2014 (6) TMI 377 - HC - Income Tax

Grant of exemption u/s 10(23-C) (iiiad) of the Act Held that - CIT(A) as well as Tribunal rightly was of the view that the assessee had specifically raised the issue of Section 10(23C) (iiiad) and had placed on record the relevant and material facts including the objects of the trust, the allotment of land, the structure of a school building and the commencement of a school - assessee trust has taken various steps, including the construction of building and getting the necessary permission and sanction for running the school; so as to bring the school into existence during the year, although the school have separate running classes from next year onwards - total receipts of the assessee would remain below Rs. 1 Crore even if the donations of Rs. 49,99,000/- are added as receipt in the nature of income of the assessee society - the assessee trust is entitled for exemption u/s 10(23C)(iiiad) thus, as such no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues:
- Appeal by revenue under Section 260-A of the Income Tax Act, 1961 regarding exemption U/s. 10(23-C) (iiiad) for A.Y. 2009-10.
- Whether the ITAT erred in granting exemption without the assessee claiming it in assessment proceedings.

Analysis:
The High Court dealt with an appeal by the revenue challenging the decision of the ITAT regarding the grant of exemption under Section 10(23-C) (iiiad) for the assessment year 2009-10. The main question raised was whether the ITAT erred in law by granting the exemption when the assessee had not claimed it during the assessment proceedings. The Tribunal's order indicated that the appeal was by the revenue, and the departmental representative accepted that the issue was covered by a previous order of the Tribunal and a subsequent decision of the Division Bench of the Court. The Tribunal's decision was based on a concession that the matter was covered by previous judgments.

On one hand, the revenue contended that the Tribunal granted the benefit of Section 10(23-C)(iiiad) without the assessee making such a claim before the assessing officer or the CIT(A). However, the counsel for the assessee strongly opposed this submission, referring to the order passed by the CIT(A) where a specific claim under Section 10(23C) (iiiad) was raised. The High Court examined the orders of both the CIT(A) and the Tribunal. The CIT(A) had considered the issue of exemption under Section 10(23C) (iiiad) based on the supplementary submission by the assessee, which included relevant facts about the trust, school building construction, and permission for running the school. The CIT(A) found the claim valid and allowable, providing detailed reasons for granting the exemption.

The High Court concluded that it would be unfair to criticize the Tribunal for allowing the claim under Section 10(23C)(iiiad) without it being raised before the CIT(A). The claim was indeed raised before the CIT(A) with supporting factual material, and the CIT(A) had thoroughly adjudicated upon it, justifying the assessee's eligibility for the exemption. The revenue did not attempt to distinguish the earlier judgments related to the case. Consequently, the High Court found no merit in the appeal, stating that it did not raise any substantial question of law, and thus, dismissed the appeal without any costs.