TMI Blog2013 (1) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... he income from interest on FDRs is an additional income of society and it cannot be considered to be part of annual receipts of the school for claiming exemption u/s 10(23C)(iiiad) in respect of school. - assessee was eligible for exemption u/s 10(23)(iiiad) as annual school receipts did not exceed Rs. One crore. - In favour of assessee - IT APPEAL NO. 4154 (DELHI) OF 2011 - - - Dated:- 31-8-2012 - I.C. SUDHIR AND T.S. KAPOOR, JJ. G.R. Agnihotri for the Appellant. Smt. Veena Joshi for the Respondent. ORDER T.S. Kapoor, Accountant Member - This is an appeal filed by the assessee against the order of Ld. CIT(A) dated 7.7.2011. The grounds of appeal raised by the assessee are as under:- 1. That the lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Trust had bona fide belief that the income of the school did not include the interest income on fixed deposits and as such the income of the school exclusive of interest on fixed deposits being Rs. 97,22,559/- and being less than Rs. one crore, the exemption was admissible to the appellant for this year. 5. (i) The lower authorities had erred in not appreciating that the annual income of the school exclusive of interest on fixed deposits being above Rs. one crore, the appellant applied to the Chief Commissioner of Income tax, Haryana Region, Panchkulla and the income of the school was granted exemption by the CCIT for the assessment year 2007-08 and the exemption has been continued for the subsequent assessment years as per Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel of assessee on 31.5.2010. The assessee vide written reply dated 30.11.2010 submitted that annual receipts of the trust for financial year 2005-06 relevant to assessment year 2006-07 were Rs. 97,22,559/- excluding FDR interest of Rs. 15,47,092/- and as the annual receipts of school do not exceed Rs. one crore as alleged in the reasons recorded. Therefore, exemption claimed u/s 10(23C)(iiiad) is in order and may be allowed. The Assessing Officer was not satisfied with the reply filed by the assessee and held that since the annual receipts of the assessee including interest exceeded Rs. one crore, the assessee was not entitled to deduction u/s 10(23C)(iiiad) and since the assessee had not obtained prior approval of CCIT, Panchkulla exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iiad). Section 44AB (a) mentions total sales, turnover or gross receipts as the case may be, in business in respect of mandatory tax audit report. Gross receipts in business means receipts generated from business. This distinction has not been made in the Act for section 10(23C). Thus, the difference between annual receipts and gross receipts has been made by the Act itself. Further interest received on FDRs is a recurring receipt on the surplus funds invested by the appellant trust. The argument of the appellant that receipts such as donations, grants etc. cannot be regarded as annual receipts u/s 10(23C) is devoid of any merit as these are to be taken as annual receipts for the purpose of arriving at surplus/deficit. In view of the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee believed that annual receipts exceeded Rs. One crore for the assessment year 2006-07, the appellant would have sought the exemption from CCIT and the same would have been allowed. In this respect reliance was placed on the judgment of Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. 88 ITR 192 (SC) wherein the Hon'ble Supreme Court observed that if the Court finds that language of a taxing provision is ambiguous or capable of more meanings then the Court has to adopt that interpretation which favours the assessee." Reliance was placed on the judgment in the case of CWT v. O.P. Tandon [1992] 195 ITR 688 (Delhi). 7. On the other hand, Ld. DR argued that during the year under consideration, the gross receipts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersity or other educational institute 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." The prescribed limit of annual receipts is Rs. One crore. From the plain reading of section 10(23C) (iiiad), it emerges that legislature had in its mind annual receipts of school or university as the case may be for consideration of exemption limit and not that of total income of society running that school or university. The present case is of a society running a school. The society besides income from running of a school is having other sources of income also. In the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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