Dy.Director of Income Tax, (Exemptions)-II, Hyderabad V. M/s. A.P. Modern Educational & Social Service Society, Hyderabad

ITA 663/HYD/2014

• Counselvise Citation: 66322514 RSA 2014
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.663/HYD/14 : ASSESSMENT YEAR 2010 - 11 DY. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD V/S. A.P. MODERN EDUCATIONAL & SOCIAL SERVICE SOCIETY, HYDERABAD ( PAN - AAAAA 6572E ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KIRAN KATTA RESPONDENT BY : NONE DATE OF HEARING 05.08.2014 DATE OF PRONOUNCEMENT 13.08.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 10.1.2014 FOR THE ASSESSMENT YEAR 2010 - 11. 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL READ AS FOLLOWS - 1. THE ORDER OF THE LEARNED. CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION UNDER SECTION 11 OF THE I.T. ACT, 1961, EVEN IN ABSENCE OF APPROVAL UNDER SUB - CLAUSE (VI) TO THE SECTION 10(23C) OF THE I.T. ACT, 1961. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT APPROVAL UNDER SUB - CLAUSE (VI) TO THE SECTION 10(23C) OF THE I.T. ACT, 1961 IS DISTINCT FROM REGISTRATION UNDER S.12A OF THE ACT. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT SUB - CLAUSE (VI) TO THE SECTION 10(23C) AS INSERTED BY THE FINANCE ACT, 1998 W.E.F. 01.04.1999, STATES THA T ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE, AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. THE ISSUE IS EXPLICITLY DEALT WITH BY THE ACT ITSELF AND THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR FRO M IT. ITA NO. 663 /HYD/201 4 A.P. MODERN EDUCATIONAL & SOCIAL SERVICE SOCIETY, HYDERABAD 2 5. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT OBTAINING APPROVAL FROM THE PRESCRIBED AUTHORITY IS MANDATORY, AS PER THE PLAIN MEANING OF SECTION 10(23)(IV) OF THE I.T. ACT, 1961, WHENEVER THE AGGREGATE GROSS RECEIPTS OF EDUCATIONAL INSTITUTION EXCEED RS. ONE CRORE. 6. THE LEARNED CIT(A) IS NOT JUSTIFIED IN DIRECTING TO ALLOW EXEMPTION U/S. 11 OF THE I.T. ACT, 1961, WHEN THE MATTER OF RECEIPT OF ANY DONATION, IF ANY, FOR ADMISSION OF STUDENTS BY WHATEVER NAME THE SAME IS CALLED, HAS NOT BEEN EX AMINED BY THE A.O., DURING THE ASSESSMENT AND MORE OVER, KEEPING IN VIEW THE RECEIPTS SHOWN BY THE ASSESSEE UNDER THE HEADS, VIZ. MISCELLANEOUS FEES, SPECIAL FEES AND MISCELLANEOUS RECEIPTS, ETC. IN RESPECT OF THE TWO SCHOOLS RUN BY IT, WHICH DOES NOT APP EAR TO BE AS PER THE PRESCRIBED FEES FOR ADMISSION OF STUDENTS. 7. .. THUS, THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL RELATES TO THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR EXEMPTION OF ITS INCOME UNDER S.11 OF THE ACT, NOTWITHSTANDING THE FACT THAT IT DID NOT OBTAIN THE NECESSARY APPROVAL UNDER S.10(23C) OF THE ACT, AND THE LEGALITY AND VALIDITY OF THE ACTION OF THE CIT(A) IN ALMOST SETTING ASIDE THE ISSUE RELATING TO ASSESSEES CLAIM FOR EXEMPTION, FOR FRESH DECISION AFTER VERIFICATION OF FULF ILLMENT OF THE CONDITIONS STIPULATED IN SS.11 TO 13 OF THE ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTION AND THE ISSUE INVOLVED RELATES TO ITS CLAIM FOR EXEMPTION IN RESPECT OF ITS INCOME UNDER S.11 OF THE ACT. ASSESSEES CLAIM FOR EXEMPTION UNDER S.11 OF THE ACT, WAS REJECTED BY THE ASSESSING OFFICER, ON THE GROUND THAT BEING AN EDUCATIONAL INSTITUTION, IT WAS ELIGIBLE FOR EXEMPTION UNDER S.10(23C) (VI) AND NOT UNDER S.11, AND