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Facts
The assessee, Chaudhary Charan Singh Haryana Agricultural University, did not file its return of income for AY 2018-19. Information indicated transactions during the period, leading the AO to reopen assessment under Section 147. The assessee subsequently filed a return, declaring Nil income after claiming exemption under Section 10(23C)(iiiab) of the Act.
Held
The Tribunal held that for claiming exemption under Section 10(23C)(iiiab) of the Act, only two conditions are required: existence solely for educational purposes and not for profit, and being wholly or substantially financed by the government. The Tribunal found that the assessee met these conditions. Furthermore, the requirement to file a return under Section 139(4C)(e) was not mandatory for claiming this exemption, especially considering the assessment year in question predates the insertion of the twentieth proviso to Section 10(23C) by the Finance Act, 2022.
Key Issues
Whether the condition of filing a return of income under Section 139(1) or 139(4C)(e) is mandatory for claiming exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961.
Sections Cited
147, 144, 144B, 10(23C)(iiiab), 139(1), 139(4C)(e), 151, 139(4C), 234F, 80IA
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Income Tax Appellate Tribunal, DELHI BENCH, ‘B’: NEW DELHI
Before: MS. MADHUMITA ROY & SHRI BRAJESH KUMAR SINGH
ORDER PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Appeals), Delhi, dated 20.03.2024, pertaining to Assessment Year 2018- 19 arising out of assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to ‘the Act’) dated 15.02.2023 passed by the Assessment Unit, Income Tax Department.
Grounds of appeal raised by the assessee are as under:-
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals), Income Tax Department (ITD) National Faceless Appeal Centre (NFAC) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, learned CIT(A), ITD has erred both on facts and in law in confirming the order of the AO despite the fact that reopening the assessment under Section 147 of the Act and consequent reassessment without complying with the statutory conditions and the procedure prescribed under the law are bad and liable to be quashed 3. On the facts and circumstances of the case, learned CIT(A), ITD has erred both on facts and in law in confirming the order of the AO despite the fact neither there is any material available with the AO nor the same was supplied to the assessee on the basis of which he has formed the belief that the information received by him suggests that income chargeableto tax has escaped assessment. 4. On the facts and circumstances of the case, learned CIT(A), ITD has erred both on facts and in law in confirming the order of the AO despite the fact that notice under section 148 of the Act has been issued ignoring the first proviso to section 148 which provides that notice under section 148 shall not be issued unless there is "information" with the AO at the time ofreopening which suggests that income chargeable to tax in the case of assessee for the relevant assessment year has escaped assessment. 5. (i) On the facts and circumstances of the case, learned CIT(A), ID has erred both on facts and in law in confirming the order of the AO despite the fact that the reassessment proceedings initiated by the AO are bad in the eye of law as the information on the basis of which notice under Section 148 issued are bad in the eye of law and are vague. (ii) That the learned CIT(A), ITD has erred confirming the order of the AO despite the fact that the reassessment proceedings initiated by the AO are bad in the eye of law, as there is no live nexus between the information and the belief formed by the Assessing Officer. 6. On the facts and circumstances of the case, learned CIT(A), ITD has erred both on facts and in law in confirming the order of the AO despite the fact that the show cause notice under Section 148A(b) of the Act, order under Section 148A(d) and notice under section 148 by the AO have been issued and passed without obtaining valid statutory prior approval from thespecified authority as provided under section 151 of the Act.
7. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on fad and in law in confirming the disallowance of Rs.25,47,64,090/- by denying the exemption claimed by the assessee under section 10(23C)(iiiab) of the Act.
On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the action of the AO and denying the exemption despite the fact that the assessee has complied with all the conditions prescribed under section 10(23C)(iliab) of the Act, and hence eligible for the same.
9. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the action of the AO and denying the exemption by wrongly interpreting the provisions of section 10(23C)(iiiab) and section 139(4C) of the Act.
10. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the action of the AO and denying the exemption despite the fact that there is no condition of filing of return of income to claim the exemption under section 10(23C)(iliab) of the Act.
11. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the abovesaid action of the AO despite the fact that the appellant university exists solely for educational purposes and not for purpose of profit, and is wholly or substantially financed by the government, and nothing adverse has been pointed out by the AO or CIT(A) in this regard.
12. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the abovesaid action of the AO ignoring the fact that the assessee has been granted exemption in subsequent year AY 2019-20 passed under section 147/144B of the Act dated 19.12.2023 and thus, the rule of consistency to be applied as there was no change of facts during the subsequent year.”
Brief facts of the case:-In case of the assessee, specific information was flagged as per Risk Management Strategy formulated by the CBDT under clause (i) to explanation (1) to section 148 of the Income-tax Act 1961. As per the specific information, the assessee Chaudhary Charan Singh Haryana Agricultural University, PAN:AAAJC1002E had not filed its return of income for the A.Y. 2018- 19 but had made following transactions during the period from 01.04.2017 to 31.03.2018:-
S. Nature of Transaction/receipt/ Amount No. income 1 Cash Deposit in SBI Rs.5,97,15,749/- 2 Fixed deposit in SBI Rs.75,48,43,670/- 3 Interest income from SBI Rs.64,12,291/- 4 Professional/technical services Rs.33,29,996/- 5 Foreign remittance Rs.3,86,340/- Total Rs.82,46,88,046/- 3.1. As no return of income was filed by the assessee for the A.Y. 2018-19, in absence of which, the above transactions carried out by the assessee remained unsubstantiated as per the AO. Thus, an opportunity of being heard as per provision of section 148A(b) of the Income Tax Act, 1961 was provided to the assessee by the AO with the prior approval from the specified authority wherein the assessee was given a show-cause notice dated 14.03.2022, which was served upon the assessee through speed post and assessee was show caused as to why the income received as above shall not be treated as income chargeable to tax which has escaped the assessment within the meaning of provision of section 147 of the IT Act, 1961 for the assessment year 2018-19.
The assessee was required to furnish reply on or before 21.03.2022.In response to the show cause notice, according to the AO, no reply was furnished by the assessee. Therefore, the AO held that it was logical to conclude that the assessee had no proper explanation with respect to the above mentioned escapement of income in its case for AY 2018-19 and income chargeable to tax amounting toRs.82,46,88,046/- had escaped assessment within the meaning of provision of section 147 of the Income-tax Act 1961 for the assessment year 2018-19.
On the basis of the above information, notice u/s 148 of the Act was issued on 30.03.2022. In response, the assessee filed a return on 22.08.2022 declaring income from other sources amounting to Rs.25,47,64,090/- and claimed exemption on the same u/s 10(23C)(iiiab) of the Act. The AO did not allow the above claim on the ground that the assessee did not file its return of income in compliance to provisions u/s 139(1) of the Act. It was stated by the AO that as per the provisions of section 139(4C)(e) of the Act, as the assessee had failed to file its return of income u/s 139(1) of the Act, which was mandatory for claiming exemption u/s 10(23C)(iiiab) of the Act and therefore the exemption claimed u/s 10(23C)(iiiab) of the Act was not allowable. The AO, thereafter, disallowed the exemption of Rs.25,47,64,090/- u/s10(23C)(iiiab)of the Act and assessed the total income at Rs. 25,47,64,090/-.
Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) while dealing with this issue as contested by the assessee in its third ground of appeal did not agree with the contention of the assessee and dismissed the appeal of the assessee by observing as under:-
“5.3 3rd Ground of Appeal: That the A.O. failed to understand the status of composition of appellant which is a renowned state university formed for education purpose by an act of parliament notified in the gazette of India dated 02/04/1970 by ministry of Law as "The Haryana and Punjab agricultural university, 1970" The said university act was later on bifurcated between Haryana and Punjab states and the name of university in Haryana changed into Chaudhary Charan Singh Haryana Agriculture University, Hisar. It is herein submitted that the university was not formed for any profit motive except to impart higher education to the students. It is further submitted that the appellant has explained and submitted the nature of receipts. Even if the appellant does not substantiate the receipts and payment yet the exemption available u/s 10(23C) (iiiab) of income tax act, 1961 cannot be legally denied. Remarks:Statutory provisions regarding exemption have to be interpreted strictly ( CommissionerOf Customs (Import), Mumbai vs M/s Dilip Kumar And Company (2018), AIR2018 SC 3606). The contention of the assessee that even if the assessee does not substantiate the receipts and payments, yet the exemption available u/s 10(23C) (iiiab) of Income tax act, 1961 cannot be legally denied, is misplaced, and not as per law. The assessee has failed to fulfill the eligibility criteria for claiming exemption u/s 10(23C) (iiiab), one of which is requirement to file return of income u/s 139(1), as per section 10(23C)(iiiab) r.w.s 139(4C)(e) of the Income Tax Act. The Ground of Appeal filed by the assessee is found to be not sustainable and is dismissed. 5.1. Before dismissing the above ground of the assessee, the ld. CIT(A) relying upon the decision of the Hon’ble Orissa High Court in the case of Stewart Science College vs ITO in W.P.(C) No.17176 of 2022.
“6.9. Viewed in aforesaid perspective, Section 10(23C)(iiiab) of the IT Act is not generally exempt qua the petitioner- College….. In case of ambiguity, the benefit tilts in favour of Revenue as laid down in Dilip Kumar and Company & Ors. (2018) 9 SCC 1 = 2018 SCC OnLine SC 747 = 2018 (361) ELT 577 (SC).” 6. Against the above order, the assessee is in appeal before us.
7. The ld. Counsel for the assessee submitted that there was no condition of filing of return of income in the Act to claim the exemption u/s 10(23C) of the Act. He submitted that for claiming the exemption u/s 10(23C)(iiiab) of the Act, only two conditions are required that the university or the other educational institution should exist solely for education purposes and not for purposes of profit, and the second is that university or other educational institution is wholly or substantially financed by the Government and both the above condition are satisfied by the assessee. He further submitted that the twentieth proviso to section 10(23C) of the Act which requires return of filing of income for claiming the exemption, has been inserted by Finance Act, 2022 and further not applied to section 10(23C)(iiiab) of the Actand therefore the same was not applicable to the assessee. He further submitted that the AO and CIT(A) have wrongly denied the exemption u/s 10(23C)(iiiab) by wrongly interpreting the provisions of section 10(23C)(iiiab) and section 139(4C) of the Act. He further submitted that the provisions of section 139(4C)(e) of the Act, nowhere mentioned filing return of income u/s 139(1) of the Act as a condition for claiming exemption u/s 10(23C) (iiiab) of the Act. He further submitted that the ld. CIT(A) incorrectly interpreted the decision of the ITAT Bangalore in the case of M/s KenchappaSamajikaShikshana vs Assistant Commissioner of Income and submitted that filing of the return in a case like of the assessee is only and administrative requirement and does not inherently affect the substantive right to the exemption u/s 10(23C of the Act.
It was further submitted by him that disallowing of exemption claimed u/s 10(23C)(iiiab) of the Act despite the fact that exemption in subsequent year i.e. AY 2019-20 has been granted vide order u/s 147 r.w.s. 144B of the Act on similar facts (placed at page no.123 to 128 of the paper book) was not proper.
