2016 (3) TMI 1066 - AT - Income Tax

Entitlement to exemption u/s.10(23C)(vi) - Held that - Merely because the Assessee School does not have power to purchase, acquire, or sell the property, does not mean that the school will cease to exist as an Institution. Thus the STATUS of the Assessee could be A.O.P. in the absence of any Memorandum of Association or Trust Deed. Considering the above decision of the I.T.A.T.Delhi Bench, in the present case also the above Matriculation School which is managed by Education Board and granted permission by the Director of School Education as early as 07.10.1997 is an Institution qualifying for exemption U/s. 10(23C)(vi) of the I.T.Act. Hence the exemption sough for the above Institution is to be granted. Accordingly, we direct the CCIT to grant exemption u/s.10(23C)(vi) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Validity of the order of the Learned Chief Commissioner of Income Tax
2. Consideration of details filed in the proceedings
3. Rejection of application for exemption u/s.10(23C)(vi)
4. Interpretation of the term "Institution" under section 10(23C)(vi)

Analysis:

Issue 1: Validity of the order
The appeal was filed against the order of the Chief Commissioner of Income Tax, Trichy dated 12.08.2015 for the assessment year 2014-15. The appellant contended that the order was bad, erroneous in law, and against the principles of natural justice.

Issue 2: Consideration of details
The appellant argued that the Chief Commissioner erred in not considering the details filed during the proceedings. The appellant school had consistently filed income tax returns, which were not negated by the Revenue in previous years. The appellant school was recognized under the Tamilnadu Recognized Private Schools (Regulation) Act, 1973.

Issue 3: Rejection of exemption application
The Chief Commissioner rejected the application for exemption u/s.10(23C)(vi) on the grounds that the appellant did not have independent existence with clear objectives solely for educational purposes. The appellant school's structure, funding, and operations were scrutinized, leading to the denial of the exemption.

Issue 4: Interpretation of "Institution"
The key contention was whether the appellant school qualified as an "Institution" under section 10(23C)(vi). The absence of a Memorandum of Association or Trust Deed raised concerns about the school's independent existence. However, the school was managed by the Sengunther Education Board, which was a registered body. The Tribunal interpreted "Institution" broadly to include schools established for educational purposes, even without the power to buy or sell property.

In conclusion, the Tribunal directed the Chief Commissioner to grant the exemption u/s.10(23C)(vi) to the appellant school, considering its establishment, management, and recognition as an educational institution. The appeal of the assessee was allowed, emphasizing the school's qualification for the exemption under the Income Tax Act.