American School of Bombay eligible for Income Tax Exemption: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the American School of Bombay is eligible for income tax exemption under the Income Tax Act.

The Assessing Officer had denied exemption to the assessee, The American School of Bombay Education Trust by holding that the assessee has not produced the books of account or documents to prove its claim of exemption made u/s. 10(22) of the Act that the assessee-trust solely existed for educational purposes.

In the opinion of the Assessing Officer, even the Directorate of Enforcement made inquiries and pointed out certain inconsistencies. The CBDT has also rejected the application made by the assessee under section 10(23C)(vi) of the Act and in absence of registration u/s. 12A of the Act, the assessee was not entitled to exemption u/s. 11 of the Act.

After considering the submissions from both the sides, the Tribunal pointed out that the assessee’s liability to furnish the supporting documentary evidence was caused by these circumstances which could be considered as a reasonable cause.

“Moreover, from the heads of expenses claimed in the Income and Expenditure statements, it is evident that these are the expenses which are necessarily required to have incurred for the purposes of running the school. Without the teachers and staff to whom salaries are required to be paid, the school administration cannot be run. Similarly, without the electricity, the school cannot function. The school premises are taken by the assessee on rental basis without which one cannot run a school. Similarly, repairs and maintenance expenses, legal and professional fees, general expenses, administration expenses etc., are all found to be in relation to the running of the school. Without incurring these expenses, it is not possible to run a school. Therefore, the AO in our view was not justified in disallowing the entire expenses claimed in the Income and Expenditure statement filed along with the return of income, merely on the ground that assessee could not furnish the details and supporting evidence,” the Tribunal said.