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Income Tax Appellate Tribunal, BANGALORE BENCH ‘A ’
Before: SMT. ASHA VIJAYARAGHAVAN & SHRI JASON P. BOAZ
PER SMT ASHA VIJAYARAGHAVAN, JM:
This appeal by the assessee is directed against order of the CIT(A), Bangalore dated 30-09-2014 for the assessment year 2009-10.
The assessee has filed its return of income for the assessment year 2009-10 on 31-07-2009, declaring nil income after claiming exemption admissible or the charitable trust. The trust has also filed along with the return of income the audited balance sheet, income and expenditure statement and receipts and payment accounts for the year ending 31-03-2009 relevant to the 2009-10. The necessary audit rep[orts were also filed in support of the accounts maintained by the assessee. The assessee had declared excess of income over expenditure amounting to Rs.1,52,144/- for which the assessee has claimed exemption from tax.
The assessee as per income and expenditure account for the year ending 31-03-2009 has declared the receipts of Rs.35,74,173/- consisting of collection of fee of Rs.34,44,186/- interest on SB account of Rs.44,055/- and interest on FD of Rs.85,932/-. Thus, the gross receipts of the assessee amounts to Rs.35,74,133/-. The AO has computed the scrutiny assessment u/s 144 of the IT Act, dated 08-11-2011 for non-appearance of the assessee or any of its representatives on the hearing date mentioned in the letter dated 20- 10-2011.
The AO has completed the assessment determining the total income at Rs.11,52,144/- being the surplus income of Rs.1,52,144/- as per the income and expenditure account and building fund of Rs.10,00,000/- as against nil income declared by the assessee. The AO has computed the income denying the exemption claimed by the assessee mainly on the ground that the exemption claimed was not allowable in the absence of registration u/s 12AA of the Act, 1961.
Before the lower authorities, the learned counsel for the assessee submitted that the AO has not appreciated the fact that the assessee during the year ending 31-03-2009 relevant to AY: 2009-10 has received only fees from the students and bank interest as declared in the income and expenditure account.
The learned counsel for the assessee further submitted that the AO was not justified in holding that the assessee was not entitled for exemption in the absence of required registration u/s 12AA of the Act, without appreciating the fact that the assessee solely and mainly exists for providing education and not for the purposes of profit and accordingly, the assessee was eligible for exemption u/s 10(23C)(iiiad) of the IT Act, since the gross receipts of the assessee trust was less than Rs.One Crore.
It was also pointed out that the assessee’s receipts for the year ending 31-03-2009 relevant to the assessment year 2009-10 have not exceeded a sum of Rs. One Crore as prescribed under Rule 2(BC(1) of the IT Rules. The registration u/s 12AA of the Act, was not mandatory as long as the gross receipts of the assessee did not exceed the prescribed limit of Rs.One Crore and therefore, the AO was not justified to deny the exemption claimed by the assessee.
We are of the opinion, that the refusal of the registration u/s 12AA of the Act, 1961 ought to have not been considered as a ground for denying the exemption admissible u/s 10(23C)(iiiad) of the Act. The AO has wrongly held
that the assessee was not entitled for the exemption as the Competent
Authority has rejected the assessee’s claim for registration u/s 12AA of the IT
Act. The assessee was aggrieved with assessment order and therefore, filed an appeal before the learned CIT(A)-V, Bangalore and the appeal so filed was later transferred to the learned CIT(A)-LTU, Bangalore has not appreciated the assessee’s claim for deduction u/s 10(23C)(iiiad) of the Act, and mainly relied upon the refusal of registration u/s 12AA of the Act and confirmed the addition made by the AO. We are of the opinion, that irrespective e of granting/refusal of the registration u/s 12AA of the Act, the claim for exemption cannot be denied in respect of the education institutions, whose turnover does not exceed Rs.One Crore, p.a as per sec.10(23C)(iiiad) of the Act, which is an overriding provision. Therefore, the assessment order dated 30-
09-2014 passed by the learned CIT(A)-LTU, Bangalore was not in accordance with the law and facts of the case and therefore, the assessment order so passed is set aside.
In the result, the assessee's appeal is allowed.
Order pronounced in the open court on the 6th November, 2015.