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Facts
The assessee, a school society, filed a 'nil' income return. The AO made an addition of Rs. 59,50,000/- on account of interest-free rent advance given to specified persons. The CIT(A) partly deleted the addition, confirming Rs. 38,86,000/-.
Held
The Tribunal held that the assessee, being a society engaged in educational activity with gross receipts not exceeding One Crore rupees, was entitled to total exemption under Section 10(23)(iii)(d) of the Act. The AO was not empowered to invoke Section 11(5) or raise the issue.
Key Issues
Whether the assessee society is eligible for exemption under Section 10(23)(iii)(d) and whether the AO was justified in making additions related to interest-free advances.
Sections Cited
143(2), 10(23)(iii)(d), 11(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
O R D E R PER RAJ PAL YADAV, VP
The assessee is in appeal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 28.02.2025 passed for assessment year 2015-16.
With the assistance of ld. Representative, we have gone through the record carefully. It emerges out from the record that assessee has filed its return of income on 24.08.2015 A.Y.2015-16 2 declaring ‘nil’ income. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Act was issued. According to the AO, a perusal of the record would reveal that assessee has given interest free rent advance to specified persons amounting to Rs.59,50,000/-. Hence, he was of the view that this advance rent ought to have not been given by the assessee and the Faceless Assessment Unit made an addition of Rs.59,50,000/-.
On appeal, CIT (Appeals) has deleted the addition to the extent of Rs.20,64,000/- and confirmed the addition of the balance amount i.e. Rs.38,86,000/-.
A perusal of the record would reveal that assessee is a Society engaged in educational activity. It is running a school upto 12th standard affiliated to Himachal Pradesh Board of School Education. Its gross receipts did not exceed One Crore of rupees and therefore, it is entitled for total exemption u/s 10(23)(iii)(d) of the Act. The AO was not empowered to invoke Section 11(5) or rake up this issue. Had the assessee crossed threshold limit of Rs.One Crore, then these aspects are to be looked into. The CIT (Appeals) has erred in A.Y.2015-16 3 confirming the part addition. Accordingly, we allow the appeal of the assessee and delete the additions made by the AO as well as partly confirmed by the ld. CIT (Appeals).
In the result, appeal of the assessee is allowed.
Order pronounced on 10.09.2025.