INCOME TAX ACT, 1961

Section 10(23C)

Exemption under section 10(23C) - Allowability - Assessee-society running an educational institute, advanced interest-free loans to a hospital -

Assessee-society was running an educational institution and was registered under section 12AA. Assessee was approved under section 10(23C). Revenue alleged that assessee advanced huge amounts to a hospital (RNMCS) and no interest was charged on such advances. Revenue cancelled the notification issued under section 10(23C)(vi) to assessee. Held: Non-charging of interest on the advances given allegation was not relevant in context of section 10(23C)(vi) in as much as there appeared no such specific clause/provision in 15th Proviso or anywhere in section 10(23C)(vi) empowering CIT(E), or as may be the case under section 12AA(3) read with section 13(1)(c). There was no gain to revenue for the simple reason that even assuming that assessee had charged interest from RNMSCS, revenue was not going to get any tax there upon because, assessee admittedly fulfilled the condition of applying its income more than 85% on one hand. Similarly, on the other hand, RNMSCS also being a charitable society running a hospital enjoying exemption under section 12A (paying of interest or not paying) to assessee was not going to make any difference because, either way entire income of RNMSCS was also exempt. Thus, order passed by CIT(E) under section 10(23C)(vi) was not sustainable.

Distinguished:B.S. Abdur Rahman Institute of Science & Technology v. The Chief CIT-3 2016 TaxPub(DT) 1443 (Mad-HC) The Desales Educational Society v. The Pr. CIT (E) (2018) 94 taxmann.com 206 (Vizag-Trib.) : 2018 TaxPub(DT) 3100 (Visakhapatnam-Trib)

REFERRED : Queen's Educational Society v. CIT (2015) 372 ITR 699 (SC) : 2015 TaxPub(DT) 1436 (SC) Aditanar Educational Institution v. Addl. CIT (1997) 224 ITR 310 (SC) : 1997 TaxPub(DT) 1051 (SC) CIT (E), Jaipur v. Mahima Shiksha Samiti 2019 TaxPub(DT) 4738 (Raj-HC) Director of Income Tax (Exemption) v. All India Personality Enhancement & Cultural Centre For Scholars Aipeccs Society and Vica-Versa (2015) 62 taxmann.com 92 (Delhi) : (2015) 379 ITR 464 (Delhi) : 2015 TaxPub(DT) 3907 (Del-HC) The Chief CIT, Udaipur & Anr. v. Geetanjali University Trust (2013) 84 DTR 337 (Raj) : 2013 TaxPub(DT) 0958 (Raj-HC) CIT-II, Chandigarh v. Surya Educational & Charitable Trust (2011) 15 taxmann.com 123 (Punjab & Haryana) : 2012 TaxPub(DT) 0780 (P&H-HC) CIT v. Red Rose School (2007) 163 Taxman 19 (All.) : 2007 TaxPub(DT) 0989 (All-HC) Dy. CIT v. Cosmopolitan Education Society (2000) 244 ITR 494 (Raj.) : 2000 TaxPub(DT) 0785 (Raj-HC)

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT