{"id":9528,"date":"2015-01-18T21:40:55","date_gmt":"2015-01-18T16:10:55","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?page_id=9528"},"modified":"2015-01-18T21:40:55","modified_gmt":"2015-01-18T16:10:55","slug":"digest-of-important-case-laws-september-2014","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-laws-september-2014\/","title":{"rendered":"Digest Of Important Case Laws &#8211; September 2014"},"content":{"rendered":"<div class=\"clock\">\n<table border=\"0\">\n<tr>\n<td colspan=\"2\"><strong>Digest of important case law &#8211; September 2014 (Compiled by KSA Legal &#038; AIFTP)<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"264\" rowspan=\"2\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<td width=\"271\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td valign=\"top\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1363\" target=\"_blank\">Download <strong>Monthly<\/strong> September 2014 Digest in pdf format <\/a><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1364\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2014 to September 2014) in pdf format<\/a><\/a> <\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1357\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2013 to December 2013) in pdf format<\/a><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1087\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2012 to December 2012) in pdf format<\/a> <\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/digest-of-important-case-laws-august-2014\/\">Looking for the Previous Month&#8217;s digest? Click here.<\/a><\/div>\n<\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_728x90 *\/\ngoogle_ad_slot = \"3275635396\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<div class=\"journal\">\n<p><strong>Journals Referred <\/strong>: BCAJ, CTR, DTR, ITD, ITR, ITR (Trib),  Income Tax Review, SOT, Taxman, Taxation, TLR, TTJ, BCAJ, ACAJ,  www.itatonline.org\n <\/div>\n<div>\n<div style='float:left; margin-top:5px ; margin-left:5px ; margin-right:10px ; margin-bottom:5px ;'>\n<\/div>\n<p><strong>S.  2(1A) : Agricultural income &ndash;Income from other sources-Onus on assesse to prove  the receipt as agricultural income- Restricting the income was held to be  justified.<\/strong><br \/>\n  The assessee an individual, had shown an agricultural income.  Since the assessee did not disclose any evidence to prove the receipt of the  income as agricultural income and the nature of the operations done therein to  earn the income, the said income was assessed under the head of &#8216;income from  other sources&#8217;. CIT (A) after getting the remand report accepted the claim of  assesse. On appeal by revenue the Tribunal partly accepted as agricultural  income restricting the income on estimate basis. On appeal High Court also  affirmed the view of Tribunal. (AY. 2001-02)<br \/>\n  <strong>B. Ramachandhiran .v. CIT  (2014) 43 taxmann.com 430 \/ 225 Taxman 22 (Mag.)(<\/strong><strong>Mad.<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S. 2(14) : Capital asset &ndash;  Agricultural land &ndash;Beyond 8 kms of local limits of the Municipality- land sold  to non-agriculturalist-It would not loose its character as agricultural land  &ndash;Not liable to be taxed as short term capital gains.[S.45]<\/strong><br \/>\n  The  Assessing Officer made addition of Rs. 4,56,83,750 on account of short-term capital  gain on the ground that assessee had sold agricultural land to one SICC which  was non-agriculturist and as per the existing State law, the assessee could not  sell the agricultural land in favour of a non-agriculturist. Therefore, the  land which was sold was a capital asset and its transfer was chargeable to tax  under capital gain. The High Court held that, it was not in dispute that what  was sold by the assessee was an agricultural land which was situated beyond 8  Kms. of local limits of the Municipality. Merely because the said land came to  be sold to a non-agriculturist, may be in breach of law prevailing in the  State, character of the land would not be changed and the land still would  continue as an agricultural land. At the most the sale in favour of  non-agriculturist can be declared as illegal and\/or invalid. There was no  provision that if the agricultural land is sold in favour of non-agriculturist  in breach of law prevailing in the State, it would not lose its character as  agricultural land and would be treated as non-agricultural land. Considering  the aforesaid facts and circumstances of the case, it could not be said that  the Tribunal had committed any error in holding the land in question not as  capital asset and not liable to be taxed. (AY. 2006 &ndash; 2007) <br \/>\n  <strong>CIT .v. Rajshibhai  Meramanbhai Odedra (2014)222 Taxman 72\/ 42 taxmann.com 497 (Guj.)