Case Law Details
Sarvoday Shikshan Prasarak Mandal Shirol Vs ITO (ITAT Pune)
The appeal involves the eligibility of an educational institution for exemption under section 10(23C)(iiiab) of the Income Tax Act. It is observed that the educational institution in question is substantially financed and meets the criteria for exemption under section 10(23C)(iiiab) of the Income Tax Act. The ITAT Pune allows the appeal of the assessee, confirming the eligibility of the educational institution for exemption under section 10(23C)(iiiab) of the Income Tax Act.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals) [NFAC], Delhi, dated 10.02.2023 for A.Y.2014-15, emanating from the order u/s.154 of the Act dated 30/03/2021 passed by the Income Tax Officer, Exemption, Kolhapur. The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 (‘The Act’) it be held that rectification order passed by the ld.AO and that upheld by ld. CIT(A) rejecting the Appellants Claim u/s.10 of the Act is incorrect and contrary to the provisions of section 154 of the Act. Accordingly, the appellants rectification application claiming exemption u/s. 10 of the Act be kindly allowed. Appellant be granted just and proper relief in this respect
(Rs. 1,78,51,500/-)
2. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 (‘The Act’) it be held that order passed by the CIT(A) by wrongly assuming applicability of s.10(23C) (iiiac) instead of 10(23C)(iiiab) of the Act and thereby upholding the order of the ld.AO be kindly quashed and accordingly, the appellants claim of exemption u/s. 10(23C)(iiiab) of the Act be kindly allowed. Appellant be granted just and proper relief in this respect
(Rs. 1,78,51,500/-)
3. Without prejudice to above grounds, on the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, be held that Ld. AO and CIT(A) both erred in taxing the Gross Receipts instead of Surplus. Accordingly, if at all the income of Appellant is to be taxed, it can be the surplus. Accordingly, appropriate order be passed and appellant be granted just and proper relief in this regard.
(Rs. 1,78,51,500/-)
4. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of healing.”
Brief facts:-
2. The brief facts emanated from the record are that the assessee is a public charitable trust registered under Bombay Public Trust Act. Assessee filed its return of income for the year under consideration on 08/02/2016 and the order u/s. 143(1) was passed on 29/03/2017 by disallowing the assessee’s claim for exemption of Rs.3,35,16,250/-. Aggrieved, the assessee filed rectification application u/s.154 before the ITO, Exemption, Kolhapur, who rejected the assessee’s application on the ground that assessee failed to furnish the details of 12AA registration and, therefore, is not eligible for deduction u/s. 11 of the Act.
3. Aggrieved by the order of the ITO, Exemption, assessee filed appeal before the ld.CIT(A), who upheld the order of ITO, Exemption. The ld.CIT(A) gave the reason for rejecting the assessee’s appeal that issue involved is outside the ambit of s.154 and there is no mistake apparent from record. Aggrieved by the order of ld.CIT(A), assessee filed the present appeal before this Tribunal.
Submissions of ld.AR:-
4. The ld.AR filed a paper book containing 61 pages. The ld.AR submitted that the assessee is running educational institution, which is substantially financed by the Government, whose grants are more than 90%. He further submitted that in the return of income, the assessee had claimed benefit of s.10(23C)(iiiab) and never claimed benefit u/s. 11 & 12. The CPC in its order u/s. 143(1) rejected the assessee’s claim without giving any reasons. Though, the assessee had filed all the details before the CPC including copy of audit report, income and expenditure account and balance sheet, the CPC erred in passing the order u/s.143(1). Therefore, the assessee filed a rectification application as it was mistake apparent from record. The assessee had claimed benefit u/s.10(23C)(iiiab) which was rejected without any reason. The ITO, Exemption erroneously stated that assessee had claimed benefit u/s.11 and the ld.CIT(A) has failed to verify these facts. Ld.AR also accepted that while filing e-return, there had been some mistake on the part of the assessee for claiming benefit u/s. 10(23C)(iiiab). Column No.16 of the return of income reads as under:-
“16. Amount eligible for exemption under any clause, other than those at 14 and 15, of section 10; claimed exemption of Rs. 3,31,83,150/-”
4.1 Column 14 & 15 of the return of income pertains to ss.10(21), 10(22B), 10(23A), 10(23B), 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via). Thus, ld.AR pointed out specifically that assessee claimed exemption u/s. 10(23C)(iiiab) and not u/s. 11 & 12.
4.2 Ld.DR relied on the order of the ld.CIT(A).
Analysis & Findings:-
5. We have heard both the parties and perused the record. At page Nos. 22 to 34 of the paper book, the assessee filed copy of return of income for AY 2014-15. On perusal of the return of income, it is observed that assessee had claimed exemption u/s. 10 of Rs.3,31,83,150/-. Ld.AR has brought to our notice that assessee claimed exemption u/s. 10(23C)(iiiab). On perusal of the income and expenditure account, it is observed that total receipts of the assessee are Rs.4,48,00,293/-, out of which government grants are Rs. 3,04,40,401/-. Thus, it is observed that the government grants are around 68% for the year under consideration. S. 10(23C)(iiiab) reads as under:-
“10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
(1) to (22) x x x xx x
(23C) any income received by any person on behalf of— (i) to (iiiaaaa) x x x x x x
(iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government.”
5.1. Since assessee is substantially financed and it is an educational institution, the assessee is eligible for exemption u/s.10(23C)(iiiab). Therefore, we allow the appeal of the assessee.
6. In the result, appeal of the assessee is allowed.
Order pronounced in open Court on 10th May, 2023.
