2019 (3) TMI 1828 - AT - Income Tax

Exemption u/s 11 - Assessee filed a revised return claiming exemption u/s 10(23C)(vi) - AO rejected claim as approval granted by the Chief Commissioner under Section 10(23C)(vi) of the Act was withdrawn - fact remains that the approval was also granted under Section 12A of the Act as a charitable institution - HELD THAT - Assessee has collected capitation fee for admission of students. These facts were not examined by the AO as well as the CIT(Appeals). In respect of capital expenditure, the CIT(Appeals) has simply rejected the claim of the assessee on the ground that the same was not claimed in the return of income filed consequent to the notice issued under Section 148 of the Act. The Apex Court itself in Goetze (India) Ltd 2006 (3) TMI 75 - SUPREME COURT found that the power of the appellate authority to consider the additional ground is not impinged. CIT(Appeals) as well as ITAT being the appellate authorities can very well entertain the claim. Apex Court itself in the case of CIT v. Shelly Products and Another ( 2003 (5) TMI 4 - SUPREME COURT found that the assessee can always bring to the notice of the Assessing Officer the material necessary for completing the assessment. In case any claim was not made or any income was wrongly included in the return of income, the same can always be brought to the notice of the assessing authority. Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
Appeals against Commissioner of Income Tax (Appeals) orders for assessment years 2006-07 to 2010-11; Reopening of assessment; Exemption under Section 11 of the Income-tax Act, 1961; Claim of exemption under Section 10(23C)(vi) of the Act; Capital expenditure deduction; Reconsideration of exemption under Section 11; Appellate authority's power to consider additional grounds.

Analysis:
The appeals were filed against the Commissioner of Income Tax (Appeals) orders for various assessment years. The main issue revolved around the reopening of assessment by the Assessing Officer after the cancellation of approval under Section 10(23C)(vi) of the Act. The assessee claimed exemption under Section 11 of the Act, arguing that the cancellation of approval was withdrawn retrospectively. The Assessing Officer and the CIT(Appeals) primarily focused on the cancellation of approval, neglecting the claim under Section 11. The assessee initially claimed exemption under Section 11 but later filed a revised return under Section 10(23C)(vi). The Tribunal noted that the approval was also granted under Section 12A as a charitable institution, necessitating examination under Section 11.

The Assessing Officer and CIT(Appeals) did not properly examine the assessee's collection of capitation fee and capital expenditure claims. The CIT(Appeals) rejected the capital expenditure claim as it was not in the return filed post a notice under Section 148. However, the Tribunal cited precedents allowing appellate authorities to consider additional grounds. It emphasized that the assessing authority can be informed of any missed claim or incorrect income inclusion. Consequently, the Tribunal decided that the matter required reassessment by the Assessing Officer, remitting the issue back for proper examination.

During the hearing, the assessee did not press the issue of reopening, leading to its dismissal. However, the Tribunal set aside the orders of the lower authorities and remitted the issue of exemption under Section 11 back to the Assessing Officer for reevaluation. The Assessing Officer was directed to reconsider the matter based on any additional material provided by the assessee and decide the issue afresh, ensuring due process. As a result, all appeals of the assessee were allowed for statistical purposes, emphasizing the need for a thorough reassessment of the exemption claim under Section 11.