2020 (1) TMI 922 - HC - Income Tax

Benefit of the exemption u/s 10(23C)(VI) - competent authority of the Central Board of Direct Taxes, New Delhi for securing the said benefit - Seeking direction to the 1st respondent to consider application submitted by the petitioner, seeking exemption and restraining the 3rd respondent in initiating all further coercive proceedings against the petitioner society for non-submission of Income Tax returns, till orders are passed by the 1st respondent in Ext.P12 application - HELD THAT - After hearing both sides and taking note of the pleadings and documents on record and without getting into the merits of the controversy in any manner, it is ordered that the 1st respondent competent authority of the Central Board of Direct Taxes, New Delhi will take up the plea made by the petitioner in Ext.P12 application dated 30-10-2019 and after affording reasonable opportunity of being heard to the petitioner through his authorised representative or counsel, if any, will render a considered decision thereon without much delay preferably within a period of 4-5 months from the date of production of the certified copy of the judgment.

Summary

Issues:
1. Eligibility for income tax exemption under Sec.10(23C)(VI) of the Income Tax Act, 1961 for an educational institution registered as a Co-operative Society.
2. Relief sought through a writ petition for quashing certain records, consideration of exemption application, and restraining coercive proceedings for non-submission of Income Tax returns.

Analysis:
1. The petitioner, an educational institution registered as a Co-operative Society, claimed entitlement to income tax exemption under Sec.10(23C)(VI) of the Income Tax Act, 1961, as it is engaged in imparting education through unaided/self-financing colleges affiliated to the university. The petitioner submitted an application (Ext.P12) before the 1st respondent, the competent authority of the Central Board of Direct Taxes, seeking the said benefit. The relevant provision, Sec.10(23C)(VI), excludes income received by educational institutions solely for educational purposes and not for profit, subject to approval by the prescribed authority. The petitioner contended that the 1st respondent is the prescribed authority for exercising powers under this provision.

2. The writ petition sought various reliefs, including quashing certain records, consideration of the exemption application (Ext.P12), and restraining further coercive proceedings for non-submission of Income Tax returns until a decision is made on the application. The court, after hearing both parties and reviewing the pleadings and documents, directed the 1st respondent to consider the petitioner's plea in the application (Ext.P12) and make a decision after affording a reasonable opportunity for the petitioner to be heard, preferably within 4-5 months from the date of the judgment. The court did not delve into the merits of the controversy but provided specific directions for the 1st respondent to address the petitioner's claim for income tax exemption.

In conclusion, the High Court of Kerala, through the judgment delivered by Justice Alexander Thomas, disposed of the writ petition by instructing the competent authority of the Central Board of Direct Taxes to consider the petitioner's application for income tax exemption under Sec.10(23C)(VI) of the Income Tax Act, 1961, within a specified timeframe, without expressing any opinion on the merits of the case.