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TMI Blog2016 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in circumstances of the case, The Ld. CIT (A)/Jalpaiguri had erred in linking the issue of exemption to the concept of surplus only. 4. That Ld. CIT(A) had erred in not taking cognizance of the provision of section 10(21) of the IT Act where by the income of a scientific research association/ organization is exempt only if it is approved u/s 35(1)(ii) of the IT Act for the relevant previous year. 5. That Ld. CIT(A) had erred in taking decision on fresh plea of claiming exemption u/s 10(23C) (iiiab) of the IT Act without affording opportunity to the Assessing Officer in violation of the provision of Rule 46A of the I T Rules 1962. 6. That the appellant craves leave to add to and/or alter, amend, rescind or modify the grounds here in above before or at the hearing of this appeal." 3. The brief facts of the case are that the assessee filed its original return for the assessment year on 19.09.2009 declaring total income at Rs. Nil. Again revised return was filed on 10.03.2010 in order to claim refund which was not claimed in the original return. Under scrutiny, notice under section 143(2) was issued. Subsequently, the jurisdiction was assigned to I.T.O.(E) vide order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administrative expenses (receipt payment statement) Rs.16,48,00,201/- Depreciation allowed as per Income & Expenditure A/c (Depreciation claimed to be as per IT. Act.) Rs. 10,02.46,670/- Rs.56,90,99.436/- Total income Rs.23,14,53,686/- 5. The CIT-A was of the view that the assessee receives funds from Government of India and Government of West Bengal to maintain and manage all science museums in the country which are under the control of the Government of India and no element of income in the hands of the assessee as it functions like a government department and the exemption was claimed u/s 10(23C)(iiiab) and was allowed to assessee for the past years and deleted said addition of Rs. 23,14,53,686/-made by the AO. 6. The Revenue in this appeal contends that the assessee is not a university and the approval u/s 35(1)(ii) of the Act is necessary to claim exemption under section 10(23C)(iiiab) of the Act and failed to appreciate section 10(21) of the Act as the AO rightly added the said amount of Rs. 23,14,53,686/- taking into consideration section 10(21) of the Act and relied on the AO's order. The Ld.AR submits that the assessee is fully funded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment; or (iiiaaa) the Clean Ganga Fund, set up by the Central Government; or] (iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government48; or (iiiac) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government48. 49[Explanation.-For the purposes of sub-clauses (iiiab) and (iiiac), any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds such percentage of the total receipts including any voluntary contributions, as may be prescribed48, of such university or other educati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 2 below sub-section (5) of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority23 to have been laid out or expended on such scientific research, be deemed to have been laid out or expended in the previous year in which the business is commenced ; 24(ii) an amount equal to one and three-fourth times of any sum paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research : Provided that such association, university, college or other institution for the purposes of this clause- (A) is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and (B) such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government; (iia) an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inks necessary in order to satisfy itself about the genuineness of the activities of the research association, university, college or other institution and that Government may also make such inquiries as it may deem necessary in this behalf : Provided also that any notification issued, by the Central Government under clause (ii) or clause (iii), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification: Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, every notification under clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received by the Central Government. 11. A thorough reading of the above provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o claim exemption under section 10(23C)(iiiab) of the Act, the approval under section 35(1)(ii) of the Act is not necessary in the present case. Therefore, ground nos. 1 to 3 raised by the Revenue dismissed. 12. In this regard, we may refer to the Judgment of The Hon'ble HIGH COURT OF DELHI DIRECTOR OF INCOME TAX vs. INDIAN NATIONAL SCIENCE ACADEMY reported in (2010) 78 CCH 0083 where a similar issue came up before the Hon'ble High Court, wherein the case on hand was remanded to Tribunal, but, however, the Hon'ble Court observed, the relevant portion which is applicable is reproduced hereunder: 9. Before we part with, we would like to make certain comments. As noted above, the NISA had been allowed approval under s. 35(1)(ii) of the Act for the last twenty five years, i.e., till 31st March, 2003 as of "Scientific Research Association". Reason why the approval is now granted as "other institution", is not discernible. It was stated by the learned counsel for the assessee that application for reconsideration and put the NISA under the category of "Scientific Research Association" is pending. We hope and expect that CBDT shall decide such an application as expeditiously as possible. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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