2022 (11) TMI 770

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...."1. That the Ld. Commissioner of Income Tax (Exemptions), Chandigarh, has erred in assuming the jurisdiction U/s 263 of the Act and holding the assessment as erroneous and prejudicial to the interest of revenue and setting aside the order as passed after due application of mind by the Ld. Assessing Officer. 2. That the Ld. Commissioner of Income Tax (Exemptions), Chandigarh has failed to appreciate the fact that the original assessment was framed by the Assessing Officer after due application of mind and on that basis and after consideration of all the facts and circumstances of the case, has allowed the exemption u/s 10(23) (iiiad) of the Act. 3. That the Ld. Commissioner of Income Tax (Exemptions), Chandigarh has failed to appreciate that the assessment had been completed after due consideration of various replies before the Assessing Officer during the course of assessment proceedings and the Assessing Officer having taken a possible view and, therefore, the assumption of jurisdiction u/s 263 was not called for by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh. 4. That the Ld. Commissioner of Income Tax (Exemptions), Chandigarh has failed ....

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....issue related to advance fee amount of Rs. 40,36,700/- was in question u/s 263. The assessee has a gross turnover Rs.99,26,655/- during the financial year.The ld. CIT(E) has added back the advance gross receipt and the interest which is worked out total amount of Rs.1,39,66,313/- (Rs.99,26,655/- (+) Rs.2958/- (+) Rs.40,36,700/-). As the gross receipts during the financial year is enhanced more than Rs. 1 Crore. Accordingly, the assessee is contravening section 10(23C) (iiiad) r.w.s. 2(15) of the Act & was not eligible for statutory deduction. The revisional authority has come to conclusion that the assessee was not investigated by the ld. AO during the assessment proceeding. So, the assessment order is erroneous and prejudicial to the interest of the revenue. Accordingly, the order of the ld. AO was setting aside for a fresh assessment in the light of observation of the ld. CIT(E). Being aggrieved assessee filed an appeal before us by challenging the order passed U/s 263 of the Act. 4. The ld. Counsel had filed the written submission with brief note before the Bench which are kept in record. Ld. Counsel placed specific paragraph of the order of u/s 263. The relevant paragraphs 4....

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....al. This particular advance fee Rs.40,36,700/- is already exhausted and is booked in the turnover for the next financial year i.e. F.Y. 2017-18. Accordingly, the assessment was completed in that financial year 2017-18 relevant to the assessment year 2018-19. The copy of the assessment order was placed order dated 10.03.2021 bearing DIN ITBA/AST/S/143(3)/2019-20/10313748931. The assessing authority had accepted the advance fees of earlier years as a turnover in a next year. 4.2 The issue was already considered by the ld. Assessing Authority in his order. The paragraph 2 page no. 2 of the assessment order is extracted as below: "2. The assessee trust/society has claimed exemption under sub clause (iiiad) of clause (23C) of section 10 of the Income Tax Act, 1961. The assessee society is pursuing charitable activity viz. education an institute under name and style of "Saint Mahapragya Educational Society". The trust/society has declared total income/receipts of Rs. 99,29,613/- against which amount applied for charitable purposes on account of revenue expenditure stands at Rs. 86,31,144/-. The case was analyzed with respect to information/ documents and books of account furn....

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.... 1962, which are reproduced as under"- "iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or "iiiac) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government. " Explanation. For the purposes of sub-clauses (iiiab) and (iiiac), 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 ....

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....the order of the Hon'ble Karnataka High Court in the case of CIT vs. Children Education Society', (2013) 34 Taxmann.com 285 (Kar) in relevant para 17 is annexed as below: "17. Rule 2BC of the Income Tax Rules prescribes the amount of annual receipts for the purposes of sub-clauses (iii)(ad) and (iii)(ae) of clause (23C) of section 10, which reads as under: "2BC (1) For the purposes of sub-clause (iii)(ad) of clause (23C) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of any university or other educational institution, existing solely for educational purposes and not for purposes of profit, shall be one crore rupees. (2) For the purposes of sub-clause (iii)(ae) of clause (23C) of section 10, the amount of annual receipts on or after the 1st day of April, 1998, of any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, shall be one crore rupees.]" Fur....