2010 (11) TMI 1073 - HC - Income Tax

Summary

Issues involved: Rejection of application for approval u/s 10(23-C)(vi) of the Income Tax Act based on objects not solely for education and non-registration under A.P. Act 30 of 1987.

Judgment Details:

Rejection of Application based on Objects not Solely for Education:
The High Court considered writ petitions where the Chief Commissioner of Income Tax rejected applications for approval u/s 10(23-C)(vi) of the Income Tax Act, citing that the societies' objects were not solely for education. The court examined the specific objects of each petitioner-society listed in the writ petitions. The court emphasized that for exemption under Section 10(23C)(vi), the institution must exist solely for educational purposes, without engaging in profit-seeking activities. The court referred to various legal precedents highlighting the importance of the word "solely" in determining eligibility for exemption. It was clarified that even if one of the objects allows for commercial activities, approval under Section 10(23-C)(vi) would not be granted. The court concluded that the inclusion of non-educational objects in the societies' objectives disqualified them from claiming exemption under Section 10(23-C)(vi).

Non-Registration under A.P. Act 30 of 1987:
The court referenced a previous judgment where it was established that non-registration under A.P. Act 30 of 1987 is not a prerequisite for approval under Section 10(23-C)(vi), but could be a condition imposed by the Chief Commissioner of Income Tax. The court directed the Chief Commissioner to reconsider the applications in light of this ruling.

Conclusion:
The High Court dismissed all the writ petitions, upholding the Chief Commissioner's decision to reject the applications for approval under Section 10(23-C)(vi) due to the non-educational nature of the societies' objects. The court affirmed that the societies did not meet the criteria of existing solely for educational purposes as required by the Income Tax Act. The judgment highlighted the importance of the word "solely" in determining eligibility for exemption and emphasized the need for institutions to primarily focus on educational activities to qualify for tax benefits.