2020 (12) TMI 572 - HC - Income Tax

Exemption u/s 10(23)(vi) - whether the present petitioner, namely Bihar Combined Entrance Competitive Examination Board would be entitled for exemption? - HELD THAT - We are of the considered view that the authority below, while concluding that the petitioner was not an educational institution, did not have complete material, including as to whether it was generating any profit by taking fees for conducting the examination. After the matter was heard for some time, learned counsel for the parties were ad-idem that the matter can be remanded back to the authority for consideration afresh, by affording opportunity to the parties to place all material, enabling the authority to arrive at a decision in accordance with law.

Summary

Issues:
1. Entitlement for exemption under Section 10(23)(vi) of the Income Tax Act.

Analysis:
The petitioner, Bihar Combined Entrance Competitive Examination Board, sought relief to quash an order passed by the respondent under Section 10(23C)(vi) and (via) of the Income Tax Act for the assessment year 2011, and to direct the respondent to grant approval under the same section. The primary issue before the court was whether the petitioner was entitled to exemption under Section 10(23)(vi) as an educational institution existing solely for educational purposes and not for profit. The impugned order dated 26th September 2012 had rejected the petitioner's claim for exemption, prompting the petitioner to challenge it.

In support of the petitioner's case, the learned counsel referred to previous decisions by the court and other High Courts, emphasizing the eligibility of educational institutions for exemption under similar provisions. On the other hand, the respondent's counsel relied on a Supreme Court judgment to support their argument against the petitioner's entitlement to exemption. The court observed that the authority below had not considered all relevant material, particularly regarding the petitioner's profit generation through examination fees. Consequently, both parties agreed to remand the matter back to the authority for a fresh consideration with complete material to make a decision in accordance with the law.

The court, after considering the arguments and the impugned order, decided to quash the order dated 26th September 2012 and remand the matter to the competent authority for a fresh consideration. The parties were directed to appear before the authority on a specified date to provide additional material. The court stressed the importance of affording a fair hearing and compliance with natural justice principles, urging the authority to decide the matter expeditiously, preferably within the current financial year. The judgment left all issues open, granting liberty to the parties to seek further legal remedies if required.

In conclusion, the writ petition was disposed of with specific directions for the reconsideration of the petitioner's application for exemption under Section 10(23)(vi) of the Income Tax Act. The judgment highlighted the need for a thorough review of all relevant material by the competent authority to arrive at a decision in line with legal provisions and principles of natural justice.