M/S C.M. PUBLIC SCHOOL,RAJPURA vs. CIT(E), CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER

ITA No.1540/Chd/2017 (Under Section 10(23C(vi) of the Act) M/s C.M. Public School, Vs. The C.I.T.(Exemptions), Village – Jandoli, Chandigarh. Rajpura, Distt. Patiala. PAN: AAAAC9863C (Appellant) (Respondent)

Appellant by : Shri Tej Mohan Singh, Adv. Respondent by : Shri Ashish Gupta, CIT DR Date of hearing : 02.04.2018 Date of Pronouncement : 06.04.2018

ORDER PER ANNAPURNA GUPTA, A.M.:

This appeal has been preferred by the assessee against

the order of Ld. Commissioner of Income Tax (Exemptions),

Chandigarh (hereinafter referred to as (‘Ld.CIT(E)’) dated

29.9.2017.

approval u/s 10(23C)(vi) of the Income Tax Act, 1961 (in

short ‘the Act’). Though the applicant assessee has been

granted approval u/s10(23C)(vi), the grievance of the

assessee is that it has been granted from assessment year

2017-18 onwards only, while it had been sought from

assessment year 2016-17 onwards.

hearing before us pointed out that the Ld.CIT(E) had

initially granted approval w.e.f. assessment year 2016-17

onwards only. The Ld. counsel for assessee drew our

attention to the opening para of the order pointing out the

said fact from the same as under:

“In exercise of powers conferred by the sub- clauses (vi) of the clause 10(23C)(vi) of the Income Tax Act, 1961, I, the Commissioner of Income Tax (Exemptions), Chandigarh hereby approve “M/s C.M. Public School, Village Jandoli, Rajpura, Distt.- Patiala-140401” for the purpose of the said sub-clause from A.Y.2016-17 onward subject to the fulfillment of the conditions.” 4. Thereafter the Ld. counsel for assessee stated that

while mentioning the conditions subject to which the

approval was granted, the Ld.CIT(E) at point No. xvii) stated

for financial year 2015-16 relevant to assessment year

2016-17 the total receipts of the applicant/assessee had

exceeded Rs.1 crore and the assessee had filed its return of

income on 30.3.2017 claiming exemption u/s 10(23C)

though approval had not been granted to it. In that light

the Ld.CIT(E) had granted approval from assessment year

2017-18 only. The relevant point No.xvii) is reproduced

hereunder:

“xvii) the Audit Report for the financial year 2015-16 reveals that the applicant has been in receipt of total income at Rs.1,29,52,078/-(in excess of Rs.One crore) and has claimed exemption by filing its ITR on 30.03.2017, despite approval u/s 10(23C)(vi) not being available. In that light, the approval u/s 10(23C) is granted from the A.Y. 2017-18 only.” 5. The Ld. counsel for assessee stated that the

applicant/assessee having applied for on 27.9.2016 for

grant of approval and the Ld.CIT(E) having granted the

same also from A.Y 2016-17 onwards in the opening para of

the order after being satisfied with the objects and

genuineness of the activities carried out by the assessee,

there was no reason to thereafter make the approval

applicable w.e.f. assessment year 2017-18. The Ld. counsel

for assessee stated that the reason given by the Ld.CIT(E)

that the assessee had treated its income for assessment

year 2016-17 as exempt though the approval u/s 10(23C)

had not been granted, as the reason for delaying the

applicability of the approval to assessment year 2017-18 is

totally irrelevant for grant of approval and is against law.

The Ld. counsel for assessee stated that inordinate delay

by the Ld.CIT(E) in granting the approval which

approximated more than one year, since the approval was

granted on 29.9.2017 as against application made on

27.9.2016, led to the assessee claiming exemption in is

return filed for assessment year 2016-17 which was getting

delayed in the meanwhile. The Ld. counsel for assessee

further stated that as per the 14 t h proviso to section

10(23C) of the Act, the applicant/assessee was required to

file an application for approval by on or before 30 t h

September of the relevant assessment year for which

exemption was sought. The relevant proviso was pointed out

to us as stating as under:

“10(23C) Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1 s t day of June,2006 for purposes of grant of exemption or continuance thereof, such application shall be

made on or before the 30 th day of September of the relevant assessment year from which exemption is sought” 6. In the impugned case, the Ld. counsel for assessee

pointed out, the assessee had sought exemption for

assessment year 2016-17 and the application had been filed

on 27-09-16, i.e. before 30.9.2016 of the relevant

assessment year, therefore, the assessee having filed its

application within time prescribed as per 14 t h proviso, the

Ld.CIT(E) could not have denied approval for the said year

when otherwise its objects and activities were found to be

genuine.

of the Ld.CIT(E).

gone through the order of the Ld.CIT(E). The fact that the

assessee has been granted approval u/s 10(23C)(vi) of the

Act is not in dispute. The only issue is the assessment year

from which it has been granted. Undisputedly, the

application for grant of approval had been filed before the

30 t h of September 2016,which is well within the time

prescribed as per 14 t h proviso to section 10(23C)(vi) of the

Act, for grant of approval w.e.f. A.Y 2016-17. The Ld.CIT(E)

had also found the assessee eligible for grant of approval.

In fact in the opening para of his order the Ld.CIT(E) had

granted approval w.e.f. assessment year 2016-17. The only

reason for shifting thereafter the applicability of the

approval from assessment year 2016-17 to A.Y 2017-18

appears to be the fact that the assessee had in the

meanwhile filed its return of income for assessment year

2016-17 claiming exemption of its income u/s 10(23C)(vi) of

the Act though it had still not been granted approval under

the said section. It is indeed, we find, a very strange

reasoning on the part of the Ld.CIT(E). How this act on the

part of the applicant assessee justifies shifting of grant of

approval from A.Y. 2016-17 to A.Y. 2017-18,when otherwise

the applicant assessee has been found eligible for grant of

approval and has also filed application for the same within

time for approval from A.Y. 2016-17, we fail to understand.

Ld.CIT(E) has also not elaborated on the issue but has

abruptly stated that on account of aforesaid act of the

assessee the approval is granted w.e.f. A.Y. 2017-18. By no

stretch of logic, this act of the applicant assessee renders

its activities ingenuine in A.Y. 2016-17.In fact, we find, the

applicant assessee has justifiably explained the reason for

doing so as the same was prompted on account of the

inordinate delay on the part of the Ld.CIT(E) in granting

approval to the assessee and the assessees return for A.Y.

2016-17 getting delayed for filing in the meanwhile. In

such circumstances, admittedly the assessee was left with

no choice but to file its return of income and claim

exemption in anticipation of grant of approval. Moreover

the applicant assessee was granted approval thereafter. We

therefore find no reason absolutely to draw any adverse

inference from the above act of the applicant assessee of

claiming exemption in the absence of approval for the same.

The Ld.CIT(E), we hold therefore was not justified in

shifting the grant of approval to A.Y. 2017-18.

reason for shifting the grant of approval to A.Y.2017-18

when otherwise the applicant assessee was eligible for

approval from A.Y. 2016-17, we direct the Ld.CIT(E) to grant

approval to the applicant assessee from A.Y. 2016-17

onwards.

allowed.

Order pronounced in the Open Court.

Sd/- Sd/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 6th April, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR Assistant Registrar, ITAT, Chandigarh