TaxTMI 
TaxTMI 
2019 (8) TMI 239
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....aforesaid common stated stand of the parties, the grounds raised in ITA 237/CHD/2019 are reproduced hereunder : "i. That on the facts & circumstances of the case, the Id. CIT (Appeals) has erred in law in deleting the addition amounting to Rs. 1,16,11,419/-/ (Rs. 1,91,84,322 in A.Y. 2014-15 A.Y.) despite the fact that the assessee failed to produce 12A registration certificate before the Assessing Officer as well as before the CIT(Appeals). ii) That on the facts & circumstances of the case, the Id. CIT (Appeals) has erred in law in accepting the stance of the assessee that assessee's case was covered by the provisions of section 10(23C)(iiiab) of the Act even when the assessee has been claiming exemption u/s 11 & 12 of the Act continuously and the assessee has changed its stance when it has not been able to furnish the 12A registration certificate before the AO and the appellate authority. iii) That the appellant craves to leave, add or amend any grounds of appeal on or before the appeal is heard or disposed of. 4. The ld. CIT-DR relying upon the grounds raised submitted that in the facts of the present case, the assessee did not produce the copy of the 12AA Ce....
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..... The record show that the said claim was supported by way of an affidavit filed before the AO. 7.1.1 Being unsuccessful before the AO, the assessee carried the issue before the CIT(A) and reiterated the submissions advanced. Reference again was made to the fact that Registration u/s 12A had been granted to the assessee vide File No. 228(11C)/1982-83/J/dated 23.04.1982 and 80G registration had been granted vide File No. CIT/Panchkula/2000-2001/80-G/21/7321 dt. 20.11.2000. 7.1.2 It was re-iterated that although the registration certificate could not be filed before the AO, however these details of the Registration Certificate namely file number and date etc. were made available to the said authority. 7.1.3 The record shows that it had also been argued that efforts were made to obtain duplicate certificate from the concerned authorities i.e. CIT (E) Rohtak and CIT (E) Panchkula. The details of these correspondences with the concerned office were stated to have been furnished before the AO. The CIT(A) considering these arguments and the provisions of law granted relief to the assessee which is under challenge in the present proceedings. 7.2 On a consideration of the peculiar f....
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....not traceable. Apart from these arguments and submission on facts, the assessee admittedly has provided the specific file number and date of Registration of 12A Certificate. In these peculiar facts which remain unassailed, we are called upon to consider the merits of the conclusion drawn in favour of the assessee allowed on a consideration of the statutory framework permissible under the Act. 7.4 Examining the claim, we note that admittedly the assessee has made available the Certificate granted u/s 80G of the Income Tax Act. The grant of Certificate u/s 80G necessitates the fulfillment of the conditions set out in Rule 11AA of the Income Tax Rules, 1962. The said Rule addresses the requirement to be met by an Institution for grant of Registration u/s 80G. For the sake of completeness, the said Rule is extracted hereunder for ready reference : Rule 11AA-[Requirements for approval of an institution or fund under section 80G.] "11AA. (I) The application for approval of any institution or fund under clause (vi) of subsection (5) of section 80G shall be in Form No. 10G and shall be made in triplicate. (2) The application shall be accompanied by the following documents, namel....
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....y the Revenue. Secondly such an argument, if advanced, would tantamount to a case of total administrative failure. The file numbers and the dates of grant of the respective Certificates is available on record. 80G certificate has been issued vide File No.CIT/Panchkula/2000-2001/80-G/21/7321 dt.20.11.2000 and 12A Registration vide File No. 228(11C)/1982-83/J/dated 23.04.1982. As noted by the AO himself, there is an unrebutted argument on record that certain records of CIT (E), Rohtak were destroyed in 1995 floods and available record had been forwarded to CIT (E), Panchkula etc. No attempt to make out a case let alone any argument is available on record by the Revenue to show that these arguments on facts referring to record of CIT (Rohtak) having been destroyed in the floods of 1995 was either an incorrect fact or an relevant fact is available on record. The fact which also remains unrebutted right from the assessment stage on record is that on the date Registration u/s 80G was granted, 12A Certificate was available, it has been filed and there is nothing on record to show that the requirement of the said Rule was circumvented or allowed to be circumvented. The assertion by way of ....
