2011 (4) TMI 1493 - AT - Income Tax

Summary

Issues Involved:
The appeal filed by the Revenue against the order of CIT(A) regarding the deletion of addition of Rs. 93.21 lakhs by allowing exemption to the income of the assessee society under Section 10(23C)(vi) of the Income-tax Act, 1961.

Issue 1: Exemption u/s 10(23C)(vi) of the Act

The Revenue contested the CIT(A)'s authority to grant exemption u/s 10(23C)(vi), arguing that only the competent authority has the power to grant such exemptions. The Authorized Representative of the assessee highlighted that the application for registration was filed on 23.12.2004, and 85% of the income was used for charitable purposes as required u/s 10(23C)(vi). They emphasized that no time limit was prescribed at that time for granting or refusing approval, and various case laws were cited to support the contention that in the absence of a decision within a reasonable time, the application should be deemed accepted.

Issue 2: Timing of Application for Exemption

The Tribunal noted that the application for registration u/s 10(23C)(vi) was filed after the relevant accounting year had ended, and the amendment brought by the Finance Act, 2006, regarding the timing of application filing did not apply to the assessment year 2004-05. The Tribunal agreed with the Authorized Representative that the 14th Proviso inserted in Section 10(23C)(vi) for exemptions made after 1st June 2006 did not apply to this case.

Issue 3: Status of Registration and Pending Application

The Tribunal observed that the assessee had been granted registration u/s 12A from 1st April, 2004, making it eligible for exemption u/s 10(23C)(vi). However, there was no evidence presented to show the status of the application with the Department or any action taken by the competent authorities regarding the approval u/s 10(23C)(vi). Due to the lack of clarity on the application's status, the matter was remanded back to the CIT(A) for further verification and decision.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes and directed the CIT(A) to investigate the factual position regarding the pending application of the assessee before the competent authorities for grant of approval u/s 10(23C)(vi) and to decide the issue afresh.