Tribunal Overturns Denial of Tax Exemption for School Trust, Highlights Assessing Officer's Duty to Grant Lawful Benefits.

The Tribunal allowed the appeal of a charitable trust running a school, quashing the intimation u/s. 143(1) that denied exemption u/s. 12A for the assessment year 2014-2015. The CIT(A) had accepted the alternate deduction claim when income was assessed as an AOP. The Tribunal found the Assessing Officer's adjustments impermissible and emphasized granting the deduction u/s. 10(23C)(iiiad), as the trust's receipts were below Rs. 1 crore. The decision underscored the AO's duty to grant lawful benefits to the assessee.

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Issues:
The appeal involves the denial of exemption u/s. 12A of the Act to a charitable trust running a school for the assessment year 2014-2015.

Summary:

Issue 1 - Denial of Exemption u/s. 12A of the Act:
The assessee, a charitable trust running a school, filed an appeal against the denial of exemption u/s. 12A of the Act for the assessment year 2014-2015. The assessee's total receipts were approximately Rs. 13 lakhs during the relevant assessment year. The assessee contended that it was entitled to the benefit of deduction u/s. 10(23C)(iiiad) of the Act as its total receipts were below Rs. 1 crore, and there was no requirement to file Form 10BB in such circumstances. The intimation u/s. 143(1) denying the exemption was challenged, and the appeal sought its annulment. The CIT(A) accepted the alternate claim of the assessee for deductions when the income was assessed as an Association of Persons (AOP). The Tribunal noted that the intimation was erroneous per se, and adjustments made by the Assessing Officer (AO) in the intimation u/s. 143(1) were not permissible. Consequently, the intimation u/s. 143(1) was quashed, and the appeal of the assessee was allowed.

Issue 2 - Grant of Deduction u/s. 10(23C)(iiiad) of the Act:
The Senior DR argued that the assessee did not raise the claim for deduction u/s. 10(23C)(iiiad) of the Act, and without such a claim, it could not be considered. However, the CIT(A) directed the AO to consider the alternate claim of the assessee concerning the assessment of income u/s. 57 of the Act. The Tribunal observed that the AO should have granted the assessee the benefit of deduction u/s. 10(23C)(iiiad) of the Act when the exemption u/s. 12A was denied. It emphasized that the AO is not only a tax collector but also a tax assessor, and if any benefit is due to the assessee, it must be granted as permissible under the law.

In conclusion, the appeal filed by the assessee was allowed, and the intimation u/s. 143(1) denying the exemption u/s. 12A of the Act was quashed. The Tribunal highlighted the importance of granting due benefits to the assessee as per the provisions of the law.

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