Fees Regulating Authority Vs ACIT (Exemption) (ITAT Mumbai)
CBDT Delay Can’t Defeat Exemption Claim: ITAT Revives Section 10(46) Relief for Maharashtra Fee Regulator
The Mumbai ITAT granted major relief to the Fees Regulating Authority, Maharashtra, by restoring the issue of taxability back to the AO after noting that its application for exemption under Section 10(46) has been pending before the CBDT for years.
The Authority, constituted under the Maharashtra Unaided Private Professional Educational Institutions Act, 2015, had claimed exemption under Section 10(46) as a statutory body created to regulate educational fees in public interest. Though registered under Section 12AA, it primarily sought exemption under Section 10(46). However, the AO and CIT(A) denied relief on the ground that the CBDT had not yet issued the formal notification required under the provision.
Before the Tribunal, the assessee demonstrated that it had applied for notification as early as January 2018, and that the matter was still under active correspondence with the CBDT even in 2026. The ITAT noted that Section 10(46) specifically grants exemption to bodies constituted under State legislation for regulatory functions benefiting the general public, provided they are non-commercial and notified in the Official Gazette.
The Tribunal observed that once notification under Section 10(46) is granted, the assessee’s income would become exempt. Therefore, it would be inappropriate to finally determine taxability without considering the outcome of the pending CBDT proceedings.
Importantly, the ITAT also kept open the assessee’s broader constitutional argument that it is an “instrumentality of the State” and therefore not liable to tax at all. The Tribunal further allowed the assessee to place additional material regarding exemption under Section 11 during fresh proceedings. Accordingly, the entire matter was restored to the AO for de novo adjudication after considering the final decision of the CBDT on the Section 10(46) application.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
