NAGPUR FLYING CLUB,NAGPUR V. INCOME TAX OFFICER WARD 1 EXEMPTION, NAGPUR

ITA 98/NAG/2024

AI Insights

The case involves the Nagpur Flying Club, a charitable organization, which appealed against the order of the Commissioner of Income Tax (Appeals) regarding the denial of exemption under section 10(23C)(iiiab) of the Income Tax Act, 1961 for the assessment year 2016-17. The Assessing Officer had initially denied the exemption citing that the club did not meet the criteria of being an educational institution existing solely for educational purposes and not for profit, as it engaged in training for commercial pilot licenses and received less than 50% of its total receipts from government assistance. The CIT(A) upheld this decision. However, the Tribunal found that the CIT(A)'s order was not a speaking order as it did not consider the submissions and documents provided by the assessee, leading to the setting aside of the CIT(A)'s order and a remand to the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24424 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: ANUP BHALERAO
• Keywords: Set aside; Opportunity of being heard

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER S.M.C. MATTER ITA no.98/Nag./2024 (Assessment Year : 2016–17) Nagpur Flying Club Old Secretariat Building Divisional Commissioner Office Nagpur 440 001 PAN – AACCN4894J ……………. Appellant v/s Income Tax Officer (Exemption) Ward–1, Nagpur ……………. Respondent Assessee by : Shri Anup Bhalerao Revenue by : Shri Abhay Y. Marathe Date of Hearing – 04/12/2024 Date of Order – 08/01/2025 O R D E R The captioned appeal by the assessee is against the impugned order dated 31/01/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2016–17. 2. The assessee is a charitable organization registered under section 12A(a) of the Income Tax Act, 1961 (\"the Act\") claimed exemption under section 10(23C)(iiiab) of the Act. The Assessing Officer during the course of assessment proceedings found that the assessee has shown total income at ` 1,35,14,702, and the amount applied to chartable purpose in India during the 2 Nagpur Flying Club previous year Revenue account at ` 1,01,14,872, which was disclosed in the return of income filed electronically along with computation of income. The expenses were shown at ` 1,00,47,378. The Assessing Officer sought explanation from the assessee by issuing statutory notices and to furnish clarification regarding difference of income and expenses as per Profit & Loss Account and as per return of income. The assessee was also asked why deemed application of income of ` 32 lakh should not be disallowed. However, the assessee chose not to respond to the statutory notices issued by the Assessing Officer. Subsequently, the Assessing Officer issued show cause notice dated 13/12/2018, informing the proposed addition. In response, the assessee filed reply dated 19/12/2018 stating as under:– “Total income as per Profit & Loss Account is ` 1,39,35,351=41, is correct. Similarly, total expenditure as per Profit & Loss Account uploaded i.e., ` 1,00,47,378=60 (which includes exceptional item of ` 4,52,637=00) is also correct. We are running flying training centre at Nagpur. This is educational course and duly approved by government. We get Government assistance for the same. We are eligible for exemption under section 10(23G)(iiiab) being more than 50% of total receipts are financed by Government.” 3. However, the Assessing Officer rejected the claim of exemption under section 10(23C)(iiiab) of the Act. 4. On appeal, the learned CIT(A) confirmed the assessment order passed by the Assessing Officer holding as under:– “7.3 In order to claim, exemption u/s 10(23C)(iiab), the assessee should be an educational institution, existing solely for educational purposes and not for purposes of profit. In the instant case, the assessee is engaged in training participants to make them eligible for obtaining commercial pilot license. The assessee did not file any documentary evidence to show that it is considered as an educational institution in view of Section 2(15) of the Act. It is also seen 3 Nagpur Flying Club that the grant received from the Government is less than 50% of the total receipt. As the assessee failed to prove that it is an educational institution, existing solely for educational purposes and failed to fulfil the conditions prescribed as per Section 10(23C)(iiiab), I am of the considered opinion that the AO rightly rejected the exemption claimed by the assessee and rightly made the impugned addition of Rs.45,79,870/-warranting no interference of the appellate authority. Thus, the Ground No.1 raised by the assessee on this issue is dismissed.” 5. We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. We find that the order passed by the learned CIT(A) / NFAC is not a speaking order. A perusal of the findings of the learned CIT(A) in the appellate order proves that the order of the learned CIT(A) is not a speaking order because while recording findings the submissions and documents filed by the assessee during the course of assessment proceedings has not been considered. Consequently, we deem it fit and proper to set aside the impugned order passed by the learned CIT(A) and restore the entire matter to the file of the Assessing Officer for denovo adjudication on merit and in accordance with law. Needless to say that the Assessing Officer shall provide reasonable opportunity of being heard to the assessee. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 08/01/2025 NAGPUR, DATED: 08/01/2025 Sd/- V. DURGA RAO JUDICIAL MEMBER 4 Nagpur Flying Club Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "