proviso to Section 2 (15) of the Act since it was engaged in activity of „advancement of any other object of general public utility.‟ Although the Court held that the Petitioner could not be recognized as an educational institute, it accepted the plea that the Petitioner there was engaged in advancement of any other object of the general public utility. The Court concluded that merely because there was profit generated as a result of the activity it could not be concluded that the „institute‟ should be disentitled to exemption. It was held that “a very narrow view had been taken that the Institute was holding coaching classes and that this amounted to business” and that therefore, „the question whether the Institute carried on business had not been examined with proper perspective.”
CIT vs . M.P. Rajya Pathya Pustak Nigam- Madhya Pradesh High Court “From a perusal of the aforesaid decisions, it is lucid that for the entitlement for getting exemption for the assessment year, it is required to see the activities of the Assessee. That is the acid test. If the income/profit is applied for non-educational purposes, it is decided only at the end of the financial year. It is to be seen whether the Assessee is engaged in any kind of educational activities. The authorities which we have referred to above have laid down the criteria under what circumstances an Assessee can claim exemption being involved in educational purposes and how the income is spent”
Council for the Indian School Certificate Examinations v. Director General of Income-Tax (Exemptions) “It is, therefore, clear that courts have laid emphasis on the activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient.”
Hon’ble Delhi High Court observed that the what ITAT had held was contrary to the settled law as explained in the above decisions. The ITAT came to the erroneous conclusion that merely because the assessee had generated profits out of the activity of publishing and selling of school text books it ceased carrying on the activity of ‘education.’ The ITAT failed to address the issue in the background of the setting up of the assessee, its control and management and the sources of its income and the pattern of its expenditure. The ITAT failed to notice that the surplus amount was again ploughed back into the main activity of ‘education’. The question to be asked was whether the activity of the Assessee contributed to the training and development of the knowledge, skill, mind and character of students? The Court opined that the answer to that above question had to be, in the facts and circumstances outlined above, in the affirmative.
Consistency: Hon’ble Delhi High Court also observed the following decisions of the Hon’ble Supreme Court and various High Courts:
Parashuram Pottery Works Ltd-Supreme Court We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year 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.
“On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter – and if there was no change it was in support of the Assessee – we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income Tax in the earlier proceedings, a different and contradictory stand should have been taken.”
Radhasoami Satsang Saomi Bagh v. CIT-Supreme Court (extract from Hoystead v. Commissioner of Taxation 1926 AC 155 (PC)) “Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the Plaintiff and traversable by the Defendant, has not been traversed. In that case also a Defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.”
CIT v. Excel Industries-Supreme Court “It appears from the record that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the Assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers’ money in pursuing litigation for the sake of it.”
Held: It was held that the ITAT was incorrect in setting aside the order passed by the CIT (A) and in denying exemption to the assessee under Section 11 and Section 12 of the Act.
It was further held that the ITAT erred in holding that the activities carried out by the assessee fell under the 4th limb of Section 2 (15) of the Act, i.e., ‘the advancement of any other object of general public utility’ and that its activities were not solely for purpose of advancement of ‘education’. Thus questions (i) (ii) and (iii) framed by the Court were answered in the negative, i.e., in favour of the assessee and against the Revenue.