2022 (4) TMI 1326 - HC - Income Tax

Exemption u/s 10(23C)(vi) (via) - CIT(Exemption) declined to grant such approval taking the view that the Trust is not existing solely for the educational purpose - HELD THAT - We take notice of the fact that the impugned order is an appealable order under Section 253(1)(f) of the Act, 1961. The appeal would lay before the Income Tax Appellate Tribunal. We relegate the writ applicant to avail the alternative remedy of statutory appeal before the Tribunal. We may clarify that the writ application was filed in the Registry of this High Court some time in the year 2020 i.e. during the lockdown period of pandemic. The Registry notified it for admission today before this Court. In such circumstances, if the issue of limitation arise before the Tribunal, the Tribunal may consider accordingly.

Summary

Issues:
1. Legality and validity of the order rejecting exemption for a charitable Trust under Section 10(23C)(vi) of the Income Tax Act, 1961.
2. Applicability of alternative remedy of statutory appeal before the Income Tax Appellate Tribunal.
3. Consideration of the issue of limitation before the Tribunal.

Analysis:

Issue 1: Legality and validity of the order rejecting exemption for a charitable Trust under Section 10(23C)(vi) of the Income Tax Act, 1961:
The writ applicant, a charitable Trust registered under the Bombay Public Trust Act, challenged the order dated 06.03.2020 passed by the CIT (Exemption), Ahmedabad, under Section 10(23C)(vi) of the Income Tax Act, 1961. The CIT (Exemption) held that the Trust is not entitled to seek exemption as it is not existing solely for educational purposes. The writ applicant sought relief through a writ application under Article 226 of the Constitution of India. The Court noted that the impugned order is appealable under Section 253(1)(f) of the Act, and directed the writ applicant to avail the alternative remedy of statutory appeal before the Income Tax Appellate Tribunal. The Court disposed of the writ application without expressing any opinion on the merits of the case.

Issue 2: Applicability of alternative remedy of statutory appeal before the Income Tax Appellate Tribunal:
The Court emphasized that the writ applicant should pursue the statutory appeal before the Tribunal, as the impugned order was appealable under the Income Tax Act, 1961. The Court clarified that the writ application was filed during the pandemic lockdown period and, if the issue of limitation arises before the Tribunal, it should be considered accordingly. By reiterating the availability of the statutory appeal route, the Court directed the writ applicant to follow the prescribed legal process for challenging the CIT's decision.

Issue 3: Consideration of the issue of limitation before the Tribunal:
The Court, while disposing of the writ application, highlighted the possibility of the issue of limitation arising before the Income Tax Appellate Tribunal. In case the issue of limitation is raised during the appeal process, the Tribunal is instructed to consider the circumstances under which the writ application was filed during the pandemic lockdown period. This instruction ensures that any potential limitation concerns are appropriately addressed by the Tribunal during the appeal proceedings.

In conclusion, the High Court of Gujarat directed the writ applicant, a charitable Trust, to pursue the statutory appeal route before the Income Tax Appellate Tribunal regarding the rejection of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The Court refrained from expressing any opinion on the merits of the case and highlighted the importance of following the prescribed legal process, including addressing any limitation issues that may arise during the appeal.