COMMISSIONER OF INCOME TAX vs. ARVIND BHARATI VIDHYALAYA SAMI

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ITA/215/2004HC RajasthanRJHC02019991200415 November 20165 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee is entitled to exemption under Section 10(23C)(vi) of the Income Tax Act, 1961, in view of the order passed by the Central Board of Direct Taxes (CBDT) dated March 16, 2007. This CBDT order, which grants approval for exemption to the assessee for Assessment Year 1999-2000 and onwards, is binding on the department. The Court noted that the learned Tribunal had already affirmed the order of the Commissioner of Income Tax (Appeals), who had allowed the exemption. Therefore, finding no force in the revenue's appeal, the High Court dismissed the appeal. The ratio decidendi is that a binding approval granted by the CBDT under Section 10(23C)(vi) supersedes the denial of exemption by lower authorities, provided the conditions stipulated in the approval are met.

What were the facts?

The assessee, Arvind Bharati Vidhyalaya Samiti, is a registered society running educational institutions. The Assessing Officer denied exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) allowed the exemption. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the revenue's appeals for Assessment Years 2004-2005 and 2000-2001. The revenue filed the present appeals before the High Court challenging the ITAT's common order dated September 19, 2008. The High Court noted that the Central Board of Direct Taxes (CBDT) had granted approval for exemption under Section 10(23C)(vi) to the assessee vide an order dated March 16, 2007, applicable from Assessment Year 1999-2000 onwards.

What were the issues?

1. Whether the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal are bad in law, and if the Assessing Officer was right in declining exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that exemption under Section 10(23C)(vi) of the Act has been granted by the CBDT vide order dated March 16, 2007, which is applicable for Assessment Year 1999-2000 and onwards, rendering nothing to be decided in the present appeals. Revenue's Contention: Initially, the revenue argued that the orders passed by the CIT(A) and ITAT were bad in law and the Assessing Officer was right in declining exemption. However, upon being pointed out the CBDT order, the revenue's counsel agreed that the CBDT order is binding and the assessee is entitled to exemption.

Which sections of the Income-tax Act were involved?

Section 10(23C)(vi),Section 11(5),Section 288(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, which have been

In exercise of powers conferred by the sub clause (vi) of the clause(23C) of Section 10 of the income tax Act, 1961(43 of 1961), the Central Board of Direct Taxes hereby approves that any income received by any person on behalf of “Arvind Bhatri Vidyalala Samiti, Ambabari, Jaipur-302023” (hereinafter the “Institution”) shall not be included in the total income of such person as assesseable, subject to the following conditions: a) the institution will apply its income, or accumulate for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its Income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; b) the institution will not invest or deposit its fund (other than voluntary contribution received and maintained in the form of jewellery, furniture, etc.) for any period during the previous years relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modes specified in sub-section (5) of the section 11; c) this approval will not apply in relation to any income being profits and gains of business, unless the business

is incidental

to the attainment of the objectives of the institution and spaate books of account are maintained in respect of such business; d) the institution will regularly file its return of income before the income tax authority in accordance witH the provisions of the income tax Act, 1961; e) that in the event of dissolution

4 of the institution, its surplus and the assets will be given to an organization with similar objectives. (f) the institution will continue to be exist solely for educational purpose. g) The institute will get its accounts audited by an accountant as defined in Explanation below sub section (2) of section 288 and furnish along with the return of income. The report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

2.

This order is applicable only to the recipients of income on behalf of the institution and not to any other receipt or income of such recipients. Taxability or, otherwise of the Income of the Institution would be separately considered as per the provisions of the Income tax Act, 1961;

3.

This order is applicable for Assessment Year 1999-2000 and onwards.

4.

The above order is liable to be rescinded by the Central Government, if it is subsequently found that the activities of the institution are not genuine or if they are not carried out in accordance with all or any of the conditions subject to which it was notified.

5.

This order is in super-cession of the earlier order no.197/115/2006- ITA-I dated 07.02.2007. (DEEPAK GARG) Under Secretary to the Govt. of India Copy to:- i) “Arvind Bharti Vidyalaya Samiti, Ambabari, Jaipur-302023” ii) The CCIT, Jaipur iii) The CIT-II Jaipur iv) The Director of income Tax, (RSP&PR), New Delhi. v) Guard File. (DEEPAK GARG) Under Secretary to the Govt. of India”

5

7.

In view of above order passed by the Central Board of Direct Taxes, the assessee/respondent is held entitled for exemption under Section 10(23C) (vi) of the Income Tax Act, 1961. Learned Tribunal has already affirmed the order of Commissioner of Income Tax (Appeals), who had allowed the exemption to the assessee/respondent, while allowing the appeal of the assessee.

8.

In these circumstances, we find no force in this appeal and the same is, accordingly, dismissed with no order as to cost. (MAHENDRA MAHESHWARI),J. (K.S.JHAVERI),J. A.Sharma/38

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