ITAT upholds Exemption u/s 10(23C)(iiiab) Despite Late Filing and Incorrect Form Submission [Read Order]

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the exemption under section 10(23C)(iiiab) of the Income Tax Act,1961 despite late filing of the income tax return and the use of an incorrect form for submission.

Haringhata Mahavidyalay,the appellant-assessee, contested the order dated October 30, 2023, from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, regarding the assessment year 2018-19.

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The appeal focused on the eligibility for exemption under section 10(23C)(iiiab) of the Income Tax Act and raised two primary issues concerning the implications of late filing the income tax return and the use of an incorrect form for filing.

Section 10(23C)(iiiab) of the Act provides tax exemption for charitable educational institutions recognized under specific provisions. To qualify, these institutions must use their income solely for educational purposes, avoid profit distribution, and maintain proper accounts subject to audit. Institutions must apply for the exemption and comply with relevant provisions to retain eligibility. Notably, late filing of returns or using incorrect forms does not disqualify them from claiming the exemption, promoting educational initiatives while ensuring compliance with charitable standards.

The first issue was whether the exemption could be denied due to the late submission of the income tax return beyond the stipulated deadline in section 139(1). The counsel for the assessee argued that the Income Tax Act does not provide grounds for denying this exemption based solely on late filing or non-filing of returns. This perspective emphasized that procedural delays should not automatically negate the exemption rights of the assessee.

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The second issue examined was whether filing the return under section 139(4D) instead of section 139(4C) would affect the eligibility for the exemption. The Departmental Representative ( DR ) was unable to cite any relevant provisions that would substantiate the denial of the exemption due to the late filing or the choice of form used for submission.

The two member bench comprising Sanjay Garg ( Judicial Member ) and Rakesh Mishra ( Accountant Member ) determined that the lower authorities' decision to deny the exemption was unjustified. It ruled in favor of the appellant, instructing the Assessing Officer ( AO ) to grant the exemption under section 10(23C)(iiiab) as claimed by the assessee, thereby allowing the appeal and reaffirming the assessee's entitlement to the exemption.

In conclusion,the appeal was allowed.

To Read the full text of the Order CLICK HERE

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