FEDERATION OF INDIAN PILOTS,MUMBAI vs. CHIEF CIT 1, NAVI MUMBAI

We heard the parties and perused the record. The assessee is registered u/s. 12A of the Act with the objective to carry on all activities relating to development of profession of field of aviation. The assessee’s name is M/s Institution of Aviation and Aviation Safety (under Trust –Federation of Indian Pilots). The assessee filed an application before learned CCIT seeking approval u/s. 10(23C)(vi) of the Act. Learned CCIT rejected the application on the following grounds :- (a) The assessee has violated provisions of section 11(2) of the Act by not utilizing funds accumulated by it u/s. 11(2) within prescribed period of five years and also failed to disclose the same in the return of income filed for A.Y. 2011-12 & 2012-13.

Learned AR submitted that the matter relating to violation of provisions of section 11(2) was also raised by the AO in the assessment proceeding relating to AY 2011-12. The said issue was carried to the Tribunal in A.Y. 2011-12 and the Coordinate Bench, vide its order dated 3.12.2016 passed in has restored the matter back to the file of the Assessing Officer for examining the same afresh. Accordingly, learned AR submitted that the decision taken by the Assessing Officer in the set aside proceedings relating to A.Y. 2011-12 would have bearing on the defect pointed out by learned CCIT. In this view of the matter, the Ld A.R submitted that this issue requires reconsideration at the end of Ld CCIT.

With regard to the second objection, learned AR placed reliance on the Circular No. 14 of 2015 dated 17.8.2015 issued by CBDT, wherein the CBDT has clarified that mere generation of surplus by an education institution from year to year cannot be a basis for rejection of application u/s. 10(23C)(vi) of the Act if it is utilised for education purpose, unless accumulation is contrary to the manner prescribed under law. The Learned AR, accordingly, submitted that the view taken by learned CCIT on this issue is not in accordance with the Circular issued by CBDT.

We heard learned Departmental Representative and perused the record. Having regard to the submissions made by learned AR, we are of the view that the application filed by the assessee before learned CCIT requires reconsideration. Accordingly, we set aside the order passed by learned CCIT and restore the matter to his file with the direction to examine the application filed by the assessee afresh in the light of the discussions made supra.

In the result, appeal filed by the assessee is treated as allowed for statistical purposes.