Siddhartha Nautiyal ORDER
Siddhartha Nautiyal, Member (J)
1. This assessee's appeal for A.Y. 2017-18, arises from order of the Commissioner of Income Tax (Exemption), Ahmedabad dated 07-03-2018, in proceedings under section 10(23C)(vi) of the Income Tax Act, 1961; in short "the Act".
2. The assessee has raised following grounds of appeal:-
"1. Ld. learned CIT(Exemptions) has erred in law as well as on fact in rejecting approval u/s. 10(23C)(iv) of the Act on facts and circumstances of the case."
3. The brief facts of the case are that the assessee is a charitable trust registered with Assistant Charity Commissioner, Rajkot vide registration dated 01.04.1986. The trust is also registered under section 12A of the Act. The assessee trust filed an application dated 30.03.2017 and sought an approval under section 10(23C)(vi) of the Act. According to assessee, the trust is carrying out educational activities through its various institutions like primary schools, secondary and higher secondary schools. However, the Commissioner of Income Tax (Exemptions), Ahmedabad observed that on perusal of the objects of the trust mentioned in the trust deed, it is seen that apart from providing educational services, the assessee trust, as per the stated objectives in the trust deed, is also engaged in providing medical facilities, social welfare, Social Security and other general activities. Therefore, from perusal of above objects, the Commissioner of Income Tax (Exemptions) observed that assessee trust is not existing solely for educational purposes but also purposes other than educational as evident from the objects of the trust deed. The provisions of section 10(23C)(vi) is applicable only in case of university or other educational institution existing solely for educational purposes. Therefore, since the assessee had other non-educational objects as per the trust deed, the CIT(Exemptions) held that assessee has not fulfilled the conditions laid down in section 10(23C)(vi) of the Act and hence rejected the application of the assessee trust for seeking approval under the above section. The CIT(Exemptions) held as below while passing the Order:
"The submission of the assessee trust has been carefully considered and found not convincing and therefore not acceptable in view of following facts. It would not be out of place to reproduced the provisions of section 10(23C)(vi) which reads as under.
"any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause(iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority"
In view of the above, the assessee has other non-educational objects as per the trust deed mentioned above. Therefore, the assessee has not fulfilled the condition laid down to proviso of section 10(23C)(vi) of the Act."
4. Before us, the counsel for the assessee submitted that the assessee trust had obtained registration under section 12A of the Act on 22.08.1986. The assessee also drew our attention that it is being audited for the past 20 years and audit report has been submitted as part of the paper book. The assessee submitted that though the terms of the trust deed cover activities other than educational activities, but the assessee trust never carried out any of activities other than educational activities. The counsel for assessee also submitted that he has placed on record the affidavit of the trustees to the effect that the assessee trust is solely existing for educational activities and the trust has not carried out any other object other than educational activities since inception. He further drew our attention to various case laws which have held merely because there are other objects of society mentioned in the trust deed, it does not mean that educational institution is not existing solely for educational purpose and registration under section 10(23C)(vi) of the Act cannot be denied. In response, Department Representative drew attention to language of section 10(23C)(vi) of the Act states "any university or other educational institution existing solely for educational purposes" and submitted that there is clear distinction between the word "existing" and the word "carrying out". Since the word employed in the impugned section is "existing", this itself implies that it is immaterial whether or not assessee trust is actually carrying out any activities other than educational activities. If the trust in the objects clause mentions/contains any other objects apart from educational activities, then it cannot be said to be "existing" only for carrying out educational activities. He also submitted that the Department is not doubting the genuineness of the activity, but for reasons cited above since the assessee is not "existing" solely for educational activities CIT(Exemptions) has not erred on facts and in law in denying exemption under section 10(23C)(vi) of the Act.
