2023 (1) TMI 863 - AT - Income Tax

Tribunal allows future years' tax exemption despite late filing, sets new precedent

The Tribunal upheld the rejection of the application for approval under Section 10(23C)(vi) for A.Y. 2018-19 due to late filing. However, it directed the ... Grant of approval u/s 10(23C)(vi) - application for approval for claiming exemption was filed beyond the prescribed period as enshrined in the Act - CIT (Exemption), Bhopal vested with any power to condone the delay involved in filing of the application by the assessee society under Sec. 10(23C)(vi) - HELD THAT:- We are of the considered view that as the Commissioner of Income-Tax (Exemption), Bhopal was not vested with any power to condone the delay involved in filing of the application by the assessee society under Sec. 10(23C)(vi), therefore, the same had rightly been rejected by him. We, thus, finding no infirmity in the view taken by the Commissioner of Income-Tax (Exemption), Bhopal who had rightly rejected the assessee’s application for approval under Sec. 10(23C)(vi), uphold the same. Grievance of the assessee that as the assessee’s application for approval under Sec. 10(23C)(vi) was disposed off by the Commissioner of Income-tax (Exemption), Bhopal vide his order dated 30.09.2020, therefore, for the said reason the assessee was precluded from reapplying for the aforesaid approval for the immediately succeeding year i.e. A.Y. 2019-20 and onwards - It is a matter of fact borne from record that as the assessee’s application for approval under Sec. 10(23C)(vi) for A.Y. 2018-19 was pending disposal on 30.09.2019, and the order came to be passed only on 30.09.2020, therefore, the assessee could not have made an application for the subsequent assessment year i.e A.Y. 2019-20. Considering similar facts which had came up before the Hon’ble high Court of Madras in the case of All Angels Educational Society [2016 (8) TMI 156 - MADRAS HIGH COURT] had though rejected the assessee’s request for condonation of delay involved in filing of its application for approval under Sec. 10(23C)(vi) for A.Y. 2012-13, but accepting its alternative contention that as its application for the said year i.e. A.Y. 2012-13 was pending consideration and the impugned order came to passed only on 13.11.2013, therefore, it could not have filed an application for the subsequent assessment year i.e. A.Y. 2013-14, had remanded the matter to the file of the CIT, Exemption with a direction to consider the same as the assessee’s application for the succeeding year i.e. A.Y. 2013-14. As the facts and the issue involved in the case of the present assessee before us are in parity with those as were there in the aforesaid cases before the Hon’ble High Court, therefore, we respectfully follow the same and remand the matter to the file of the Commissioner of Income-Tax (Exemption), Bhopal with a direction to consider the present application filed by the assessee for approval under Sec. 10(23C)(vi) as that filed for the immediate succeeding year i.e. A.Y. 2019-20 and onwards - Appeal filed by the assessee is partly allowed for statistical purposes. Issues Involved:1. Rejection of the application for approval under Section 10(23C)(vi) of the Income Tax Act, 1961 due to late filing.2. Consideration of the application for subsequent assessment years due to the delay in the decision by the Commissioner of Income-Tax (Exemption).Detailed Analysis:1. Rejection of the Application for Approval under Section 10(23C)(vi) due to Late Filing:The assessee society, established with the primary objective of imparting education, filed an application in Form No. 56D on 25.04.2019 with the Commissioner of Income-Tax (Exemption), Bhopal, seeking approval under Section 10(23C)(vi) of the Income Tax Act for the Assessment Year (A.Y.) 2018-19. According to the sixteenth proviso to Section 10(23C) as amended by the Finance (No.2) Act, 2009, the application should have been filed by 30.09.2018. The Commissioner of Income-Tax (Exemption) rejected the application on the grounds that it was filed beyond the prescribed period. The Commissioner drew support from judicial pronouncements and concluded that the application was not maintainable due to the delay.The Tribunal reviewed the grounds of appeal and noted that the Commissioner of Income-Tax (Exemption) was not vested with any power under the Act to condone the delay in filing the application. This view is supported by the judgments of the Hon'ble High Court of Madras in the case of All Angels Educational Society Vs. Chief CIT and other similar cases. Consequently, the Tribunal upheld the Commissioner's decision to reject the application for A.Y. 2018-19 due to the delay.2. Consideration of the Application for Subsequent Assessment Years:The assessee contended that the delay in the Commissioner's decision on the application for A.Y. 2018-19 precluded them from filing an application for the subsequent assessment year, A.Y. 2019-20, within the stipulated time. The Tribunal found merit in this argument. It was observed that the assessee's application for A.Y. 2018-19 was pending until 30.09.2020, thus preventing the filing of a new application for A.Y. 2019-20 by the deadline of 30.09.2019.The Tribunal referred to similar cases, such as the Hon'ble High Court of Madras in All Angels Educational Society and the Hon'ble High Court of Bombay in Sanjay Ghodawat University, where the courts had directed the authorities to consider delayed applications for the subsequent assessment year. Following these precedents, the Tribunal directed the Commissioner of Income-Tax (Exemption) to consider the assessee's application for approval under Section 10(23C)(vi) as filed for the immediate succeeding year, A.Y. 2019-20, and onwards.Conclusion:The Tribunal partly allowed the appeal. While the request to condone the delay for A.Y. 2018-19 was declined, the Tribunal remanded the matter to the Commissioner of Income-Tax (Exemption), Bhopal, with instructions to treat the application as filed for A.Y. 2019-20 and subsequent years. This decision ensures that the assessee's application for exemption is considered for future assessment years despite the initial delay.