2011 (7) TMI 75 - HC - Income Tax

Allowability - Exemption u/s 10(23C)(iiiad) - Since, arguments of the assessee was that if under Section 11 of the Act, benefit is not available, at least benefit under Section 10(23C)(iiiad) was available - However, the AO refused to even comment on merits of the claim of the assessee and simply objected to the plea of the assessee only on the ground that since no compliance was made on various noticed issued by the AO, the claim of the assessee could not be accepted - Held that - It would clearly follow that an educational institution, if it is a Trust, can claim exemption as a Trust established for charitable purposes u/s 11 of the Act - It is also an option to seek the benefit of Section 10(23C)(iiiad) of the Act if the aforesaid conditions stipulated therein are fulfilled - Decided in favour of assessee. Assessee Trust is solely for the purposes of education or not - Hence, went through the documents including the MoU which was filed by the assessee before the authorities below and convinced that the activity actually carried out by the assessee was solely for the purpose of educational purpose and not for other purposes - Decided in favour of assessee.

Summary

Issues:
1. Allowability of exemption under Section 10(23C)(iiiad) of the Income Tax Act for Assessment Years 2002-03 and 2003-04.
2. Competency of authorities to examine exemption under Section 10(23C)(iiiad) when not claimed before the Assessing Officer.
3. Whether the assessee Trust qualifies as an educational institution existing solely for educational purposes under Section 10(23C)(iiiad).

Issue 1: Allowability of exemption under Section 10(23C)(iiiad) of the Income Tax Act
The appeals related to Assessment Years 2002-03 and 2003-04 challenged the denial of exemption under Section 11 of the Act to the assessee Trust as it was not registered under Section 12A of the Societies Registration Act. The assessee claimed exemption under Section 10(23C)(iiiad) on the grounds of being devoted solely to educational activities. The CIT(A) allowed most of the expenditure, except for certain items. The Tribunal upheld that the assessee fulfilled the eligibility conditions under Section 10(23C)(iiiad) and was entitled to exemption.

Issue 2: Competency of authorities to examine exemption under Section 10(23C)(iiiad)
The Revenue contended that the CIT(A) and Tribunal were not competent to consider exemption under Section 10(23C)(iiiad) as it was not claimed before the Assessing Officer. However, the Court found that the assessee had submitted relevant documents supporting its claim for educational activities. The Tribunal rightly rejected the Revenue's contention, emphasizing that the claim was not a new one before the CIT(A).

Issue 3: Qualification of the assessee Trust as an educational institution under Section 10(23C)(iiiad)
The assessee Trust provided evidence of its educational activities, such as syllabus approval, registration under regulatory bodies, and training programs. The CIT(A) and Tribunal concluded that the Trust existed solely for educational purposes based on the evidence presented. Upon reviewing the documents, the Court also confirmed that the Trust's activities were indeed focused on education. Consequently, the Court dismissed the appeals, finding no substantial question of law.

In conclusion, the judgment addressed the allowability of exemption under Section 10(23C)(iiiad) for the assessee Trust, the competency of authorities to examine such exemptions, and the qualification of the Trust as an educational institution. The Court upheld the Tribunal's decision, emphasizing the Trust's dedication to educational activities and its eligibility for exemption under the relevant provision of the Income Tax Act.