IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No. 311/LKW/2023 Assessment Year: 2018-19 Income Tax Officer v. Sapien Educational (Exemption) Society Room No.426, 4^th Floor, 1, C/o Xaviers High Pratyaksh Kar Bhawan, 57, School, Mahvaria, Ram Tirath Marg, Lucknow- Sultanpur-228001.

226001.

PAN: AAGAS2725K (Appellant) (Respondent)

C. O. No. 01/LKW/2024 (In arising out of ITA. No. 311/LKW/2023)

Assessment Year: 2018-19 Sapien Educational Society v. Income Tax Officer

1, C/o Xaviers High School, (Exemption)

Mahvaria, Sultanpur-228001. Ram Tirath Marg Narhi, Lucknow-226001.

PAN: AAGAS2725K (Appellant) (Respondent)

Appellant by: Shri Suyash Agarwal, Adv Respondent by: Shri Amit Kumar, CIT(DR)

O R D E R

PER ANADEE NATH MISSHRA, A.M.:

(A) This is an appeal preferred by Revenue against impugned order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi; dated 17.08.2023. The grounds of appeal of Revenue are as under: -

“1. The Ld. CIT(A) has erred in law and facts in partly allowing the appeal of the assessee by restoring the case with AO with direction to verify the expenditure claimed by the assessee and thereafter compute the income; as it is beyond the powers of CIT(A).

2. The order of Ld. CIT(A) be cancelled with suitable directions.”

(A.1) The assessee has filed cross objection on the following grounds: -

“1. Because, the Ld. Commissioner of Income Tax (Appeals) has erred on facts and law while not allowing benefit of provisions of section10(23C) in A.Y. 2018-19 wherein subsequent year assessee was approved u/s 10(23C)(vi) of the Income Tax Act and eligible for deduction in parity of provisions of section 12A of the Income Tax Act.

2. Because, the Ld. Commissioner of Income Tax (Appeals) has erred on facts and law while restricting the application of fund to the extent of Rs. 3,77,87,472.07/- against gross receipt of Rs. 3,83,03,348.60/- and computing the surplus at Rs. 5,15,876.53/- without considering institution is existing solely for education purpose not for the propose of profit and eligible for exemption u/s 10(23C) of the Income Tax Act.”

(B) In this case, the assessee filed a return of income declaring total income at Nil. Vide assessment order dated 08.03.2021 [DIN No. ITBA/AST/S/143(3)/2020-21/1031317779(1)]. The ssessee’s income was assessed at Rs.3,83,03,349/-. The relevant portion of the aforesaid assessment order is reproduced as under: - “5. The assessee society has claimed exemption u/s 10(23C)(iiiad) of the Income Tax Act, 1961 in its return of income. Since the aggregate annual receipt of the society is above Rs.One Crore, the assessee society is not exempt u/s 10(23C)(iiad) of the I.T. Act, 1961. The society is neither registered u/s12A nor approved u/s 10(23C)(vi) of the Income Tax Act, 1961 for the A.Y. 2018-19. Since the assessment in this case has been made u/s 143(3) at an income of Rs.3,83,03,349/- as processed u/s 143(1) by the Deputy Commissioner of Income Tax (CPC), Bangalore, penalty proceeding u/s 270A of the I.T. Act, are being initiated separately for misreporting of income.

6. The assessment of income is done as per computation sheet at an income of Rs.3,83,03,349/- and the sum payable is determined as per the demand notice.”

(B.1) The assessee’s appeal filed in the office of the Ld. CIT(A) was partly allowed. The relevant portion of the impugned order of the Ld. CIT(A) is reproduced as under: -

“8.1 During assessment proceedings, the AO noticed that the appellant has claimed exemption u/s. 10(23C) (iiiad), however, the appellant society is neither registered u/s 12A nor approved u/s 10(23C)(vi) of the Act. Therefore, AO had taker the gross receipts of Rs.3,83,03,349/- as income and completed the assessment The appellant in his submission has stated that he had filed application for exemption Certificate u/s 10(23C)(vi) on 23.03.2019, got the approval from CIT exemption v