In the Income Tax Appellate Tribunal (Delhi Bench ‘B’: New Delhi), the case of Chhaju Ram Law College versus Income Tax Officer, Ward-1 Hisar, Haryana, was reviewed for the assessment year 2017-18. The primary issues revolved around the denial of tax exemptions under Section 11 and 12AA of the Income Tax Act, 1961, which the appellant challenged.
The appellant, Chhaju Ram Law College, a constituent of CRM Jat Post Graduate College in Hissar, filed an appeal against the order dated 30.06.2022 of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (‘CIT(A)’). The dispute arose from the CIT(A)’s decision to uphold the assessing officer’s denial of tax exemptions to the college for not possessing the requisite Section 12AA registration, thereby treating its gross receipts as taxable income.
The appellant argued that it was part of a registered society that was already enjoying exemptions under Section 80G of the Income Tax Act and claimed that it was eligible for benefits under Section 11. However, due to an inadvertent error, the college had filed its returns separately and had claimed rebates under Section 11 without the required registration. The college’s submissions included that the separate filing was an oversight and not an intention to evade taxes. It was noted that the appellant had incurred substantial expenses in the amount of Rs. 1,84,75,075/- during the year for its educational activities, which should have been considered when determining its taxable income.
The tribunal observed that the college’s grounds for appeal had been summarily dismissed by the CIT(A) without adequate consideration of the facts presented, particularly regarding the appellant’s linkage with the CRM Jat Post Graduate College and the claimed expenses. As a result, the tribunal remitted the case back to the CIT(A) for a comprehensive review and a fresh decision, ensuring that the appellant was given a reasonable opportunity to be heard.
This case highlights the complexities and procedural challenges that educational institutions may face in navigating tax exemption provisions within the Indian tax framework. It underscores the importance of maintaining proper registrations and documentation when claiming tax benefits, especially for institutions operating as part of larger educational groups.
Chhaju Ram Law College vs ITO, Ward-1 Hisar, Haryana (2017-18)
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