2023 (5) TMI 633 - AT - Income Tax

Exemption u/s.10(23C)(iiiab) - government grants are around 68% for the year under consideration - HELD THAT - Since assessee is substantially financed and it is an educational institution the assessee is eligible for exemption u/s.10(23C)(iiiab). Therefore we allow the appeal of the assessee.

Summary

Issues involved: Appeal against order of Commissioner of Income Tax (Appeals) rejecting exemption claim u/s.10 of the Income-tax Act; Incorrect assumption of applicability of s.10(23C)(iiiac) instead of 10(23C)(iiiab); Taxation of Gross Receipts instead of Surplus.

Exemption Claim u/s.10: The appeal was filed against the order of Commissioner of Income Tax (Appeals) rejecting the appellant's claim for exemption u/s.10 of the Income-tax Act. The appellant contended that the rectification order passed by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals) was incorrect and contrary to the provisions of section 154 of the Act. The appellant sought relief by claiming exemption u/s.10 of the Act.

Applicability of s.10(23C)(iiiab): The appellant challenged the order passed by the Commissioner of Income Tax (Appeals) for wrongly assuming the applicability of s.10(23C)(iiiac) instead of 10(23C)(iiiab) of the Act. The appellant requested the quashing of the order and the allowance of the claim of exemption u/s.10(23C)(iiiab) of the Act, seeking just and proper relief in this regard.

Taxation of Gross Receipts: The appellant argued that both the Assessing Officer and Commissioner of Income Tax (Appeals) erred in taxing the Gross Receipts instead of Surplus. The appellant contended that if the income of the appellant is to be taxed, it should be the surplus. The appellant sought appropriate relief in this regard.

Brief Facts and Submissions: The appellant, a public charitable trust, filed its return of income which was disallowed by the Assessing Officer for exemption claimed. The rectification application was rejected on the grounds of failure to furnish details of 12AA registration. The Commissioner of Income Tax (Appeals) upheld this decision, stating that there was no mistake apparent from the record. The appellant, represented by the AR, argued that the educational institution was substantially financed by the Government and claimed exemption u/s.10(23C)(iiiab) which was wrongly rejected without proper reasons.

Analysis and Decision: Upon analysis, it was found that the appellant, being substantially financed and an educational institution, was eligible for exemption u/s.10(23C)(iiiab). The Tribunal allowed the appeal of the assessee, granting the relief sought. The appeal was allowed, and the order was pronounced in open Court on 10th May, 2023.