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TMI Blog2016 (9) TMI 1680X X X X Extracts X X X X X X X X Extracts X X X X ..... erse and contrary to the existing facts. The learned CIT(A) has wrongly relied on certain case laws which have no relevancy. 4. That learned CIT(A) has wrongly observed in his order that registration under ss. 11 to 13 is necessary to get the benefit of exemption under s. 10(23C) whereas legal position is not so. The CBDT has categorically clarified in its Circular No. 712, dt. 25th July, 1995 wherein it is stated that if a society is eligible for exemption under s. 10(23C) then the provisions of ss. 11, 12 and 13 do not apply. This will mean that the registration with the CIT under s. 12A is not necessary as is required in the case of public trust claiming exemption under s. 11. The learned CIT(A) has grossly erred in ignoring this settled legal position." 2.1-2.2 Brief facts as emerge from the assessment order are that the assessee AOP filed its return of income for the year under consideration on 9h Feb., 2010 declaring income at Rs. Nil. It is observed by the AO from the returned income that the assessee claimed interest income of Rs. 16,05,233 as exempt. The assessee had shown all the other columns, meant for balance sheet and P&L a/c as nil. The AO observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention towards the fact that it is a society/institution which is imparting education without any profit motive and further stressed that since the Institution is wholly and substantially financed by the Government it is eligible for exemption. I find that the appellant has neither touched nor highlighted the fact that why in the year under consideration. claim of exemption of interest income was denied to it. In order to analyze the submission made and issue under reference, it is necessary to look into the relevant provision of ss. 10(23C)(iiiab) and 10(23C)(iiiad), which reads as below : .......(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 Government; or (iiiad) any university or other educational institution 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; or..." 6.1.1..: 6.1.2... 6.1.3 It may be clarified that provisions of s. 10(22) are analogous to the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t learned CIT-2, Jaipur had also found that the activities of the appellant society were not of educational nature and denied the grant of registration w.e.f. 1st June, 2007 after detailed discussion and reasons assigning for not accepting the application. Further, it is admitted fact that no registration under s. 10(23C) has been granted to the appellant by prescribed authority. In view of the above facts and discussion, it is held that the AO rightly denied the claim of exemption of interest income to the tune of Rs. 16,05,233. The grounds raised in this regard arc dismissed." 2.4 During the course of hearing, the learned Authorised Representative prayed that the lower authorities have erred in denying the claim of exemption of interest income to the tune of Rs. 16,05,233. The case relied on by the assessee have been taken into consideration. 2.5 The learned Departmental Representative relied on the orders of the lower authorities. 2-6.I have heard the rival contentions and perused the materials available on record. It is noted from the assessment order wherein the AO observed that the assessee was not granted registration under s. 12A(2) of the Act for the year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Government and therefore, the assessee is entitled to the benefit of exemption under s. 10(23C)(iiiab) of the IT Act, cannot be found fault with. Therefore, the substantial question of law is answered in favour of the assessee and against the Revenue." (2) Akali Baba Phool Singh Educational Trust v. Dy. Director of IT (Exemption) [2011] 43 SOT 700. TheTribunal Delhi Bench in this case observed as under : "(6) We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that penalty in the present case was imposed by the AO under s. 272A(e). As per the provision of s. 273B, any penalty' imposed by the AOunder sub-s. (2) of s. 271A is not imposable if the assessee proves that there was reasonable cause for the said failure. Penalty under s. 272A(2)(e) is imposable if the assessee fails to furnish the return of income, which he is required to furnish under sub-s. (4A) of s. 139. It is the submission by the learned Authorised Representative for the assessee that the assessee was under the bona fide belief that its income is exempt under s. 10(23C)(iiiab) and for this reason, the assessee was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion in the case of CIT v. Indian Institute of Management [2015] 275 CTR (Kar) 424 : [2015] 115 DTR (Kar) 251 : [2015] 370 ITR 81 (Kar) and a finance to the extent of more than 10 per cent of the total finance would constitute substantial finance and, therefore, the finding recorded by the Tribunal that the assessee is entitled to the benefit exempted under s. 10(23C)(iiiab) of the Act cannot be found fault with 6. In the light of the aforesaid findings, in our view, it is unnecessary to go into the question whether the assessing authorities were .justified in reopening the assessment and there was sufficient reasons and whether the assessee is entitled to the benefit under s. 11 of the Act also. Accordingly, we pass the following order : Appeals are dismissed." (5) Ganapathy Educational Trust v. Asstt. Director of IT (Exemption) [2013] 144 ITD 509, order dt. 25th June, 2013. In this case, Tribunal,Chennai Bench observed as under : "(18) Since we have held that the assessee is eligible for claiming exemption under the provisions of s. 10(23C) (iiiab), it is not mandatory for the assessee to seek registration under the provisions of s. 10(23C)(vi). Be that as it may, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23C)(iiiab). provides that any university or other institution education existing solely for educational purpose and not for the purpose of profit, and which is wholly or substantially financed by the Government. We are of the view that the argument of learned counsel that 'The Serampore College" will fall under the category of 'other educational institution ' under s. 10(23C) and will be exempt under cl. (iiiab), since it exists solely for educational purpose and not for the purpose of profit, as no part of the profit or surplus is diverted for private gain. But only, condition to be examined factually is that, whether, on consolidation of the income expenditure accounts of 4 units of the Serampore College for relevant assessment year, can it be held that the college was substantially financed by the Government during the year as per provisions of the Act or not. Thus only fact to be determined is that whether, the Serampore College is substantially financed by the Government or not ? In case the finding comes that the college is financed substantially then it is covered by the s. 10(23C)(iiiab) of the Act and is eligible for exemption. The Serampore College will then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is noted that the assessee institute is financed by the Central Government, and the amount granted by the Government is deposited in the nationalized bank. The interest so received by the institute from the bank is utilised for the purpose of institute as per memorandum of association and rules and regulation of the society. Taking into consideration of the above decisions as well as facts of the case, it is observed that the assessee institute is covered and entitled to exemption under s. 10(23C)(iiiab) of the IT Act, 1961 as the provisions of s. 10(23C)(iiiab) provides that any income received by any university or other institution education existing solely for educational purpose and not for the purpose of profit, and which is wholly or substantially financed by the Government is not includable in the total income. In this view of the matter, the appeal of the assessee is allowed. 3.1 Now the grounds of the appeal of the assessee in ITA No. Jodh/2016 are taken for adjudication as under : "1. That interest receipt from bank amounting to Rs. 22,87,182 was wrongly assessed by the AO and again confirmed by the learned CIT(A) ignoring the fact that the appellant's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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