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2023 (4) TMI 571 - AT - Income TaxDisallowance of exemption u/s.10(23C)(iiiad) vide order u/s.154 - Gross Receipts were above Rs.1 Crore during the year and hence exemption is not admissible - AR submitted that disallowance made by the AO u/s.10(23C)(iiiad) by clubbing corpus fund with other receipts is not justified - HELD THAT - We are of the considered view that corpus fund received by the assessee with specific directions cannot be treated as receipt for the purpose of Sec.10(23C)(iiiad) and therefore, the total receipt of the assessee for the relevant assessment year was below the prescribed limit of Rs.1 Cr. for the purpose of exemption claimed under the provisions of section 10(23C)(iiiad) - Accordingly, the assessee s Trust was eligible for exemption u/s.10(23C)(iiiad) of the Act, even if no registration u/s.12AA was in existence or granted for the impugned assessment year, wherein receipt of the society working solely for educational purpose was below Rs.1 Cr. As in the present case, after a thoughtful consideration, we are of the opinion that the assessee trust was undeniably entitled for exemption u/s.10(23C)(iiiad) of the Act, for which, the mistake was apparent from the record of the assessee, which were already in possession with the authorities below. They have considered the corpus donation also as receipt of the assessee for the purpose of Sec.10(23C)(iiiad) of the Act, and denied exemption to the assessee. Therefore, we hold the orders of the Revenue authorities as unsustainable - Directing the AO to grant exemption u/s.10(23C)(iiiad) of the Act, to the assessee. Appeal of assessee allowed.
Issues Involved:
1. Whether the corpus fund should be included in the "annual receipts" for the purpose of exemption under Section 10(23C)(iiiad) of the Income Tax Act. 2. Whether the assessee is entitled to exemption under Section 11 of the Income Tax Act for the assessment years in question. Summary: Issue 1: Inclusion of Corpus Fund in Annual Receipts for Section 10(23C)(iiiad) Exemption The assessee, a Trust, contested the disallowance of exemptions under Section 10(23C)(iiiad) for the assessment years 2014-15 and 2015-16. The Assessing Officer (AO) included corpus donations in the gross receipts, which exceeded the Rs.1 crore threshold, thereby denying the exemption. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this view, leading to the assessee's appeal to the ITAT. The Tribunal found that the corpus donations, being capital receipts with specific directions for infrastructure development, should not be included in the "annual receipts" for the purpose of Section 10(23C)(iiiad). Citing judicial precedents, including the Punjab & Haryana High Court's decision in CIT (Exemptions) v. Shanti Devi Educational Trust and other relevant cases, the Tribunal held that the corpus donations do not form part of the annual receipts. Consequently, the Trust's receipts from regular activities were below Rs.1 crore, making it eligible for the exemption under Section 10(23C)(iiiad). Issue 2: Entitlement to Exemption under Section 11 The assessee also claimed exemption under Section 11, which was initially denied due to the lack of registration under Section 12AA for the relevant years. However, the Tribunal noted that the Trust was granted registration under Section 12AA from AY 2018-19 onwards. Despite this, the Tribunal emphasized that the corpus donations should not be aggregated with regular receipts, and thus, the Trust's annual receipts were below the prescribed limit for the exemption under Section 10(23C)(iiiad). Conclusion: The ITAT Chennai allowed the appeals for both assessment years, directing the AO to grant exemption under Section 10(23C)(iiiad), as the annual receipts excluding corpus donations were below the Rs.1 crore threshold. The Tribunal set aside the orders of the lower authorities, emphasizing that the corpus fund should not be included in the annual receipts for the purpose of this exemption. The appeals for AY 2014-15 and AY 2015-16 were thus allowed, providing relief to the assessee.
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