ITAT Upholds Exemption for Educational Institution

The ITAT dismissed both departmental appeals against the orders of the ld. CIT(A) for assessment years 2005-06 and 2006-07. The assessee, a registered society operating educational institutions, was found eligible for exemption u/s. 10(23C)(iiiab) as its programs were government-funded. The additions made by the AO on unproved grant, unsecured loans, and donations were deleted by the ld. CIT(A) and upheld by the ITAT. The ITAT held that the additions were not maintainable under the exemption, leading to the dismissal of the departmental appeals.

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Issues involved: Appeal against orders of ld. CIT(A) for assessment years 2005-06 and 2006-07.

Summary:
The case involved appeals by the Revenue against orders of ld. CIT(A) for assessment years 2005-06 and 2006-07. The assessee, a registered society running educational institutions, claimed exemption u/s. 10(23C)(iiiab) of the IT Act. The AO made additions on account of unproved grant, unsecured loans, and unproved donations, which were challenged by the assessee before the ld. CIT(A). The ld. CIT(A) found that the assessee was eligible for exemption u/s. 10(23C)(iiiab) as its educational programs were funded by the Government. The additions were deleted by the ld. CIT(A) for both assessment years. The Revenue challenged the deletions, but the ITAT held that the assessee was entitled to exemption u/s. 10(23C)(iiiab) and the additions made were not maintainable. The ITAT relied on a decision of the Hon'ble Delhi High Court to support its conclusion that the additions made u/s. 68 would also be covered by the exemption u/s. 10(23C). Therefore, the departmental appeals were dismissed as there was no justification to interfere with the ld. CIT(A)'s order.

In conclusion, both departmental appeals were dismissed by the ITAT as the assessee was entitled to exemption u/s. 10(23C)(iiiab) of the IT Act, and the additions made by the AO were not maintainable in light of the exemption.

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