He therefore submitted that the action of the AO in denying the exemption of Rs. 25,47,64,090/- claimed u/s 10(23C)(iiiab) of the Act and confirmed by the ld. CIT(A) was not justified and the same may be reversed and the assessee may be allowed the exemption of Rs. 25,47,64,090/- as claimed u/s 10(23C)(iiiab) of the Act. The written submission of the Ld. AR is reproduced as under:-
This is an appeal filed by the assessee against the order of CIT(A) confirming the action of AO and denying the exemption claimed by the assessee u/s 10(23C)(iiiab) of the Act amounting to Rs 25,74,64,090/-. Brief facts of the case 2. The assessee is a University established under the Haryana and Punjab Agricultural University Act, 1970 notified in Gazette of India dated 2/4/1970 by Ministry of Law. Government of India. The same was later on in 1991 changed into Chaudhary Charan Singh Haryana Agriculture University under the Act, 1970. (attached at PB Pg. 36-67). The objects of the university are stated in the section 7 of the said Act (at PB Pg. no. 39). Thus, the university exists solely for educational purposes and not for purposes of profit, and is claiming exemption under section 10(23C)(iliab) of the Act. 3. For the year under consideration, no return of income was filed by the assessee and thus, AO has reopened the case u/s 147 of the Act. Notice u/s 148 of the Act was issued to the assessee on 30.03.2022 requiring to furnish return of income of the assessee. In response, the assessee filed return of income on 22.08.2022 declaring income Nil income after claiming exemption u/s 10(23C) (iliab) of the IT Act. (ITR Acknowledgement along with computation attached at PB pg. 74-76).
4. Thereafter, a show cause notice was issued to the assessee on 30.01.2023 (PB Pg. 110-112) asking that as to why exemption claimed u/s 10(23C)(iiiab) may not be disallowed. In response, the assessee filed reply on 06.02.2023, placed at PB Pg 113-114 stating that: • The accounts of university are prepared which are further approved by Joint Director, Local Audit, Chandigarh. For the FY 2017-18 the accounts of university was not approved by Joint Director within the time limit of filing of return of income as per section 139 of the income Tax Act 1961 when the accounts are approved by Director, Chandigarh the time of return as per 139 has been expired. Now the university has filed its return of income in response to notice issued u/s 148 and claimed exemption u/s 10(23C) (iiiab) of income tax Act, 1961. • University was formed with the basic objective of : a)making provision for imparting education in different branches of study, particularly agricultural, animal sciences b) furthering the advancement of learning and prosecution of research, particularly in agriculture and other allied services c) undertaking the extension of such sciences to the rural people of the territories within which the University is required by this Act to function d) such other expenses as the appropriate Government may, by notification in Official Gazette 5. However, Ld. AO made disallowance of exemption claimed u/s 10(23) iiiab) of the IT Act amounting to Rs 25,74,64,090/- holding that claim of the assessee was not allowable as it had not filed its return of income in compliance to provisions u/s 139(1) of the Act. Therefore, claimed exemption is not allowable.
Aggrieved by the order passed by Ld. AO, assessee filed an appeal before CIT(A).
7. During the course of appellate proceedings, assessee reiterated written submission as under: • There is no provision under the Income Tax act to deny the exemption for late or non-filing of return u/s 139(1) particularly to the case of the appellant. (Statement of Facts before CIT(A). • The assessee receives the budget from the government of Haryana and also receives some grant from UGC (Govt. Institutes) for the sole purpose of education and other related activities which are wholly exempted u/s 10(23C) (iiiab) of Income Tax Act • Unspent balance is adjusted by the State Govt. and University does not retain any kind of income which is adjusted by State Govt. during release of grant in the next year and permission is accorded by Govt. to incur any expenditure • It incurred the expenditure for research, extension and educational purpose which was more than the • Therefore, assessee is eligible for claiming the exemption disallowed by ld. AO 8. However, CIT(A) confirmed the action of the AO by denying the exemption claimed by the assessee u/s 10(23C)(iiiab) amounting to Rs 25,74,64,090/-.
