THE COMMISSIONER OF INCOME TAX EXEMPTIONS CHANDIGARH vs. SWAMI GANGA GIRI JANTA GIRLS COLLEGE

Facts

The Revenue, Commissioner of Income Tax (Exemptions), Chandigarh, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had quashed and set aside an order passed by the CIT (Exemptions). The appeal was filed with a delay of 80 days, which was condoned. The Revenue contended that the ITAT had erred and a substantial question of law arose. The ITAT had found that Rule 2BBB was not applicable for the assessment year 2012-13 as it came into force from 12.12.2014. The Revenue argued that a previous judgment relied upon by the ITAT had been overruled by the Supreme Court.

Held

The High Court held that the Revenue's argument was misconceived. The Court noted that the ITAT had correctly found Rule 2BBB to be inapplicable for AY 2012-13 as it was introduced later. Regarding the Supreme Court's decision in M/s New Noble Educational Society, the Court clarified that while Queen’s Educational Society was overruled to the extent of its interpretation of 'solely', the core findings of the ITAT and the Assessing Officer were consistent with the principles laid down in New Noble Educational Society. The Assessing Officer had granted exemption under Section 10(23C)(iiiab) because the Trust was substantially financed by the Government (grant of Rs. 89,19,294/- against gross receipts of Rs. 2,66,32,390/-) and had incurred expenditure (Rs. 2,56,60,780/-) towards its educational aims and objects. The Court found no reason to interfere with the orders of the ITAT and the Assessing Officer in light of the Supreme Court's observations. Therefore, no substantial question of law arose.

Key Issues

1. Whether Rule 2BBB of the Income Tax Rules, 1962, was applicable for Assessment Year 2012-13, given its effective date? Assessee's Contentions: The judgment does not record specific contentions made by the assessee. However, the ITAT's finding that Rule 2BBB was not applicable for AY 2012-13 implies the assessee likely argued this point. Revenue's Contentions: The Revenue argued that the ITAT had erred in its decision and that a substantial question of law arose. It further contended that a judgment relied upon by the ITAT (Tolani Education Society vs. Deputy Director of Income Tax (Exemptions)) which in turn relied on Queen’s Educational Society vs. Commissioner of Income Tax, had been overruled by the Supreme Court in M/s New Noble Educational Society vs. The Chief Commissioner of Income Tax and another. The Revenue believed this overruling was relevant to the present case.