ABM Senior Secondary Public School Society Vs ITO (Exemptions) (ITAT Chandigarh)
Assessee, a registered society, runs a school affiliated to HP Board, imparting education up to 12th standard. Gross receipts during AY 2015-16 did not exceed ₹1 crore. AO noticed assessee had advanced ₹59.50 lakh as rent advance to specified persons & held it in violation of Section 11(5). Addition of ₹59.50 lakh was made by Faceless Assessment Unit. CIT(A) deleted ₹20.64 lakh but sustained ₹38.86 lakh addition.
Tribunal’s Observations
- Assessee’s receipts were below ₹1 crore; therefore, it was eligible for full exemption u/s 10(23C)(iiiad).
- AO had no jurisdiction to invoke Section 11(5) restrictions, as applicability arises only if receipts exceed the ₹1 crore threshold.
- Since exemption was available, advancing rent or mode of investment was irrelevant for this year.
- CIT(A) erred in partly sustaining the addition without considering the overriding effect of Section 10(23C)(iiiad).
Tribunal’s Decision
- Entire addition of ₹59.50 lakh deleted.
- Exemption u/s 10(23C)(iiiad) restored in full.
- Appeal allowed in toto.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The assessee is in appeal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 28.02.2025 passed for assessment year 2015-16.
2. With the assistance of ld. Representative, we have gone through the record carefully. It emerges out from the record that assessee has filed its return of income on 24.08.2015 declaring ‘nil’ income. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Act was issued. According to the AO, a perusal of the record would reveal that assessee has given interest free rent advance to specified persons amounting to Rs.59,50,000/-. Hence, he was of the view that this advance rent ought to have not been given by the assessee and the Faceless Assessment Unit made an addition of Rs.59,50,000/-.
