ITO WARD-2 Vs. SIDDHARTHA EDUCATIONAL SOCIETY

JUDGEMENT

(1.) THESE appeals pertaining to the assessment years 2003 -04, 2005 -06, 2006 -07, 2007 -08 and 2008 -09 are directed against common order of the Commissioner of Income Tax (Appeals), Visakhapatnam dated 17.01.2012. Cross objections have been filed by the assessee in all the revenue appeals for the assessment years 2003 -04, 2005 -06, 2006 -07 (arising out of original assessment) and 2007 -08. Cross appeals have been filed for the assessment years 2006 -07 (arising out of reassessment) and 2008 -09. As the issues arising in all these appeals are common, for the sake of convenience, they are heard together and disposed of by way of this common order.

(2.) FACTS in brief. The assessee society is engaged in the running of an Educational Institution. It is registered with the Registrar of Societies and has also got registration u/s. 12A of the Income -Tax Act, 1961 (hereinafter called as 'Act'). The educational institutions are run in the name of "Siddhartha Group of Educational Institutions", in and around Eluru. Initially, Shri Suresh Babu and Smt. Vijaya Lakshmi who are active and founder members of the society, were running regular coaching classes, as well as residential classes in their individual capacity and were being regularly assessed to tax on the income derived there from. Later on, they floated a society in the year 1993 and since then educational activities are being carried on in the name of this society.

(3.) DURING the assessment year 2004 -05, for the various reasons given by the assessing officer in the assessment order, he held that the society did not exist solely for educational purposes but is working with a profit motive. He denied exemption u/s. 11 of the Act and assessed the assessee society under the normal provisions of Income -Tax Act under the head income from business. On appeal, the Ld. CIT(A) Rajahmundry confirmed the action of assessing officer vide his order dated 04.05.2007. Subsequently, the Commissioner of Income Tax, Rajahmundry, cancelled the registration granted to the society u/s. 12A of the Act, vide his order dated 26.11.2007, with retrospective effect from 01.04.2003. The assessing officer thereafter completed the assessment for the assessment year 2005 -06 vide order dated 17.12.2007 denying exemption u/s. 11 of the Act based on the same reasons as cited for the assessment year 2004 -05. This order was also a subject matter of appeal before the Ld. CIT(A) Rajahmundry, who dismissed the assessee's appeal vide order dated 11.02.2009. The orders of the Ld. CIT(A) Rajahmundry for the assessment years 2004 -05 and 2005 -06 as well as the order of the CIT Rajahmundry cancelling registration u/s. 12A of the Act, were subject matter of appeal before the ITAT. The revenue also filed cross objections. ITAT vide its common order dated 09.05.2011 allowed the appeal of the assessee, thus restoring the registration granted u/s. 12A of the Act and also allowing the appeals of the assessee against the order of the Ld. CIT(A) for the assessment year 2004 -05 and 2005 -06. The cross objections filed by the revenue were dismissed.