The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that the activity of providing courses for women is charitable in nature therefore the tribunal allowed income tax refund to women training institutes.
Assessee Young Women’s Christian Association is a society, registered under Section 12A of the Income Tax Act, 1961.While the assessment proceedings carried out assessee claims exemption under Sections 11 and 12 of the Income Tax Act.
After passing the assessment order the AO found that the assessee’s income from imparting non recognized courses by Women Training Institute is not education within the meaning of Section 2(15) of the Income Tax Act.
Aggrieved assessee filed an appeal before the CIT(A).The CIT(A) relied upon the decision of Supreme Court in CIT vs. Shelly Products & Another held that “since the assessee paid tax on the impugned income of Rs. 99,97,872/- declared in the return, tax paid hereon will not be refunded even though the said income is eligible for exemption under section 11 of the Income Tax Act”
In view of the above decision CIT(A) disallowed the appeal of the assessee. Aggrieved the order of CIT(A) assessee filed a second appeal before the tribunal.
Before the bench Saten Sethi, counsel for the assessee submitted that they had claimed refund on the ground of the failure of the authorities to pass an order of assessment.
Assessee counsel also contented that If assessment could not be made in accordance with the provisions of theIncome Tax Act, it amounts to deemed acceptance of return of income furnished by the assessee.
Umesh Takiyar counsel for the revenue supported the decision of the CIT(A).
The tribunal, while considering the contentions observed that, The Assessment Year 2009-10 in the assessee’s own case, the tribunal directed AO to grant exemption under section 11 along with consequential benefits.
It was also determined that CIT(A) misapplied the decision of the Supreme Court case of Shelly Products & Another. The facts of the assessee’s case are altogether different from those of Shelly Products & Another.
In Para 31 of the decision in Shelly Products & Another, the Supreme Court observed that,
“In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of assessment proceedings. He can certainly make such a claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any.”
The tribunal observed that the above view is squarely applicable to the facts of the assessee’s case.
Accordingly, the two member bench of tribunal G.S. Pannu, (President) and Astha Chandra, (Judicial Member) allowed the appeal filed by the assessee and directed the AO to grant refund in accordance with law.
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