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....conclusion arrived at. 7.8 Accordingly, in view of the detailed reasoning hereinabove, the issue posed in Question (i) framed by us is answered in favour of the assessee. The departmental ground in view thereof is dismissed. 8. Before addressing the second issue framed by us which arises for our consideration in the facts of the present case, it is necessary to address the departmental request for remand posed on the basis of the premises that the facts relatable to the said claims were never considered by the AO as no such claim was made before the AO. 8.1 On a perusal of the record we find that the assessee had made an alternate claim seeking exemption u/s 10(23C)(iiiab) before the Assessing Officer arguing that the assessee had been receiving government aid for the stated activity for the last so many years. The Assessing Officer has expressly noted that the claim was highlighted on the basis of the following factual position addressed vide letter dated 19.11.2015. The Assessing Officer in his order dated 28.03.2016 has extracted the following details of receipt of government aid by the assessee in the assessment order : Financial Year Amount 2008-09 Rs. 2,43,65,00....
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....ncerned, percentage of receipts to be considered as crossing the statutory threshold limit by way of insertion of Explanation below clause 10(23C) was not available as it was inserted prospectively and the vagueness attributable to the words "substantially financed" could be said to have existed. The fact that the insertion in the Explanation as introduced prospectively w.e.f. 01.04.2015 is not in dispute. However, even when there was a perceived ambiguity in the statutory position, it can be seen from the following discussion in the order that the legal position stood well addressed as the Courts had stepped in to fill this gap. It is pertinent to note that even before the insertion of the Explanation below clause 10(23C)(iiiab) in the absence of any statutory guidance thereon, there were decisions of different Courts and Tribunals where the limits of about 37% have also been held to be sufficient for the society to claim the benefit of the provisions. Reference may be made to the decision of the Hon'ble Karnataka High Court in the case of CIT Vs Indian Institute of Management (2011) 196 Taxman 276 (Kar). In the facts of the said case, Government financing of 37.85% was held t....
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...., any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds such percentage of the total receipts including any voluntary contributions, as may be prescribed of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year ]; (emphasis supplied) 9.3 It also needs to be addressed for the sake of completeness that the Statute as quoted hereinabove has used the expression "exceeds such percentage of the total receipts............." that vide Rule 2BBB (inserted w.e.f. 12.12.2014) of the Income Tax Rules, the bar at the minimum threshold of 50% has been fixed for an institution which has to be financed by the Government for claiming benefit of Section 10(23C)(iiiab). Before this date, as noted by way of judicial standards set by the Courts in the absence of any statutory guidance, institutions receiving less than this percentage could also be eligible. 9.4 Ac....
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....purposes and that the grants received from the Government were in excess of over 50 per cent, of the total expenditure incurred and the total receipts during the years 10.3 The Assessing Officer denied the benefit under section 10(23C)(iiiab) as he was of the view that since the Government grant received was less than 75%, it could not be said that the assessee was substantially financed by the Government. For arriving at the stated limit of 75%, the AO referred to section 14 of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971. 10.4 The said view did not find favour with the Commissioner (Appeals) who held that the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 was not applicable in the absence of any reference to it. Relying upon the decision of the Karnataka High Court in the case of CIT Vs Indian Institute of Management, the CIT(A) allowed the assessee's appeal. 10.5 Said order was upheld by the ITAT. The Tribunal found that the grant from the Government was approximately 56 per cent of the total receipts while upholding the order of the Commissioner (Appeals). 10.6 The Revenue carried the is....
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....f the words "substantially financed" by the addition of Explanation to Section 10(23C)(iiiab) of the Act read with Rule 2BBB of the Rules provides that the Government grant should be at 50 per cent of the total receipts. The Court held that, "the vagueness attributable to the meaning of the words "substantially financed" is removed by the addition of the Explanation to section 10(23C)(iiiab) of the Act read with rule 2BBB of the Rules. The above Explanation states that grant from the Government should be in excess of the prescribed receipts in the context of total receipts (including voluntary donations). Rule 2BBB of the Rules provides that the Government grant should be at 50 per cent of the total receipts. 10.10 Referring to the decision of the Apex Court in the case of State of Bihar Vs S.K. Roy [1966] AIR 1966 SC 1995 held that, "it is recognized principle of construction that subsequent legislation may be looked at in order to see what is the proper interpretation to be put upon the earlier legislation, where the earlier Act is obscure or ambiguous or readily capable of more than one interpretation. The same principle would apply to an amendment made to an Act to understand....