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2016 (7) TMI 956 - ITAT CHANDIGARH

2016 (7) TMI 956 - ITAT CHANDIGARH - TMI - Entitlement to benefit under section 10(23C)(iiiab) denied - Held that:- It is not in dispute that assessee solely exists for educational purposes. Therefore, assessee is entitled for deduction/exemption under section 10(23C)(iiiab) of the Act. Further, the ld. CIT(Appeals) found that assessee's total receipts were of ₹ 1.48 Cr out of which 95% grant-in-aid was ₹ 40,01,416/-, vocational course grant was ₹ 9 lacs. Grant-in-aid received .....

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s are meant for specific building purposes, therefore, ld. CIT(Appeals) was justified in holding that these are not receipts of the assessee educational institution. When these amounts are reduced from the total receipts of the assessee, the total receipts from educational institution would be less than ₹ 1 Crore. Therefore, assessee would be entitled for deduction/exemption under section 10(23C)(iiiad) of the Income Tax Act. - Decided in favour of assessee. - ITA No. 1065/CHD/2011 - Dated .....

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the provisions of Section 10(23C)(iiiad) of the Income Tax Act were applicable in the case of the assessee. 2. The Ld. CIT(A) has erred in holding that the income of the assessee was exempt and that the provisions of Section 10(23C)(iiiab) of the Income Tax Act were applicable in the case of the assessee as the assessee was substantially financed by the Government whereas the total finance received from Government was only 25.6% of the total receipts . 3. Briefly the facts of the case are that a .....

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ion. A school and art college was setup. The government gave grant in-aid of 95% to run the school and college. Till 2000, the expenditure was more than the receipts and upto 2002, the receipts were also less than one crore, as such there was no need to file any application for exemption. The Commissioner of Income Tax-I has passed order on 25.09.2008 u/s 12AA of the IT. Act, 1961 granted registration u/s 12AA(l)(b)of the I. T. Act, 1961. Similarly, Chief Commissioner of Income Tax has also pass .....

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r: i) 5%M.C.share ₹ 66,000/- ii) 95% Grant in aid Rs. 40,01,416/- iii) Scholarship Received ₹ 48,883/- iv) Donation ₹ 4,87,085/- v) Vocational course grant ₹ 9,00,000/- vi) Sports Equipment Grant ₹ 25,.250/- Total ₹ 55,28,634/- The school when established was sanctioned 95% grant in aid for meeting the expenditure on salary etc. Scholarships were given by the university for disbursement to the student. Similarly donations have been given by Hansali Wale Sant f .....

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#8377; 4,87,085/- is also enclosed. These details were called for in the last hearing as per order sheet entry. It is also covered u/s 10(23C)(iiiab), any university or other educational institution existing solely for educational purposes and not for purposes of profit and which is wholly or substantially financed by the government. Grant in aid, donations and vocational course grant does not form part of the total receipts. The receipts being less than ₹ 1 crore and the society was setup .....

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A.Y. 2004-05 onwards and the same was granted. The Ld. Counsel for the appellant has argued before me that application for exemption u/s 10(23C)(vi) for A.Y. 2003-04 was not made before the Chief Commissioner of Income Tax, N.W. Region, Chandigarh because the receipts of the appellant were less than ₹ 1 crore in F.Y. 2002-03, pertaining to A.Y. 2003-04 and further it was substantially financed by the government. 4.2.1 For the sake of ready reference, provisions of section 10(23C)(iiiad) ar .....

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nnual receipts as may be prescribed;" 4.2.2 Thus, the annual receipts of the educational institution have to be taken into account for calculation u/s 10(23C)(iiiad) and the grant-in-aid and the amounts received for specific purposes are not to be included in total receipts. A perusal of the income expenditure account of the appellant reveals that appellant's total receipts were of ₹ 1,48,31,595/-. out of which 95% grant-in-aid was ₹ 40,01,416/-, vocational course grant was .....

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d as receipts of the appellant. These three items itself, if totaled, amount to ₹ 53,88,501/- and if this amount is reduced from gross receipts, the effective receipts would be only ₹ 94,43,094/-. Apart from . these, there are some other receipts, which are for particular purposes and cannot be included for the purposes of calculation of receipt u/s 10(23C)(iiiad) of the Act. Thus, receipts of the appellant, which should be taken for the purposes of section 10(23C)(iiiad) would be le .....

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not right in taxing the surplus of income over expenditure in the case of the appellant, as appellant's case was covered u/s 10(23C)(iiiab)/ (iiiad) of the Act. Grounds of appeal No. 2 to 5 are allowed". 5. The ld. DR relied upon order of the Assessing Officer. The ld. DR submitted that Section 10(23C)(iiiad) nowhere specifies as to what constitutes aggregate annual receipt. He has submitted that no words have to be added in the statute. He has referred to Rule 2BBB of the IT Rules and .....

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submissions made before him. He has submitted that it is not in dispute that assessee society is existing solely for imparting education and assessee is substantially financed by the Punjab Government. He has submitted that Assessing Officer at the time of passing of the order held that assessee was receiving only 25.6% of the total receipts as grants from Government, therefore, same cannot be covered under wholly or substantially financed by the government. He has submitted that Assessing Offic .....

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uld be entitled for deduction under both the provisions. He has submitted that 95% grant-in-aid by Punjab Government was for expenditure on salary etc. and vocational course grant is received from the UGC for running vocational course. Donation from Hansaliwale Santji was meant for building purposes and other donations have been received for specific purposes, therefore, there is no infirmity in the order of ld. CIT(Appeals) in allowing relief to the assessee. 6. I have considered rival submissi .....

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essee is substantially financed by the Government for any previous year. The ld. DR admitted that the said rule is applicable and inserted into Act w.e.f. 12.12.2014, therefore, this rule would not apply to the assessment year under appeal i.e. 2003-04. Even in the ground of appeal, the revenue has contended that the total finance received from the Government was only 25.6% of the total receipts as is mentioned by the Assessing Officer in the assessment order as well. Hon'ble Karnataka High .....

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eals) granted the relief to the assessee but he declined to grant the relief under section 10(23C)(iiiab). The Tribunal granted relief to the assessee. On appeals: Held, dismissing the appeals, that the material on record disclosed that the Government has financed the assessee- institutions and its share was 25 cent. It was not in dispute that the assessee is carrying on its activities of imparting education. It is not existing for the sake of profit-making. When 25 per cent, of the finance to t .....

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