TaxTMI 
TaxTMI 
2013 (10) TMI 161
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....sessment on the premise that the Assessee is not having any exemption. He assessed the total income at Rs.47,03,58,078/- and raised a demand for Rs.24,32,30,437/- including interest and surcharge. In the said Assessment Order, he recorded a finding that the assessee had advanced a sum of Rs.37 crores to Sri.Dayananda Pai for purchase of property. During the year no purchase of property had been made and it remained as advance. Therefore, the said advance amount paid cannot be treated as utilized for educational purpose. Aggrieved by the said order, the Assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Though the Appellate Authority agreed with the said finding of fact, in view of the notification under Section 10(23C)(vi) of the Act, he held the assessee is entitled to exemption and therefore, allowed the appeal. Aggrieved by the said order, the Revenue preferred an appeal before the Tribunal. The assessee also preferred a Cross-objection. 3. The Tribunal held that as the Board has already approved the Institution under Section 10(23C)(vi) of the Act, its income is exempted under that Section. Since the Income Tax Authorities directed the prescribed aut....
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....that the Assessee does not have exemption under Section 10(23C)(vi) of the Act. The Assessee also claimed computation of income under Sections 11 and 12 of the Act. The Assessing Authority noticed that the Assessee has made an advance of Rs.37 crores to one P.Dayananda Pai for purchase of property. During the year, no purchase as against the advance has been made. The Assessee claimed that the advance for purchase of property is an admissible investment under Section 11(5) of the Act. During the year, neither the property was registered nor possession of the property was taken over by the Assessee. In the circumstances, he held the Assessee cannot claim ownership rights with respect to this property and that the amount continues to be an advance only as on 31.03.2001. Therefore, the claim of the Assessee for computation of income under Sections 11 and 12 of the Act was also rejected. Therefore, he proceeded to pass an order under Section 143(3) of the Act and raised a demand for Rs.24,32,30,437/-. Aggrieved by the said order, the Assessee preferred an appeal to the Commissioner of Income Tax (Appeals). 8. During the pendency of this appeal, the Central Board of Direct Taxes vide t....
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....y person, any income falling within any of the following clauses shall not be included- ........................... .......................... (23C) any income received by any person on behalf of- ............................ ........................... (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority; or 10. In computing the total income of a previous year of any person any income falling under Section 10(23C)(vi) shall not be included. Before the assessee could claim the benefit of the said provision, the assessee should obtain an approval by the prescribed authority. In the instant case, the approval has been accorded by the prescribed authority which reads as under: ORDER:- In exercise of powers conferred by the sub-clause (vi) of clause (23C) of Section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby approves "Manipal Academy of Higher Educati....
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.... per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and (b) does not invest or deposit its funds, other than- (i) any assets held by the fund, trust or institution [or any university or other educational institution or any hospital or other medical institution] where such assets form part of the corpus of the fund, trust or institution [or any university or other educational institution or any hospital or other medical institution] as on the 1st day of June, 1973; (ia) any asset, being equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998;] (ii) any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution or any university or other educational institution or any hosp....
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....he Assessing Authority cannot ignore the order of exemption. Therefore, on enquiry if he is satisfied that the assessee is not entitled to exemption as he has violated the terms and conditions of exemption order, he has to bring the said fact to the notice of the prescribed authority. Thereafter, the prescribed authority is under an obligation to issue a show cause notice to the assessee to show-cause, why the order of exemption should not be rescinded. After hearing the assessee, if the prescribed authority decides to rescind the exemption granted, they are at liberty to pass such an order and a copy of the said order is to be communicated both to the assessee as well as the Assessing Authority. It is on receipt of such an order rescinding the exemption order, the Assessing Authority could proceed to assess the assessee and raise a demand for payment of tax. This is the procedure prescribed under the scheme of the Act. Therefore, merely because there is an exemption order, the assessee is not entitled to exemption unless he satisfies the conditions subject to which the said exemption is granted. The question whether such conditions are fulfilled or not is a matter to be investigat....