TaxTMI 
TaxTMI 
2022 (9) TMI 1393
X X X X Extracts X X X X
X X X X Extracts X X X X
....Income Tax (Appeals) ought to have held that the appellant society is eligible for exemption u/s 10(23C)(iiiad) and accordingly ought to have refrained from making any additions. 4. The Learned Commissioner of Income Tax (Appeals) ought to have appreciated that the limit of One Crore on the gross receipts applies in respect of receipts of each institution and not on the aggregate receipts of all the institutions 5. Without prejudice, the Learned Commissioner of Income Tax (Appeals) ought to have allowed depreciation to arrive at the taxable income. 6. Without prejudice, the Learned Commissioner of Income Tax (Appeals) ought to have allowed exemption under section 11 read with second proviso to Section 12A(2) of Income Tax Act,1961. 7. The learned Commissioner of Income Tax (Appeals) ought to have held that the provisions of section 234A,234B,234C and 234F are not applicable in the appellant Society's case. 8. For these and other grounds of appeal that may be urged at the time of hearing, the appellant prays that the appeal may kindly be allowed." 2. Facts of the case are that the assessee is a Society formed under Mysore Societies Registration Act, III of 1940 on 09-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the Act, if the statement referred to in clause (a) of section 11(2) of the Act is not furnished on or before the due date specified in Section 139(1) of the Act, the income not so applied for a charitable and religious purpose in India under clause (2) to explanation to section 11(1) of the Act shall be deemed to be income of the person. According to the Ld. CIT(A), assessee lost the opportunity to avail exemption provided in section 11 of the Act by not filing the return within the due date specified u/s 139(1) of the Act. Against this assessee is in appeal before us. 4. We have heard the rival submissions and perused the materials available on record. In this case, the return of the assessee has been processed u/s 143(1) of the Act by CPC vide their intimation dated 28.6.2019, wherein the AO disallowed the claim of depreciation at Rs.10,11,146/- and thereby the claim of the assessee for exemption u/s 10(23C)(iiiad) of the Act has been denied on the following reasons, which has been mentioned in the communication of proposed adjustment sent u/s 143(1)(a) of the Act vide letter dated 1/3/2019, which is as follows:- As per Rule 2BC of Income Tax Rules Exemtions claimed unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to be a notice of demand issued under section 156; and - all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee." 4.2. The cumulative effect of this section substituted and omission w.e.f. 1.6.1999 of section 143(1A), 143(1B) & 143(5) of the Act is that neither prima facie adjustments can be made nor any levy of additional income tax can be made on or after 1st, June, 1999. Thus, the power of AO under this section are very limited and restricted only to the returned income filed by the assessee. The A.O. cannot visit beyond the return except to compute tax or interest after adjustment of pre-paid tax as mentioned above. Therefore, according to the clear provisions of section 143(1) of the Act, it would be beyond the jurisdiction of AO to compute income by denying exemption u/s 10(23C)(iiiad) of the Act on the reason that aggregate annual receipts shown in Schedule Part-A General (1) details of the projects/institutions run by the assessee is more than Rs.1 crore. In our opinion, the issue of determining the exemption ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e annual receipts of such educational institutions put together, probably, the said provision regarding exemption would be of no use at all. Especially, if the society is running a medical college or any engineering college or other professional courses, then the annual receipt of each institution would run to few crores and therefore, the very object of granting exemption to such genuine institution would be lost. Therefore, the word "aggregate annual receipt" has to be understood with the context m which it is used and the purpose for which the said provision was inserted, keeping in mind, the Scheme of the Act. Therefore, if an assessee is running several educational institutions, if any of them is wholly or substantially financed by the Government, then the income from such educational institution received by the assessee is not included while computing his total income. Similarly, income from each educational institution if they are not receiving any aid from the Government wholly or substantially in respect of which the aggregate annual receipt do not exceed Rs. 1 crore received by the assessee, is also not included while computing annual total income of the assessee. 24. C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f section 143(1)(a) of the Act. The matter has also to be considered from another angle that the words `prima facie' which has been used therein means on the face of and refers to the items, on which there cannot be two opinions. If the matter is arguable one or debatable then same cannot be disallowed under the proviso referred to above. Thus, on the proper interpretation of this section, the rights of the ITO are restricted with regard to the disallowances which are prima facie inadmissible. Whether the provisions of a particular section [section 167B in this case] are applicable or not, will not be covered under this section. [JKs Employees Welfare Fundy. ITO [1992] 107 CTR (Raj.) 161 : [1993] 199 ITR 765 (Raj.). See also CIT v. Orbit Travel & Tours (I?) Ltd [1999] 238 ITR 931 (AP). In Tata Yadogawa Ltd v. CIT [2011] 335 ITR 53 (Jharkhand), it was held that as prima facie adjustment is permissible only in respect of claims, the incorrectness of which is apparent from any information in the return and debatable claims are not liable to such prima facie adjustments, AO was not justified in making prima facie adjustments in respect of the deduction claimed under s. 35AB towar....