(HC)<\/strong><\/p>\n<p><strong>S. 2(14) :  Capital asset &ndash;Agricultural land -Land within 5 Kms of local  municipality-Assessable as capital gains.<\/strong><br \/>\n  During relevant year assessee sold certain land situated in village &#8216;M&#8217;.  In course of assessment, AO taking a view that land sold by assessee fell  within definition of capital asset as provided under section 2(14), assessed  profit arising from sale of land as short-term capital gain . Tribunal held  that land in question was not a capital asset and, thus set aside addition made  by AO. On appeal by revenue the Court held that since there was no denial of  fact that land in question fell within 5 Kms. of limits of local Municipal  Committee, there was no occasion for Tribunal to hold that it would not  constitute a capital asset within meaning of section 2(14).Accordingly the  order of Tribunal was to be set aside and that of AO was restored. (AY. 2002 &ndash; 03) <br \/>\n  <strong>CIT .v. Khazan Singh (2014) 46 taxmann.com  238 \/ 225 Taxman 22(Mag.)(P&amp;H)(HC)<\/strong><\/p>\n<p><strong>S. 2(22)( e ) :Deemed  dividend-Unsecured loan-Not a shareholder-Unsecured loan could not be treated as deemed dividend in hands of  assesse.<\/strong><br \/>\n  The Assessing Officer noticed that assessee-company had taken  unsecured loan from a company. Treating said loan as deemed dividend under  section 2(22)(e) in hands of assessee, he made addition to assessee&#8217;s income.  The Commissioner (Appeals) upheld the order of the Assessing Officer on the  ground that the loans taken would not be covered by the exclusion\/exception  provided in section 2(22)(e)(iii) and accordingly, were deemed dividend. It was  held that the tribunal had examined all the facts relevant to the case and had  correctly reached the conclusion that none of the shareholders of assessee or  the assessee itself was a shareholder of said similarly company shareholders  are not holding any shares in the assessee. Further, section 2(22)(e) does not  provide that having a common director in two companies would make section  2(22)(e) applicable. Consequently, section 2(22)(e) was not applicable in  respect of the loan advanced to the assessee. In view of the above, no  substantial question of law arose. (AY. 2002&ndash;03).<strong><\/strong><br \/>\n  <strong>CIT .v. Bombay Oil Industries Ltd.(2014)222 taxman  38(Mag.)\/ 42 taxmann.com 440 (Bom.)(HC)<\/strong> <\/p>\n<p><strong>S.2(22)(e):Deemed  dividend-Loan to shareholder-Whether lending of money substantial part of  business of company not established on facts-Matter remanded. <\/strong><br \/>\n  Tribunal  finding since lender companies did not carry on money-lending business,  advances to assessee not in ordinary course of business. Court held that the  test laid down by the Tribunal was not proper test. Whether lending of money  substantial part of business of company not established on facts. Matter  remanded.(AY.2007-2008)<br \/>\n  <strong>Kishori Lal  Agrawal .v. CIT (2014) 364 ITR 158 (All.)(HC)<\/strong><\/p>\n<p><strong>S. 2(29B) : Long-term capital  gains-Allotment of flat-<\/strong><strong>Delivery of possession are  consequential acts and relate back to and arise from the rights conferred by  the allotment letter-Assessable as long term capital gains. [S. 45]<\/strong><br \/>\n  A  flat was allotted to assessee on 7-6-1986.  She paid first instalment on 4-7-1986.Possession of flat was delivered on a  later date. Thereafter she sold flat on 5-7-1989.In return of income for  assessment year 1990-91, she disclosed capital gain arising from sale of flat  as long-term capital gain. Lower authorities treated capital gain as short-term  capital gain. The  mere fact that possession was delivered later does not detract from the fact  that the allottee was conferred a right to hold property on issuance of an  allotment letter. The payment of balance instalments, identification of a particular  flat and delivery of possession are consequential acts and relate back to and  arise from the rights conferred by the allotment letter. The Court held that capital gain arising from  sale of flat was a long-term capital gain.