2009 (9) TMI 1029 - HC - Income Tax

Summary

Issues involved:
The issue involves the rejection of an application for grant of exemption u/s 10(23C)(vi) of the Income-tax Act based on the interpretation of the society's objects and whether the society is being run solely for educational purposes.

Facts of the case:
The Sri Venkateswar Education Society, registered under the Societies Registration Act, applied for exemption u/s 10(23C)(vi) of the Income-tax Act for running Venkateswar International School. The society's objects primarily focus on education, with some clauses also mentioning care for destitute, orphan children, and aged and poor individuals.

Petitioner's Argument:
The petitioner argued that the rejection was unjust as the society's funds were solely used for education, and the objects should be interpreted in a manner that fulfills the spirit of the Income-tax Act. The rejection was challenged in a writ petition.

Respondent's Argument:
The respondent contended that exemption can only be granted if the society is run solely for educational purposes. The inclusion of other objectives in the society's objects led to the rejection of the application.

Court's Analysis:
The court noted that the society was primarily focused on imparting education, with no other significant activities. The petitioner provided an affidavit assuring that funds would only be used for educational purposes, addressing the respondent's concerns.

Precedent and Decision:
Referring to previous judgments, the court allowed the writ petition, setting aside the rejection order and directing the respondent to grant exemption u/s 10(23C)(vi) of the Income-tax Act from 2007-08 onwards. The court highlighted that if the undertaking is violated, the respondent can withdraw the exemption. No costs were awarded in the case.