SIKKIM MANIPAL UNIVERSITY Vs. CHIEF COMMISSIONER, INCOME TAX

JUDGEMENT

(1.) THE petitioner has challenged the order of the Chief Commissioner of Income Tax (in short CCIT), Jalpaiguri passed under Section 154 of the Income Tax Act, 1961 on the grounds that the aforesaid power can only be exercised for rectification of a mistakes which are apparent on record and not when an elaborate reasoning is to be provided to arrive at the finding that there appears to be a mistake apparent on record. The challenge is further made on the ground that the appellate tribunal which stands on a higher pedestal having decided an issue based on the reasoning is binding on the authority put on the lower pedestal and the subordinate authority cannot pass an order which is directly in conflict with the findings and/or reasoning recorded by the appellate tribunal.

(2.) SHORN of unnecessary details, the petitioner, a university recognized by the University Grants Commission. Because of Sikkim Manipal Health and Technological Science Act, 1995, constituted with an object to establish and incorporate Sikkim Manipal University of Health, Medical and Technological Science in the state of Sikkim. By virtue of an agreement dated 12th September, 1992 entered into between the state of Sikkim who was desirous of establishing the educational opportunities and health services with the manipal education and medical group, a registered trust who established medical, dental, nursing, pharmacy and other allied health training as under graduate, graduate and post graduate levels to create a centre of excellence of providing health, medical care, education and research facilities in the field of medical science and technology. A further agreement dated 15th September, 1998 was entered into between the state of Sikkim and Sikkim Manipal University, the petitioner herein, for establishment of a referral cum teaching hospital with super specialties facilities and the land measuring twenty five acres in the city of Gangtok was allotted on lease. The petitioner subsequently became desirous of establishing an engineering college which was accepted by the state of Sikkim and to facilitate the same, a further land measuring seven acres was allotted in terms of the agreement dated 15th May, 2003. It was further agreed that a sum of Rs. 4.78 crores shall be granted by the department of North Eastern Council of India to purchase the equipments and the Government of Sikkim provided an annual grant to the tune of Rs. 2.5 crores. The said agreement was fully implemented and it is the case of the petitioner that till 2010, an aggregate sum of Rs. 2.82 crores was given by the Government of Sikkim. Subsequently the petitioner applied for registration under Section 12AA of the Income Tax Act, 1961 claiming that the university is substantially owned and financed by the Government of Sikkim. Initially the said application stood dismissed by the competent authority which was carried further to an appellate authority, that is the tribunal, and by a reasoned order dated 20thAugust, 2010, the tribunal set aside the order refusing the registration under the said Act and direct the authority to grant registration to the petitioner under the aforesaid provision. In terms of the order of the tribunal, the Commissioner of Income Tax vide order dated 19th October 2010 granted the registration under Section 12AA read with sub -section (a) of Section 12A of the Income Tax Act, 1961 with effect from 1st April 2009.

(3.) ACCORDING to the petitioner, there was some confusions as to the applicability of the Income Tax Act to the state of Sikkim which constrained the petitioner to file the return until a notice under Section 148 of the Income Tax Act was served upon the petitioner. In pursuance of the said notice, a return pertaining to the assessment year 2004 -2005 to 2007 -2008 was filed claiming an exemption under Section 10 (23C) (vi) of the said Act by the petitioner. However, a revised return is filed by the petitioner claiming an exemption under Section 10 (23C) (iiiab) of the said Act which was introduced by the Finance (II) Act, 1998 with effect from 1st April 1999. The University Grants Commission was approached by the petitioner to take up an issue with the Director General (Income Tax) for granting an exemption on the donation received by them. By a letter dated 29th February, 2000 issued by the University Grants Commission, it is communicated that the institutions satisfied the conditions under Section 10 (23C) (iiiab) of the Act, University Grants Commission may not have a role to play as exemption is automatic.