×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
10-04-2019, Rajasthan State Text, Section 10(23C)(iiiab), Tribunal Jaipur
These two appeals by the assessee are directed against two separate orders of ld. CIT (A), Jaipur both dated 11.02.2019 for the assessment years 2013-14 & 2014-15 respectively. The assessee has raised common grounds in these appeals and the grounds raised for the assessment year 2013-14 are as under:-
“1. Impugned assessment order passed U/s 143(3) is bad in law and on facts being against the principal of natural justice and for many more other reasons. Hence, the action of ld. AO as well as CIT(A) is against law.
2. Under the facts and in the circumstances of the case and in law, Ld. AO as well as Ld. CIT(A) have erred in:-
a) not considering the submission of the appellant assessee in right perspective
b) denying exemption under section 10(23C)(iiiab) based on incorrect assumption of facts and law.
3. Under the facts and circumstances, Ld AO has erred in making addition of Rs. 40,00,21,090/-. Further, Ld. CIT(A) has erred in confirming the addition.
4. That the appellant craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.”
2. The only common issue arises in these appeals of the assessee is denial of exemption U/s 10(23C)(i iab) of the Act. The assessee is society registered under the Rajasthan Society Act, 1958. The assessee society was set up by he Government of Rajasthan as an autonomous body and registered on 29.12.1973. The pre dominant objects of the assessee society inter alia “to prepare, edit, publish, print, stock, sell distribute, or otherwise deal in textbooks, supplementary books, reference books, extra reading material, workbooks and exercise books for pupils and teaching aids, teacher’s hand books, and curriculum (hereinafter referred to as the education literature) useful for furtherance of teaching and learning in institutions meant for Lower and higher primary education. To prepare edit, print, publish, stock, sell and distribute or enter into any arrangement for preparing, editing, printing, publishing, stocking, distribution and sale of textbooks approved or assigned by the Government of Rajasthan or other appropriate authority appointed by the Board and any other educational literature which the Board may decide to publish, with a view to making the same available at a price, fixed at not profit no loss basis.” The assessee society is managed, governed and control by the Government of Rajasthan through the governing Board as appointed by the Government. Initially the assessee society was claiming exemption U/s 10(22) of the Act till the provisions were amended e.w.f. 01.04.1999 whereby the said Section 10(22) was omitted and a new provisions of Section 10(23C) was inserted in the statute. After 01.04.1999 the assessee has been claiming exemption U/s 10(23C)(iiiab) of the Act. For the years under consideration, the assessee filed its return of income declaring total income at nil after claiming the benefit of Section 10(23C)(iiiab) of the Act. The AO noted that the assessee society has shown surplus of Rs. 40,00,21,086/- and claimed as exempt income U/s 10(23C)(iiiab) of the Act. The AO has questioned the allowability of the exemption on the ground that the institution existing solely for educational purpose is eligible for exemption U/s 10(23C)(iiiab) of the Act and not for the purpose of profit and further the institution which is wholly and substantially financed by the Government is eligible for the benefit under the said provisions. Accordingly, the AO issued a show cause notice to the assessee and in reply the assessee furnished the necessary details and claimed that the assessee is existing solely for the educational purpose as its object are mainly to prepare edit, publish, print, stock, sell distribute, or otherwise deal in text books free of cost to the Government schools as well as on discount rate to the private distributor for private schools. The entire receipt is against the supply of school books as per the NCERT curriculum. Further, the Government of Rajasthan has financed 100% capital of the assessee society in the year 1974 and thereafter the assessee started sell generated surplus without collecting the money from any person except the amount received from the Government on account of textbooks supplied free of cost to the students of government schools and private schools on discount rate.
The assessee has not received any deposit, aid or grant from any other person or institution. Thus, the assessee claimed it cannot be said that it is not wholly and substantially financed by the Government. The AO was not impressed with the reply of the assessee and held that the assessee has not fulfilled third contention laid down U/s 10(23C)(iiiab)