TMI Blog2022 (10) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutions/trusts/funds referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of Sec. 10(23C) of the Act. Be that as it may, as there is no obligation cast upon an assessee to apply 85% of its gross income for claiming exemption u/s 10(23C)(iiiad) of the Act, therefore, the very basis for reopening of the assessee s case by the AO is incorrect and misconceived on the said count. Assessee society had filed an application for registration u/s.12A on 28.11.2007, which was granted on 11.04.2008 i.e. w.e.f. 01.04.2007 from A.Y.2008-09 onwards, therefore, its income for the year under consideration i.e. A.Y.2007-08 would not be exempted and would be exigible to tax - On a perusal of the return of income filed by the assessee although the assessee in its return of income had in substance claimed exemption of its income u/s.10(23C)(iiiad) but had also referred to claim for exemption u/s.11(1)(a) of the Act of Rs. Nil. As the assessee had not claimed any part of its income as exempt under Sec. 11(1)(a) of the Act, therefore, there could have been no basis for the AO to arrive at a bonafide belief that the income of the assessee chargeable to tax had e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.54,17,572/- on mere presumption that the assessee's objectives are not solely for educational purposes and denied the exemption u/s.10(23C)(iiiad), more so, the ld AO himself admitted that the alleged non-educational objectives, in fact were not pursued in the AY07-08, as held in Geetanjali Education Society (2014) 267 CTR 369 (Kar). 4. On the facts and circumstances of the case and in law, the ld CIT(A) has erred in sustaining the addition of Rs.54,17,572/- on mere presumption that the assessee's objectives are not solely for educational purposes and denied the exemption u/s.10(23C)(iiiad), more so, in absence of any allegation that the assessee-society had carried on for the purposes of profit, as held in Queen's Educational Society (2015) (SC). 2. Succinctly stated, the assessee which is a charitable society had filed its return of income for the assessment year 2007-08 on 31.03.2008, declaring an income of Rs. Nil. The return of income filed by the assesee society was processed as such u/s. 143(1) of the Act. Subsequently, the case of the assessee was reopened by the A.O for the reasons, viz. (i). that as the assessee society had not applied 85% of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the assessee s claim of exemption u/s.10(23C)(iiiad) of the Act and determined its income at Rs.54,17,572/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. At the very outset of the hearing of the appeal the Ld. Authorized Representative (for short AR ) for the assessee assailed the validity of the jurisdiction that was assumed by the A.O under Section 147 of the Act. Elaborating on her aforesaid contention the Ld. AR has taken us through the copy of the reasons to believe on the basis of which proceedings u/s.147 of the Act were initiated in the case of the assessee. It was submitted by the Ld. AR that the AO had grossly misconceived the settled position of law and in the reasons to believe had wrongly observed that as the assessee had failed to apply 85% of its gross income, therefore, it was not entitled for exemption under Sec. 10(23C)(iiiad) of the Act. It was submitted by the ld. AR that there was no obligation cast upon an assessee to apply 85% of its gross income as a pre-requisite condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for registration u/s.12A of the Act on 28.11.2007, which was granted on 11.04.2008 i.e. w.e.f. 01.04.2007 from A.Y.2008-09 onwards, therefore, its income for the year under consideration i.e. A.Y.2007-08 would not be exempted and would be exigible to tax. 9. Having given a thoughtful consideration to the facts involved in the present case before us, we are unable to comprehend the very basis for the AO to take recourse to proceedings u/s.147 of the Act. As application of 85% of gross income is by no means a requisite condition for claim of exemption under Sec. 10(23C)(iiiad) of the Act, therefore, in our considered view the A.O had grossly misconceived; or in fact misunderstood the settled position of law, and thus, had wrongly taken recourse to proceedings u/s.147 of the Act. In order to dispel all doubts we herein cull out the provisions of Sec. 10(23C)(iiad) of the Act, which reads as under : 10. In computing the totalincome of a previous year of any person, any income falling within any of the following clauses shall not be included :- (23C). any income received by any person on behalf of (iiiad). any university or other educational institution exist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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