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2012 (7) TMI 683 - AT - Income TaxReassessment - Assessee claimed exemption of income u/s. 10(23C)(iiiad) of the IT Act and challenged the addition of Rs.16,18,000/- u/s. 40(a)(ia) of the IT Act. - AO accepted the claim of the assessee that the assessee is an educational society and running school and therefore, the income of the assessee was found to be exempt u/s. 10(23C) of the IT Act because the receipts of the assessee were below Rs. 1.00 crore. Held that:- since in the case of the assessee, the annual receipts were not exceeding Rs. 1.00 crore, therefore, instead of applying provisions of section 10(23C)(vi), in which the approval of the CCIT is required, the provisions of section 10(23C)(iiiad) would be attracted. Therefore, the order of the ld. CCIT dated 15.09.2008 would be wholly irrelevant to the matter in controversy. The AO and the ld. CIT(A) should not have been influenced by the order of ld. CCIT dated 15.09.2008. The orders of the authorities below further reveal that the authorities below have not examined the issue of grant of exemption to the assessee U/s. 10(23C)(iiiad) of the IT Act in proper perspective. As long as an institution exists solely for educational purposes it would qualify for grant of exemption under section 10(23C)(vi) of the Act. Merely because profits have resulted from the activity of imparting education that would not change the character of the institution existing solely for educational purposes. Therefore, even if the assessee has not deposited the TDS on the payment of rent, but if the assessee has satisfied the requirement of section 10(23C)(iiiad) of the IT Act, then the assessee would be entitled for exemption. Regarding reassessment - The reasons for reopening of assessment have, therefore, been properly recorded by the AO, which was in accordance with the provisions of section 40(a)(ia) of the IT Act. At that stage, there was nothing before the AO to prove whether the amount was paid or payable or whether the assessee’s income was exempt u/s. 10(23C) of the Act. - the AO has properly invoked the jurisdiction u/s. 147/148 of the IT Act and the AO had genuine reasons to believe that income chargeable to tax had escaped assessment and at the stage of reopening, sufficiency of reasons could not have been challenged.
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