CBDT Circular No. 14/2015 dated 17th August 2015 is self explanatory and clarify the vital points covering scope of enquiry while granting approval/s 10 (23C) (vi). This clarification on Section 10(23C)(vi) having impact on University or educational institution whose aggregate annual gross receipts exceed Rs. 1 Crore. The vital clarification covers the following;
a. It is also clarified that the principle laid down by the Apex Court in American Hotels case (supra) must be followed while considering the applications filed seeking approval for exemption u/s 10(23C)(vi).
b. It also covered necessity for registration u/s 12AA while seeking approval /claiming exemption u/s 10(23C)(vi).
c. Impact of extraordinary powers of the Managing Trustees to appoint remove or nominate other trustees.
d. Generation of surplus out of gross receipts.
e. Collection of amounts under different heads of fee from students.
f. Impact of extraordinary powers of the Managing Trustees to appoint remove or nominate other trustees.
g. Field authorities are advised to keep the above position in mind while dealing with the matters of approval /exemption u/s 10(23C)(VI). Similar principles would also apply to cases covered u/s 10(23C)(via) of the Act.
1. For this section approval of application for grant for exemption is necessary.
2. Application to the Prescribed authority ( Form 56 D) in four Sets
3. Self Attested List of Major Office Bearers
4. Self Attested Copy of By-laws or memorandum and article of association along with registration certificate of the Society or trust deed of trust.
5. Self attested Copies of the assessment orders for last 3 Years, if any
6. Any approval issued on or after 1-12-2006 will be one time approval and valid till date of withdrawn.
7. The Institution shall publish its accounts in local news paper and furnish the same along with application.
8. Opportunity to hear in case of dissatisfaction.
9. The prescribed authority may call further Documents and Information.
10. Max period of disposal – Within Twelve Months from the date of receipt of the Application.
11. Prescribed Authority: Application in Form No. 56D is to be made to the jurisdictional Chief Commissioner of Income Tax (Exemptions) or Director General of Income Tax (Exemptions).
12. The time period for application to be filled shall have to be filed at any time during the financial year immediately preceding the assessment year from which such exemption is sought.
13. Such application cannot be made for any earlier period.
14. The exemption will be for a period of three years and fresh application shall have to be made after the expiry of un-expired period of 3 years which shall also be permanent exemption unless withdrawn.
15. However its approval is to be granted or rejected within a period of 12 months from the end of the month in which application was received by the authorities.
16. Audit of Accounts is compulsory for such institutions.
17. It is mandatory to file return of income.
CA AMRESH VASHISHT, Meerut
(About the Author– Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email firstname.lastname@example.org or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)