Provisions of Sec. 13 Not Applicable to Charitable Society Notified u/s 10(23C) Along with Sec. 12A | ITAT
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Case Details: Income Tax Officer vs. The Theosophical Society - [2024] 163 taxmann.com 770 (Chennai-Trib.)
Judiciary and Counsel Details
- Mahavir Singh, Vice President & S.R. Raghunathan, Accountant Member
- N. Sanjay Gandhi, JCIT for the Appellant.
- Ms G. Vardini Karthik, Adv. for the Respondent.
Facts of the Case
The assessee is a society notified under section 10(23C)(iv) of the Income Tax Act, 1961. It is also registered under section 12A(a) of the Act. The Assessee filed a return of income admitting nil income after claiming an exemption under section 11 of the Act.
The Assessing Officer (AO) discovered that two individuals who had donated to the society had stayed in the society’s guest house, paying only nominal maintenance charges. He applied section 13(1)(c)(ii), arguing that the guest house had been rented to interested persons at an insufficient rate. As a result, the exemption under section 11 was revoked.
On appeal, the CIT(A) granted relief to assessee. Aggrieved Revenue filed the instant appeal before the Chennai Tribunal.
ITAT Held
The ITAT observed that it is an admitted fact that society has been registered under section 10(23C)(iv) along with the registration under section 12A(a). As per CBDT Circular No. 557, dated 19-3-1990, provisions of sections 11 and 13 relating to ‘interested person’ will not be applicable once the society is notified under section 10(23C).
Since the assessee was a charitable society duly registered under section 10(23C)(iv) along with section 12A(a), conditions prescribed in section 13 were not applicable, and the Assessing Officer could not make disallowance under section 11. Thus, there was no infirmity in the order of the CIT(A) in allowing the assessee’s appeal.
List of Cases Referred to
- ITO v. Virendra Singh Memorial Shiksha Samiti [2010] 35 SOT 1 (Lucknow) (para 7).
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