2018 (3) TMI 148 - AT - Income Tax

Eligible for exemption u/s 10(23C)(vi) - Denying the benefit of exemption to the assessee and u/s 11(1)(a) - Held that - We find that the CBDT vide Circular No. 07/2010 dated 27.10.2010 clarified that any approval issued on or after 1.12.2006 under sub-clause (vi) or (via) of section 10(23C) would also be a one-time approval which would be valid till it is withdrawn. AO while denying the claim of the assessee, has relied on the order of the CCIT who rejected the application filed by the assessee for exemption u/s 10(23C)(vi) of the Act. As the assessee continues to be eligible for exemption u/s 10(23C)(vi) of the Act vide order of the competent authority dated 15.6.2009 and the Assessing Officer framed the assessment merely denying the benefit of exemption to the assessee and its u/s 11(1)(a) of the Act, we find no reason to interfere in the findings of the Commissioner of Income Tax (Appeals) and accordingly uphold the same. - Decided against revenue.

Summary

Issues:
1. Disallowance of expenses claimed by the assessee without proper justification.
2. Examination of the claim for exemption under Section 10(23C)(vi) for educational purposes.

Analysis:
1. The appeal involved a dispute regarding the disallowance of expenses totaling ?44,29,178 made by the Assessing Officer, which the Commissioner of Income Tax (Appeals) deleted. The assessee, a charitable trust engaged in providing education, had its exemption certificate under Section 10(23C)(vi) rejected for the assessment year 2012-13. The Assessing Officer assessed the income at ?62,85,420, including the disallowed expenses. The Commissioner allowed the appeal, emphasizing that the assessee's exemption continued as per CBDT Circular No. 07/2010, which clarified the one-time approval for such exemptions. The Tribunal upheld the Commissioner's decision, citing the High Court's judgment in the assessee's favor and the continued eligibility for exemption.

2. The second issue revolved around the examination of the claim for exemption under Section 10(23C)(vi) for educational purposes. The assessee's approval for exemption was challenged by the Assessing Officer based on the rejection of the application by the CCIT. However, the High Court quashed the CCIT's order, allowing the assessee's claim for exemption. The Tribunal, in line with the High Court's decision and the CBDT Circular, upheld the assessee's eligibility for exemption under Section 10(23C)(vi) for the assessment year 2012-13. The Tribunal dismissed the revenue's appeal, affirming the Commissioner's decision and the continued validity of the assessee's exemption certificate.

In conclusion, the Tribunal's judgment favored the assessee, emphasizing the importance of the CBDT Circular and the High Court's ruling in upholding the eligibility for exemption under Section 10(23C)(vi) for educational purposes. The decision highlighted the significance of legal provisions and precedents in determining tax exemptions and disallowances, ensuring fair treatment for charitable organizations engaged in educational activities.