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2014 (2) TMI 307 - AT - Income TaxEligibility for exemption u/s 11 - Held that - Relying upon the decision in ACIT(Exemptions) vs. Raisatani Siksha Samiti 2008 (3) TMI 501 - ITAT HYDERABAD - Merely because s. 10(23C) provides for exemption of the income of an educational institution, it does not follow that such institution cannot avail exemption under s. 11/12 subject to conditions being fulfilled - When the assessee duly granted registration u/s 12A of the IT Act and claimed exemption u/s 11 of the Act, the Assessing Officer cannot deny exemption on the reason that the assessee s case is covered u/s 10(23C) of the IT Act - In the present case, assessee is having registration u/s 12A of the Act, therefore, claim of exemption u/s 11 is to be granted - The order of the CIT(A) is confirmed - Decided against Revenue.
Issues:
- Whether the assessee is eligible for claim of exemption u/s 11 of the IT Act without approval under sub-clause (vi) to the section 10(23C) of the Act. - Whether obtaining approval from the prescribed authority under sub-clause (vi) to section 10(23C) is mandatory when gross receipts of an educational institution exceed Rs. one crore. - Whether the obtaining of approval u/s 10(23C)(vi) of the Act is mandatory for claiming exemption. - Whether an educational institution can claim exemption under both section 11 and section 10(23C) of the IT Act. - Whether the Assessing Officer can deny exemption under section 11 when an educational institution is covered under section 10(23C) of the IT Act. Analysis: The appeal by the Revenue challenged the order of CIT(A)-IV Hyderabad regarding the eligibility of the assessee for exemption u/s 11 of the IT Act for the assessment year 2007-08. The Revenue contended that the CIT(A) erred in holding the assessee eligible for exemption without approval under sub-clause (vi) to section 10(23C) of the Act. The Revenue argued that obtaining approval from the prescribed authority is mandatory when an educational institution's gross receipts exceed Rs. one crore. The Revenue emphasized the distinction between approval under sub-clause (vi) to section 10(23C) and registration u/s 12A of the Act. The assessee, a registered society under section 12A of the IT Act, claimed exemption u/s 11 for running educational institutions. The Assessing Officer (AO) questioned the exemption claim due to the absence of notification u/s 10(23C)(vi) of the IT Act. The assessee argued that the provisions of sections 10(23C) and 11-13 are beneficial, and the organization can choose the provisions that suit it best. The AO disallowed the claim based on precedents and the lack of approval u/s 10(23C)(vi) despite gross receipts exceeding Rs. one crore. Before the CIT(A), the assessee contended that approval u/s 10(23C)(vi) is not mandatory, citing relevant judgments. The CIT(A) allowed the claim, stating the weakness in the AO's assessment order. The Revenue appealed, but the respondent did not appear at the hearing. The ITAT, Hyderabad, referenced a prior decision to explain the distinction between exemptions under sections 11 and 10(23C), emphasizing that an educational institution can avail exemptions under both sections if conditions are met. The ITAT upheld the CIT(A)'s decision, emphasizing that when an assessee is registered u/s 12A and claims exemption u/s 11, the AO cannot deny the exemption solely based on the institution's coverage under section 10(23C). The ITAT confirmed the CIT(A)'s order, dismissing the Revenue's appeal. The judgment highlighted the flexibility for the assessee to choose between exemptions under section 11 or section 10(23C) based on their registration status.
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