INCOME TAX ACT, 1961

Section 10(23C)(vi)

Exemption under section 10(23C)(vi) - Educational institution - Rejection of application filed by assessee under section 10(23C)(vi) -

Assessees had filed application seeking continuance of approval under section 10(23C)(vi) solely for the reason that for certain earlier years the approval granted under section 10(23C)(vi) was withdrawn due to violations of the conditions imposed on the assessee while granting approval for the purpose of sub-clause (vi) of clause (23C) of section 10. In the search and seizure proceedings conducted under section 132 certain discrepancies were found and accordingly the benefit of approval under section 10(23C)(vi) was withdrawn. However, for the assessment years 2011-12, 2012-13 and 2013-14 the returns were filed by the assessee societies and they were accepted without making any additions and no adverse inference was drawn by the department. It was, therefore, pleaded by the assessee that since the objects of the assessee societies were same when they were originally granted approval under section 10(23C)(vi) and since there was no violations to the conditions stipulated while granting the approval earlier as on date, the relevant application may be treated as a fresh application and the approval may be granted.Held: When assessee had come out with the fresh application the revenue had to only examine that during the relevant assessment year the institution existed/ existing only for the purpose of education. A violation made during the earlier assessment year need not be imported to the relevant assessment year while deciding the issue for the relevant assessment year. As it appeared from the orders of the CIT dated 29-9-2017, during the period 1-4-2016 till 29-9-2017, no violation was pointed out. Further, from the assessment order(s) of the assessees for the assessment year 2015-16 dated 27-12-2017 and 22-12-2017 it was evident that there was no violation. In such circumstances, one fails to understand as to why the assessee societies have to be penalised which will ultimately result in hardships to the public at large. Since during the relevant period the assessee societies had neither violated any of the provisions of section 10(23C)(vi) nor conducted itself detrimental to the conditions stipulated by the CIT while granting approval under section 10(23C)(vi) on the earlier instance, and further placing reliance on the Circular of the CBDT No. 14/2015 dated 17-8-2015 and the decision of the Delhi High Court, the decision of the CIT(Exemptions) to reject the application filed by the assessee under section 10(23C)(vi) was not justified. Therefore, CIT was directed to grant approval under section 10(23C)(vi) to both the assessees from the relevant assessment year onwards.

Relied:American Hotel and Lodging Association Educational Institute v. CBDT [(2008) 301 ITR 86 (SC) : 2008 TaxPub(DT) 2007 (SC)] ; Council for Indian School Certificate Examinations v. Director General of Income Tax (2014) 364 ITR 508 (Delhi) : 2014 TaxPub(DT) 2441 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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