ITAT Orders AO to Grant Relief After Exemption Approval u/s 10(23C)(iiiad) Despite Lack of 12A Registration [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) directed the Assessing Officer(AO) to grant relief after exemption under Section 10(23C)(iiiad) of Income Tax Act,1961, was approved, holding that the benefit could not be denied solely due to lack of registration under Section 12A.

Ashrafi Devi Shiksha  Samiti, appellant-assessee, was a society running an educational institution named Niranjan Institute of Education Technology. It filed its income tax return on 20th October 2022, declaring Nil income. While processing the return under section 143(1), the Assessing Officer (CPC) proposed an addition of Rs.77,43,697 on the ground that the assessee was not registered under section 12A and therefore not eligible for exemption under sections 11 and 12 of the Act.

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In reply, the assessee claimed exemption under section 10(23C)(iiiad), which does not require registration under section 12A. However, the AO (CPC) did not accept this claim and added Rs.77,43,697 to the total income.

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The assessee filed an appeal before the Commissioner of Income Tax(Appeals)[CIT(A)], which was dismissed. The CIT(A) noted that the assessee, not registered under section 12A, had claimed exemption under section 11 in its return for the year. The assessee later made a fresh claim for exemption under section 10(23C)(iiiad), but the CIT(A) found that this was not a new issue, as a similar claim had been disallowed in the previous assessment year.

The CIT(A) also observed that the assessee had not filed Form 10AC, required for claiming exemption under section 10(23C)(iiiad), and concluded that the AO was not obligated to consider the new claim. The appeal was dismissed, with the CIT(A) rejecting the assessee's argument of inadvertent error and finding that the necessary facts were not fully disclosed.

The two member bench comprising Vikas Awasthy(Judicial Member) and Avdhesh Kumar Mishra(Accountant Member) reviewed the case and agreed with the findings of the Addl/JCIT(A), regarding the adjustment of Rs.77,43,697/-. However, after the approval under section 10(23C)(i) r/w 10(23C)(vi) was granted on 08.07.2024, the assessee's entire income from the educational institution became fully exempt. As a result, the tax could not be levied on the exempt income, even after the adjustment.

The tribunal decided to return the matter to the AO to implement the approval and allow the exemption under section 10(23C). The ITAT directed the AO to grant the necessary relief to the assessee.

In short,the appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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