2014 (3) TMI 681 - AT - Income Tax

Claim of exemption u/s 11 of the Act - Whether the CIT(A) was right in directing the AO to allow the claim of exemption u/s 11, the same was not claimed in the return of income filed u/s 139(1) of the Act Held that - The decision in Fellowship of Physically Handicapped 2014 (3) TMI 250 - ITAT MUMBAI followed - the appellant has been filing amended clauses of Memorandums of Association along with return of income - As such it cannot be said that the appellant trust has not informed the Income tax Authorities regarding the change in Memorandum of Association - the assessee has been granted registration under section 12A and the original objects continued to exist apart from the fact that the amended objects remain charitable - the CIT(A) was of the view that the assessee is entitled to exemption under section 12A - the assessee is entitled to claim exemption u/s 11 of the Act Decided against Revenue.

Issues involved:
1. Claim of exemption u/s 11 not initially filed in the return of income u/s 139(1).
2. Claim of exemption u/s 11 revised in response to notice u/s 148.
3. Eligibility for exemption u/s 10(23C) (iiiad) & (iiiae) not satisfied.

Analysis:
1. The appeal by the Revenue challenged the order passed by the CIT(A)-I, Mumbai for A.Y. 2006-07 regarding the claim of exemption u/s 11. The Revenue questioned the direction given by the CIT(A) to allow the exemption even though it was not initially claimed in the return of income u/s 139(1) of the Act.
2. The Revenue also contended that the CIT(A) erred in directing the AO to allow the exemption u/s 11 without considering the revised claim made by the assessee in response to a notice u/s 148. Reference was made to the Supreme Court's decision in the case of CIT Vs. Sun Engineering Works P Ltd. (1992) 198 ITR 297, 320 SC.
3. Further, the Revenue argued that the CIT(A) failed to acknowledge that the assessee did not meet the basic conditions for exemption u/s 10(23C) (iiiad) & (iiiae) as it was neither a university nor a hospital existing solely for philanthropic purposes.
4. The AO had initially denied the exemption by reopening the assessment, stating that the assessee was not solely for educational purposes or a hospital for treatment purposes. However, the CIT(A) noted a precedent for A.Y. 2008-09 where exemption under section 11 was granted based on the trust's activities in education, medical help, and financial aid to the handicapped.
5. The Revenue appealed the decision, but the ITAT affirmed the CIT(A)'s order based on the precedent set in the assessee's case for A.Y. 2008-09. The Revenue's argument was considered but ultimately dismissed.
6. The ITAT upheld the CIT(A)'s decision, stating that it did not warrant any interference based on the consistency with the earlier decision for A.Y. 2008-09. The appeal by the Revenue was consequently dismissed, affirming the CIT(A)'s order regarding the exemption claim under section 11.

This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the arguments presented by the Revenue and the decisions made by the CIT(A) and the ITAT.

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