2023 (11) TMI 979 - AT - Income Tax

Educational institution wins exemption under sections 10(23C)(iiiad) and 11/12 despite trustee advances and delayed appeal filing

Sher-e-Kashmir College of Education, (Unit of) Pir Panchal Education Trust Versus Income Tax Officer, Ward-1 (3), Jammu

ITAT Amritsar condoned a delay of 3080 days in filing appeal, accepting the assessee's explanation regarding custody of records and Chairperson's health ... Condonation of delay in filing of appeal - delay of 3080 days - HELD THAT:- The assessee explained that all the records of the college were in custody of the office of the Superintendent and during the period, health of the Chairperson/Secretary of the college had considerably be fallen and he had to undergo cardiac treatment in Super Speciality Hospital at Jammu. The assessee prayed for condonation of delay. AR further argued that the grounds of appeal of the assessee were covered in its favour in assessee’s own case by the order of ITAT-Amritsar Bench. The ld. DR had not made any strong objection against the assessee’s submission. Accordingly, the delay for 3080 days is condoned. Exemption u/s 11 - eligibility for the deduction u/s 10(23C) (iiiad) on turnover exceeding 1 Crore - advance to the trustee is violation of section 13(1)(c)(ii) and section 13(d) (i) r.w.s. 13(2) and 13(3), so, the exemption available u/s 11 is denied - HELD THAT:- Form evidence it reveals that the turnover of assessee during impugned assessment year is with in the limit specified u/s 10(23C)(iiiad). So, the assessee eligible for deduction u/s 11/12 of the Act. Advance to the trustee which is violation of section 13(1)(c)(ii) and section 13(d)(i) r.w.s. 13(2) and 13(3) - The issue is squarely covered by the assessee’s own case [2022 (6) TMI 1444 - ITAT AMRITSAR] by the order of ITAT-Amritsar Bench. The assessment order is quashed, and the addition is deleted. The exemption claimed by the assessee is restored. Issues Involved:The main issues involved in the judgment are the condonation of delay in filing the appeal, denial of exemption under section 10(23C)(iiiad) and section 11, disallowance of expenses, addition of interest under section 234B of the Income-tax Act, and violation of section 13 in relation to advances made to trustees.Condonation of Delay:The appellant filed the appeal with a delay of 3080 days and sought condonation, citing reasons such as health issues of key personnel and reliance on previous ITAT decisions. The delay was ultimately condoned after considering the circumstances and arguments presented by the appellant.Denial of Exemption under Section 10(23C)(iiiad) and Section 11:The case involved an educational trust claiming exemption under section 10(23C)(iiiad) and section 11 of the Act. The assessing officer denied the exemption due to advances made to trustees, which were deemed as a violation of section 13 provisions. The appellate tribunal, referring to previous ITAT decisions, ruled in favor of the appellant, quashing the assessment order and restoring the exemption claimed.Disallowance of Expenses and Addition of Interest:The assessing officer disallowed certain expenses and added interest under section 234B to the total income of the appellant. The tribunal, after considering the arguments presented by both parties and examining the financial statements, found in favor of the appellant, deleting the disallowed expenses and interest added.Violation of Section 13 - Advances to Trustees:The core issue revolved around the advances made by the trust to trustees, which were considered a violation of section 13(1)(c)(ii) and section 13(d)(i) in conjunction with other provisions. The tribunal, relying on precedents and financial evidence, concluded that the violation was not established conclusively and ruled in favor of the appellant, restoring the exemption and quashing the assessment order.This judgment highlights the importance of adherence to legal provisions, thorough examination of financial records, and the significance of precedent in tax-related matters.