2014 (4) TMI 400 - AT - Income Tax

Claim of exemption u/s 11 of the Act Society registered u/s 12A of the Act without approval u/s 10(23C) of the Act Held that - The AO is not correct in denying exemption to the assessee - even in absence of approval u/s 10(23C)(vi) of the Act, the assessee can make an alternative claim of exemption u/s 11 of the Act if, otherwise, it satisfies the conditions laid down - the CIT(A) s order being is upheld. Verification and allowability of exemption u/s 11 of the Act Held that - If the assessee has not collected any money by whatever name called over and the prescribed fees for admission of the student the AO is directed to verify the claim of the assessee and if the assessee has not collected any money over and above the prescribed fees for admission of the student by whatever name called and if the assessee otherwise has fulfilled the conditions prescribed u/s 11 to 13 of the Act, then, it will be eligible for exemption u/s 11 of the Act thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue.

Summary

Issues:
- Interpretation of provisions under sections 10(23C), 11, 12A of the Income Tax Act
- Eligibility of exemption under section 11 for a society registered under section 12A without approval under section 10(23C)
- Assessment of exemption for an educational institution regarding prescribed fees and additional charges

Analysis:

1. Interpretation of Provisions under Sections 10(23C), 11, 12A: The case involved appeals by the Department against a common order of the CIT(A) regarding assessment years 2004-05 to 2006-07. The primary contention was the eligibility of exemption under section 11 of the Income Tax Act for a society registered under section 12A, despite lacking approval under section 10(23C) of the Act. The Assessing Officer had disallowed the exemption claimed by the assessee due to the absence of approval under section 10(23C). However, the CIT(A) accepted the claim that registration under section 12A would suffice for exemption under section 11, subject to fulfilling the conditions specified in sections 11 to 13 of the Act.

2. Eligibility of Exemption under Section 11: The CIT(A) held that even without approval under section 10(23C), a society registered under section 12A could claim exemption under section 11 if all the conditions prescribed in the relevant sections were met. Citing judicial pronouncements, the CIT(A) supported the alternative claim for exemption under section 11 in such circumstances. The Tribunal concurred with this view, emphasizing that the Assessing Officer's denial of exemption solely based on the lack of approval under section 10(23C)(vi) was incorrect. The Tribunal directed the Assessing Officer to verify the claim for exemption under section 11, provided the society had not collected additional charges beyond the prescribed fees for student admission and had met the conditions under sections 11 to 13 of the Act.

3. Assessment of Exemption for Educational Institutions: The Tribunal highlighted the importance of adherence to prescribed fees for student admission by educational institutions to qualify for exemption under section 11. Referring to previous decisions by the ITAT, the Tribunal emphasized that if an institution had not collected extra charges beyond the prescribed fees and met the conditions under sections 11 to 13, it would be eligible for exemption under section 11, even without approval under section 10(23C). The Tribunal remitted the matters to the Assessing Officer for a fresh decision, instructing a thorough verification process and a fair opportunity for the assessee.

In conclusion, the Tribunal allowed the appeals filed by the revenue for statistical purposes, maintaining the CIT(A)'s order in favor of the assessee regarding the eligibility of exemption under section 11 and the assessment criteria for educational institutions under the Income Tax Act.