2023 (10) TMI 24 - AT - Income Tax

Claim of exemption u/s 10(23EC) as well as exemption u/s 11 - contribution received from recognized stock exchange and the members - HELD THAT - We find that the income of the assessee with respect to contribution received from recognized stock exchange and the members thereof is eligible for exemption under section 10 (23EC) of the act. Central government for this exemption also notifies the assessee. Therefore, as far as the income of contribution is concerned, the learned CIT A has correctly granted the assessee under that section. Provisions of section 11 (7) provides that where a trust or institution has been granted registration under section 12 AA and the said registration is in force for any previous year then nothing contained in section 10 shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year. However, there is an exception to this rule with respect to income exempt under section 10 (23C) (1), (23EC), (46) and (46A). With effect from 1 April 2024 such is removed with respect to income u/s 10 (23EC), (46) (46A) of the act. Thus prior to 1-4- 2024 there was no bar on assessee claiming exemption under section 10 (23EC) and under section 11 and 12 of the act. The impugned assessment year before us is assessment year 2016 17, 2019 20 and 2020 21. We find no justification in the claim of the revenue that assessee can only claim exemption under section 11 and 12 even prior to 1/4/2024. Thus, we do not find any merit in the argument of the revenue. Assessment orders passed under section 143 (3) of the act for earlier years and subsequent years have granted assessee exemption on contribution income under section 10 (23EC) of the act and all other income under section 11 and 12 of the act. In view of this, the grounds of appeal raised by the learned assessing officer do not hold any merit. Therefore, dismissed.

Summary

Issues involved:
The judgment involves three appeals filed by the Income Tax Officer for different assessment years against the appellate order passed by the National Faceless appeal Centre. The appeals raise questions regarding the exemption claimed under different sections of the Income-tax Act and the validity of adjustments made to the returned income under Section 143(1) of the Act.

Issue 1: Exemption under Section 10(23EC) and Section 11

The appeals question the justification of allowing exemption under both Section 10(23EC) and Section 11 of the Income-tax Act despite the restriction provided under Section 11(7) of the Act. The contention revolves around the eligibility of the assessee trust to claim dual exemptions and the treatment of income derived from contributions received from commodity exchange and members thereof.

Issue 2: Validity of Adjustment to Returned Income

The cross objections raised by the assessee challenge the validity of the adjustment made to the returned income under Section 143(1) of the Income-tax Act. The dispute arises from the denial of exemption claimed under Section 10(23EC) of the Act by the Assessing Officer, leading to a discrepancy in the total income of the appellant.

Details of the Judgment:

The facts of the case reveal that the Assessee trust was established with the objective of compensating eligible claims of investors against defaulting members and creating awareness about commodity trading. The trust claimed exemption under Section 10(23EC) for contributions received and under Section 11 for other income derived from property held under trust. The Centralized processing Centre of Income Tax denied the exemption under Section 10(23EC) in the intimation issued under Section 143(1) of the Act.

Before the CIT (A), the assessee argued for the eligibility of both exemptions based on the provisions of the Act and previous assessment orders. The CIT (A) ruled in favor of the assessee, allowing the exemption under Section 10(23EC) for the contribution income. The Assessing Officer appealed the decision, but the Tribunal upheld the CIT (A)'s order, emphasizing the eligibility of the assessee for the exemptions claimed.

The Tribunal highlighted the provisions of Section 11(7) and the exemption criteria under Section 10(23EC), emphasizing that prior to 1 April 2024, there was no restriction on claiming dual exemptions. The Tribunal dismissed the revenue's argument and the appeal, affirming the assessee's entitlement to the exemptions claimed.

In conclusion, the Tribunal dismissed the appeal of the Assessing Officer and the cross objections of the assessee for all three assessment years, upholding the decision in favor of the assessee.