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TMI Blog2023 (4) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, 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. - ITA Nos. 611 & 612/Chny/2022 - - - Dated:- 6-4-2023 - SHRI MAHAVIR SINGH , HON BLE VICE PRESIDENT AND SHRIARUN KHODPIA , HON BLE ACCOUNTANT MEMBER For the Appellant : Mr. Y. Sridhar , FCA For the Respondent : Mr. Hema Bhupal , JCIT ORDER PER ARUN KHODPIA , ACCOUNTANT MEMBER : These two appeals filed by the assessee are directed against the separate orders of the Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi, both dated 31.05.2022 and pertains to assessment years 2014-15 2015-16. Since, the facts are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption under sub-clause (iiiad) and (iiiae) shall be increased to Rs.5 crore and such limit shall be applicable for an assessee with respect to the aggregate receipts from university or universities or educational institution or institutions as referred to in sub-clause (iiiad) and this amendment will take effect from 1st April, 2022 and will accordingly apply to the assessment year 2022-23 and subsequent assessment years . d. even by assuming, without conceding, that the corpus donation partake the character of annual receipts, still the threshold limit for proposed exemption at Rs.5 Crores. if considered, with the Finance Act's message which is loud clear and in favour of small Trusts, the benefit of exemption u/s 10(23)(c) may be considered in favour of appellant, being a small Trust. 6. For the above reasons and other reasons that may be adduced at the time of hearing, the Order u/s.250 by the CIT(A) may kindly be quashed and justice be rendered. 7. The appellant craves to amend, alter or delete any of the above grounds of appeal. 4. The assessee has raised the following grounds of appeal in ITA No.612/Chny/2022 for the AY 2015-16: 1. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . d. even by assuming, without conceding, that the corpus donation partake the character of annual receipts, still the threshold limit for proposed exemption at Rs.5 Crores, if considered, with the Finance Act's message which is loud clear and in favour of small Trusts, the benefit of exemption u/s 10(23)(c ) may be considered in favour of appellant, being a small Trust. 6. For the above reasons and other reasons that may be adduced at the time of hearing, the Order u/s 250 by the CIT(A) may kindly be quashed and justice be rendered. 7. The appellant craves to amend, alter or delete any of the above grounds of appeal. 5. The brief facts of the case are that the assessee is a Trust filed its return on 29.09.2014 for the AY 2014-15 admitting Nil income claiming exemption u/s.11 of the Income Tax Act, 1961 (in short the Act ). The return was processed by the CPC u/s.143(1) of the Act, on 28.02.2016. the exemption claimed u/s.11 of the Act, was denied and demand of Rs.35,32,086/- was raised on the assessee. The reason for disallowance was that the assessee s Trust was not registered u/s.12AA of the Act. Subsequently, a rectification petition on 25.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To challenge the findings of the Ld.CIT(A), the assessee is now before us to substantiate its contentions which could nor found favour by the Revenue authorities. 8. At the outset, the Ld.AR submitted that disallowance made by the AO u/s.10(23C)(iiiad) of the Act, by clubbing corpus fund with other receipts is not justified for the submissions of the assessee. As per provisions of Sec.10(23C)(iiiad) of the Act, the aggregate annual receipt of the school should be the receipts collected for Rs.49,19,960/- only. The corpus donation received with specific direction by the Trust to develop infrastructure for Rs.72,18,000/- is a capital receipt and the same cannot be taxed in the hands of the assessee, irrespective of the fact whether registration u/s.12AA of the Act, has been granted or not. To substantiate its contentions, the assessee drew our attention to the order of the Ld.CIT(A), wherein, the Ld.CIT(A) has not discussed the matter on merits, have decided the same on the basis of technicalities that there is no mistake apparent from the records and concluded that the AO has correctly dismissed the rectification petition of the assessee. 9. To fortify the argument on the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged to tax though the trust is not registered (AY 2005 - 06). 10. On the basis of principle of law laid down in the aforesaid judgments, it was the prayer of the assessee that since aggregate annual receipt of the school was below Rs.1 Cr., the AO has taken a stand against the provisions and intent of law and facts of the case which was further unjustifiably affirmed by the Ld CIT(A), therefore, it was the prayer of the Ld AR that the order of the Ld.CIT(A) is liable to be quashed and the exemption u/s.10(23C)(iiiad) of the Act deserves to be restored /allowed to the assessee. 11. On the contrary, The Ld.DR vehemently supported the order of the AO the Ld.CIT(A). 12. We have considered the rival contentions and submissions, perused the materials on record, including judicial pronouncements relied upon. Admittedly, the assessee is a Trust with charitable objects and was granted registration u/s.12AA of the Act, on 03.09.2018 w.e.f. AY 2018- 19. The disallowance of exemption u/s.11 of the Act, was made by the AO considering the fact that the assessee was not having registration u/s.12AA of the Act, for the year under consideration while intimation u/s 143(1) was pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the Tribunal accepted the plea of the assessee that it ran three educational institutions, that it had received donation of agricultural land valued at Rs.1.01 crore by a registered gift deed from V and three others, and that the assessee had received corpus donation of Rs.15 lakhs from three concerns, and held that since it was not the case of the Department that the objects of the assessee-trust were not charitable nor that the donation in the shape of land or amount had been utilized for any other purposes except on the objects of the assessee-trust the Commissioner (Appeals) was not justified in upholding the action of the Assessing Officer and accordingly directed the Assessing Officer to delete the addition treating the assessee as a registered trust with charitable objects. On appeal: Held, dismissing the appeal, that the Tribunal while setting aside the orders of the authorities below had rightly directed the Assessing Officer to delete the addition treating the assessee as a registered trust with charitable objects. Of course, no educational activity had been started by the assessee during the assessment year 2007-08 but at the same time, the fact that the assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed. 5. We find that in the above said provision the key emphasis is on the words annual receipts. The sale proceeds of land and bonds cannot be equated to annual receipts as stated under Section 10(23C) of the Act. The sale in the case on hand is in the nature of conversion of a capital asset from one form to another. Therefore, the denial of the benefit of Section 10(23C) of the Act to the assessee by the Assessing Officer was rightly interfered with by the Commissioner of Income Tax (Appeals) and confirmed by the Tribunal. In such view of the matter, we hold that the appeal is devoid of merits and no substantial question of law arises for our consideration. Accordingly, this appeal is dismissed. 16. The judgement in the case of Shiksha Samiti (supra) relied upon by the assesseeis absolutely relevant for the present case, wherein, the assessee s society has corpus receipt of Rs.39,14,102/- and the other receipts of Rs.60,24,857/-,wherein, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations, judicial pronouncements and provisions of the Act, 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. However, 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, having no contrary submissions or decisions placed before us by the revenue, as against the judgments cited above, we hold the orders of the Revenue authorities as unsustainable. Consequently, we set aside the order of the authorities below and are directing the AO to grant exemption u/s.10(23C)(iiiad) of the Act, to the assessee. 21. In the result, appeal filed by the assessee in ITA No.611/Chny/2022 for the AY 2014-15 is allowed in terms of our observations hereinabove. 22. Since, we have set aside the issue in ITA No.611/Chny/2022 for the AY 2014-15, the ratio of our decision will apply mutatis-mutandis in ITA No.612/Chny/2022 for the AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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