2023 (10) TMI 907 - AT - Income Tax

Revision u/s 263 - as per CIT AO accepted the claim of assessee regarding exemption u/s. 10(23C)(iiiab) wrongly - Applicability of Rule 2BBB - Percentage of Government Grant for considering university, hospital etc. as substantially financed by the Government - assessee had received grant at 33.5% of the total receipt - HELD THAT - For adjudication for A.Y 2012-13, the ld. CIT(E) had utilised the power beyond jurisdiction. The Rule 2BBB was not applicable during the impugned assessment year. No prospective effect is allowed related to this Rule. Thus implementation of section 263 is beyond the jurisdiction for the revenue. The ld. CIT(E) has no power to implement the Rule 2BBB against the assessee. We fully relied on the order of the Tolani Education Society, 2013 (2) TMI 268 - BOMBAY HIGH COURT DR had not placed any contrary fact against the assessee. The assessee is eligible for the exemption. The order passed u/s 263 is quashed. Assessee filed two returns u/s. 139(1) and 139(4) - Two different intimations u/s. 143(1) were emanated and the appeals were filed by the assessee against the two intimations for redressal of its grievance - A.Y. 2015-16 - CIT(A) was erred to reject the appeal without considering the merit of the case - interest of justice would be sub served if the impugned order is set aside and the matters are remitted back to the ld. CIT(A) for consideration thereof afresh. Form No. 10BB could not be filed along with the return of income - CBDT extended time for filing the Form No. 10BB. Accordingly delay caused by the assessee for filing the Form No. 10BB for assessment year 2016-17 is duly condoned. We remit back the matter to ld. CIT(A) for considering the issue in the light of the CBDT circular no. 19/2020. The said circular is applicable during impugned assessment year. The issue is first time agitated before the ITAT. The ld. DR had not made any objection against the submission of assessee. We accept the grounds of appeal of the assessee

Summary

Issues involved:
The judgement involves appeals filed for three different assessment years against orders passed by the ld. Commissioner of Income-tax (Exemptions) and ld. Commissioner of Income-tax (Appeals)-2 under sections 263 & 250(6) of the Income Tax Act, 1961 respectively.

A.Y. 2012-13:
The assessee, an educational institute, was granted exemption u/s. 10(23C)(vi) for AY 2012-13. The ld. CIT(E) challenged this exemption, claiming the assessee was not eligible due to grant received. The assessee argued Rule 2BBB was not applicable for that year, citing relevant case law. The Tribunal held that the implementation of section 263 was beyond jurisdiction, as Rule 2BBB was not applicable, thus allowing the appeal.

A.Y. 2015-16:
The assessee filed two returns and appealed against two intimations under section 143(1). The ld. CIT(A) rejected the appeal without considering the merits. The Tribunal set aside the order and remitted the matters back for fresh consideration by the ld. CIT(A).

A.Y. 2016-17:
The claim u/s. 10(23C)(vi) was rejected for non-filing of Audit Report in Form No. 10BB within the stipulated time. The Tribunal considered a CBDT circular extending time for filing Form No. 10BB and remitted the matter back to the ld. CIT(A) for further adjudication.

The Tribunal allowed the appeal for AY 2012-13, set aside the order for AY 2015-16 for fresh consideration, and remitted the matter back for AY 2016-17 in light of the CBDT circular.