2015 (11) TMI 1816 - AT - Income Tax

Denying exemption u/s 10(23C)(vi) - assessee trust is solely engaged for educational purposes and thus there is no justification in denying exemption u/s 10(23C)(vi) though the trust deed was amended subsequently by the assessee - HELD THAT - As perused the order of the Chief Commissioner. On a perusal of the object clauses of the trust deed, we find that the assessee is established not only for managing all types of educational institutions but also to promote finance, hospitals, research centers in medical science. On a perusal of the profit and loss account and income expenditure account of the assessee, we find that the assessee incurred certain expenditure towards awareness on agriculture, awareness on scientific research programme and blood donor camp expenses, medical treatment expenses, free eye camp activity which goes to show that assessee s activities are not confined only to the education during the year ended 31.03.2014. The Chief Commissioner also observed that assessee trust amended its deed only on 29.07.2015 which is beyond the year ended 31.03.2014, therefore not relevant for the assessment year 2014-15 and he denied exemption holding that assessee trust is existing not only for education but also for other activities. We do not find any infirmity in coming to the conclusion by the Chief Commissioner in rejecting the application for exemption under section 10(23C)(vi) - Decided against assessee.

Summary

Issues:
1. Denial of exemption under section 10(23C)(vi) of the Act for the assessment year 2014-15.

Analysis:
The appeal was filed against the Chief Commissioner of Income Tax's order denying exemption under section 10(23C)(vi) of the Act for the assessment year 2014-15. The assessee contended that the trust was solely engaged in educational activities and thus should be granted the exemption. However, the Departmental Representative argued that the trust's objects indicated involvement in financial activities, hospitals, and dispensaries, in addition to educational purposes. Upon reviewing the trust deed and financial accounts, it was found that the trust had incurred expenses related to various non-educational activities like agricultural awareness, scientific research programs, medical treatment, and eye camps during the relevant period. The Chief Commissioner noted that the trust had only amended its deed after the assessment year in question, indicating a broader scope of activities beyond education. Consequently, the Chief Commissioner's decision to deny the exemption under section 10(23C)(vi) was upheld by the Appellate Tribunal.

The Appellate Tribunal found that the trust's activities extended beyond educational purposes based on the trust deed, financial records, and expenditure incurred on non-educational initiatives. The Tribunal agreed with the Chief Commissioner's assessment that the trust's objectives encompassed activities beyond education, such as finance, hospitals, and research centers in medical science. The timing of the trust deed's amendment, which occurred after the relevant assessment year, further supported the conclusion that the trust was not solely focused on educational endeavors during the period under review. Therefore, the Tribunal dismissed the assessee's appeal and upheld the Chief Commissioner's decision to deny the exemption under section 10(23C)(vi) of the Act for the assessment year 2014-15.

In conclusion, the Appellate Tribunal affirmed the Chief Commissioner's decision to deny the assessee's exemption under section 10(23C)(vi) of the Act for the assessment year 2014-15. The Tribunal determined that the trust's activities extended beyond educational purposes, as evidenced by the trust deed, financial accounts, and expenditure on non-educational programs. The delay in amending the trust deed also indicated a broader scope of activities, leading to the rejection of the assessee's appeal. Consequently, the appeal was dismissed, and the Chief Commissioner's order was upheld by the Tribunal.