&nbsp; <a href=\"..\/..\/User\/Desktop\/September%20-%202014\/fileopen.aspx%3fid=104010000000001207&amp;source=link\">Circular No. 471, dated 15-10-1986<\/a>.(AY. 1990-91)<br \/>\n  <strong>Madhu Kaul  (Ms.) .v. CIT (2014) 43 taxmann.com 417 \/363 ITR 54 \/ 271 CTR 107 \/ 225 Taxman  86 (P&amp;H)(HC)<\/strong><\/p>\n<p><strong>S. 2(47) :Transfer &ndash;Capital  gains- Registration of sale deed alone of completes transfer&ndash;Capital gains  taxable in that year only.[S.45, 54EC]<\/strong><br \/>\n  Assessee  entered into an agreement of sale on 7-12-1999 with a company for sale of his property  and received full sale consideration on 21-12-2002. Thereafter, 16 sale deeds were  registered in favour of nominees of company on various dates between 27-2-2003  and 23-3-2004.  Possession of the above property was handed over to nominees on 25-3-2004.  In return of income filed for assessment year 2004-05, the assessee disclosed  capital gains arising out of sale of above property. The entire sale  consideration was invested in notified bonds on various dates between 13-5-2004  and 10-9-2004  and exemption under section 54EC was claimed. The AO held that the sale  transactions, which took place between 27-2-2003 and 7-3-2003, would be liable to capital gains tax  for the assessment year 2003-04. The sale transactions, which took place  between 27-2-2003  and 7-3-2004,  would be liable to capital gains tax during the assessment year 2004-05. The  CIT(A), however, revered the order of the AO and held that the entire capital  gains tax would be chargeable in assessment year 2004-05. On second appeal, the  Tribunal held that the transfer as contemplated under section 2(47)(v) took  place as early as on 21-12-2002 and accordingly directed the Assessing Officer  to tax the entire capital gain in the assessment year 2003-04. The High Court  held that, registration of sale deed alone completes transfer, capital gain  arising on sale transactions, which took place between 27-2-2003 and 7-3-2003,  would be considered for taxation only in assessment year 2003-04 and as regards  sale deeds executed between 11-4-2003 and 23-3-2004 liability would be assessed  in assessment year 2004-05. (AYs. 2003-04 &amp; 2004-05)<br \/>\n  <strong>R. Krishnaswamy .v. CIT  (2014) 222 Taxman 270\/43 taxmann.com 177 (<\/strong><strong>Mad.<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S. 2(47)  :Transfer- Capital gains-Family arrangement-Court decree-Amount received held  to be not liable to capital gains.[S. 45]&nbsp; <\/strong><br \/>\n  Amount received by assessee  pursuant to a Court decree in lieu of her share in self-acquired property of  father who died intestate, could not be said to result in &#8216;transfer&#8217; attracting  provisions of s. 2(47)(i) or (ii), hence not&nbsp;  liable to capital gains tax. (AY. 2009-10)<br \/>\n  <strong>T. Gayathri  (Smt.) .v. ITO (2014) 150 ITD 48 (Bang.)(Trib.)<\/strong><\/p>\n<p><strong>S.3: Previous year-Assessing  authority according permission to change previous year to year ending June 30  instead of calendar year-No ambiguity in adopting the period of assessment from <\/strong><strong>1-1-1987<\/strong><strong> to 31-3-1989.[S.154]<\/strong><br \/>\n  The assessee adopted the  calendar year as its previous year and accordingly the assessment for the year  1987-88 was completed. The assessee was accorded permission to change the  previous year from the calendar year to the previous year ending on June 30 of  every year. However, in view of the amendment, instead of ending the previous  year on June 30, 1988, relevant to the assessment year 1989-90, the assessee  had to adopt the previous year ending on March 31, 1989, relevant to the  assessment year 1989-90 and, accordingly, the assessee filed the return for the  period January 1, 1987, to March 31, 1989. The assessing authority cancelled  the permission granted to the assessee for adopting the previous year ending on  June 30 every year under section 154. The Commissioner (Appeals) set aside the  order under section 154 and that order attained finality&nbsp; Tribunal confirmed the order of CIT (A). On  appeal be revenue&nbsp; dismissing the appeal  the Court held that passing two assessment orders did not survive, there was no  error in the order of the Tribunal. The result was that the order of the  assessing authority, granting permission to adopt the previous year, ending on  June 30 every year, was valid. The assessment made for the assessment year  1989-90 for the period, namely, January 1, 1987, to March 31, 1989, was in consonance with the amended section 3. The amendment was  applicable to the assessment year 1989-90. Therefore, there was no ambiguity in  adopting the period of assessment from January 1,   1987,  to March 31, 1989.