2009 (8) TMI 659 - HC - Income Tax

Exemption- The assessee is running an educational institution and claimed exemption under section 11 of the Act in respect of its income. The Assessing Officer did not accept this plea on the ground that the assessee failed to file notification under section 10(23C)(vi). The Commissioner of Income-tax (Appeals) upheld the stand of the assessee. This view was affirmed by Tribunal. Held that- once all the requisite conditions under section 10(23C)(vi) had not been complied with, there would be no bar to seeking exemption under section 11.

Summary

Issues:
- Appeal under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal regarding exemption of income of an educational society not notified under section 10(23C)(vi) of the Income-tax Act, 1961.

Analysis:
The judgment delivered by Adarsh Kumar Goel J. addressed the appeal made by the Revenue against the order of the Income-tax Appellate Tribunal. The issue revolved around whether an educational institution could claim exemption under section 11 of the Income-tax Act without being notified under section 10(23C)(vi). The Assessing Officer initially rejected the plea of exemption by the assessee due to the absence of notification under section 10(23C)(vi). However, the Commissioner of Income-tax (Appeals) supported the assessee's claim, emphasizing that the absence of such notification did not hinder exemption under section 11. This stance was further supported by the Tribunal, citing the judgment in CIT v. Bar Council of Maharashtra [1981] 130 ITR 28. It was noted that the assessee was duly registered under section 12A and had previously been granted exemption for other assessment years.

The judgment highlighted that the assessee had been granted exemption both before and after the assessment year in question. The Revenue's argument relied on the non-compliance of conditions under section 10(23C)(vi) to deny exemption under section 11, citing the judgment in American Hotel and Lodging Association Educational Institute v. CBDT [2008] 301 ITR 86. However, the court dismissed this contention, stating that if all conditions for exemption under section 11 were met, the failure to comply with conditions under section 10(23C)(vi) did not bar seeking exemption under section 11. The court differentiated the present case from the one cited by the Revenue, emphasizing that the judgment in Bar Council of Maharashtra [1981] 130 ITR 28 (SC) remained relevant. Both the Commissioner of Income-tax (Appeals) and the Tribunal had confirmed that all conditions of section 11 were satisfied, making the judgment in Bar Council of Maharashtra applicable. Consequently, the court concluded that no substantial question of law arose and dismissed the appeal.