LexVIVEKANAND SCHOOL THROUGH HEADMASTER versus PRESIDENT OF ZILA PANCHAYAT AND ORS.
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[2008] 16 S.C.R. 54 A VIVEKANAND SCHOOL THROUGH HEADMASTER v. PRESIDENT OF ZILA PANCHAYAT AND ORS. (Civil Appeal No. 6657 of 2008) B NOVEMBER 14, 2008 [DR. ARIJIT PASAYAT AND DR. MUKUNDA!<AM SHARMA, JJ.] /.- c Uttar Pradesh and Uttaranchal (Kshetra Panchayats and Zila Panchayats) Adhiniyam, 1961: s.121 ~~Demand under - On the ground that fees collected from students was part of receipts for computing taxable incoine - Held: Tax Authorities were not justified in treating the student fees as D part of taxable income - Authorities directed to compute taxable income and then decide tax liability - Tax/Taxation. The Tax Assessing Officer demanded payment of tax from the appellant,-school under s.121 of the Uttar Pradesh and Uttaranchal (Kshetra Panchayat and Zila E Panchayats) Adhin_iyam, 1961 for assessment years 1998-99, 1999-2000 and 2000-2001. Appellant filed appeal before Commissioner which was dismissed after considering the affidavit filed by the respondent stating that the appellant-school· was a commercial body and F had collected Rs.2.86 lacs and Rs. 3.32 lacs as fees from the students iii the year 1993-94 and 1994-95 respectively. Hence the instant appeal. Partly allowing the appeal, the Court G HELD: 1. S.121 of the Uttar Pradesh and Uttaranchal (Kshetra Panchayat and Zila Panchayats) Adhiniyam, 1961 deals with tax on "circumstances and property. .J.. Rule 6 of the U.P. Zila Panchayat (Imposition, Assessment H 54 - VIVEKANANDSCHOOL THROUGH HEADMASTER v. 55 PRESI. OF ZILA PANCHAYAT AND ORS. ·and Collection of Circumstances and Property Tax) A Rules, 1994 provides that tax shall be assessed and paid on the basis of the total taxable income of the assessee in the previous financial year. As provided in clause (e) of Rule 7 of the Rules, the total arnount of tax imposed on any person shall not exceed rupees six thousand per B annum. Different provisions of the Rules envisage the powers and duties of the taxing authority, basis and conditions of assessment of tax, assessment and collection of tax, notice to general public for inspection of the list and filing of objection against the tax so c assessed. A bare reading of the Act shows that the tax is leviable on the total income. Relevance of this question would arise only after the authorities decide as to whether there is taxable income or not. [Paras 5 and 7] [58-C-D] Mis. R.R. Engineering Co. v. Zila Parishad, Bareil/y and D .• Anr. AIR (1980) SC 1088, distinguished. Pandit Ram Narain v. State of U.P. & Ors. (1956) SCR 664, referred to. 2. Pursuant to the directions of this Court, the E Balance Sheets as on 31.3.1994 and 31.3.1995 and the Income-Expenditure Statement for the financial years 1993~94 and 1994-95 were produced. Receipt from the I>· students was Rs.2,86,472/- for the first period, while for the subsequent period, it was Rs.3,32,425/-. Apparently, F the respondents were not justified in treating the said amounts to be the taxable income. It appears from the financial statements that apart from the students' fees, donation was received from Indian School Society G amounting to Rs.3, 15,000/- for the first year and Rs.2,84,000/- for the subsequent year. After deduction of the expenses, the surplus, i.e. income over expenditure which was transferred to the school fund account was Rs.28,449.15 for the first year and Rs.26,647 .80 for the H 56 SUPREME COURT REPORTS (2008] 16 S. C.R. A subsequent year. The question may arise as to whether donation could be treated as a part of the receipts for computing the taxable income. The relevance of this question would arise only after the authorities decide as to whether there is taxable incom·e·or not. The authorities B are directed to compute the taxable income and then decide as to whether any tax is leviabh:!. [Paras 10 and 12] [59-C, D, E, F, HJ c D E l Case Law Reference AIR (1980) SC 1088 (1956) SCR 664 distinguished referred to Para 8 Para 7 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6657 of 2008. From the final Judgment and Order dated 22.2.2007 of the High Court of Uttarakhand at Na in ital in Writ Petition No. 1055 of 2003(M/B) J.C. Gupta, Dharam Singh and Rajesh for the Appellant. The Judgment of the Court was delivered by DR. ARIJIT PAfJAYAT, J.1. Leave granted. 2. Challenge in this appeal is to the judgment of a Division F Bench of the Uttarak,hand High Court dismissing the writ petiti
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