Dr. Babasaheb Ambedkar Open University Vs CIT (ITAT Ahmedabad)
ITAT Ahmedabad held that Rule 2BBB of the Income Tax Rules, 1962 was introduced only from AY 2015-16 and the same is not applicable for AY 2014-15. Thus denial of exemption u/s. 10(23C)(iiiab) of the Income Tax Act unjustified.
Facts- This appeal is preferred by the assessee, Dr. Babasaheb Ambedkar Open University, against the revisionary order passed by the Commissioner of Income Tax (Exemptions), Ahmedabad u/s. 263 of the Income Tax Act, 1961, dated 29th March 2024. The order under challenge revises the assessment order passed by AO u/s 147 r.w.s. 144B, dated 29th March, 2022, accepting the assessee’s claim for exemption u/s. 10(23C)(iiiab) of the Act for the Assessment Year (AY) 2014-15.
Conclusion- The AO accepted the assessee’s claim for exemption under Section 10(23C)(iiiab) of the Act after examining the relevant facts and submissions. The assessee provided detailed calculations showing that when interest income on government grants is included, the government financing exceeds 50% of the total income, thereby meeting the threshold for substantial financing. The AO did not apply Rule 2BBB retrospectively, as the rule was introduced only from AY 2015-16. There was no legal requirement during AY 2014-15 to adhere to the 50% threshold outlined in Rule 2BBB.
