2024 (7) TMI 20 - AT - Income Tax

Rectification Intimation u/s. 154 - denying the claim u/s 10(23C)(iiiad on the ground that Form 10BB has not been filed - as noted return of income filed by the appellant was not a valid one and hence the CPC was correct in processing the same and determining taxable income without giving benefit of exemption that was available to the appellant either u/s. 10 23c iiiad or for that matter u/s. 11 of the Act - HELD THAT - The assessee is having 12 units and gross receipts at Rs. 2, 50, 44, 219/- is already on assessment records. Now the assessee counsel s plea is that the assessee s case is to be examined in the light of judgement of Children s Education Society 2013 (7) TMI 519 - KARNATAKA HIGH COURT wherein held that the Tribunal was correct in holding that the exemption in terms of the provisions of section 10(23C)(iiiad) was available to the assessee as annual receipts of each of the institutions of the assessee was less than the prescribed limit under the provision. The mistake pointed out by the assessee in its petition filed u/s 154 of the Act on 5.2.2019 cannot be said to be debatable issue as this was covered by the judgement of jurisdictional High Court and the ratio laid down by that judgement to be applied to the facts of the case and ld. AO is directed to give effect to the petition filed by the assessee u/s 154

Issues:
1. Denial of exemption claimed under Section 10(23C)(iiiad) of the Income Tax Act, 1961.
2. Requirement of filing Form 10BB for claiming exemption.
3. Validity of rectification order passed by the Assessing Officer.

Analysis:

Issue 1: Denial of exemption claimed under Section 10(23C)(iiiad)
The assessee, a charitable trust running 12 educational institutions, filed for exemption under Section 10(23C)(iiiad) for the assessment year 2016-17. The Central Processing Centre (CPC) did not allow the exemption claimed, stating that the audit report in Form 10BB was mandatory for gross receipts exceeding Rs.1 crore. The Assessing Officer (AO) passed a rectification order denying the claim based on non-filing of Form 10BB. The National Faceless Assessment Centre (NFAC) upheld the AO's decision. The Tribunal found that the denial of exemption was unjustified as the assessee had filed all necessary documents and clearly indicated the exemption claimed. Citing a jurisdictional High Court judgment, the Tribunal directed the AO to grant the exemption as per the petition filed by the assessee under Section 154 of the Act.

Issue 2: Requirement of filing Form 10BB for claiming exemption
The Assessing Officer denied the exemption claim on the grounds of non-filing of Form 10BB, stating it was mandatory for certain types of exemptions under Section 10(23C). The assessee argued that Form 10BB was not required for the exemption claimed under Section 10(23C)(iiiad). The Tribunal agreed with the assessee's contention, emphasizing that the denial of exemption based on non-filing of Form 10BB was incorrect and contrary to the facts of the case. The Tribunal directed the AO to grant the exemption as per the petition filed by the assessee under Section 154 of the Act.

Issue 3: Validity of rectification order passed by the Assessing Officer
The Assessing Officer passed a rectification order denying the exemption claim due to non-filing of Form 10BB and consolidated gross receipts exceeding the prescribed limit. The Tribunal found the AO's decision to be erroneous and not in line with the jurisdictional High Court judgment, which held that the exemption was available as the annual receipts of each institution were below the limit. The Tribunal directed the AO to give effect to the petition filed by the assessee under Section 154 of the Act, thereby allowing the appeal and granting the exemption.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to grant the exemption claimed under Section 10(23C)(iiiad) based on the documents filed and the jurisdictional High Court judgment.

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