2015 (10) TMI 1429 - AT - Income Tax

Eligibility u/s. 10(23C)(iiiac) denied - Held that - In the case in hand, there is no dispute that the assessee is a wholly/substantially funded by the Government of India/State Govt. of Karnataka. This being the fact of the matter, the assessee is entitled for exemption u/s. 10(23C)(iiiac) of the Act. As no distinguishing facts/decisions have been brought on record by the Revenue, respectfully following the decision of the Coordinate Bench in the case of Raichur District Health & Family Welfare Society (2013 (5) TMI 635 - ITAT BANGALORE) we direct the Assessing Officer to allow the assessee exemption u/s. 10(23C)(iiiac) of the Act. - Decided in favour of assessee.

Summary

Issues:
- Eligibility of the assessee under section 10(23C)(iiiac) of the Income Tax Act.

Analysis:
The appeal was filed against the order of the Ld. CIT (A) for the assessment year 2009-10. The grievance of the assessee was that the Ld. CIT(A) failed to recognize the assessee's eligibility under section 10(23C)(iiiac) of the Act. The assessee, a district level society under the Department of Health & Family Welfare, Govt. of Karnataka, formed for implementing the National Rural Health Mission Programme, filed a return claiming exemption under section 11 of the Act. The Assessing Officer denied the claim, stating that the assessee did not prove eligibility under section 10(23C) and that the application for registration under section 12AA was rejected. The Assessing Officer treated interest income from bank deposits as income from other sources. The assessee then approached the Ld. CIT(A) without success.

The counsel for the assessee referred to a decision of ITAT, Bangalore Bench in a similar case and argued that the society should be eligible for exemption under section 10(23C)(iiiac) based on the funding received from the Government. As the assessee was substantially funded by the Government of India/State Govt. of Karnataka, it was concluded that the assessee met the criteria for exemption under section 10(23C)(iiiac). Since no distinguishing facts were presented by the Revenue, the decision of the Coordinate Bench was followed, directing the Assessing Officer to allow the assessee exemption under the mentioned section.

In conclusion, the appeal filed by the assessee was allowed, and the Assessing Officer was directed to grant exemption under section 10(23C)(iiiac) of the Act. The order was pronounced in the open court on 8.6.2015.