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2023 (4) TMI 571
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....the following grounds of appeal in ITA No.611/Chny/2022 for the AY 2014-15: 1. The order of Id CIT(A) is contrary to law and facts and circumstances of the case. 2.The Id. CIT(A) erred in confirming the disallowance of exemption of Rs.49,64,696/- made by the AO u/s.10(23C)(iiiad) vide order u/s.154 on the premise that the Gross Receipts were above Rs.1 Crore (as shown below) during the year and hence exemption is not admissible. Corpus Fund Received (Voluntary) Rs. 72,18,000 School Fees/Other income/Bank interest Rs. 49,64,696 Aggregate Gross Receipts/Income Rs.1,21,82,696 3. The Id. CIT(A) has failed to consider that the Section as well as the rule uses the words "annual receipts" which should not exceed the limit of Rs.1 Crore. However, the words "annual receipts" are not defined anywhere in the law. Dictionary meaning of "annual" is - occurring or payable every year. Thus, it means the receipts which the institution receives every year, normally fees or subscriptions and not amount received towards corpus. 4. In computing the total income of any person, any income falling within any clauses - the law is very clear that the in....
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....r income/Bank interest Rs. 77,09,830 Aggregate Gross Receipts/Income Rs.1,49,59,830 3. The Id. CIT(A) has failed to consider that the Section as well as the rule uses the words "annual receipts" which should not exceed the limit of Rs.1 Crore. However, the words "annual receipts" are not defined anywhere in the law. Dictionary meaning of "annual" is - occurring or payable every year. Thus, it means the receipts which the institution receives every year, normally fees or subscriptions and not amount received towards corpus. 4. In computing the total income of any person, any income falling within any clauses - the law is very clear that the income of any university or any institution is not to be included. The clause does not use the words "total income" in respect of the institution, but it is only annual receipts. Hence, the reference is to the educational institution and not the assessee as a whole. 5. The Id. CIT(A) also failed to consider the following: a. that the objects and activities of the Trust had remained the same in preceding assessment years also. b. that in case the benefit of exemption not available u/s 10(23)(c)....
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....d exemption u/s.11 of the Act, for the AY 2014-15 also. It was also submitted by the Ld.AR that the assessee has received corpus donation apart from regular receipts from its charitable activities during the year under consideration for construction of building therefore the same should not have been aggregated with the regular receipts while computing the annual receipt of the assessee for the purpose of claiming exemption u/s.10(23C)(iiiad) of the Act. The amount received by the assessee trust from its activities under the head School Fees/Other income/Bank interest only should have been treated as annual receipts, which in total were only Rs.49,64,696/-. The AO, on the basis of gross receipt of the trust including corpus donation of Rs. 72,18,000/- and other regular receipts of Rs. 49,64,696/- has totaled the amount to Rs.1,21,82,696/-,accordingly, have considered the gross receipts of the assessee trust for impugned year exceeding the prescribed limit of Rs.1 Cr. and have denied the exemption u/s.10(23C)(iiiad) of the Act. The assessee's case which was pending for rectification u/s.154 of the Act, was not considered as a case where assessment proceedings were pending and theref....
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....he year under consideration exceeded Rs.1.00 crore and as such it is not eligible for exemption u/s.10(23C)(iiiad). During the assessment proceedings, AO noted that the AR of the assesse has submitted that the receipts of the society are only Rs.60,24,857/- and an amount of Rs.39,14,102/- was received as donation towards corpus fund. The AO held that the receipts of the society exceeded Rs.1.00 Crore and therefore exemption u/s 10(23C)(iiiad) is not allowed. The AO thus made the assessment vide his assessment order dated 19.12.2011 passed u/s.148/143(3) of the IT Act CIT (A) allowed the exemption aggrieved the Dept. went in appeal before the Hon. ITAT, which upheld CIT (A) 's order and held that - The amounts contributed, as corpus donations for Infrastructure development shall form part of corpus would not constitute income of the society. Therefore, the receipts of the educational institution are below Rs.1.00 Crore and as such exemption u/s 10 (23C)(iiiad) is allowable. For the purpose of section 10(23C)(iiiad), in the term 'aggregate annual receipts' refers to the receipts by the educational institution and not that of the society. b. Divine Educat....
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....as claimed under rectification petition, the same cannot be considered as a mistake apparent from the record and thus, the rectification petition was rejected. In appeal, findings of the AO were accepted by the Ld.CIT(A) and dismissed the appeal filed by the assessee. 13. In back drop of the above facts and circumstances of the case and on perusal of the judicial pronouncements, as well, it would be relevant to refer to the decision of the Hon'ble Punjab & Haryana High Court the case of CIT (Exemptions) v. Shanti Devi Educational Trust reported in [2018] 409 ITR 522 (P&H), wherein, the Hon'ble Punjab & Haryana High Court has held as under: EDUCATIONAL INSTITUTION - EXEMPTION - REGISTRATION OF TRUST UNDER SECTION 12AA NOT MANDATORY TO CLAIM EXEMPTION UNDER SECTION 10(23C)(iiiad) - INCOME-TAX ACT, 1961, ss. 10(23C)(iiiad), 12AA During the course of registration proceedings under section 12AA of the Income-tax Act, 1961 the assessee-trust submitted audited accounts for the financial years 2006-07, 2007- 08 and 2008-09. From the balance-sheet for the financial year 2006-07 relevant to the assessment year 2007-08, it was found that the trust had collected a sum of R....
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....ty or other educational institution existing solely for educational purposes and not for the purpose of profit was exempt if the aggregate annual receipts of such university or educational institute did not exceed the amount prescribed. The findings of fact recorded by the Tribunal had not been shown to be illegal or perverse, which warranted interference. No question of law arose. 14. The matter in the case of Shanti Devi Educational Trust (supra) was taken up by the revenue for the directions of the Hon'ble Supreme Court vide SLP (Civil) Diary No.10671/2018 dated 20.04.2018, where the SLP of the revenue was dismissed on the ground of delay as well as on merits. 15. In an another case "CIT Vs MADARSA-E-BAKHIYATH-US-SALIHATH ARABIC COLLEGE" reported in [2015] 278 CTR 374 (Madras), wherein, the Hon'ble jurisdictional High Court has held that the sale proceeds of the land and bonds cannot be equated to annual receipts as stated u/s.10(23C) of the Act. The sale in the case on hand is in the nature of conversion of a capital asset from one form to another. Therefore, the denial of benefit of Sec.10(23C) of the Act, by the AO was rightly interfered by the Ld.CIT(A) and confirmed b....
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....not constitute income of the society. Therefore, the annual receipts of educational institutions for the purpose of section 10(23C)(iiiad) were below Rs.1 Cr. and as such exemption u/s.10(23C)(iiiad) of the Act, was allowable. 17. In the case of Divine Education Institute & Social Development Society (Supra), wherein, the co-ordinate bench of ITAT Delhi Bench has held that corpus fund which is meant for specific purpose to meet out capital expenditure, cannot be a part of annual receipt of educational institution, even if no registration u/s.12AA of the Act, has been granted. 18. Respectfully following the above judicial pronouncements, adverting to the submissions and observations as noted hereinabove. After a thoughtful analysis, we are of the considered view that corpus fund received by the assessee with specific directions cannot be treated as receipt for the purpose of Sec.10(23C)(iiiad) of the Act, and therefore, the total receipt of the assessee for the relevant assessment year was below the prescribed limit of Rs.1 Cr. for the purpose of exemption claimed under the provisions of section 10(23C)(iiiad) of the Act. Accordingly, the assessee's Trust was eligible for exem....