IT HAD NOT OBTAINED THE REQUISITE APPROVAL UNDER THAT PROVISION AND HENCE IT IS NOT ELIGIBLE FOR EXEMPTION EVEN UNDER S.10(23C)(VI) OF THE ACT. THE CIT(A) IN THE IMPUGNED ORDER, FOLLOWING THE CONSISTENT VIEW TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS, NOTED BELOW F ROM HIS ORDER, HELD THAT THOUGH THE ASSESSEE HAS NOT BEEN NOTIFIED UNDER S.10(23C) OF THE ACT, AND AS SUCH IT IS NOT ELIGIBLE FOR EXEMPTION UNDER THAT PROVISION, SINCE ITA NO. 663 /HYD/201 4 A.P. MODERN EDUCATIONAL & SOCIAL SERVICE SOCIETY, HYDERABAD 3 IT IS REGISTERED UNDER S.12AA IT CAN MAKE AN ALTERNATIVE CLAIM FOR EXEMPTION UNDER S.11 OF THE ACT. ( I ) CIT V/S. BAR COUNCIL OF MAHARASHTRA(1981)130 ITR 28(SC) ( II ) AMERICAN HOTEL AND LODGING ASSOCIATION/EDUCATIONAL INSTITUTE V/S. CBDT(2008) 170 TAXMAN 306(SC) ( III ) RAJASTHANI SIKSHA SAMITHI (ITA NO.80 & 81/HYD/2008) ( IV ) ST. THERESAS CONVENT SOCIETY, HYDERABAD 9ITA NO.844/HYD/08) ( V ) ADIT(EXEMPTIONS) V/S. LOUIS EDUCATIONAL SOCIETY (ITA NO.1456/HYD/2008 DATED 26.12.2008) ( VI ) AP SOCIETY OF KNOWLEDGE (ITA NO.843/HYD/09 DATED 9.10.2009) THE CIT(A) ACCORDINGLY DECIDED THE ISSUE RELATING TO ASSESSEES CLAIM F OR EXEMPTION UNDER S.11 OF THE ACT IN FAVOUR OF THE ASSESSEE. 4. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US, WITH THE GROUNDS EXTRACTED IN PARA 2 ABOVE.. 5 . AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE RESPO NDENT - ASSESSEE, DESPITE NOTICE OF HEARING SENT THROUGH THE DEPARTMENT. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE RELATING TO MAINTAINA BILITY AND ALLOWABILITY OF ALTERNATIVE CLAIM OF THE ASSESSEE FOR EXEMPTION OF ITS INCOME FROM TAX UNDER S .11 OF THE ACT, NOTWITHSTANDING THE FACT THAT IT HAS NOT OBTAINED APPROVAL UNDER S.10(23C) OF THE ACT, IS COVERED IN FAVOUR OF THE BY THE ASSESSEE, BY THE DECISIONS OF COORDINATE BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS. T HE IMPUGNED ORDER OF THE CIT(A) , TO THIS EXTENT, IS BASED ON THE CONSISTENT VIEW TAKEN BY VARIOUS BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS, NOTED ABOVE . ITA NO. 663 /HYD/201 4 A.P. MODERN EDUCATIONAL & SOCIAL SERVICE SOCIETY, HYDERABAD 4 6. THEREFORE, HAVING ACCEPTED THE ASSESSEES ELIGIBILITY TO RAISE AN ALTERNATIVE CLAIM UNDER S.11 OF THE ACT, NOTWITHSTANDING THE REJECTION OF ITS CLAIM FOR EXEMPTION UNDER S.10(23C) OF THE ACT, THE CIT(A) INSTEAD OF GRANTING THE EXEMPTION UNDER S.11 OF THE A CT STRAIGHT AWAY, ON THE GROUND THAT THERE IS NO FINDING BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED ANY DONATIONS ETC. COMPULSORY, OUGHT TO HAVE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS FOR DUE VERIFICATION AN D REDECIDING THE MATTER AFRESH. WE ACCORDINGLY, MODIFY THE ORDER OF THE CIT(A) ON THIS ASPECT, AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO EXAMINE THE ISSUES UNDER S.11 AND ACCORDINGLY REDECIDE THE ISSUE IN ACCORDANC E WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. 7. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 13 TH AUGUST, 2014 SD/ - SD/ - (B.RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 13 TH AUGUST, 2014 COPY FORWARDED TO: 1. A.P. MODERN EDUCATIONAL & SOCIAL SERVICE SOCIETY, PLOT NO.57, SRINAGAR COLONY, HYDERABAD 2. DY. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) I V HYDERABAD 4. COMMISSIONER OF INCOME - TAX II I , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S