The assessee, a university, claimed exemption u/s 10(23C)(iiiab) ...

Revenue authorities' attempt to deny educational institution's tax exemption overruled by tribunal.

Case Laws     Income Tax

October 25, 2024

The assessee, a university, claimed exemption u/s 10(23C)(iiiab) for the relevant assessment year, which was accepted by the Assessing Officer (AO) after considering the applicable laws and facts. The AO included interest income on government grants in calculating the government financing, which exceeded 50% of the total income, meeting the substantial financing threshold. The Commissioner of Income Tax (Appeals) [CIT(E)] invoked Section 263, revising the AO's order as prejudicial to revenue, by excluding interest income and applying Rule 2BBB retrospectively. The Appellate Tribunal held that the AO correctly allowed the exemption based on the prevailing legal framework, judicial precedents, and facts. The exclusion of interest income and retrospective application of Rule 2BBB by the CIT(E) were incorrect. The AO's order was neither erroneous nor prejudicial to revenue. Accordingly, the CIT(E)'s order invoking Section 263 was quashed, and the assessee's appeal was allowed, upholding the principle of consistency and the AO's decision to grant exemption u/s 10(23C)(iiiab).

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