Exemption under Section 10(23BBA) upheld for AY 2016-17 due to consistent AO acceptance in AY 2019-20

The ITAT Hyderabad upheld the exemption under section 10(23BBA) granted to the assessee for A.Y. 2016-17, following the AO's allowance of the same exemption for A.Y. 2019-20. Although the principle of res judicata does not apply to income tax proceedings, the tribunal emphasized the need for consistency in the revenue's approach when facts and law remain unchanged. Since no new material or change in law was presented, the AO's acceptance of the exemption for A.Y. 2019-20 precluded a contrary stance for A.Y. 2016-17. Consequently, the tribunal confirmed the CIT(A)'s order allowing the exemption under section 10(23BBA) for A.Y. 2016-17.

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ISSUES:

Whether the income of a temple is exempt under section 10(23BBA) of the Income Tax Act, 1961.Whether the principle of res judicata applies to income tax proceedings across different assessment years.Whether exemption under section 10(23BBA) applies only to statutory bodies or authorities managing religious places, and not to the religious places (temples) themselves.Whether reliance on judicial precedents from other High Courts is appropriate where facts differ.Whether consistency in tax treatment across assessment years should be maintained in absence of changes in facts or law.

RULINGS / HOLDINGS:

The Court held that exemption under section 10(23BBA) of the Act was rightly allowed to the temple for the assessment year in question, affirming the order of the Commissioner of Income Tax (Appeals).The Court confirmed that the principle of res judicata does not apply to income tax proceedings, as "each year's assessment is final only for that year and does not govern later years."However, the Court emphasized that "when there is no changes in facts or law, a consistent approach should be adopted by the revenue," and thus, acceptance of exemption in a later year (A.Y. 2019-20) precludes denial in the earlier year (A.Y. 2016-17).The Court rejected the Revenue's contention that exemption under section 10(23BBA) is limited to statutory bodies or authorities and does not extend to the temple itself, noting the assessee's registration under the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowment Act, 1987, and supervision by the Endowment Department.The Court found no reason to interfere with the CIT(A)'s reliance on judgments from other High Courts given the facts and law applicable to the case.

RATIONALE:

The Court applied the statutory framework of section 10(23BBA) of the Income Tax Act, which exempts income of certain trusts, endowments, or societies managing religious places, and considered the assessee's registration under a state endowment act and government supervision to determine eligibility.The Court acknowledged the settled principle that "res judicata does not apply to income tax proceedings," citing the Supreme Court's observation that assessments are year-specific and independent.The Court adopted a doctrinal approach emphasizing consistency in tax administration, holding that in absence of any change in facts or law, the revenue should not take contradictory positions in different assessment years.The Court distinguished the Revenue's reliance on case law by noting differences in facts and the applicability of the exemption to the assessee's specific circumstances.

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