9. Aggrieved by the order of CIT(A), assessee filed an appeal before Your Honours. No condition of filing of return of income to claim the exemption under section 10(23C) of the Act 10. Provisions of section 10(23) (iiiab) so far as is relevant for the present purpose is extracted hereunder: "10. Incomes not included in total income.— In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- …….. (23C) any income received by any person on behalf of— ……….. "any income received by a person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government;"
Thus, there are only 2 conditions for claiming the exemption u/s 10(23C) (iiiab) of the Act, the first one is that the university or other educational institution existing solely for educational purposes and not for purposes of profit, and the second is that the university or other educational institution is wholly or substantially financed by the Government.
In the present case, assessee is a renowned state university formed for education purpose by an act of parliament notified in the gazette of India dated 02/04/1970 by ministry of Law as "The Haryana and Punjab agricultural university, 1970' The said university act was later on bifurcated between Haryana and Punjab statesand the name of university in Haryana changed into Chaudhary Charan Singh Haryana Agriculture University, Hisar. Copy of Haryana and Punjab agricultural university, 1970 is placed at PB Pg. no. 36-67.
13. The objects of the university are stated in the section 7 of the said Act (at PB Pg. no. 39). Thus, the university exists solely for educational purposes and not for purposes of profit.
Assessee has duly submitted the documents evidencing that no amount is received by the assessee, rather unadjusted balance is adjusted by the State Govt.
Therefore, assessee has duly met the conditions applicable for claiming exemption u/s 10(23C)(iiiab) of the Act.
These are matters of fact which are required to be adjudicated upon by the Assessing Officer rather than argument that since assessee has not filed return of income, assessee is not eligible for claiming exemption u/s 10(23C)(iiiab) of the Income Tax Act. In fact there is no requirement under section 10(23C)(iiiab) of the Act which requires filing of return of income for claiming the exemption under section 10(23C)(iiiab) of the Act. Twentieth proviso to section 10(23C) of the Act which requires return of filing of income for claiming the exemption, has been inserted by Finance Act, 2022 and further not applies to section 10(23C)(iiiab) of the Act 17. Finance Act, 2022 has inserted twentieth proviso w.e.f. 01.04.2023 as follows: "Provided also that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub- clause (vi) or sub-clause (via) shall furnish the return of income for the previous year in accordance with the provisions of subsection (4C) of section 139, within the time allowed under that section:" 18. To appreciate the twentieth proviso to section 10(23C) and the facts of the present case, the following points are to be considered: • The first thing to note that prior to the insertion of this proviso in section 10(23C), there is no condition/ requirement under section 10(23C) of the Act which requires filing of return of income for claiming the exemption under section 10(23C) of the Act. Meaning thereby, all the clauses of section 10(23C), including clause (iliab), has no such condition which requires filing of return of income for claiming the exemption • The second thing is that the Twentieth proviso to section 10(23C) has been inserted by Finance Act 2022, w.e.f. 01.04.2023 and shall applies to AY 2023-24 and subsequent assessment years. In the present case, the assessment year is AY 2018-19 and thus, twentieth proviso to section 10(23C) shall not apply • More importantly, the third point is that the condition of filing of return of income for claiming the exemption has been inserted with respect to only sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via). Meaning thereby, the twentieth proviso to section 10(23C) shall not applies to sub-clause (iiiab), and thus there is no requirement under section 10(23C) of the Act which requires filing of return of income for claiming the exemption under section 10(23C)(iiiab) of the Act.
Thus, the twentieth proviso to section 10(23C) clears the aspect that prior to its insertion, there is no condition/requirement under section 10(23C) which mandates filing of return of income. Moreover, the said proviso is not applicable to the facts of the present case. AO and CIT(A) has wrongly denied the exemption u/s 10(23C) (iliab) by wrongly interpreting the provisions of section 10(23C) (iliab) and section 139(4C) of the Act.
