2018 (4) TMI 1719 - AT - Income Tax

Exemption u/s 10(23C)(vi) - rejection of exemption on the ground that one of the objects of the assessee to provide facilities for indoor and outdoor games for the recreation of members is not an educational object - HELD THAT - CCIT can grant the approval only in the case where assessee existed solely for educational purposes. In the present case the assessee is also providing facilities for indoor and outdoor games for recreation of members is not covered under the purview of section 10(23C(vi). Therefore ld. CCIT has rightly rejected to grant approval to the assessee society under section 10(23C(vi) of the Act. We find no infirmity in the order passed by the ld.CCIT. Thus this appeal filed by the assessee is dismissed.

Summary

Issues: Exemption under section 10(23C)(vi) of the Income Tax Act, 1961 for an educational society providing facilities for indoor and outdoor games.

Analysis:
1. Issue of Exemption Eligibility: The appeal concerned an educational society seeking exemption under section 10(23C)(vi) of the Income Tax Act, 1961. The society, M/s. Hamsavahini Educational Society, applied for exemption but was rejected by the Chief Commissioner of Income Tax, Visakhapatnam, citing that providing facilities for indoor and outdoor games does not align with the educational purpose required for exemption under the said section.

2. Contentions of the Parties: The assessee argued that its primary objective is to provide education, making it eligible for the exemption. Conversely, the Departmental Representative contended that exemption under section 10(23C)(vi) is applicable only to entities solely engaged in educational activities without other objectives.

3. Legal Analysis: The Tribunal examined the objects of the assessee society, which included establishing schools and promoting literacy along with providing recreational facilities. Section 10(23C)(vi) specifies that approval is for entities existing solely for educational purposes. Given the dual objectives of the society, involving both education and recreational activities, the Tribunal upheld the decision of the Chief Commissioner to deny exemption under section 10(23C)(vi).

4. Decision and Rationale: The Tribunal concluded that since the assessee society was not solely dedicated to educational purposes but also provided recreational facilities, it did not meet the criteria for exemption under section 10(23C)(vi). Therefore, the appeal was dismissed, affirming the decision of the Chief Commissioner. The judgment emphasized that approval under this section is reserved for entities exclusively focused on educational activities without profit motives, excluding those with additional objectives like recreational services.

In summary, the judgment clarified the eligibility criteria for exemption under section 10(23C)(vi) of the Income Tax Act, emphasizing the requirement for entities to exist solely for educational purposes to qualify for such exemption.