(AYs.1988-1989, 1989-1990]<br \/>\n  <strong>CIT .v. Rampur  Distillery and Chemical Co. Ltd. (2014) 364 ITR 551 (All)(HC)<\/strong><\/p>\n<p><strong>S. 4 : Charge of income-tax &ndash;  subsidy &ndash; As per the scheme the subsidy&nbsp;  being in nature of capital receipt, was not liable to tax.<\/strong><br \/>\n  The  assessee firm was running a cinema hall. It had shown certain receipts, which  included entertainment tax. In the profit and loss account, the assessee had  transferred a part of receipts to entertainment subsidy account and claimed  same to be exempt from tax being in the nature of capital receipts. The  assessee explained that there was a scheme of the Government of Rajasthan to  encourage construction of new cinema halls by providing such a subsidy in the  form of entertainment tax for a particular period. The AO did not agree with  the assessee and treated said amount as its income. The CIT (A) however,  accepted the plea of the assessee. The Tribunal upheld the order of the CIT(A).  The HC observed that the State Government proceeded to exempt entertainment tax  for a period of 5 years payable by a &quot;new&quot; cinema hall constructed,  subject to the condition that commercial exhibition of films in such cinema  hall was required to be started by 31-3-2000. The State Government had exempted such  proprietor of new cinema hall from payment of entertainment tax on the given  conditions, the object was clearly to promote the construction of new cinema  halls. Merely because the amount was not directly meant for repaying the amount  taken for construction of the cinema hall, its purpose could not be considered  to be other than that of promoting construction of new cinema hall. In the  totality of the circumstances; and particularly looking to the scheme of the  Act of 1957 as also the object and purport of the exemption notification, the  assistance in question cannot be said to be an operational subsidy so as to be  taken as a revenue receipt. HC also observed that remission by the Government  had been to the proprietor of the entertainment and not to the person admitted  to the entertainment. The remission had been the methodology adopted by the  State Government to provide assistance to the new cinema hall; and had been  essentially in the nature of a subsidy, i.e., the assistance from the  Government to the new cinema hall. Accordingly, it was held that the Tribunal  was justified in affirming the deletion of addition, being the amount of  entertainment tax capitalized as subsidy.<br \/>\n  <strong>CIT.v. Samta Chavigarh  (2014)222 Taxman 205 (Mag.)\/44 taxmann.com 337\/268 CTR 199 (Raj.)(HC)<\/strong><\/p>\n<p><strong>S. 4:<\/strong><strong> Charge of income-tax &#8211;<strong> Dharmada collections are not taxable as income<\/strong><\/strong><br \/>\n  Dharmarth receipts  are not taxable.(ITA No. 437\/Asr\/2012 Dt. 5.09.2014) (AY. 2009-10) <br \/>\n  <strong>Nitco logistics Pvt. Ltd. .v. JCIT (<\/strong><strong>Amritsar<\/strong><strong>)(Trib.);  www.itatonline.org<\/strong><\/p>\n<p><strong>S. 5 : Scope of total  income&ndash;Real income&ndash;Notional interest-Yardstick will have to applied from the  businessman&rsquo;s point of view and certainly not according to the AO-Deletion of  addition by Tribunal was affirmed. <\/strong><br \/>\n  In  terms of MOU, the assessee had not charged interest from its collection agent Sahara India  where delay in transmission of fund did not exceed two months. The AO observed  that the assessee had given a loan to Sahara India in  the form of working capital on which no interest was charged. Accordingly, the  AO disallowed interest on the borrowings to the extent of interest not charged  on the interest-free loan given to Sahara India.  