2013 (7) TMI 1225 - HC - Income Tax

Summary

Issues involved:
The judgment deals with the rejection of an application for approval under s. 10(23C)(vi) of the IT Act by the Chief CIT, Ghaziabad, on the grounds that the educational institution's memorandum stipulates other objects, the application was made by the society instead of the educational institution, and the institution was charging fees contrary to its objects.

Details of the Judgment:

1. Maintainability of the Application:
The petitioner society, registered under the Societies Registration Act, contended that the application for approval under s. 10(23C)(vi) could be filed by the society as a 'person' under s. 2(31) of the Act. The petitioner argued that the society's income from various sources could still qualify for exemption under s. 10. The Court referred to previous judgments, including the Aditanar case, to support the view that a society solely engaged in educational activities qualifies as an 'other educational institution' under s. 10(22) and s. 10(23C)(vi).

2. Objects of the Society:
The Department contended that the society's application was rightly rejected due to the presence of other aims and objects in its memorandum. However, the Court held that if the society is primarily engaged in educational activities, as evidenced by the application and material on record, it qualifies for approval under s. 10(23C)(vi). The Court emphasized the need to consider the actual activities being pursued by the society rather than the objects mentioned in its memorandum.

3. Decision and Remittance:
The Court quashed the impugned order and remitted the matter back to the prescribed authority for a fresh decision. It directed the authority to consider the society's educational activities and make a decision within three months. The Court refrained from delving into other issues, leaving them to be decided by the authority in accordance with the law.

Conclusion:
The judgment clarifies that a society primarily engaged in educational activities can apply for approval under s. 10(23C)(vi) of the IT Act, even if its memorandum contains other objects. The Court's decision emphasizes the importance of considering the actual activities being pursued by the society when determining eligibility for tax exemption.