TaxTMI 
TaxTMI 
2022 (3) TMI 217
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....aside the said order u/s. 143(3) of the Act dt.27-10-2016 directing the AO to make de-novo assessment. 2. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Exemption), Ahmadabad, ought to have dropped the proceedings initiated u/s. 263 of the Act. 3. It is therefore prayed that the order dt.22-03-2019 passed by the Commissioner of Income Tax (Exemption), Ahmadabad, u/s. 263 of the Act may be cancelled. 3. Brief facts of the case are that the assessee ,i.e Society For Gujarat Dental Health Education And Research had filed its return of income for the impugned assessment year i.e. 2014-15 declaring NIL income after claiming its income exempt u/s. 11 of the Act. Thereafter the case was selected for scrutiny assessment and the income assessed at Rs. 96,24,705/-. The Ld. CIT(E) on verification of records thereafter found that the assessing officer had not properly assessed the income, for the reason that the assessee had been granted excess exemption of 15% of its income on grants from state government of Rs. 4.72 crores. Para 2.1 of the order of the Ld. CIT(E) bringing out the above is as under: 2.1 On per....
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.... erroneous so as to cause prejudice to the Revenue. There is nothing in the entire show cause notice bringing out how and why the assessee was not eligible, as per the provisions of law, to claim exemption of 15% of the grants received. The contents of the show cause notice are reproduced hereunder for clarity: To, The Managing Trustee, Society for Gujarat Dental Health Education & Research, Civil Hospital Campus, Asarwa, Ahmedabad-380016 Sir, Sub: Proceedings U/s 263 of the I. T. Act in the case of Society for Gujarat Dental Health Education & Research (PAN: AAKTS0210N) for A.Y. 2014-15 - reg. Kindly refer to the above. 2. On verification of the case record, it is found that return of income for F.Y. 2013- 14 relevant to the A.Y. 2014-15 was filed on 17/09/2014, by declaring the total income of Rs. NIL along with the Auditor's report U/s 12A(b) of the Act in Form No. 10B. The same was selected for scrutiny and thereafter, Order U/s 143(3) of the I. T. Act for A.Y. 2014-15 was passed on 27/10/2016 determining total income of Rs. 96,24,705/-, by making addition on account of claim of depreciation. 3....
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....14-15. In this connection, you are requested to attend before the undersigned in person or through an Authorised Representative on 01/08/2018 at 11:30 A.M. in my office to present your case, alongwith all relevant documents. 5. In case of non-compliance, it will be presumed that you have nothing to say in your case and the matter will be decided on merits and on the basis of documents available on record. Yours faithfully, (D.P. GUPTA) Commissioner of Income tax, (Exemptions), Ahmedabad 7. As is evident from the above the Ld. CIT(E) has merely stated that the assessee was not entitled to exemption of 15% of the grants received by it from the Government amounting to Rs. 4.72 crores. He has referred to the provisions of Section 11 of the Act but has not mentioned as to how the provisions of Section 11 disentitle the assessee to the said exemption. There is absolutely no basis mentioned in the show cause notice for this interpretation of law by the Ld. CIT(E) and it appears to be totally on his own whims and fancies . The Ld. DR, during the course of hearing before us, was unable to enlighten the bench as to which provision of law denied claim of exemption @ 15....
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....law. 9. In the present case there being no basis at all with the Ld. CIT(E) for considering the assessment order to be erroroneous , the initiation of revisionary proceedings by the Ld. CIT(E) u/s. 263 of the Act,we hold, is without jurisdiction and invalid. The order passed in pursuance to such invalid assumption of jurisdiction is also therefore, we hold, no sustainable in law and for this reason alone is set aside. 10. Further we have noted that nowhere in the entire order passed by the Ld.CIT(E) any basis has been given for finding the assesses claim to exemption of 15% of the government grants not being as per law. The finding of the assessment order being erroneous on this count is therefore, we find, without any basis or justification. And in the light of the same, we hold, that there is no finding of the assessment order being erroneous. 11. Going further, we find that the assessee had explained as to why the order of the A.O. was not in error. He had stated that though the assessee had claimed exemption u/s. 11 of the Act, it was rightfully and legally entitled to claim its income as exempt as per the provisions of Section 10(23C)(iiiab) of the Act since it was wh....
