2014 (5) TMI 937 - AT - Income Tax

Refusal of exemption u/s 11 of the Act Approval u/s 10(23C)(vi) of the Act Educational institution Held that - The AO is not correct in denying exemption to the assessee on that ground alone - even in absence of approval u/s 10(23C)(vi) of the Act, the assessee can make an alternative claim of exemption u/s 11 of the Act if, otherwise, it satisfies the conditions laid down - So far as the other direction of the CIT(A) to the AO to verify and allow exemption u/s 11 of the Act, if the assessee has not collected any money by whatever name called over and above the prescribed fees for admission of the student - during the hearing of the appeals assessee pointed out that for subsequent AY 2011-12, the AO himself has allowed exemption u/s 11 of the Act, to the assessee when the AO has himself has granted exemption u/s 11 to the assessee in AY 2011-12, there was no reason to interfere with the order passed by the CIT(A) Decided against revenue.

Summary

Issues involved:
Department's appeal against CIT(A)'s order regarding exemption under sections 10(23C) and 11 of the Income Tax Act for assessment years 2009-10 & 2010-11.

Analysis:
1. Issue 1: Eligibility for exemption under section 11 without approval under section 10(23C):
The Department contested the CIT(A)'s decision allowing exemption under section 11 to the assessee society, even without approval under section 10(23C). The CIT(A) held that registration under section 12A sufficed for exemption under section 11, citing judicial precedents like CIT vs Bar Council of Maharastra and others. The ITAT concurred, emphasizing that fulfillment of conditions under sections 11 to 13 warranted exemption under section 11, irrespective of section 10(23C) approval. The ITAT also noted the CIT(A)'s directive for the Assessing Officer to verify if no additional charges beyond prescribed fees were collected for student admissions, in line with previous ITAT decisions.

2. Issue 2: Denial of exemption based on educational institution status:
The Assessing Officer denied exemption under section 11 to the assessee due to its status as an educational institution, insisting on approval under section 10(23C)(vi). However, the ITAT disagreed, citing established ITAT rulings that allowed exemption under section 11 even without section 10(23C)(vi) approval if all conditions were met. The ITAT upheld the CIT(A)'s order, highlighting that the Assessing Officer's stance was unfounded. Notably, the ITAT mentioned the Assessing Officer's grant of exemption under section 11 for the subsequent assessment year 2011-12, indicating consistency in treatment.

3. Conclusion:
The ITAT dismissed the Department's appeals, affirming the CIT(A)'s order granting exemption under section 11 to the assessee society for the relevant assessment years. The ITAT underscored the precedence of registration under section 12A for exemption under section 11 and emphasized adherence to prescribed conditions. The decision highlighted the importance of verifying compliance with fee regulations for student admissions to determine eligibility for exemption. The ITAT's ruling aligned with established judicial interpretations and upheld the principle that section 10(23C) approval was not a prerequisite for claiming exemption under section 11, provided all statutory conditions were satisfied.