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Facts
The Revenue filed an appeal against the order passed by NFAC, Delhi, concerning assessment year 2018-19. The assessee admitted ineligibility for exemption under section 11 of the Act but claimed eligibility under section 10(23BBA).
Held
The Tribunal held that the CIT(A)'s denial of exemption under section 10(23BBA) based solely on the non-filing of a return was unsustainable, referencing a CBDT circular. The matter was remanded to the Assessing Officer for fresh verification of statutory conditions.
Key Issues
Whether the denial of exemption under section 10(23BBA) solely on the ground of non-filing of return is sustainable, and whether the assessee satisfies the statutory conditions for this exemption.
Sections Cited
11, 10(23BBA)
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Income Tax Appellate Tribunal, ‘A’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue against the order passed by the NFAC, Delhi vide order dated 04/02/2025 in DIN No.ITBA/NFAC/S/250/2024-25/1072891530(1) for the assessment year 2018-19.
This appeal was heard with the assistance of the learned counsel for the assessee and the learned Departmental Representative.
At the outset, the learned counsel for the assessee fairly admitted that the assessee is not eligible for exemption under section 11 of the Act. In this regard, the finding of the learned CIT(A) is correct and does not require any interference.
However, the learned counsel submitted that the assessee is eligible for exemption under section 10(23BBA) of the Act. It was pointed out that this claim was also raised before the learned CIT(A), but the same was denied on the ground that the assessee had not filed a return of income, which according to the learned CIT(A) was necessary for claiming such exemption. However, the learned counsel argued that this reasoning is not correct. He relied upon CBDT Circular No. 4 of 2002, dated 16 July 2002, which clarifies that filing of return of income is not mandatory for availing exemption under section 10(23BBA) of the Act. Thus, the denial of claim by the learned CIT(A) on this ground cannot be sustained.
However, the learned counsel further submitted that none of the authorities below have examined whether the assessee satisfies the specific statutory conditions laid down in section 10(23BBA) of the Act. He fairly requested that the matter may be remanded to the Assessing Officer for proper verification as per law. The learned Departmental Representative did not object to this request.
We have considered the rival submissions and perused the record. It is an admitted position that exemption under section 11 is not available. The only question left is the assessee’s entitlement under . section 10(23BBA) of the Act. The reasoning of the learned CIT(A), which is based only on the absence of return filing, cannot be upheld in view of the CBDT Circular referred to above. At the same time, eligibility under section 10(23BBA) is a mixed question of law and fact and must be verified by the Assessing Officer in detail. The assessee has also agreed to such verification.
6.1 In these circumstances, we are of the view that the matter requires fresh examination. We therefore set aside the order of the learned CIT(A) and restore the issue to the file of the Assessing Officer. The Assessing Officer shall verify whether the assessee fulfils all statutory conditions of section 10(23BBA) of the Act. The Assessing Officer shall also take into account CBDT Circular No. 4 of 2002 and grant the assessee a reasonable opportunity of hearing before deciding the matter afresh in accordance with law. Accordingly, the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.