National Law Institute University Vs DCIT (Exemption) (ITAT Indore)
ITAT Indore held that activity of providing hostel/mess is part of main activity of imparting education. Hence, claim of 15% of gross receipts as eligible exemption under section 11(1)(a) of the Income Tax Act justified.
Facts- The assessee is a law university established under Rashtriya Vidhi Sansthan Viswavidhyalaya Adhiniyam, 1997. Uptill AY 2014-15, the assessee was entitled to exemption u/s 10(23C)(iiiab). Thereafter, w.e.f. 01.04.2014, the assessee has been granted registration u/s 12AA. Thus, the assessee has become entitled to exemption u/s 11/12 from previous year 2014-15 / AY 2015-16. Accordingly, for AY 2015-16 under consideration, the assessee filed return on 30.09.2015 declaring total income of Rs. Nil after claiming exemption u/s 11/12.
The case was selected for scrutiny-assessment and the AO issued statutory notices u/s 143(2)/142(1) which the assessee complied. Ultimately, the AO completed assessment vide assessment-order dated 12.12.2017 u/s 143(3) determining total income at Rs. 5,62,97,660/- after making certain adjustments. CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that there is an undisputable position manifest from the elements of ‘journal entry’ to signify/establish that the assessee carried hostel/mess activity and earned income therefrom in earlier years and accumulated corpus upto 31.03.2014. When it is so, we agree, in principle, that the taxation of the amount of Rs. 5,42,75,671/- in AY 2015-16 relevant to previous year 2014-15 is against the very scheme of Income-tax Act, 1961 and not sustainable.
