Exemption U/s. 10(23-C) (iiiad) even when the assessee had not claimed any exemption under the Section in assessment proceedings

It has been submitted on behalf of the revenue that the Tribunal granted the benefit of Section 10(23-C)(iiiad) without such a claim being made before the assessing officer or the CIT(A).

Held – The assessee trust has taken various steps, including the construction of building and getting the necessary permission and sanction for running the school; so as to bring the school into “existence” during the year, although the school have separate running classes from next year onwards. More then sufficient details and evidences have been brought on record in support of this contention as well. This is an admitted fact that total receipts of the assessee would remain below Rs. 1 Crore even if the donations of Rs. 49,99,000/- are added as receipt in the nature of income of the assessee society. So I hold that the assessee trust is entitled for exemption u/s 10(23C)(iiiad).

HIGH COURT OF JUDICATURE AT ALLAHABAD
Chief Justice’s Court
INCOME TAX APPEAL No. – 100 of 2014
Commissioner Of Income Tax
Vs.
Om Sarla Babu Educational Trust
Counsel for the Appellant:- Dhananjay Awasthi
Counsel for respondent:- Vishwjit
Hon’ble Dr. Dhananjaya Yeshwant Chandrachud,Chief Justice

ORDER
Hon’ble Dilip Gupta,J.

This appeal by the revenue under Section 260-A of the Income Tax Act, 1961 arises from the decision of the ITAT; the assessment year being A.Y. 2009-10. The revenue has raised the following question of law:

“Whether the ITAT erred in law in granting exemption U/s. 10(23-C) (iiiad) even when the assessee had not claimed any exemption under the Section in assessment proceedings.”

The order of the Tribunal indicates that the appeal was by the revenue and in support of the appeal, the departmental  representative appeared. The departmental representative, as the Tribunal recorded, fairly accepted that the issue was covered by the order of the Tribunal dated 29 November 2013 which was pertaining to A.Y. 2009-10. This order of the Tribunal had also been confirmed by the Division Bench of this Court while dismissing the appeal filed by the revenue (Income Tax Appeal Defective No. 38 of 2014) on 1 May 2014. The order of the Tribunal proceeded on a concession that the matter was covered.

However, it has been submitted on behalf of the revenue that the Tribunal granted the benefit of Section 10(23-C)(iiiad) without such a claim being made before the assessing officer or the CIT(A).

On the other hand, learned counsel appearing on behalf of the assessee has strongly contested the correctness of the submission by referring to the order passed by the CIT(A) where a specific claim under Section 10(23C) (iiiad) was raised.

We have duly perused the order of the CIT(A) as well as the order of the Tribunal. The order of the CIT(A) would indicate that in the supplementary submission which was filed on 26 February 2013, the assessee had specifically raised the issue of Section 10(23C) (iiiad) and had placed on record the relevant and material facts including the objects of the trust, the allotment of land, the structure of a school building and the commencement of a school. The CIT(A) specifically dealt with this issue and observed as follows:

“Without prejudice to above, the appellant’s additional ground regarding its entitlement for exemption u/s 10(23C)(iiiad) goes; the same also is found valid and allowable. The assessee trust has taken various steps, including the construction of building and getting the necessary permission and sanction for running the school; so as to bring the school into “existence” during the year, although the school have separate running classes from next year onwards. More then sufficient details and evidences have been brought on record in support of this contention as well. This is an admitted fact that total receipts of the assessee would remain below Rs. 1 Crore even if the donations of Rs. 49,99,000/- are added as receipt in the nature of income of the assessee society. So I hold that the assessee trust is entitled for exemption u/s 10(23C)(iiiad).”

In this background, it would not be a fair comment on the order of the Tribunal to submit that the Tribunal allowed the claim under Section 10(23C)(iiiad) without such a claim having been raised before the CIT(A).

As a matter of fact, such a claim was raised before the CIT(A) together with relevant factual material. The claim was duly adjudicated upon and the CIT(A) furnished adequate grounds for holding the assessee to be eligible to the exemption under Section 10(23C)(iiiad).

It is in this background that a concession was made before the Tribunal on behalf of the revenue that the said issue was covered by another decision of the Tribunal in the case of the assessee itself, though for another institution. No attempt has been made on behalf of the revenue to distinguish the judgement of this Court dated 1 May 2014 in the earlier appeal filed by the revenue.

Consequently, we do not find any merit in the appeal. The appeal does not raise any substantial question of law and it is, accordingly, dismissed. There shall be no order as to costs.

Order Date :- 27.5.2014
RK (Dilip Gupta,J.) (Dr.D.Y.Chandrachud,C.J.)

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Submitted by –CA Prarthana Jalan

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