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....lose herewith the following documents to enable your Honour to appreciate the relevant facts properly. i. Copy of Government of Gujarat Resolution/Notification establishing the Society for Gujarat Dental Health Education & Research ii. Copy of Memorandum of Association and the rules and Regulations of Society for Gujarat Dental Health Education & Research. iii. Copy of acknowledgment of the return of income for A,Y. 2014-15 and the computation of income. iv. Copy of Auditor's report and the detailed accounts including balance sheet, income and expenditure account and schedules thereto. 3, At the outset we submit this is government educational institution. It has been established by the Government of Gujarat. While it is registered as a Public Charitable Trust and under the Societies Registration Act, 1960, it is managed by the officers of the Government appointed as trustees, it would be seen from the object of the Memorandum of Association that the Society is established by the government of Gujarat solely for the educational purposes in the field of dentistry not for the purposes of profit. Therefore the income of the Society is ex....
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.... action proposed to be taken u/s. 263 of the Act deserves to be dropped. In case of queries, if any, we request your Honour to kindly intimate the same and give us an opportunity for submitting explanation. 4. In view of the submissions made hereinabove your Honour will kindly appreciate that the income of the Institution being exempt no prejudice is caused to the Revenue. We therefore request your Honour to kindly drop the proceedings u/s.263 of the act and oblige. 5. Letter of Authority is attached herewith. 'Thanking your Honour. Yours faithfully, For Society for Gujarat Health Education & Research 13.. And then vide letter dated 28th August, 2018 reproduced under: To, Commissioner of Income Tax, (Exemptions), Ahmedabad Sir, Sub: Show cause notice u/s. 263 of the I.T. Act, 1961- Society for Gujarat Dental Health Education & Research (PAN: AAKTS0210N) for A.Y. 2014-15 - Submissions regarding With reference to the above subject and in continuation to our previous written submission dt.2 1-08-201 Sand also with reference to the hearing that took place on 21- 08-2018, we b....
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....,000/- iii. Other receipts during the year, (income & Expenditure A/c) Rs. 15,05,685/- TOTAL RECEIPTS Rs. 14,65,05,685/- The government grants works out to Rs. 14,50,00,000/- which comes to 98.97% of the total receipts. Accordingly the income of the trust is exempt u/s. 10(23C)(iiiab) of the Act. 14. The assessee had ,as is evident demonstrated that it was substantially financed by the state government and for the said purpose had shown that more than 90% of its total receipts was by way of endowment funds and grants and subsidies from the state government. 15. Ld. CIT(E), we find has rejected this contention by stating that the claim made by the assessee is incorrect and that it is not substantially financed by the Government ,its percentage of Government grants to total receipt being only 49.24%. The relevant findings of the Ld. CIT(E) in this regard at para 9(i) of the order is as under: (i) With regard to assessee's contention that it falls u/s 10(23C)(iiiab), it is not found acceptable in view of the fact during the year under revision, it has not satisfied the basic condition that it was wholly or substantially financed by ....
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....1 of the Act. (1,43,76,263-70,80,000 as per notice u/s.263) Rs. 72,96,263/- Total Rs. 19,08,06,524/- Your Honour will kindly see from the above working that there would be no tax liability even 11 of the Act even in a case it is assumed that provisions of S.I0(23C)(iiiab) are inapplicable. 17. The same was rejected by the Ld. CIT(E) holding at para 9(ii) of his order as under: ii. With regard to assessee's other contention as mentioned in para 6.b above, the same can not be accepted as in its computation of income formed part of return of income filed on 17.09.2014,it has claimed accumulation or set apart to the extent of 15 % of total income which comes to Rs. 1,43,76,263/-. Now, without filing revised return of income, the assessee can not revised its claim for the same simply by way of a written submission as above. Hence, the same is not tenable and therefore, rejected. In other words, no claim of exemption of income u/s 10(23C)(iiiab) has been made in the return of income. Thus it can not allowed at this stage. Moreover, there are other conditions to be satisfied for claiming the exemptions u/s 10(23C)(iiiab) of Income Tax Act. 18....