5. We have heard the rival contentions and perusal the material on record. In our view, though the objects clause of the trust deed mentions/contains activities other than educational activities, but as submitted by the counsel for the assessee and also supported by affidavits filed by the trustees placed before us, it is seen that the assessee has not engaged in any activity apart from educational activities. The Ld. Departmental Representative also has submitted that the genuineness of the activities of the assessee trust are not in doubt. Therefore, the issue for consideration before us is whether if the trust deed mentions/contains activities other than educational activities, whether the Commissioner of Income Tax (Exemptions) has validly denied grant of exemption under section 10(23C)(vi) of the Act.
5.1. In the case of Dharmraj Kelvani Mandal v. CCIT in ITA 2913/Ahmedabad/2015, the ITA observed as under:
14. In the light of the above, if we examine the facts of the present case, then it would reveal that the assessee trust came to existence in 1954. It is running educational institutions. It has been registered under Section 12AA of the Act since 25.8.1998. It is also enjoying the exemption under section 80G. Thus, the department has never doubted about the genuineness of the activities of the trust and purpose of its existence. While rejecting the application of the Trust under section 10(23C), the ld. CCIT has not pointed out any specific aspect. He only harboured a belief that assessee might have some ancillary activities not associated with education. This is only a hypothetical observation. In all these decisions, it has been propounded that if the assessee has not taken other objections mentioned in the trust deed, and exclusively carried out activities of education, then approval under section 10(23C) will not be denied. Respectfully following these decisions, we allow the appeal of the assessee and direct the prescribed authority to grant approval under section 10(234C)(iv) of the Income Tax Act to the assessee for the Assessment Year 2013-14.
15. In the result, the appeal of the assessee is allowed.
5.2. In the case of Allahabad Young Men's Christian Association v. CCIT MANU/UP/0001/2015 : (2015) 54 Taxman.com 190(Allahabad), the High Court held that may merely because there are other objects of society does not mean that educational institution is not existing solely for educational purpose.
5.3. In the case of C.P. Vidya Niketan Inter College Shikshan Society v. Union of India MANU/UP/2009/2012 : 40 taxman.com 76 (Allahabad) the mere possibility that society in future might pursue non-charitable activities would not constitute grounds to reject approval under section 10(23C)(vi) of the Act.
5.4. In the case of Harf Charitable Trust v. Chief Commissioner of income tax MANU/PH/1514/2016 : 63 taxman.com 53(Punjab and Haryana), the High Court held that merely because one of the clauses of trust deed of assessee trust provided that trust could carry on other businesses as decided by trustees, it would not per se disentitle trust from being considered for registration under section 10(23C)(vi) of the Act.
5.5. In the case of Neeraj Janhitkari Gramin Sewa Sansthan v. Chief Commissioner of income tax MANU/UP/1726/2014 : 49 taxman.com 535 (Allahabad), the High Court held that mere presence of objects in memorandum providing for other charitable activities would not disentitle a society to claim approval under section 10(23C)(vi) of the Act.
5.6. In light of the facts of the case and the judicial precedents cited above, we are of the considered view that the Commissioner of Income Tax (Exemptions), in the instant set of facts has not taken note of the factual position of the assessee in the correct perspective. The assessee has been engaging solely in educational activities. There is admittedly nothing on record to demonstrate that the assessee has engaged in activities other than educational activities. The assessee trust has been registered since 1986. The Ld. Departmental Representative has stated that the revenue has not doubted the genuineness of the activities of the assessee trust. The assessee has placed on record the affidavits of trustees to the effect that the assessee trust has solely engaged in educational activities. The sole ground for denial of exemption under section 10(23C)(vi) of the Act is that the objects clause in the trust deed contains/mentions objects other than educational activities and since the impugned section only gives exemption to any university or other educational institution existing solely for educational purposes, the assessee's application for exemption under section 10(23C)(vi) of the Act was denied. In light of the judicial precedents cited above, we are the considered view that since the assessee trust only carried out educational activities, a fact which has also not been disputed by the Revenue, the Commissioner of Income Tax (Exemptions) has erred in fact and law in denying exemption under section 10(23C)(vi) of the Act to the assessee trust in the instant set of facts.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17-05-2022.
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