2017 (12) TMI 1573 - HC - Income Tax

Exemption u/s 11 & 12 denied - holding funds in non-specified modes - ITAT restoring back the matter to the file of CIT(E) for giving further time and opportunity to the assessee to convert the shares into specified assets within a specified period - whether the Ld. CIT(E) was justified in withdrawing the notification and benefit u/s 10(23C) (vi) of the Act, on the basis that the assessee has not made investment in the specified assets? - Held that - There is no dispute with regard to the fact that the assessee kept this investment as it is without converting into the same in the mode specified under the Act despite elapse of several years, the proviso of Section 10(23C)(vi) empowers the prescribed authority under the Act to withdraw the approval granted u/s 10(23C) (vi). As borne out of records that the Revenue chose not to rescind the approval in earlier years. The Ld. Counsel for the assessee urged that withdrawal of exemption is very harsh step as the assessee has been enjoying the benefit of exemption, for several years - restore this issue to the file of the CIT(E) to reconsider the submissions of the assessee, and give last opportunity to convert the shares into specified assets within a specified period, and meantime withdraw exemption u/s 11 & 12 in respect of income earned from the investment made in non-specified assets. This ground of assessee s appeal is allowed for statistical purpose. Appeal dismissed.

Summary

Issues:
Challenge to Tribunal's order remitting the matter for reconsideration.

Analysis:
The appellant challenged the Tribunal's decision remitting the matter for reconsideration. The substantial question of law framed by the appellant questioned the Tribunal's action of restoring the matter to the file of CIT(E) for giving further time to convert shares into specified assets, contrary to the provisions of the IT Act. The Tribunal observed that the assessee had filed details regarding the shares and donation, arguing that only income from non-specified investments should be taxed. The Tribunal referred to previous judgments to support its decision, emphasizing that the assessee had not made investments as required by law. The Tribunal considered the harshness of withdrawing exemption and decided to give the assessee a last opportunity to convert shares into specified assets within a specified period while withdrawing exemption for income from non-specified assets. Ultimately, the Tribunal decided to restore the issue to the file of CIT(E) for reconsideration.

The High Court saw no reason to interfere with the Tribunal's decision. The appeal was deemed devoid of merit and dismissed accordingly. The High Court upheld the Tribunal's decision to remit the matter back to the CIT(E) for further consideration.