TMI Blog2022 (9) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... ns run by the assessee is more than Rs.1 crore. In our opinion, the issue of determining the exemption u/s 10(23C)(iiiad) of the Act or 10(23C)(iiiae) is very debatable. As relying on Children Education Society [ 2013 (7) TMI 519 - KARNATAKA HIGH COURT] the issue which is very much debatable that which cannot be done while processing the return u/s 143(1) of the Act. Further, the Ld. CIT(A) not addressed the issue properly. Hence, the lower authorities committed error in disallowing the claim of assessee as claimed in the return of income while processing return of income u/s 143(1) of the Act. Accordingly, we allow all the grounds taken by the assessee in this appeal from ground Nos.2 to 5. - ITA No.345/Bang/2022 - - - Dated:- 6-9-2022 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER Appellant by : Shri K. Kotresh, A.R. Respondent by : Shri K.R. Narayana, D.R. O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of CIT(A), NFAC, Delhi dated 16.12.2021 for the assessment year 2018-19. The assessee has raised following grounds of appeal:- Being aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had declared Aggregate Annual Receipts of the Schools and Colleges in Part A - GEN at Page 1 of ITR-7. Since Aggregate Annual Receipt in any of the Schools and Colleges had exceeded the prescribed limit of Rs 1 Crore under Section, the entire income from Other Sources amounting to Rs 78,31,804/- was claimed as exemption under Section 10(23C)(iiiad) of the Act by mentioning the claim at SI. No. 9(c) of Part B -TI of ITR 7. Hence the total income was arrived at as Rs. Nil. Since no income tax was payable, TDS of Rs 2,21,230 was claimed as refund. 2.2 The Deputy Commissioner, Centralized Processing Center, Bengaluru - sent an Intimation under section 143(1) of the Act for the relevant assessment year dated 26.06.2019. In the said Intimation, assessee's claim of entire income as exempt u/s 10(23C)(iiiad) of the Act was disallowed. The depreciation of Rs. 10,11,146/- was also disallowed. The Computation was finalized by determining the total income of the assessee at Rs. 88,42,950/- Further, he levied income tax thereon at normal rates amounting to Rs. 24,65,385/- and education cess thereon amounting to Rs. 73,962/-. Besides, he levied Interest under sections 234A, 234B an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any tax deducted at source, any advance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of subsection (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee: Provided that except as otherwise provided in this sub-section, the acknowledgement of the return shall be deemed to be an intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him: Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made: Provided also that where the return made is in respect of the income first assessable in the assessment year commencing on the 1st day of April, 1999, such intimation may be sent at any time up to the 31s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn open to private organizations. But for throwing open the field to the private operators, probably, the country would not have achieved in the field of education what it has achieved. Therefore, lot of funds are invested in running these educational institutions, either by creating a Society or a Trust. In course of time, they have expanded their activity providing course in various subjects at various levels and for that purpose they have established more than one educational institution. Each educational institution is a separate entity controlled under various statutes for various purposes. May be the Management of these educational institutions would be in the hands of the Societies or the Trust, but for all other purposes they are different, independent entities. That is the reason why Section 10 (23) (c) is worded as under: Any income received by any person on behalf of... Here any person refers to the assessee and on behal f of refers to such institutions. It may be an Universityr, it may be an educational institution, it may be a hospital or other institutions of similar nature. As all such institutions are independent entity and they generate income and when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational institution, is correct and it does not call for any interference. Therefore, the substantial questions of law No.2. and 3 is answered in favour of the assessee and against the revenue. 4.3 In the case of Deputy Commissioner of Income-tax (Exemption), Bhopal Vs. Shri Vaishnav Polytechnic College Govn by VSK Market Tech Educational Society reported in (2021) 186 ITD 378, the Coordinate bench of ITAT Indore Tribunal has held as under:- 5. For the purposes of adjustments under cl. (Hz) to the first proviso to s. 143(1)(a), a deduction claimed must be inadmissible on the face of the return; documents and accounts accompanying it without any scope for doubt or debate; question of prima facie adjustment under s. 143(1)(a) has to be considered with reference to the position on the date on which the return is filed and not with reference to the events subsequent thereto. [Samtel Color Ltd v. Union of India [2002] 177 CTR (Delhi) 289: [2002] 258 ITR 1 (Delhi)]. Section 143(1)(a) contemplates that power could be exercised only : (a)(i) in respect of loss carried forward, (a)(ii) deduction, or (a)(iii) allowance, and (a)(iv) relief claimed; (b) the power in respect of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under s. 143(1)(a) and not a matter that rewires a detailed consideration; assessee having made out a prima facie case in respect of deduction of 'corporate guarantee obligation' as there was an agreement and also a guarantee obligation, claim for deduction of corporate guarantee obligation could not be disallowed by way of prima facie adjustment under s. 143(1)(a). Following types of disallowances/additions/alterations have been held to be not permissible by resort to section 143(1)(a): Corpus donations received by a trust-SRF Charitable Trust v. Union of India (1991) 100 CTR (Delhi) 160/(1992) 193 ITR 95(Delhi) Amount claimed non-taxable in the relevant year-Bank of America NT S.A. v. Dy. CIT (1993) 200 ITR 739 (Bom) Creating tax demand by invoking section 167B-JKs Employees Welfare Fund v. ITO (1992) 107 CTR (Raj.) 161/(1993) 199 ITR 765 (Raj.) 4.4. In our opinion, the issue which is very much debatable that which cannot be done while processing the return u/s 143(1) of the Act. Further, the Ld. CIT(A) not addressed the issue properly. Hence, the lower authorities committed error in disallowing the claim of assessee as claimed in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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