2016 (11) TMI 1022 - HC - Income Tax

Denial of exemption under Section 10(23C)(vi) - Held that - In view of order passed by the Central Board of Direct Taxes vide order dated 16th March, 2007, which is applicable for Assessment Year 1999-2000 and onwards, the assessee/respondent is held entitled for exemption under Section 10(23C) (vi) of the Income Tax Act, 1961. Learned Tribunal has already affirmed the order of Commissioner of Income Tax (Appeals), who had allowed the exemption to the assessee/respondent, while allowing the appeal of the assessee.

Summary

Issues:
1. Interpretation of Section 10(23C)(vi) of the Income Tax Act, 1961.
2. Validity of the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal.
3. Applicability and binding nature of the order passed by the Central Board of Direct Taxes.

Analysis:

Issue 1: Interpretation of Section 10(23C)(vi) of the Income Tax Act, 1961
The case involves a dispute regarding the exemption under Section 10(23C)(vi) of the Income Tax Act, 1961, granted to a registered society running educational institutions. The Assessing Officer initially denied the exemption, but the Commissioner of Income Tax (Appeals) allowed it, a decision further supported by the Central Board of Direct Taxes' order dated 16th March, 2007. The debate centered on whether the institution met the conditions specified under Section 10(23C)(vi) for tax exemption.

Issue 2: Validity of the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal
The appellant contended that the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were erroneous in denying the exemption under Section 10(23C)(vi) to the assessee. However, it was highlighted that the Central Board of Direct Taxes had approved the exemption for the institution, making the orders of the lower authorities untenable. Consequently, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in granting the exemption, leading to the dismissal of the appeals filed by the revenue.

Issue 3: Applicability and binding nature of the order passed by the Central Board of Direct Taxes
The pivotal point in the judgment was the order issued by the Central Board of Direct Taxes on 16th March, 2007, approving the exemption for the institution under Section 10(23C)(vi) of the Income Tax Act, 1961. This order was deemed binding on the department, as acknowledged by both parties, and established the entitlement of the assessee to the exemption. The Court, in light of this binding order, concluded that the appeal lacked merit and dismissed it without any costs.

In conclusion, the High Court upheld the decision of the lower authorities and dismissed the appeal, emphasizing the significance of the Central Board of Direct Taxes' order in determining the entitlement of the institution to exemption under Section 10(23C)(vi) of the Income Tax Act, 1961.