2018 (6) TMI 1808 - AT - Income Tax

Deemed approval of the entity under section 10(23C)(vi) - Tribunal upheld the order of AO in treating the assessee as AOP instead of an institution solely existing for imparting education - HELD THAT - As there is merit in the miscellaneous application filed by assessee for assessment year 2007-08 wherein the assessee had filed application before the Commissioner for granting approval under section 10(23C) (vi) of the Act on 31.03.2006. In view of the dictate of the Hon ble Supreme Court in CIT Vs. Society for The Promotion of Education 2016 (2) TMI 672 - SC ORDER which is in respect of application made under section 12AA of the Act which is parameteria to provisions of section 10(23C)(vi) of the Act we hold that since the Commissioner has not disposed off application dated 31.03.2006 within period of six months the registration is deemed to be granted to the assessee w.e.f. 30.09.2006 i.e. after expiry of six months from the date of making application. Hence applicant is entitled to grant deduction under section 10(23C)(vi) of the Act w.e.f 30.09.2006 which falls within assessment year 2007-08.

Summary

Issues:
1. Deemed approval under section 10(23C)(vi) of the Act.
2. Overruling of Full Bench decision by Hon'ble Supreme Court.
3. Rectification of mistake apparent from record.

Analysis:
1. The Tribunal had initially decided the issue of deemed approval under section 10(23C)(vi) of the Act, relying on the full Bench decision of the Hon'ble Allahabad High Court. The Tribunal held that the applicant was not entitled to the deduction claimed under this section due to the absence of approval from the prescribed authority. Additionally, the Tribunal upheld the Assessing Officer's decision in treating the assessee as an Association of Persons (AOP) instead of an institution solely existing for imparting education.

2. The applicant contended that the Full Bench decision was overruled by the Hon'ble Supreme Court in the case of CIT Vs. Society for the Promotion of Education. The applicant argued that a subsequent decision by the Supreme Court on the same issue gives rise to a prima facie mistake, allowing for rectification under the Income Tax Act. The Tribunal, after considering the Supreme Court's decision, found merit in the applicant's claim and allowed the deduction under section 10(23C)(vi) from a specific date.

3. The Tribunal, in light of the Supreme Court's decision, rectified the mistake apparent from the record and allowed the deduction for the relevant assessment year. However, the Tribunal dismissed similar applications for earlier assessment years as the applications were not filed in accordance with the Act's requirements, thus not entitling the applicant to the deduction for those years. The Tribunal differentiated between the applications and granted relief based on the specific circumstances of each case.

In conclusion, the Tribunal allowed the applicant's claim for the assessment year 2007-08 based on the Supreme Court's decision, rectifying the mistake apparent from the record. The Tribunal dismissed similar applications for earlier years due to non-compliance with the Act's requirements. The judgment showcases the importance of legal precedents and the impact of higher court decisions on lower court rulings in tax matters.