Case Law Details
National Law University Vs DCIT (ITAT Delhi)
ITAT Delhi held that assessee being a local authority is not engaged in business or earning profit, accordingly, penalty u/s 271B for not getting accounts audited unsustainable.
Facts- The assessee has claimed exemption u/s 10(23C)(iiiab) of the Act for Rs. 28,69,49,640/- in its return of income for the year under consideration. The case was assigned for faceless assessment. Notice u/s 143(2) of the Act was issued and the case was taken up for scrutiny. During the assessment proceedings Ld. AO was not satisfied with the claim of exemption for the purpose of Section 10(23C)(iiiab) r.w.r. 2BBB
AO observed that the assessee university has not audited its account as per Clause (b) of sub-section (1) of section 12A of the Act despite the fact that its total income as computed under the Act without giving effect to the provisions of Section 12 exceeds the maximum amount which is not chargeable to Income Tax in F.Y. 2017-18. Therefore, directed that penalty proceedings u/s 271B of the Act be initiated. Accordingly, notice u/s 271B was issued to the assessee. AO not satisfied with the reply of the assessee, passed the penalty order.
Conclusion- It can be appreciated that the assessee university has been established by the Act of Legislative Assembly of the National Territory of Delhi, and Subsection (3) of Section 3 of the University Act, provides for the establishment of University and that “ The University shall be engaged in teaching and research in law and in allied disciplines.”. The preamble of the University Act makes it very apparent that the purpose of the establishment of a Law University is the establishment of a national-level institution of excellence in the field of legal education and research in the NCT of Delhi. The object of the university as specified in section 4 of the University Act, the powers and function of the University defined u/s 5 grossly indicate that the University is not engaged in any ‘business’ as understood for the purpose of the Act. It is existing solely for educational purposes. It is not established for the purpose of profit.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
