2019 (1) TMI 799 - HC - Income Tax

Exemption u/s 10(23EA) - charitable activities - claim not made by the assessee during the filing of return of income but as an alternative at the appellate stage before the CIT(A) - Held that - Revenue does not dispute that necessary facts were already on record to examine such a claim. That being the position, the assessee s claim was based on pure interpretation of statute. Tribunal, therefore, correctly rejected the Revenue s objection relying upon the decision of this Court in the case of Pruthvi Brokers & Share Holders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT . The reference can also be made to the decision of the Supreme Court in case of National Thermal Power Corporation vs. CIT (1996 (12) TMI 7 - SUPREME COURT) holding that the powers of Commissioner of Income Tax (Appeals) are much wider than that of the AO. The other contention though not specifically mentioned by the Revenue in the question framed, we have examined the same. There is no prohibition in law which would prevent the assessee Trust which qualifies for benefits under Section 11 to 13 from claiming exemption under Section 10 (23EA) of the Act. In fact when the Assessing Officer allowed such an exemption for two claims which assessee had raised in the return, the Revenue accepted this position. - Decided against revenue.

Summary

Issues:
1. Whether the ITAT erred in allowing exemption under section 10(23EA) of the Income Tax Act when the claim was made at the appellate stage?
2. Whether a Trust qualifying for benefits under Sections 11 to 13 can claim exemption under Section 10(23EA) of the Act?

Issue 1:
The appeal was filed by the Revenue challenging the ITAT's judgment dated 23/5/2014. The main question was whether the ITAT erred in allowing exemption under section 10(23EA) of the Act when the claim was not made by the assessee during the filing of the return of income but as an alternative at the appellate stage before the CIT(A). The respondent, a Trust registered under the Charitable Trusts Act and a National Stock Exchange Investor Protection Fund Trust, had filed a return of income for assessment year 2010-11 claiming exemption under Section 10(23EA) for two different sources of receipts. The Assessing Officer granted the exemption. The CIT(A) rejected a similar claim for another receipt stating it was not made in the return filed. However, the ITAT allowed the claim, citing no legal prohibition for a Trust qualifying under Sections 11 to 13 to claim exemption under Section 10(23EA). The Tribunal relied on a decision of the Division Bench and the Supreme Court to support its decision. The High Court upheld the ITAT's decision, stating that necessary facts were on record to examine the claim, and the Tribunal's decision was based on a pure interpretation of the statute.

Issue 2:
The second issue involved whether a Trust eligible for benefits under Sections 11 to 13 of the Act can claim exemption under Section 10(23EA). Although this contention was not specifically raised by the Revenue, the High Court examined it. The Court found no legal prohibition preventing a Trust qualifying for benefits under Sections 11 to 13 from claiming exemption under Section 10(23EA). The Assessing Officer had already accepted such an exemption for two claims raised by the assessee in the return. The Court concluded that no question of law arose, and therefore, the Income Tax Appeal was dismissed.