Case Law Details
The undisputed facts of the case are that the assessee society does not possess registration under section 12A of the Act for relevant assessment year. From the perusal of return filed by it alongwith Form No.10B shows that it intended to claim exemption under section 11 of the Act, which it could not, since it did not have registration under section 12A of the Act at that time.
However, it can claim exemption under any other provision of the Act provided it satisfies all the conditions given in that provision. Under section 10(23C)(iiiad) of the Act, any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of Rs.1 core can avail of this exemption. Undoubtedly, the annual receipt during the relevant assessment year of the assessee does not exceed Rs.1 crore. The only issue to be seen is whether the assessee is existing solely for educational purposes and not for the purpose of profit. Since the assessee has been granted registration under section 12A of the Act in the future as on 26.5.2011, it cannot be denied that it did not exist for earning of profits. Now, the only question is whether the assessee is existing wholly for educational purposes. No doubt, the assessee has one of its objects the education activities as discussed hereinabove. From the perusal of balance sheet and other papers filed in the Paper Book, it is seen that the only activity carried on by the assessee during the year is relating to the education only. The fact of educational activities being carried out by the assessee has been confirmed by the Assessing Officer himself in the Remand Report dated 18.2.2014 filed by him before the learned CIT (Appeals) during the appellate proceedings for the assessment year 2010-11. In this report, the Assessing Officer confirmed that the assessee trust is running a school for educating the deaf & dumb, mentally retarded, physically handicapped and poor students. After enquiries, the Assessing Officer also found that there are 250 to 300 children approximately in the school to whom the assessee trust is providing all facilities i.e. food, clothing, hostel, conveyance and medical etc. for which no charges have been received by the assessee. The assessee may be having many other objects in its trust deed but during the year no other activity other than education has been pursued by it. The exemption under section 10(23C)(iiiad) of the Act is available on the educational activities of an assessee and if the assessee is carrying on only this sole activity during the year, the exemption cannot be denied to it on the basis that it has other objects also in its trust deed. There is no allegation by the Assessing Officer that the assessee has deviated from its objects. If in any of the subsequent years, the assessee carries on any other activities other than educational, it has to maintain separate books of account and if it does not do the same, the Assessing Officer can take care of it during the course of assessment proceedings of that year. On the perusal of the order of the Assessing Officer, it appears that the charitable nature of the activities carried on by the assessee has not been doubted by him. Therefore the Assessing Officer cannot deny the benefit of exemption under section 10(23C) of the Act to the assessee on the ground that it has objects other than education also. In this regard, reliance placed by the learned counsel for the assessee on the judgment of Hon’ble Calcutta High Court in the case Birla Vidhya Vihar Trust Vs. CIT (1982) 136 ITR 445 (Cal) is not out of place, whereby it has been held that a trust may have income from several sources but the sole object is the educational and the income has not diverted for personal profit, the trust is entitled for the benefit under section 10(23C)(iiiad) of the Act. The contention of the Assessing Officer that the assessee itself has claimed exemption under section 11 of the Act while filing its return of income and not exemption under section 10(23C)(iiiad) of the Act cannot be the basis for disallowing the claim as it is a trite law by now that even if the assessee himself does not claim any benefit if it is eligible for any such benefit and fulfills all the conditions provided under the Act, it incumbent on the authorities to give him such benefit. It has been very clearly provided in the Circular No.14(XL-35) dated 11.4.1995 (supra) issued by the CBDT, whereby it has been instructed that the officers of the Department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. In this view, as the assessee is carrying on the educational activity only during the year, it has to be given exemption under section 10(23C)(iiiad) of the Act.
As regards the contention of the Assessing Officer that the exemption under section 10(23C)(iiiad) of the Act cannot be given to the assessee as it did not file the Audit Report alongwith the return of income as required by the tenth proviso to clause (23C) of section 10 of the Act. The tenth proviso to section 10(23C) of the Act reads as under :
Provided also that where the total income, of the fund or institution or any university or other educational institution or any hospital or other medical institution referred to in sub- clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
From the perusal of the said proviso, we see that the provisions of this proviso are applicable only to clause (iv), (v) (vi) and (via) of section 10(23) of the Act. Since the assessee is claiming exemption under section 10(23C)(iiiad) of the Act, there is no need to file Audit Report in Form No.10BB. In view of the above, the assessee has complied with all the conditions of section 10(23C)(iiiad) of the Act. We do not find any infirmity in the order of the learned CIT (Appeals) and confirm the same. The ground Nos. 1 and 2 raised by the Department are dismissed.
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