The AO in 2d para on Page 3 of assessment order and CIT(A) in para 4.4 to 4.7 on page 7 to 9 of its order, has relied upon section 139(4C)(e), which reads as follows- "(4C) Every- (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause iiiab) or sub-clause (iiiad) or sub-clause (vi) or any hospital or other medical institution referred to in sub-clause iiiac) or sub- clause (iiiae) or sub-clause (via) of clause (23C) of section 10; shall, if the total income in respect of which such research association, news agency, association or institution, person or fund or trust or university or other educational institution or any hospital or other medical institution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund or Mutual Fund or securitisation trust or venture capital company or venture capital fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1)."
Therefore, as per the clear interpretation of sec 139(4C)(e) all that provision requires is that if the total income without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, they have to file return of income in the prescribed form. The section further says that such income will be treated as if return of income required to be furnished u/s 139(1) of the Act. 22. It is pertinent to note that the said sub-section nowhere mentioned filing return of income u/s 139(1) as a condition for claiming exemption u/s 10(23C) (iiiab) of the Act. Sub-section 139(4c)(e) simply says about filing of return in prescribed form.” 8. The Ld. DR relied upon the orders of the authorities below.
We have heard the rival submissions and perused the material available on record. The AO on perusal of the ITR of the assessee noted that it had declared income from other sources amounting to Rs.25,47,64,090/- and had claimed exemption u/s 10(23C)(iiiab) of the Act. The said claim was not allowed by the AO on the ground that the assessee had not filed its return of income in compliance to provision u/s 139(1)/139(4C)(e) of the Act, which according to the AO was a mandatory condition for claiming the said exemption. The same was also confirmed by the Ld. CIT(A). The ld. CIT(A) did not agree with the submission of the assessee relying upon the single member Bench decision of the Co-ordinate Bench of ITAT, Bangalore in the case of M/s KenchappaSamajikaShikshana vs ACIT in wherein, in para no.7 of the order, the Co-ordinate Bench held as under:-
7. It can be seen from the provisions of section 139(4C) of the Act, filing the return of income on or before the due date u/s. 139(1) of the Act does not disqualify from claiming exemption u/s. 10(23C)(iiiad) of the Act. All that the provision requires is that if the total income for giving effect of provisions of section 10 exceeds the maximum amount which is not chargeable to income tax, they have to file a return of income in the prescribed form. The section further says that such return of income will be treated as if it is a return required to be furnished u/s. 139(1) of the Act.
Further, as discussed above in para no.5.1 of this order, the ld. CIT(A) relied upon the decision of Hon’ble Odissa High Court in the case of Stewart Science College (Christian Minority Educational Institution vs ITO, Ward-1(1)
Cuttack) [2022] 449 ITR 257 (Ori.) to hold that section 10(23C)(iiiab) of the Act was not generally exempt for the petitioner in view of the decision of the Hon’ble Apex Court in the case of Dilip Kumar and Company & Ors. (2018) 9 SSC 1 and upheld the order of the AO in denying the exemption on the section 10(23C)(iiiab) of the Act.
11. In this regard, the relevant provisions of section 10(23C)(iiiab) of the Act, the 20thproviso to 10(23C)(iiiab) and the provisions of section 139(4C)(e) of the Act are reproduced as under:-
Incomes not included in total income. (23C)any income received by any person on behalf of- xxxxxxx (iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or XXXXXX 11.1. 20th proviso of section 10(23C)(iiiab) of the Act.
Provided also that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall furnish the return of income for the previous year in accordance with the provisions of sub-section (4C) of section 139, 50[within the time allowed under sub-section (1) or sub- section (4) of that section] : xxxxxxxxxxxx 11.2. Section 139(4C) Every— xxxxxxxxxxxx fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (iiiab) or sub-clause (iiiad) or sub- clause (vi) or any hospital or other medical institution referred to in sub-clause (iiiac) or sub-clause (iiiae) or sub-clause (via) of clause (23C) of section 10; xxxxxxxxxxx
139(4C)(e) shall, if the total income in respect of which such research association, news agency, association or institution, person or fund or trust or university or other educational institution or any hospital or other medical institution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund or Mutual Fund or securitisation trust or venture capital company or venture capital fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).
