2016 (3) TMI 1083 - AT - Income Tax

Approval under section 10(23C)(vi) rejected - Held that - 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 to 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. - Decided in favour of assessee.

Summary

Issues:
- Denial of approval under section 10(23C)(vi) of the Income Tax Act, 1961 based on non-compliance with provisions of the Right to Education Act, 2009.

Analysis:
1. The appeal challenged the rejection of the application for approval under section 10(23C)(vi) of the Income Tax Act, 1961, due to non-compliance with the Right to Education Act, 2009. The assessee, a society running an educational institution, argued that denial was unjust and arbitrary, emphasizing its registration under section 12AA and charitable activities.

2. The Tribunal examined the provisions of section 10(23C)(vi) and the requirement for approval by the prescribed authority. The second proviso emphasized the authority's need to ensure the genuineness of the activities. The Tribunal noted that non-compliance with other Acts should not be a ground for denial under the Income Tax Act, citing a Delhi ITAT case.

3. The Tribunal highlighted that the Income Tax Act is self-contained, and denial of approval should be solely based on the genuineness of activities. Non-compliance with the Right to Education Act does not automatically invalidate educational activities. The Tribunal referenced a case to support the view that personal beliefs should not influence decisions under the Income Tax Act.

4. As the Principal Chief Commissioner did not question the genuineness of the society's activities, the Tribunal directed the approval of registration under section 10(23C) of the Act. The appeal was allowed, emphasizing that denial based on non-compliance with the Right to Education Act was not justified under the Income Tax Act.

5. The Tribunal's decision highlighted the importance of adherence to the specific provisions of the Income Tax Act in granting approvals under section 10(23C)(vi), emphasizing the need for the prescribed authority to focus on the genuineness of the activities rather than non-compliance with other statutes.