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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI S.V. MEHROTRA
O R D E R PER S.V. MEHROTRA, A.M :
This is an appeal filed by the assessee against the order dated 31.08.2016 passed by the Commissioner of Income Tax (Appeals)-1, Noida, u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) relating to assessment year 2012-13. 2. Brief facts of the case are that the assessee society had filed the return of income declaring Nil income. The Assessing Officer determined the income at Rs.12,04,601/- by invoking provisions of section 11(6) of the Act as under :-
Actual Application Income available for application to charitable purposes Income declared applied for Rev: 3,63,91,745/- Total Receipts Rs.4,82,91,236/- Charitable purposes as per Cap: 55,31,228/- Available for Rs.4,10,47,550/- Audit report Total: 4,19,22,973/- application (85%) Actually applied Rs.3,98,42,949/- Less Depreciation Rs.20,80,024/- Balance Rs.12,04,601/- Actual application Rs.3,98,42,949/-
Before ld. CIT(A), it was submitted that the assessee was duly notified u/s 10(23C)(vi) vide Notification No.7/2007-08/3426 dated 20.03.2008 and had existed solely for the purposes of education. It was further submitted that the provisions of section 11 were not applicable to the cases coming u/s 10(23C)(vi) and, therefore, order of the Assessing Officer to hold the receipts of the assessee in excess of 15% of the gross receipts and not utilized for charitable purposes, to be the taxable income of the assessee, was bad in law. Ld. CIT(A) accepted the assessee’s contentions on this count and, accordingly, deleted the addition made by Assessing Officer by invoking provisions of section 11 of the Act. However, he observed that since the gross receipts of the assessee for assessment year under consideration were Rs.4,82,91,236/-, the amount being in excess of the limit prescribed under Rule 2BC of the Income Tax Rules, 1962, therefore, the assessee was not eligible for benefit of exemption u/s 10(23C)(vi) of the Act.
Ld. counsel referred to para 6 of ld. CIT(A)’s order and pointed out that he has observed that the provisions of section 10(23C)(vi) of the Act are subject to the provisions of section 10(23C)(iiiab) and section 10(23C)(iiiad) of the Act and Rule 2BC of the Rules. He further pointed out that that these observations are completely contrary to the mandate of the Act. He pointed out that section 10(23C)(vi) is an independent provision and not subject to clause (iiiab) and (iiiad) of section 10(23C)(vi) of the Act.
I have considered the submissions of both the parties and have perused the record of the case. Sections 10(23C)(iiiab), 10(23C)(iiiad) and 10(23C)(vi) are reproduced as under :-
“10. 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— ………. (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 ………. (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; ………. (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority.”
A bare perusal of section 10(23C)(vi) clearly shows that it covers the university or other educational institution existing solely for educational purposes other than those mentioned in sub-clause (iiiab) and (iiiad). The gross receipts of more than Rs.1 crore are relevant with reference to clause (iiiad) and not with reference to clause (vi). Admittedly, the assessee was duly notified u/s 10(23C)(vi) and, therefore, there was no basis for holding that the assessee was not entitled to the benefit of exemption u/s 10(23C)(vi). In the result, the ground no.1 of the appeal of the assessee is allowed. Since ground no.1 is allowed the other grounds have become academic.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 31st day of January, 2017.