2010 (11) TMI 824 - HC - Income Tax

Delay in filing the application u/s 10(23C)(vi) - Held that - Period of limitation for entertaining applications under section 10(23C)(vi) for grant of exemption on or after the 1st day of June, 2006. The Legislature has, however, not made any provision for condonation of the delay in presenting such an application. The Chief Commissioner of Income-tax, being a creature of the statute, cannot travel beyond the statutory provisions, and could not, therefore, have condoned the delay in presenting the application under section 10(23C)(vi) beyond the period of limitation, fourteenth proviso does not empower the Chief Commissioner of Income-tax to condone the delay in filing the application, the order passed by him, rejecting the petitioner s application for the assessment year 2008-09 on the ground that it was belated, cannot be faulted Some of their objects were non-educational, and they were not registered under A. P. Act 30 of 1987 - Held that - The order of the first respondent, in rejecting the petitioner s application for the assessment year 2009-10 on the ground that their objects were non educational, cannot be faulted. Even if the petitioner s contention that registration under A. P. Act 30 of 1987 is not a condition precedent, in view of the judgment of this court in New Noble Educational Society v. Chief CIT 2010 (11) TMI 761 - Andhra Pradesh High Court & is to be accepted, since the object of eradicating unemployment can neither be said to be integrally connected with or as being ancillary to, the object of providing education, the order of the first respondent in rejecting the petitioner s application for exemption under section 10(23C)(vi) for the assessment year 2009-10 cannot be faulted. Against assessee.

Issues Involved:
1. Legality and arbitrariness of the Chief Commissioner of Income-tax's proceedings dated May 26, 2010.
2. Eligibility for approval under section 10(23C)(vi) of the Income-tax Act, 1961.
3. Timeliness of the application for the assessment year 2008-09.
4. Nature of the petitioner's objects and their alignment with educational purposes.
5. Requirement of registration under A. P. Act 30 of 1987.

Issue-wise Detailed Analysis:

1. Legality and Arbitrariness of the Chief Commissioner of Income-tax's Proceedings:
The petitioner sought to declare the proceedings of the Chief Commissioner of Income-tax dated May 26, 2010, as illegal and arbitrary. They requested a direction to grant approval under section 10(23C)(vi) of the Income-tax Act, 1961. The court examined whether the proceedings were conducted in accordance with the law and found that the Chief Commissioner acted within the statutory framework, thus rejecting the petitioner's claim of illegality and arbitrariness.

2. Eligibility for Approval under Section 10(23C)(vi) of the Income-tax Act, 1961:
The petitioner, a registered society, claimed that their existence was solely for educational purposes and not for profit. They argued that their amended objects should be considered for approval. The court emphasized that for eligibility under section 10(23C)(vi), the institution must exist "solely for educational purposes" and not for profit. The court referred to several precedents, including CIT v. Sorabji Nusserwanji Parekh and Aditanar Educational Institution v. Addl. CIT, to clarify that the institution's activities must be exclusively educational.

3. Timeliness of the Application for the Assessment Year 2008-09:
The petitioner submitted their application on May 27, 2009, which was beyond the statutory period. The fourteenth proviso to section 10(23C)(vi) stipulates that applications must be made on or before September 30 of the relevant assessment year. The court noted that the Chief Commissioner of Income-tax has no power to condone the delay in presenting such applications. Consequently, the court upheld the rejection of the application for the assessment year 2008-09 due to its untimeliness.

4. Nature of the Petitioner's Objects and Their Alignment with Educational Purposes:
The petitioner's original objects included activities such as eradicating unemployment and encouraging social activities, which do not solely relate to education. The court reiterated that the term "education" under section 10(23C)(vi) must involve systematic instruction and formal schooling. The amended objects, registered on August 24, 2009, still included "eradicating unemployment," which the court found to be charitable but not solely educational. The court concluded that the petitioner's objects did not meet the strict requirement of being solely for educational purposes, thus justifying the rejection of their application for the assessment year 2009-10.

5. Requirement of Registration under A. P. Act 30 of 1987:
The petitioner contended that registration under A. P. Act 30 of 1987 was not a condition precedent for approval under section 10(23C)(vi). The court acknowledged this argument but emphasized that the primary issue was the nature of the petitioner's objects. Since the object of "eradicating unemployment" was neither integrally connected with nor ancillary to education, the court upheld the rejection of the application regardless of the registration requirement.

Conclusion:
The court dismissed the writ petition, affirming that the Chief Commissioner of Income-tax acted within the legal framework in rejecting the petitioner's applications for the assessment years 2008-09 and 2009-10. The court found that the petitioner's objects did not meet the criteria of being solely for educational purposes as required under section 10(23C)(vi) of the Income-tax Act, 1961.

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