11.3. We have carefully considered the above provisions and are of considered view that filing of return of income by the assessee for claiming exemption u/s 10(23C)(iiiab) is not mandatory. We agree with the submissions of the assessee that for claiming exemption u/s 10(23C)(iiiab) of the Act only two conditions are required i.e.the university or the other educational institution should exist solely for education purposes and not for purposes of profit, and the second,the university or other educational institution is wholly or substantially financed by the Government and in the case of the assessee both the above conditions are satisfied as evident from the copy of The Haryana and Punjab Agricultural University Act, 1970, vide which the assessee university was createdin the name of ‘The Haryana Agricultural University’ and notified in Gazette of India dated 02.04.1970 by Ministry of Law, Govt. of India, which was later on substituted by Haryana Act No.15 of 1991 as Chaudhary Charan Singh Haryana Agricultural University (placed at page no.36 to 67 of the paper book more particularly at page no.36-37 and 39-40). As per para-7 of the said Act, the object of the assessee university is as under:-
Objects of a corresponding University
Each corresponding University shall be deemedto be established and incorporated for the following objects, namely :- (a) making provision for imparting education in different branches of study, particularly agriculture, veterinary and animal science, agricultural engineering, home sciences and other allied sciences; (b) furthering the advancement of learning and prosecution of research, particularly in agriculture and other allied sciences; (c) undertaking the extension of such sciences to the rural people of the territories within which the University is required by this Act to function; (d) such other purposes as the appropriate Government may, by notification in the Official Gazette, direct. 11.4. Further, the assessee vide letter dated 18.02.2025 signed by the Comptroller of the said university certified that entire funds of Rs.429,99,18,068.50 received by the assessee was from State Government, Indian Council of Agricultural Research (Ministry of Culture) and other Ministries and government undertaking, the details of which was mentioned in the said letter is reproduced as under:-
11.5. Therefore, the assessee satisfies both the twin conditions for claiming the exception u/s 10(23C)(iiiab) of the Act. Moreover, the AO has not brought any fact on record that the assessee did not exist solely for education purposes and or for purposes of profit, and that the university or other educational institution was not wholly or substantially financed by the Government 11.5. The ld. CIT(A) has not been fair in quoting selectively the decision of the Hon’ble Orissa High Court Stewart Science College (supra) as reproduced in para no.5.1 of this order as against the full para of the Hon’ble Orissa High Court in para no.6.9. For ready reference, the para no.6.9 as quoted by the ld. CIT(A) and the para no.6.9 in the Hon’ble High Court order are reproduced:-
6.9. Viewed in aforesaid 6.9. Viewed in aforesaid perspective, Section perspective, Section 10(23C)(iiiab) of the IT 10(23C)(iiiab) of the IT Act is Act is not generally exempt qua the not generally exempt qua the petitioner-College. Therefore, it is open for petitioner- College….. In case the Adjudicating Authority to examine of ambiguity, the benefit tilts whether the claim for exemption on the in favour of Revenue as laid basis that the petitioner-College, claiming down in Dilip Kumar and to be a minority institution on the basis of Company & Ors. (2018) 9 certification in the year 2021, is existing SCC 1 = 2018 SCC OnLine solely for educational purposes and not for SC 747 = 2018 (361) ELT purposes of profit and it is wholly and 577 (SC).” substantially financed by the Government. In case of ambiguity, the benefit tilts in favour of Revenue as laid down in Dilip Kumar and Company & Others, (2018) 9 SCC 1 = 2018 SCC OnLine SC 747 = 2018 (361) ELT 577 (SC). In the said case, 5- Judge Constitution Bench of Hon'ble Supreme Court of India has propounded as follows:
"66. To sum up, we answer the reference holding as under: i. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. ii. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. iii. The ratio in Sun Export case (supra) [Sun Export Corporation Vrs. Collector of Customs, (1997) 6 SCC 564] is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled."
