Exemption us 10(23)(C)(vi)- By not applying provisions of the Right of Education Act, it cannot be said that the assessee is not doing any genuine educational activities.
ABCAUS Case Law Citation:
ABCAUS 2038 (2017) (08) HC
Important Case Laws Cited/relied upon by the parties:
Amrawati Welfare Society vs. Central Board of Direct Taxes and Others
Brief Facts of the Case:
The respondent-assessee was a trust running educational institutes/schools. It filed an application for grant of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 (the Act) before the Principal Chief Commissioner of Income Tax (PrCCIT).
The PrCCIT denied the exemption holding that the assessee did not satisfy the condition contained in Section 10(23C)(vi) of the Act to the effect that it was existing solely for educational purposes and not for purposes of profit.
Aggrieved by the order, the assessee filed an appeal before the Tribunal. The Tribunal directed the PrCCIT to grant registration to the trust.
The ITAT observed that the only reason for denial of exemption could be where the Income Tax Officer was not satisfied as to the genuineness of the activities of the assessee. Since the PrCCIT had not doubted the activities of the Society, a direction was given to him to grant registration under Section10(23C) of the Act.
Aggrieved by the order of the ITAT, the Revenue was in appeal before the High Court.
One of the objection raised by the Revenue was that the assessee had not provided for reservation in admission and free tuition to children belonging to weaker section of the society thereby indicating its profit motive.
Observations made by the High Court:
The High Court observed that a perusal of the provision of Section 10(23)(vi) shows that the recognition is given to an institution which exists solely for educational purposes provided it is not running for the purpose of profit. Secondly, it has to be approved by the prescribed authority. The only requirement for granting registration under this Section is the satisfaction of the prescribed authority with regard to the genuineness of the activities of the assessee.
It was also noted that the Tribunal had categorically recorded that the assessee was a Trust registered under Section 12AA of the Act which made it quite clear that the assessee was pursuing the charitable activities.
It was further observed that the provisions of the Right to Children to Free and Compulsory Education Act, 2009, were not applicable to the assessee being an unaided Society. Since the Pr. CCIT had not doubted the genuineness.
The High Court noted the following relevant findings recorded by the Tribunal which could not be controverted by the Revenue by pointing any error:
“The provisions of Section 10(23C)(vi) of the Act is quite clear to the fact that the only reason for denial of said exemption can be the case where the officer is not satisfied as to the genuineness of the activities of the assessee. By not applying the provisions of the Right of Education Act, it cannot be said that the assessee is not doing any genuine educational activities. For non-compliance of Right to Education Act, there is a specific appropriate authority which may take action against the assessee. Otherwise also, as stated by us earlier, the RTE provisions are not applicable to the assessee being an unaided society. It is not open to the Income tax Department to take any such step. There may be some provisions in the relevant Act for the consequences of such non-compliance but it can certainly not be in the form of not granting approval to the assessee under the Income Tax Act.
Since the Principal Chief Commissioner of Income Tax has not doubted the genuineness of the activities of the society, we hereby direct him to grant registration under Section 10(23C) of the Act”
Held:
The appeal of the Revenue was dismissed as devoid of any merit.
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