(2012) 241 KLR 626

 IN THE HIGH COURT OF KERALA AT ERNAKULAM 

PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH 

THURSDAY, THE 16TH DAY OF FEBRUARY 2012/27TH MAGHA 1933 

ITA.No. 183 of 2011 ( ) 

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ITA.384/2009 of I.T.A.TRIBUNAL,COCHIN BENCH 

APPELLANT/RESPONDENT: 

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THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM BY ADVS. SRI. P.K.R. MENON, SR.COUNSEL, GOI(TAXES) 

SRI.JOSE JOSEPH, SC, FOR INCOME TAX 

RESPONDENTAPPELLANT: 

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ST.MARY'S MALANKARA SEMINARY, NALANCHIRA.P.O., TRIVANDRUM-695015. 

THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 16-02-2012, ALONG WITH 184/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: AS ITA.NO.183/2011 

APPENDIX PETITIONER(S) EXHIBITS: 

• ANNEXURE A: COPY OF THE ORDER U/S 143 (3) OF THE INCOME TAX ACT DT.24.03.2006 
• ANNEXURE B: COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DT.10.10.2006. 
• ANNEXURE C: COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DT.25.04.2007. 
• ANNEXURE D: COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DT.23.03.2009. 
• ANNEXURE E: COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DT.10.03.2011. 
  

RESPONDENT'S EXHIBITS: 

• NIL 
  

/TRUE COPY/ P.A.TO JUDGE AS 

[CR] 

C.N. RAMACHANDRAN NAIR & BABU MATHEW P. JOSEPH, JJ. 

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I.T. Appeal Nos. 183 & 184 OF 2011 

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Dated this the 16th day of February, 2012 

Head Note:-

Income Tax Act, 1961 - 10(23C)(iiiad) - Whether  a "Seminary" teaching students for priesthood is an educational institution entitled to exemption from tax?

Held:- Religious teaching in the seminary is also education and seminary is therefore an "educational institution" entitled for exemption.  

Income Tax Act, 1961 - Section 11 - Whether a religious institution which is entitled to exemption from tax u/s 11 of the I.T.Act, can claim benefit of exemption under S.10(23C)(iiiad)?

Held:- In this case for want of registration u/s 12A, the respondent forfeited their claim for exemption u/s 11 of the Act. When this happened at the assessment stage, respondent raised an alternate claim for exemption u/s 10(23C)(iiiad) before the first appellate authority who though allowed the claim first, recalled it later. However, in second appeal the Tribunal allowed the claim on merits which is contested by the Revenue in this appeal. A pure question of law can be raised at any stage of the proceedings under the I.T. Act. The ground raised in appeal by the assessee based on 10 (23C)(iiiad) is certainly a pure question of law and on the same facts the issue was found in favour of the respondent. So much so, we feel respondent was rightly found to be eligible to raise the additional and alternate ground of exemption which was found in their favour.

J U D G M E N T 

Ramachandran Nair, J 

The question raised in these connected appeals filed by the Revenue against the very same assessee is whether the Tribunal was justified in holding that a "Seminary" teaching students for priesthood is an educational institution entitled to exemption from tax u/s 10(23C)(iiiad) of the Income Tax Act. One additional question raised is whether the Tribunal was justified in holding that the respondent was entitled to claim exemption u/s 10(23C) (iiiad) for the first time at the appellate stage. We have heard the learned Standing Counsel appearing for the appellant and we have also gone through the orders of the Tribunal. 

2. The first question raised is whether a seminary coaching and training students for priesthood is an educational institution as referred to in the above provision of the I.T. Act. Educational institution is not defined under the I.T.Act. Therefore, for ascertaining the scope and meaning of "Educational Institution" the Tribunal referred to various decisions, particularly the decision of the Allahabad High Court in City Montessori School(Regd.) v. Union of India and others reported in (2009) 315 ITR 48(All) wherein the Court held that education means instruction, schooling or training given to the young in preparation for the work of life. On the facts, there can be no controversy because training for priesthood involves extensive coaching in religious studies making a person fit to perform the duties of the priest which is a profession. Seminary, in this case is run by Malankara Catholic Church at Thiruvananthapuram where several students undergo coaching and training for priesthood. Freedom to practice and propagate religion is a right conferred under Article 25 of the Constitution. Propagation of religion necessarily involves education and training of young generation on religious matters and unless the same is systematically done religious beliefs and practices cannot be carried to future generations. Therefore religious teaching is a right recognized under the Constitution. A person admitted to seminary takes as much as about 10 years to become a qualified priest and the long duration by itself reveals the extensive coaching and training required to become a priest who is a religious practitioner. So much so, there cannot be any controversy that religious teaching is also education within the meaning of the term contained in S.10 (23C)(iiiad) of the I.T.Act. 

3. It is well known that 'theology' is a subject taught in western universities and degrees and even Ph.Ds. are awarded in 'theology' by several Universities in Europe. There is nothing to indicate that S.10(23C)(iiiad), requires the educational institutions referred to therein to impart education in any particular subject or in any manner whatsoever. So much so, the term 'education' should enjoy a wide connotation covering all kinds of coaching and training carried on in a systematic manner leading to personality development of an individual. In the case of seminary, students on completion of their studies are made priests who head the churches as religious leaders practising and propagating religion as a profession. So much so, we hold that religious teaching in the seminary is also education and seminary is therefore an "educational institution" entitled for exemption u/s 10 (23C)(iiiad) of the I.T.Act. 

4. The next question raised is whether the respondent admittedly a religious institution which is entitled to exemption from tax u/s 11 of the I.T.Act, can claim benefit of exemption under S.10(23C)(iiiad). In this case for want of registration u/s 12A, the respondent forfeited their claim for exemption u/s 11 of the Act. When this happened at the assessment stage, respondent raised an alternate claim for exemption u/s 10(23C)(iiiad) before the first appellate authority who though allowed the claim first, recalled it later. However, in second appeal the Tribunal allowed the claim on merits which is contested by the Revenue in this appeal. 

5. The Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. Commissioner of Income Tax. 229 ITR 383 held that a pure question of law can be raised at any stage of the proceedings under the I.T. Act. The ground raised in appeal by the assessee based on 10 (23C)(iiiad) is certainly a pure question of law and on the same facts the issue was found in favour of the respondent. So much so, we feel respondent was rightly found to be eligible to raise the additional and alternate ground of exemption which was found in their favour. We, therefore, answer both the questions in favour of the respondent and dismiss both the appeals. 

Sd/-C.N. RAMACHANDRAN NAIR, JUDGE. 

Sd/- BABU MATHEW P. JOSEPH, JUDGE. 

ul/- [True copy] P.S. to Judge.