2018 (10) TMI 418 - AT - Income Tax

Exemption u/s 10(23C)(vi) denied - Applicant been filed at the wrong jurisdiction - applicant society having its registered office at Chennai and having got its registration u/s 12AA from the Exemption Office at Chennai, therefore, the present application has been filed at the wrong jurisdiction - Held that - As per mandate of Form No.56D as well as Rule-2CA, the name and address of registered office of university or other educational institution has to be given, therefore, in the instant case as the school is registered in Punjab and operating at KalaChak Road, Sujanpur, Pathankot which comes under the jurisdiction of CIT(E), Chandigarh. Even the Asseeee since 2011-12 is regularly assessed at Pathankot and therefore according to the notification referred above, the jurisdiction vest with the CIT(E) to grant approval under section 10(23C)(vi) of the act. Hence on the aforesaid analyzation and consideration, we do not have any hesitation to held that the ld. CIT(E), Chandigarh is having jurisdiction to decide the application under consideration filed by the appellant. After getting reply from the Applicant trust, CIT(E) has not given any opportunity to the applicant trust either to establish its case and/or to substantiate the documents relied upon by the Applicant. As reasonable opportunity is mandatory before declining the approval, so on this aspect also, the impugned order is liable to be set aside. We consider it appropriate to remand back the case to the file of ld. CIT(E) to decide afresh within 03 months of this order. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961.
2. Lack of proper and reasonable opportunity to be heard.
3. Jurisdiction of the Commissioner of Income Tax (Exemptions).

Issue-wise Detailed Analysis:

1. Denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961:
The appellant challenged the order dated 29.09.2017 by the Commissioner of Income Tax (Exemptions), Chandigarh, which refused to grant approval for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The appellant argued that the order was against the facts of the case and untenable in law. The CIT(E) declined the approval on the grounds that the applicant society had several object clauses not related to education, thus not meeting the criterion of being "solely for education."

2. Lack of proper and reasonable opportunity to be heard:
The appellant contended that no proper and reasonable opportunity of being heard was provided before refusing the exemption. The CIT(E) had issued a letter on 17.08.2017, fixing the hearing for 04.09.2017, and the appellant responded on 08.09.2017. However, the CIT(E) still declined the approval without further engagement, which the appellant claimed was a violation of their right to a fair hearing.

3. Jurisdiction of the Commissioner of Income Tax (Exemptions):
The CIT(E) refused the exemption partly on the grounds that the application was filed in the wrong jurisdiction, as the applicant society was registered in Chennai and had its registration under Section 12AA from the Exemption Office at Chennai. The tribunal examined the jurisdiction issue and referred to the notification specifying the territorial jurisdiction of various CIT(Exemptions). According to the notification, the CIT(E), Chandigarh, had jurisdiction over cases in Punjab, where the appellant's school was located and regularly assessed.

Tribunal's Findings:

1. Solely for Education:
The tribunal referenced a similar case, Sutlej Educational Charitable Trust v. CIT(E), where the ITAT Amritsar directed the grant of approval under Section 10(23C)(vi) for an institution existing solely for education and not for profit. The tribunal found that the appellant's trust, despite having multiple objects, had filed an affidavit stating its sole engagement in educational activities. Thus, the reason for rejection by the CIT(E) was not upheld.

2. Jurisdiction:
The tribunal clarified that the CIT(E), Chandigarh, had the jurisdiction to grant approval under Section 10(23C)(vi) since the appellant's school was located in Punjab and regularly assessed there. The notification and the rules under Form No.56D supported this jurisdiction.

3. Opportunity to be Heard:
The tribunal noted that the CIT(E) did not provide a reasonable opportunity for the appellant to substantiate its case after the initial response. This lack of opportunity was against the principles of natural justice. Therefore, the tribunal found it appropriate to remand the case back to the CIT(E) for a fresh decision within three months, ensuring a reasonable opportunity for the appellant to be heard.

Conclusion:
The appeal was allowed for statistical purposes, with the tribunal directing the CIT(E) to reconsider the application afresh, providing a fair hearing to the appellant. The order was pronounced in the open court on 06.09.2018.