ARYA SHIKSHA MANDAL,JALANDHAR vs. INCOME TAX OFFICER WAD ( EXEMPTIONS), JALANDHAR

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ITA 126/ASR/2022Status: DisposedITAT Amritsar22 September 2022AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee, being an educational institution with turnover below Rs. 1 crore, is specifically eligible for exemption under Section 10(23C)(iiiad). The disallowance of exemption under Section 11 was therefore incorrect.

What were the facts?

The assessee, an educational trust, claimed exemption under Section 11 of the Income Tax Act for AY 2017-18. The AO processed the return under Section 143(1) and disallowed the exemption. The CIT(A) upheld the AO's order, despite the assessee arguing eligibility for exemption under Section 10(23C)(iiiad) due to its educational nature and turnover below Rs. 1 crore.

What were the issues?

Whether the assessee, an educational trust, is eligible for exemption under Section 10(23C)(iiiad) instead of Section 11, given its specific nature and turnover.

Which sections of the Income-tax Act were involved?

Section 10(22),Section 11,Section 12AA,Section 139(1),Section 143(1),Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

For Respondent: Ms. Amanpreet Kaur, Sr.DR
Hearing: 20.09.2022Pronounced: 22.09.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals), NFAC, Delhi, [in brevity the CIT(A)] bearing appeal no.DIN & Order No. ITBA/NFAC/S/250/2022-23/1042942472(1), date of order 04.05.2022, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2017-18.The impugned order was originated from the order of the DCIT, CPC, (in brevity the AO) order passed u/s 143(1) of the Act date of order 16.07.2019.

2.

The brief fact of the case is that the assessee is an educational trust and running schools about 125 years. The assessee trust has been regularly filing its return by claiming exemption u/s 10(22) of the Act. And after the abolition of section 10(22) the trust has been filing its return by claiming exemption u/s 10(23C) (iiiad) of the Act and his exemption was duly allowed by the department.

During the assessment year under appeal the assessee filed a return u/s 139(1) and wrongly claiming exemption u/s 11. The return was processed u/s 143(1) and disallowance of exemption u/s 11. The gross receipt of the assessee is below 1 crore for the assessment year 2017-18. So, the assessee is eligible for claiming exemption u/s 10(23C) (iiiad). The assessee rectified the intimation u/s 143(1) and informed that the assessee is only eligible exemption as an educational trust. But the ld. AO had not considered the assessee’s plea. The assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the order of the ld. AO.

3.

Aggrieved assessee filed an appeal before us.

4.

The ld. Counsel of the assessee, Mr. Y.K.Sud, vehemently argued and informed that the assessee is an educational trust and for this assessment year the turnover is below Rs.1 crore. The assessee also registered u/s 12AA of the Act.

The assessee is eligible for exemption u/s 10(23C)(iiiad) of the Act. During processing of the return the ld. AO rejected the assessee’s claim u/s 11. The same issue was agitated before the ld. CIT(A). The ld. CIT(A) did not consider the submission of the assessee. Prayer was made before the CIT(A) for considering the exemption U/s. 10(23C)(iiiad) related the assessment year. In this respect the ld. Counsel for the assessee filed a written submission on 16.09.2022 before the bench which is kept in the record.

5.

The ld. Sr. DR vehemently argued and relied on the orders of revenue authorities.No other contrary view was placed before the bench.

6.

We heard the rival submission and relied on the documents available in the record. The ld. Counsel for the assessee relied on the order of the ITAT, Cochin Bench in the case of AL-Farook Educational Centre vs. ITO’, (2009) 124 TTJ(Coch) 286. Mr. Sud respectfully relied on the para 11 of the said order which is extracted as below:-

“11. When the law provides exemption on general terms and on specific terms, provisions applicable for specific purpose must be applied to specific institutions even though general provisions also may support the case. Here in the present appeal, the assessee is an educational center i.e. a specific activity even though in the nature of charitable activity. A specific provision of law is available under section 10(23C)(iiid) for the benefit of the educational institutions. Therefore, more appropriately, the assessee is entitled for claiming exemption under section 10(23C)(iiid). If the activities carried on by the assessee are only educational activities, the assessee is covered by section 10(23C)(iiid). The specific function carried on by the assessee is covered by equally specific provision of law and in such circumstances, the assessee is not supposed to take shelter under section 11.”

7.

The claim of the assessee is very specific purpose. The criterion for claiming exemption u/s 10(23C) (iiiad) are that running the educational institution and the turnover should be below Rs. 1 crore. The assessee accumulated both the conditions for getting exemption u/s 10(23C) (iiiad). We set aside the order of the ld. CIT(A). The addition made by the ld. AO amount of Rs.1,65,622/- u/s 143(1) is liable to be quashed. Accordingly, the appeal of the assessee is allowed.

8.

In the result, the appeal bearing ITA 126/Asr/2022 is allowed.

Order pronounced in the open court on 22.09.2022

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