11.6 The Hon’ble High Court in the aforesaid para, nowhere stated that the filing of the return by the assessee u/s 139(4C)(e) of the Act was mandatory for claiming the exemption u/s 10(23C)(iiiab) of the Act. Therefore, the reliance by the ld. CIT(A) on the above decision and the decision of the Hon’ble Apex Court in the case of Dilip Kumar and Company & Ors. (supra) to hold that the filing of the return by the assessee u/s 139(4C)(e) of the Act was mandatory for claiming the exemption u/s 10(23C)(iiiab) of the Act is not correct in the given facts of the case. However, in view of the decision of the Hon’ble Apex Court in the case of Dilip Kumar and Company & Ors. (supra)the burden would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification which in view of the above discussion has been satisfied by the assessee. Therefore, the decision of the Dilip Kumar and Company & Ors. (supra) as relied by the ld. CIT(A) will not be applicable to the facts of this case.
11.7. Further, it may be mentioned that there is a specific provision u/s 234F of the Act for the consequences for not filing of return in the case of an assessee, which is required to file its return of income as per the provision of section 139 of the Act. The said section is reproduced as under:-
“[Fee for default in furnishing return of income.
234F. (1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of fee, a sum of,—
(a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year;
(b) ten thousand rupees in any other case:
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.] 11.8. Moreover, there are sections in the Act, wherein, it is mentioned that the claim of the assessee shall not be admissible, if certain requirements as per law are not filed along with the return. For example, sub-section-7 of section 80IA of the Act for claiming deduction u/s 80IA(1) of the Actduring the material period i.e. AY 2018-19 laid down a conditionthat the deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.The relevant provisions of the said section are reproduced as under:-
Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. xxxxxxxxxxxxx (7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.
11.9. As seen from the above discussion, there is no such mandate in the provisions of section 10(23C)(iiiab) and section 139(4C)(e) of the Act that filing of return u/s 139(4C)(e) of the Act by the assessee was a mandatory condition for claiming exemption u/s 10(23C)(iiiab) of the Act.
11.10 Moreover, on similar facts, in the case of the assessee, wherein, on similar information, the assessment for 2019-20 was reopened by the AO vide notice u/s 148 of the Act dated 28.03.2023, wherein, the AO had accepted the claim of the assessee vide assessment order u/s 147 r.w.s. 144B of the Act dated 19.12.2023, and held that since, the assessee was an university and was exempted from tax u/s 10(23C) of the Act and no other details/evidence was available on record through which the contention of the assessee could be rejected and completed the assessment at Nil income filed as filed by the assessee on 17.11.2023. The said order is placed at page no.123 to 128 of the paper book and the relevant discussion on page no.126 is reproduced as under:-
“Reasons for inference drawn that no variation is required on this issue; In this case, as is evident from the above discussion of facts that assessee sufficiently explained the source of cash deposited in its bank account and also explained the source of investment to make time deposits in the bank account. Since, the assessee is a university and is exempted from tax u/s 10 (23C) of the Act and no other details/evidence is available on record, through which the contention of the assessee can be rejected, therefore, the explanation given by the assessee are considered as reasonable and return income of the assessee is acceptedas such and no adverse inference is drawn in the case.” 11.11. Therefore, in view of the above facts and discussion, we hold that the assessee is eligible for exemption u/s 10(23C)(iiiab) of the Act and the AO and the Ld. CIT(A) were not correct in not allowing the claim of exemption of Rs.25,47,64,090/- as claimed by the assessee. Therefore, we delete this addition of Rs.25,47,64,090/-. Accordingly, ground nos.7 to 12 of the appeal are allowed.
12. In view of the grounds no.7 to 12 of the appeal are allowed, the other grounds of appeal being ground nos. 1 to 6 become academic and are not adjudicated.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14th May, 2025.