Shree Sanskar Tirth Educational and Charitable Trust vs. The CIT(Exemptions), Ahmedabad - (Income Tax Appellate Tribunal) (17 May 2022)

As the assessee trust only carried out educational activities, exemption under Section 10(23C)(vi) of the IT Act is to be allowed

MANU/IR/0024/2022

Direct Taxation

The assessee is a charitable trust registered with Assistant Charity Commissioner. The trust is also registered under Section 12A of the Income Tax Act, 1961 (IT Act). The assessee trust filed an application and sought an approval under section 10(23C)(vi) of the IT Act. 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. 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) of IT Act 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 Act and hence, rejected the application of the assessee trust for seeking approval under the above Section.

The issue for consideration before present Court 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 IT Act.

In the case of Harf Charitable Trust v. Chief Commissioner of income tax, 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 IT Act.

In the case of Neeraj JanhitkariGraminSewaSansthan v. Chief Commissioner of Income Tax, 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 IT Act.

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 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.

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 IT Act to the assessee trust in the instant set of facts. The appeal of the assessee is allowed.

Tags : EXEMPTION DENIAL LEGALITY