Where petitioner-university, with a view to avail exemption under section 10(23C)(vi) for assessment year 2019-20 and onwards, filed related application in Form No. 56D before Commissioner (Exemptions), however, same was rejected by him on ground that application was filed beyond prescribed time-limit and that he had no jurisdiction to condone delay in filing of such delayed application, since there is no provision for extension of limitation period or for condonation of delay in filing application for grant of exemption under section 10(23C), Commissioner (Exemptions) was justified in rejecting said application for assessment year 2019-20. However, he certainly fell in error in not considering said application for subsequent assessment years. Because even if said application was filed with delay for assessment year 2019-20, it was before prescribed date for subsequent assessment year. Vide Decision of High court of Bombay in Sanjay Ghodawat University, Kolhapur, Vs. Commissioner of Income Tax (Exemptions)

Facts of the case:

  1. The assessee is a university called Sanjay Ghodawat University, Kolhapur established by an act of the State Legislature of Maharashtra and which became operational on and from 13-7-2017. 2. It is stated that because of heavy rainfall and resultant food in different parts of the country, Central Board of Direct Taxes (CBDT) passed an order dated 27-9-2019 under section 119 of the Income-tax Act, 1961 (briefly “the act” herein-after) extending the due date for fling of income tax returns as well as reports of audit for the assessment year 2019-20 from 30-9-2019 to 31-10-2019. 3. With a view to avail exemption under section 10(23C)(vi) of the act for the assessment year 2019-20 and onwards, petitioner fled the related application in Form No. 56D before Commissioner of Income-tax (Exemptions), Pune i.e. respondent No. 1 on 31-10-2019. 4. Petitioner has explained that due to exceptional situation prevailing in Kolhapur region because of food, it was not possible to complete the audit of the accounts of the petitioner before the said date which caused delay in fling the application. 5. However, notice dated 15-9-2020 was issued to the petitioner by respondent No. 1 informing the petitioner that its application fled on 31-10-2019 was not within the prescribed time limit; such application was required to be fled on or before 30th September of the relevant assessment year from which exemption was sought. 6. Respondents have filed a common affidavit through Shri. Niraj Bansal, Commissioner of Income-tax (Exemptions), Pune. 7. Referring to the 16th proviso to section 10(23C)(vi) of the act, it is contended that an application for exemption or continuance of exemption under section 10(23C)(vi) of the act has to be fled on or before the 30th day of September of the relevant assessment year from which the exemption is sought which date in the instant case would be on or before 30-9-2019. 8. There is no provision for condonation of delay in the event of belated fling of such application. 9. Learned counsel for the petitioner at the outset has referred to section 253 of the act, to clause (f) of sub-section(1) and submits that an appeal to the Income-tax Appellate Tribunal would lie under the said provision against an order passed by the prescribed authority under sub-clause (vi) of clause (23C) of section 10. 10. He submits that if by such an order an assessee is denied exemption on merit and he is aggrieved by the same, he may appeal to the Income-tax Appellate Tribunal against such an order under the said provision. But in the instant case, no such order has been passed by respondent No. 1. 11. The Court referred to Section 10(23C) of the Income Tax Act, 1961 and explained that in computing the total income of a previous year of any person, any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned and which may be approved by the prescribed authority; provided that when income of such institution exceeds the maximum amount which is not chargeable to tax in any previous year, such institution shall get its accounts audited in respect of that year by an accountant. 12. The court also added that in case the institution makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be made on or before the 30th day of September of the relevant assessment year from which the exemption is sought. 13. The court mentioned that that the 10th proviso to clause (23C) of section 10 is referred to in rule 16CC of the Income-tax Rules, 1962 which says that the report of such audit which is required to be furnished under the 10th proviso to clause (23C) of section 10 shall be in Form No. 10BB. 14. Rule 2CA of the Rules lays down the guidelines for approval under sub-clauses (vi) and (via) of clause (23C) of section 10. Sub-rule (2) says that an application for approval shall be made in Form No. 56D by any university or other educational institution etc. 15. There is a significant difference between Form No. 10BB and Form No. 56D. While Form No. 10BB, which is the report of audit, is required to be fled along with the income tax return, Form No. 56D, which is the application seeking approval for exemption under section 10(23C)(vi) of the act, is required to be filed within 30th September of the relevant assessment year. 16. Under Section 119(2) of Income Tax Act,1961 CBDT if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases by general or special order, authorise any income tax authority, not being a Commissioner (Appeals), to admit an application or claim for any exemption, deduction, refund or any other relief under the act after the expiry of the period specified under the act for making such application or claim and deal with the same on merit in accordance with law. 17. Thus, in an appropriate case CBDT can pass a general order or a special order; by such an order it can authorise any income tax authority not being a Commissioner (Appeals) which would include Commissioner of Income-tax (Exemptions); to admit an application or claim for any exemption etc. after expiry of the period specified under the act; and to deal with the same on merit in accordance with law. 18. There is no provision for extension of the limitation period or for condonation of delay in fling the application for grant of exemption under section 10(23C)(vi) of the act by the Commissioner of Income-tax (Exemption) To that extent respondent No. 1 was justified in rejecting the application for the assessment year 2019-20. 19. However, as per the version of the respondents themselves the application for exemption of the petitioner was not confined to assessment year 2019-20 only. It was an application for grant of exemption from the assessment year 2019-20 onwards. 20. While respondent No.1 was correct in rejecting the application for the assessment year 2019-20 as being time-barred, it certainly fell in error in not considering the said application for subsequent assessment years i.e. for assessment year 2020-2021 and onwards. 21. Because even if the application was filed on 31-10-2019 which was belated

for the assessment year 2019-20, it was before the prescribed date for the subsequent assessment year i.e. assessment year 2020-2021 and thereafter as it had been fled much before the cut of date of 30-9-2020. Judgement: The Honorable High Court of Bombay held the case as follows: 1. Petitioner shall file an application before the CBDT under section 119(2)(b) to authorize respondent No. 1 to condone the delay in fling its application dated 31-10-2019 for exemption under section 10(23C)(vi) of the act, for the assessment year 2019-20 and to deal with the same on merit in accordance with law 2. If such application is fled by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in accordance with law within a period of four weeks thereafter with due intimation to the petitioner.

  1. Respondent No. 1 shall consider the application of the petitioner dated 31-10-2019 for grant of
    exemption under section 10(23C) (vi) of the act for the assessment year 2020-21 onwards in accordance with law within a period of eight weeks from the date of receipt of a copy of this order.

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