TMI Blog2016 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... order to claim exemption under section 10(23C)(iiiab) of the Act, the approval under section 35(1)(ii) of the Act is not necessary in the present case. By applying the observation of Hon’ble HIGH COURT in DIRECTOR OF INCOME TAX vs. INDIAN NATIONAL SCIENCE ACADEMY [2010 (1) TMI 40 - DELHI HIGH COURT ] to the facts of the case on hand, we hold that the assessee is not liable to pay any tax. - Decided in favour of assessee - ITA No. 760/Kol/2013 - - - Dated:- 13-5-2016 - Shri P. M. Jagtap, A.M. Shri S.S.Viswanethra Ravi, J.M. For The Appellant : Shri Sachchidanand Srivastava, CIT,DR For The Respondent : Shri S.M.Surana, Advocate ORDER Per Shri S.S.Viswanethra Ravi, J.M . This is an appeal by the Revenue against the order dated 07.02.2013 passed by the CIT(A), Jalpaiguri for the assessment year 2009-10. 2. The Revenue has raised the following grounds: 1. That on the facts and in circumstances of the case, The Ld. CIT (A)/Jalpaiguri had erred in accepting the assessee's contention that the exemption has been claimed u/s 10(23C)(iiiab) of the IT Act which has been allowed to the assessee all through. 2. That on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CBDT. Thus, the AO was of the view that the assessee was not approved under section 35(1)(ii) for the assessment year 2009-10. 4. During the assessment proceedings, the AO found that the assessee claimed exemption u/s 10(23C) in the original return and was not claimed in the Revised return. The Finance Officer submitted on 16.12.2011 that there is no approval for claiming exemption u/s 10(23C) was available with the assessee. The AO found that the assessee is not registered u/s 12A of the Act, but however, noticed that the assessee got renewal of recognition of Scientific and Industrial Research Organizations (SIROS) from Deptt. of Science and Ind. Research for short DSIR for the period from 01.04.2007 to 31.03.2010 vide No.11/80/88-TV dt.08.06.2007. AO of the view that such recognition of DSIR is not an approval u/s 35(1)(ii) of the Act to claim exemption and denied exemption of ₹ 23,14,53,686/- as claimed by the assessee by observing that the said amount is liable to be assessed under the head Income from other sources and COMPUTATED the TOTAL INCOME of the assesse as under: Gross receipts (taking into consideration the Receipt Payments Account and Income Expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act by the CBDT valid upto 31.03.2004 and the assessee claimed exemption under the provisions 10(23C) of the Act but however got renewal from SIROS. The AO denied such exemption as there was no such approval granted to the assessee for the year under consideration, but however, found that the approval u/s 35(1)(i) granted by CBDT is valid only upto 31-03-2004 and fresh application for approval is pending with the CBDT and treated the receipts by way of grants from the Government of India and Government of West Bengal as income and put to tax as computed therein to the income of assessee. 8. Therefore, it is clear that the assessee has been claiming exemption under section 10(23C) (iiiab) of the Act. Though the approval was not received as it was pending with CBDT, the assessee got recognition from Scientific and Industrial Research Organisation which functions under Department of Science Industrial Research from 01.04.2007 to 31.03.2010. Thus, the assessee is entitled to claim exemption. In this regard, we may refer to the Chapter-III wherein the incomes not included in total income provided under section 10 and clause (iiiab) to sub section (23C) therewith where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 119 of paper book. It clearly shows that the assessee is an autonomous society registered on 4.4.1978 and Union Minister of Education as its President. The assessee has taken over the three science museums/ centres situated in Kolkata, Bangalore and Bombay vide gazette notification dated 6.4.1978 and thereafter it established many such science museums all over the country and the assessee has been maintaining them through the funds granted by the Government of India. As discussed above, the assessee is fully funded by the Government of India and registered under West Bengal Registration of Societies Act, 1961 and a non-profit autonomous society carrying non-formal education existing solely for education purposes. Therefore, we are of the view, that the funds granted by the Government of India does not come under the definition of income and thus, it cannot be included in total income in terms of the section 10(23C) of the Act. Therefore, we hold that section 10(23C) is application to the case of the assessee. 10. On the other hand, the AO disallowed the claim of exemption on the ground that no approval under section 35(1)(ii) from CBDT was not available for the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d authority in the prescribed manner, and (D) fulfils such other conditions as may be prescribed25; (iii) an amount equal to one and one-fourth times of any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university, college or other institution to be used for research in social science or statistical research : Provided that such association, university, college or other institution for the purposes of this clause- (A) is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and (B) such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government. Explanation.-The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution to which clause (ii) or clause (iii) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture on scientific research should be relatable to the business. Whereas clause (ii) of subsection (1) of section 35 of the Act, any amount paid to put in use for scientific research to a university, college or other institution, deduction is available to an extent of one and three-fourth times of above-said amount. In the present case, the assessee is not an institution incurring expenditure for scientific research. It is an educational institution formed and registered in the year 1978 for the purpose of managing science museums in the country under the control of Department of culture. The ld. AR submitted that it is an institution established to portray the growth of science and technology and their application in industry and human welfare with a view to develop scientific attitude and temper and to create, inculcate and sustain a general awareness amongst the people and took us to page 121 of paper book drew our attention to the point no.3(iv) and (vii) of objects of the assessee as provided in memorandum of association of assessee. So point for consideration for us to decide whether an approval is required under section 35(1)(ii) of the Act for the assessee to claim exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the INSA is a non-profit organization fully funded by Department of Science and Technology, Ministry of Science and Technology, Government of India. If it is correct, it would be open to the INSA to press this fact before the Tribunal to support its plea that being an institution 100 per cent financed by the Central Government, it is not liable to pay any tax . The party shall appear before the Tribunal on 11th Feb., 2010. 13. Therefore, we find support from the Judgment supra, where the Hon ble HIGH COURT observed that when the assessee therein is a non-profit organization fully funded by Department of Science and Technology, Ministry of Science and Technology, Government of India and that being an institution 100 per cent financed by the Central Government and need not liable to pay any tax and even directed assessee therein to press the same before the Tribunal. In the present case also, as discussed above, the assessee receiving funds from Government of India and Government of West Bengal to maintain and manage all science museums in the country which are under the control of the Government of India and no element of income in the hands of the assessee as it functions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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