Mahavir Singh, Member (J) -
(1.) BOTH these appeals by assessee are arising out of separate orders of CIT(A) -XXXVI, Kolkata in Appeal Nos. 264 & 265/CIT(A) -XXXVI/Kol/Cir.2,Hgl./11 -12/1240 & 1182 respectively both dated 25.09.2012. Assessments were framed by JCIT (OSD), Circle -2, Hooghly u/s. 143(3) read with section 147 of the Income -tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Years 2009 -10 and 2010 -11, vide his separate orders, both dated 28.11.2011.
(2.) FIRST common issue raised by assessee in these appeals is that, whether institution known as 'Senate of Serampore College' is a taxable entity or not. For this assessee raised following ground nos. 2 &3.
"2. For that in the facts and circumstances of the case the assessee be held to not to be a taxable entity and hence the assessment order passed on the assessee be cancelled.
For that in the facts and circumstances of the case the assessee cannot be assessed to tax merely because it filed a return of income though it was not a taxable entity."
Second common issue raised by assessee in these appeals is, that, whether assessee is entitled to exemption u/s. 10(23C)(iiiab) of the Act or not. For this assessee raised following ground no 4:
"4. Without prejudice to above and in the facts and circumstances of the case the assessee be entitled to exemption u/s. 10(23C)(iiiab) of the IT Act 1961 and accordingly the entire income of the assessee be held to be exempt u/s. 10(23C)(iiiab) of the IT Act 1961."
3. Brief facts relating to above two inter connected issues are that the assessee is an educational institute, which does not exist for profit. The AO in assessment order noted the fact that it is a theological university established to promote piety and learning, particularly among the native Christian population of India. The Serampore College is a university incorporated by the Royal Charter of 1818. The Serampore College was granted power to grant degree, diploma and certificate in any branch of knowledge under Royal Danish Chapter of 1827 for establishment of universities at Calcutta, Bombay and Madras. Serampore College has two branches at Bangalore and Calcutta. It has 47 affiliated colleges. The general education in the streams of arts, science and commerce was affiliated to the University of Calcutta after its establishment in 1857. Subsequently, 'The Serampore College Act 1918' was passed by Government of India, as Bengal Act IV of 1918, to supplement and in certain matters to supersede, the Royal Charter of incorporation. By this statue, regulations of 'The Serampore College' was brought in for better governance and management, and college has been run in terms of the statues. 'The Serampore College' has following constitutes units in its functions and activities, as is evident from the Serampore College Act 1918:
i) 'College Council' -headed by a Master (President) which is the Supreme Body which frames policy issues and confers Degree, Diploma, Certificate:
ii) Senate of the College (Senate of Serampore College): Appointed by the Council, the Senate shall frame courses of study and make rules for conduct of examination and perform all other matters and things necessary or proper subject to the control of the Council.
iii) 'Theology Department': The purpose of this department is to impart higher Theological Education to the prospective minister of Churches or lay people through its Faculty of Theology. It has affiliated college in India and sub -continent. The college confers Bachelor Divinity degree and other diploma under Serampore College (University) which is recognized for further post graduate examinations by many Indian Universities including Calcutta University. Any person irrespective of caste, creed and religion can study these courses under the Theology Department.
iv) 'Serampore College (Arts, Science and Commerce)' -The general fields of studies in the streams of Arts, Science and Commerce is affiliated to the University of Calcutta since its inception in 1857. The degrees are granted by the University of Calcutta."
(3.) THE assessee filed its return of income in the name of "Senate of Serampore College" for the first time for the assessment year 2009 -10 on 28 -09 -2010 declaring nil income. The assessee also applied for grant of exemption u/s. 10(23C) (Via) of the Act on 11 -11 -2009 before CCIT Kolkata -X. The CCIT Kolkata -X asked for report from the AO and the AO after examine the audited accounts for the FY 2003 -04 to 2008 -09, forwarded its finding to CCIT Kolkata -X on 05 -10 -2010. In view of the report of AO, CCIT Kolkata -X rejected the application of the assessee, 'Senate of Serampore College' vide his order No. CCIT -X/10(23C)/2/2010 -11/1910 -14 dated 25 -11 -2010. Thereafter the AO issued notice u/s. 148 of the Act dated 01 -02 -2011 for the AYs 2009 -10, 2010 -11, 2006 -07 and 2004 -05, for the reason that in each of the year there is excess of income over expenditure as per the audited Income and Expenditure account. In the present year, the assessee's excess of income over expenditure as per audited Income and Expenditure of account was to the tune of Rs. 64,39,213/ -. According to AO, even the exemption application u/s. 10(23C)(Via) of the Act was also rejected by the CCIT Kolkata -X vide order dated 25 -11 -2010. Before the AO during the course of assessment proceedings the assessee filed detailed written submissions, which are reproduced in the assessment order, claiming that 'Senate of Serampore College' is only a unit of college and the legal entity should be, 'The Serampore College'. It was pleaded by the assessee that Serampore College's activities are discharged through its four units, namely,
Unit I: College Council -unaudited by Government
Unit II: Senate of Serampore College -unaudited by Government
Unit III: Theology Department -Unaudited by Government
Unit IV: Arts, Science, Commerce (General) Government Audited.
According to assessee, these independent units were created for operational convenience. According to assessee the assessable entity is, 'The Serampore College'. The assessee also claimed before the AO that the assessee being a substantially aided by the Government, is eligible for exemption u/s. 10(23C)(IIIab) of the Act. The assessee referred the complete facts and figures and total financial picture of the College as under: -
In term of the above, the assessee stated that the Government grant or financial aid by the Government works out to 44.12% of the total receipts/income of the four units of the college during the previous year 2008 -09 relevant to AY 2009 -10. Hence, according assessee, the financial assistant received from Government is, 'substantial' which is evident from the facts of the case. The AO has rejected the explanation of the assessee on both the issues and assessed the excess of income over expenditure as total income of the assessee. Aggrieved, assessee preferred appeal before CIT(A).;