2019 (2) TMI 46 - AT - Income Tax

Exemption u/s 10(23C)(vi) - excess of income over expenditure from running the school - AO treated the building fund and building maintenance fund as revenue receipts and added the same to the income of the assessee - Held that - We find that the issue is covered in favour of the assessee by the order of the Tribunal in assessee s own case for assessment years 2010-11 Perusal of the order passed by CIT Exemption lying at Page 8 of the paper book filed by the assessee, apparently shows that the application in Form 56D for claiming exemption u/s 10(23C) (vi) was filed on 15/03/2008 by the assessee and consequently CIT Exemption accorded the approval with effect from the Assessment Year 2008-09. Thus respectfully following the order of the Coordinate Bench in assessee s own case for assessment year 2010-11, we restore the issue to the file of the Assessing Officer to decide the matter afresh in light of the order of approval u/s 10(23C)(vi) of the Act, vide order dated 15.6.2015, and having retrospective effect after providing adequate opportunity to the assessee. - deciced in favour of assessee for statistical purposes.

Summary

Issues:
1. Denial of approval under section 10(23C)(vi) of the Income Tax Act, 1961.
2. Addition of building fund and building maintenance fund to income.
3. Disallowance of exemption claimed under section 10(23C)(vi) of the Act.
4. Denial of capital expenditure and concealment of income.

Analysis:
1. The appeal pertains to the denial of approval under section 10(23C)(vi) of the Income Tax Act. The assessee, an educational society, had applied for approval which was initially denied but later granted by the Commissioner of Income Tax (Exemptions) after a High Court order. The Assessing Officer disallowed the exemption claimed by the assessee leading to the current appeal before the ITAT.

2. The Assessing Officer added the building fund and building maintenance fund to the income of the assessee, treating them as revenue receipts. The assessee contended that these amounts were capital receipts for construction and maintenance purposes, and therefore, should not be included in the income. The ITAT was tasked with reviewing this addition.

3. The denial of exemption claimed under section 10(23C)(vi) of the Act was a crucial issue. The assessee argued that the denial was erroneous, citing the High Court's order and subsequent approval by the Commissioner of Income Tax (Exemptions). The ITAT considered the previous orders and directed the matter to be re-evaluated by the Assessing Officer in light of the approval granted.

4. Another issue raised was the denial of capital expenditure and the show cause notice for concealment of income. The assessee contended that the capital expenditure was allowable under the law and should not have been disallowed. Additionally, the show cause notice for concealment of income was challenged as being against the facts and details submitted. The ITAT reviewed these contentions along with the other issues presented in the appeal.

Overall, the ITAT allowed the appeal for statistical purposes, directing a fresh assessment by the Assessing Officer considering the approval granted under section 10(23C)(vi) of the Act. The decision was based on the precedent set in the assessee's own case for a previous assessment year.