On appeal, the CIT(A) as well as the Tribunal deleted the addition made by the  AO. On appeal, the HC observed that Sahara India was the collecting agent not  only for the assessee but also for various other companies. As per MOU, the  assessee charged interest from Sahara India  where delay in transmission of funds exceeded two months.&nbsp; When the parties had agreed not to charge the  interest, as per the condition laid down in the MOU i.e. &#8216;if the remittance is  within the less than two months&#8217;, then the AO could not compel it to do so. The  HC held that yardstick will have to applied from the businessman&rsquo;s point of  view and certainly not according to the AO.Hence upheld the order of tribunal.  (AYs. 1992-93 &amp; 1994 &ndash; 95)<br \/>\n  <strong>CIT.v. Sahara India Mutual  Benefit Co. Ltd. (2013)222 Taxman 217(Mag.)\/ 40 taxmann.com 69 (All.)(HC)<\/strong><\/p>\n<p><strong>S.  9(1)(vii) : Income deemed to accrue or arise in India&ndash;Fees for technical  services-Business connection-Management service agreement-Liable to deduct tax  at source&ndash;DTAA-India&ndash;France [S.195, Art.13]<\/strong><br \/>\n  Applicant an Indian company entered into a  Management Services Agreement with a partnership firm, incorporated in France for various  management services. It was submitted that &#8216;make available&#8217; clause was not  satisfied in this case and, hence, services would not fall under technical  services as per India-France Treaty. Revenue on other hand submitted that fees  for technical services includes fees for managerial, technical or consultancy  nature and services rendered by&nbsp;  partnership firm fell under broad definition of technical services as  per provision of Act and India-France DTAA and hence there was no requirement  of &#8216;make available&#8217; under article 13 of DTAA between India and France. Protocol  or Memorandum of Association could be made use for interpreting provision of  Treaty, however, it would not be correct\/proper to import words, phrases or  clause that were not available into Treaties between two Sovereign nations, on  basis of Treaties with other countries. In absence of &#8216;make available&#8217; clause  in India-France DTAA payments made by applicant for services rendered came  under definition of fees for technical services both under Act and Treaty and  were liable to tax in India, thus, applicant would be liable to withhold tax as  per provision of section 195 from payments made\/to be made to partnership firmdt. 2 May, 2014) <br \/>\n  <strong>Steria (<\/strong><strong>India<\/strong><strong>) Ltd. In re (2014) 45 taxmann.com 281 \/ 364 ITR 381 \/ 268  CTR 399 \/ 225 Taxman 90(<\/strong><strong>AAR<\/strong><strong>)&nbsp; <\/strong><\/p>\n<p><strong>S. 10(14) : Exempt  income-Special allowance or benefit&ndash; Development Officer in LIC, received  incentive bonus in order to reimburse expenses required to be incurred for  procuring business &ndash; bonus claimed as exempt under section 10(14)-Matter  remanded to CIT to decide afresh.[S. 264]<\/strong><br \/>\n  The  assessee, a Development Officer in LIC, received an incentive bonus in order to  reimburse the expenditure required to be incurred for procuring business. For  the first time in the assessment year 1982-83, he claimed that part of the  incentive bonus was required to be exempted under the provisions of the Act.  The Assessing Officer accepted the claim by holding that the assessee was  entitled to deduction of 40 per cent of the incentive bonus as expense. Since  the assessee had not claimed the said relief in the original returns for the  assessment years 1975-76 to 1981-82, he approached the Commissioner by way of a  revision application under section 264. The Commissioner rejected the revision  application as time barred. On writ petition filed by the assessee, the High  Court directed the Commissioner to rehear the assessee&#8217;s revision application  by taking into consideration the decision of the Gujarat High Court rendered in  the case of CIT v. Kiranbhai H. Shelat [1999] 235 ITR 635. The Commissioner in  remand proceedings held that the aforesaid decision of the Gujarat High Court  was in contradiction to the decision of the Supreme Court in case of Gestetner  Duplicators (P.) Ltd. v. CIT [1979] 117 ITR 1 as well as the decision of the  Karnataka High Court in the case of CIT v. M.D. Patil [1998] 229 ITR 71. He  accordingly declined to follow the decision of the Gujarat High Court and  rejected the application under section 264. On writ, the High Court held that  once the jurisdictional High Court had, after taking into consideration the  decision of the Supreme Court in the case of Gestetner Duplicators (P.) Ltd.  (supra), held that the assessee is entitled to expenses of 30 per cent against  incentive bonus, the Commissioner could not have refused to follow the same.  The matter was remanded to the Commissioner for deciding afresh, keeping in  view the binding decision of the Gujarat High Court. (AY. 1975-76 to 1981-82)<br \/>\n  <strong>P.V. Ashar Development  Officer .v. B.C. Goel (2014) 222 Taxman 219(Mag.) (Guj.)(HC)<\/strong><\/p>\n<p><strong>S.10(15):Exemption-Interest  on money borrowed by industrial undertaking in <\/strong><strong>India<\/strong><strong> from foreign  country-Interest entitled to exemption.<\/strong><br \/>\n  The assessee had purchased or  acquired capital equipment in the form of workover rigs and for this purpose  had obtained loans from State Bank of India, Singapore in foreign currency and  Indian rupees. Money borrowed for  purchasing workover rigs for drilling for ONGC. Contract stipulating that work  included preparation of well for production. Interest income was held to be  entitled to exemption.<br \/>\n  <strong>Dewan Chand Ram  Chandra Industries P. Ltd.&nbsp; .v. UOI  (2014) 364 ITR 70 (<\/strong><strong>Delhi<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S. 10(23C): Exempt  Income&ndash;CBDT accorded approval to claim exemption u\/s.10(23C)&ndash;Denial of  exemption by the Assessing Officer in the course of assessment proceedings was  held to be not justified. [S. 143(3)]<\/strong><br \/>\n  Assessee, a charitable society, made an application for grant of  approval for exemption of income under section 10(23C)(vi). CBDT by an order accorded  approval to the assessee for the purpose of section 10(23C)(vi). In the returns  of income filed for the assessment years 1999-2000 and 2001-02, the assessee  claimed exemption under section 10(23C)(vi). AO denied the exemption on account  that it had not complied with the conditions imposed by CBDT. CIT(A) upheld the  order of AO. Tribunal allowed the exemption under section 10 (23C)(vi). On  appeal by revenue, High Court held that the first proviso to section 143(3) was  inserted by the Finance Act, 2002, w.e.f. 1-4-2003. The provision of first  proviso to section 143(3) makes it clear that no order making an assessment  shall be made by the Assessing Officer without giving effect to the provisions  of section 10(23C)(vi) unless the Assessing Officer has intimated the Central  Government or the prescribed authority, the contravention of the provisions of  section 10(23C)(vi). Only after such approval granted has been withdrawn, he  can proceed to pass an order denying the benefit of exemption on the ground of  contravention. Having regard to the language employed, the said provision is  mandatory. Without complying with the requirement of the said provision, the  Assessing Officer gets no jurisdiction to deny the exemption. That is what the Tribunal  has held. In the absence of a specific provision, section 21 of the General  Clauses Act, 1897 is attracted, which provides that where by any Central Act or  Regulations a power to issue notifications, orders, rules, or bye-laws is  conferred, then that power includes a power, exercisable in the like manner and  subject to the like sanction and conditions, if any, to add to, amend, vary or  rescind any notifications, orders, rules or bye-laws so issued. Therefore, the  argument of the revenue that prior to 1-4-2003 when there was no express  provision for recession of the approval granted once, the Assessing Authority  was vested with the power to deny the exemption without seeking for recession  of the approval granted is without any substance. Therefore, the said finding  is in accordance with law and do not suffer from any legal infirmity. (AYs. 1999-00 &amp; 2001-02)<br \/>\n  <strong>CIT .v. Peoples Education  Society (2014)222 Taxman 98\/42 taxmann.com 353 (Karn.)(HC)<\/strong><\/p>\n<p><strong>S.10(23C): Exempt income-Educational institutions&ndash;Exemption granted  by CBDT is binding on department.[S.119]<\/strong><br \/>\n  The assessee is a registered society running various educational  institutions. The Assessing officer has denied the exemption under Section  10(23C)(vi). Held that, in view of above order passed by the Central Board of  Direct Taxes, binding on the department, the assessee\/respondent is held  entitled for exemption under Section 10(23C)(vi) of the Income Tax Act.  (A.Y.2000-01)<br \/>\n  <strong>CIT .v. Arvind Bhartiya Vidhyala Samiti (2014)222  Taxman 37(Mag.)\/ 42 taxmann.com 437 (Raj.)(HC)<\/strong><\/p>\n<p><strong>S.10(23C):Educational  institution- Nature of activity carried on by organisation would be predominant  factor-Surplus generated was utilized for the purpose of education  purpose-Entitled exemption.&nbsp; <\/strong><br \/>\n  The  assessee society was engaged in ensuring high standards of education imparted  through the medium of schools. It had 1750 schools which were affiliated to it  and provide education from nursery to twelfth standard. It was reorganized and  listed as a body conducting public examinations under the Delhi School  Education Act 1973.The Council was registered as a society under the Society  Registration Act, 1860) (Punjab Amendment)Act, 1957 as extended to the Union  Territory of Delhi. Approval was denied by the prescribed authority on the  ground that activities of the assesse were in the nature of business and for  the purpose of profit and activities of the assesse was not genuine . On writ  allowing the petition the court held that; Nature of activity carried on by  organisation would be predominant factor. Surpluses generated for purposes of  modernising activities and building of necessary infrastructure to serve object  of assessee. Assessee existing solely for educational purposes there was no  evidence to show assessee carried on any activity other than for educational  purpose. Reasonableness of amount spent and quality of decisions of management  of assesse. The  expression used in section 37 of the Income-tax Act, 1961, &quot;wholly or  exclusively for the purposes of business and profession&quot; is similar in its  import to the expression &quot;applied wholly and exclusively to the object for  which it is established&quot; as occurring in section 10(23C)(vi). Entitled to exemption.. Writ petition of  assesse was allowed.((AY .2008-2009)<br \/>\n  <strong>Council for the <\/strong><strong>Indian<\/strong><strong> <\/strong><strong>School<\/strong><strong> Certificate Examination .v. <\/strong><strong>DGIT<\/strong><strong> (2014) 364 ITR  508 (<\/strong><strong>Delhi<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S. 10B :Export&nbsp; oriented undertakings-Export of  granites-Matter remanded to Assessing Officer where the Tribunal failed to look  into documents and rejected claim under section 10B &amp; 80HHC. [S.80HHC]<\/strong><br \/>\n  The  assessee-company was engaged in the business of export of granites. The  assessing authority denied the benefit of exemption under section 10B to the  assessee. The Commissioner (Appeals), however, granted relief under section  80HHC. After failing before the Tribunal, the Revenue preferred an appeal  before the High Court and the matter was remitted to the Commissioner  (Appeals). The Commissioner rejected the claim under section 10B as well as  section 80HHC. The Tribunal held that the issue was squarely covered by the  judgment of the High Court in assessee&rsquo;s own case for AY 1994-95 wherein the  assessee was not entitled to exemption under section 10B and 80HHC as well.<br \/>\n  On  appeal, the High Court held that the judgment rendered by High Court for  assessment year 1994-95 was an ex parte order and further, in absence of  certificate under section 14 of Industries (Development and Regulation) Act,  1951, it was held that assessee was not entitled for exemption under section  10B. Similarly benefit under section 80HHC was declined for non-filing of audit  report. However, subsequently assessee had produced the said documents claiming  exemption but authorities declined its claim. Therefore, in view thereof,  entire matter was sent to the assessing authority, who would look into all  materials produced by assessee in respect of its claim and decide the matter  afresh. (AYs. 1995-96 &amp; 1996-97)<br \/>\n  <strong>Natural Stones Exports Ltd. .v. <\/strong><strong>ACIT<\/strong><strong> (2014) 222 Taxman 35(Mag)\/42 Taxmann.com 467  (Karn.)(HC)<\/strong><\/p>\n<table border=\"1\" cellspacing=\"0\" cellpadding=\"5\">\n<tr>\n<td width=\"90%\" valign=\"top\">The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. 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