2016 (8) TMI 156 - HC - Income Tax

Approval under Section 10(23C)(vi) - condone the delay in filing an application - Held that - After receipt of the reply and written submission and after affording an opportunity of personal hearing, the respondent pointed out that there is no power for condoning the delay in filing the application in Form No.56D and with regard to alternative prayer, the same was also rejected stating that the assessment year is defined under Section 2(9) to mean the period of 12 months commencing on the 1st April of every year and therefore, the application cannot be treated as application for the assessment year 2013-2014. Ultimately, in paragraph 4.4 of the impugned order, the application was rejected as out of time. However, without stopping there, the respondent thereafter, proceeded to analyze the objective of the Society, which, in my view, was an exercise not called for. Having rejected the application on the ground of limitation, the question of examining the merits of the matter would not arise and it is a superseded exercise. However, considering the legal position that there is no power to condone the delay in filing an application under Section 10(23C) of the Act, this Court is not inclined to exercise its extraordinary jurisdiction to condone the delay. However, this Court is inclined to give appropriate direction to the respondent to consider the petitioner s application as an application for the subsequent assessment year, namely, 2013-2014 in accordance with law. Such direction is issued considering the peculiar facts and circumstances of the case and that the petitioner could not have made an application for the subsequent assessment year 2013-2014, since their application for assessment year 2012-2013 was still pending consideration and the impugned order came to be passed only on 13.11.2013. The respondent is at liberty to consider the amended objectives of the petitioner Trust. Accordingly, the writ petition is partly allowed and the finding rendered by the respondent that the petitioner s application cannot be considered as the same is time barred is affirmed and the finding with regard to objectives of the Society by respondent holding that the Society cannot be said to be solely for education purpose is set aside.

Summary

Issues:
1. Rejection of application for exemption under Section 10(23C)(vi) of the Income Tax Act due to delay in filing and non-fulfillment of educational purpose requirement.

Analysis:

Issue 1: Rejection based on delay and educational purpose requirement
The petitioner, a registered Society operating an Educational Institution, filed an application seeking exemption under Section 10(23C)(vi) of the Income Tax Act for the assessment year 2012-2013. The respondent issued a show cause notice citing two grounds for potential rejection: delay in filing and the Society's non-compliance with the educational purpose clause. The respondent ultimately rejected the application on both grounds. The petitioner challenged the rejection, arguing that if the delay was the basis for rejection, the merits should not have been considered. The petitioner had amended the Trust's objects, aiming to resubmit the application. The respondent contended that the rejection was valid due to the delay and non-compliance with the Act's requirements. The Court examined the issue of whether the respondent could decide on the merits after rejecting the application based on delay.

Court's Analysis:
The Court referred to previous judgments, including the decision in Shri Anand Rishi Jain Society case, emphasizing that rejection based on delay should not lead to a review of the merits. The Court noted that the respondent's decision to consider both grounds post-rejection based on delay was improper. The Court highlighted the lack of statutory power to condone the delay under Section 10(23C)(vi) but acknowledged its discretion under Article 226 of the Constitution to consider peculiar circumstances. The Court cited the Roland Educational and Charitable Trust case, emphasizing that statutory provisions override general laws like the Limitation Act. The Court agreed with the respondent's rejection based on delay but directed a fresh consideration for the subsequent assessment year, 2013-2014, due to the peculiar circumstances and the Trust's amended objectives.

Conclusion:
The Court partly allowed the writ petition, affirming the rejection based on delay but setting aside the non-compliance with the educational purpose requirement. The matter was remanded for fresh consideration for the assessment year 2013-2014, considering the amended Trust objectives. The Court declined to condone the delay but directed the respondent to reevaluate the application in line with the law and the Trust's amendments.