2019 (3) TMI 1667 - AT - Income Tax

Benefits of the exemption u/s 10(23C)(vi) - claim was neither made in the return of income nor before the assessing officer - HELD THAT - Legitimate relief available to the assessee and not claimed in the return of income and the time permitted to revise the return of income under Section 139(5) having elapsed can be claimed by the assessee either before the assessing authorities or before the CIT (A) provided the relevant facts and data with respect to the claim was before the authorities. In this particular case, the appellant has been granted certificate in connection with exemption of his income under 10(23C)(vi) vide the CCIT order referred above and a finding have already been given with respect to the same by the undersigned. Thus, it is true that the appellant was enjoying exemption u/ s 10(23C) (vi) of the I.T. Act, 1961 which was overlooked by the AO. Thus, I find merit in the submissions of the appellant and this ground of appeal is allowed. The AO is directed to allow the appellant the benefit of the exemption already granted to it u/s 10(23C)(vi) of I.T. Act, 19961. In the result, the appeal is allowed.

Summary

Issues Involved:
1. Justification of allowing the society benefits of exemption under Section 10(23C)(vi) of the Income Tax Act when the claim was not made in the return of income or before the assessing officer.
2. Justification of allowing the society benefits of exemption under Section 10(23C)(vi) when the income was used for the benefit of interested persons, contravening the 13th proviso of Section 10(23C).

Issue-wise Detailed Analysis:

Issue 1: Justification of Allowing Exemption under Section 10(23C)(vi)
- The Revenue contended that the exemption under Section 10(23C)(vi) should not be allowed as the claim was neither made in the return of income nor before the assessing officer, citing the Supreme Court decision in Goetze (India) Ltd. vs. CIT.
- The assessee argued that it had no taxable income after applying Section 11 provisions at the time of filing the return, hence did not claim Section 10(23C) exemption.
- The assessee had been granted perpetual approval for exemption under Section 10(23C) by the Central Board of Direct Taxes, effective from 06.11.2007.
- The CIT(A) allowed the exemption, relying on CBDT Circular No. 14 dated 11.04.1955, which instructs tax authorities to assist taxpayers in claiming all due benefits, even if not claimed by the taxpayer.
- The Tribunal upheld the CIT(A)'s decision, emphasizing that the purpose of the law is to ensure the correct assessment and collection of legitimate taxes, and the authorities should assist in securing all due reliefs and exemptions.

Issue 2: Contravention of the 13th Proviso of Section 10(23C)
- The Revenue argued that the society's income was used for the benefit of interested persons, violating the 13th proviso of Section 10(23C), which mandates that income should be applied solely for educational purposes.
- The assessee demonstrated that it had applied its entire income towards its educational objectives and had not accumulated any income, thus not contravening the proviso.
- The Tribunal found no force in the Revenue's argument as the assessee had consistently applied its income towards its educational purposes and had not accumulated any income.
- The Tribunal upheld the CIT(A)'s decision, directing the assessing officer to allow the exemption under Section 10(23C)(vi) as the assessee had complied with the necessary conditions.

Conclusion:
- The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order to grant the exemption under Section 10(23C)(vi) to the assessee.
- The Tribunal emphasized the duty of tax authorities to assist taxpayers in claiming all due benefits and reliefs, as per the CBDT Circular No. 14 and various judicial precedents.
- The Tribunal concluded that the assessee had complied with the necessary conditions for exemption under Section 10(23C)(vi) and had not contravened the 13th proviso of the section.

Final Judgment:
- The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order, granting the exemption under Section 10(23C)(vi) to the assessee. The judgment was pronounced in the open court on 15.03.2019.