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2018 (2) TMI 49 - AT - Income TaxRegistration u/s 10(23C)(vi) eligibility - proof of charitable activities - Held that - From the examination of the objects it is apparent that the assessee s main objects are to provide education to children and which as per the provisions of section 2(15) are charitable in nature therefore this finding of Ld. CIT(E) is not correct. As far as the objection of CIT(E) regarding earning of income from buses and from sale of books and dresses we find that these buses were being utilized for the purpose of carrying students from their homes to school and vise versa and there is no material available with the department to hold that the buses were being utilized for commercial purposes other than for carrying the students. As regards the objection of Ld. CIT(E) that the name of school in the MOA is not mentioned we find that this objection of Ld. CIT(E) is absurd as Memorandum of Association is a document wherein main objects of society are mentioned and to carry out these objects the assessee started school to fulfill the main objects. We direct the Ld. CIT(E) to grant registration to the society u/s 10(23C)(vi) of the Act. - Decided in favour of assessee.
Issues Involved:
1. Objection regarding income from transportation fees and sale of bags, dresses, and books. 2. Objection regarding the absence of a specific mention of running a school in the Memorandum of Association. 3. Objection concerning the receipts exceeding the limit of ?1 crore. 4. Objection regarding the aims and objects in the Memorandum of Association including non-educational purposes. Detailed Analysis: 1. Income from Transportation Fees and Sale of Bags, Dresses, and Books The Ld. CIT(E) objected to the assessee earning ?30,43,110/- from transportation fees and sales of bags, dresses, and books, arguing that these activities do not support the charitable intent of promoting education. The Ld. AR countered that these activities were incidental to running the school and not for profit. The buses were used solely for transporting students, and the sale of bags and books was part of school activities, not commercial ventures. The tribunal found this objection unsustainable, stating that the primary purpose of these activities was to support the educational function of the school, not to generate profit. 2. Absence of Specific Mention of Running a School in the Memorandum of Association The Ld. CIT(E) objected that the Memorandum of Association did not explicitly mention running a school. The Ld. AR argued that the main objects of the society were to impart education, and it was not necessary to specify the school's name in the Memorandum. The tribunal agreed, noting that the broad objectives of the society were sufficient and that the school was a means to achieve these objectives. 3. Receipts Exceeding the Limit of ?1 Crore The Ld. CIT(E) noted that the receipts during the financial years 2013-14 to 2015-16 exceeded ?1 crore, suggesting wrongful exemption claims under Section 10(23C). The Ld. AR argued that the society was running the school solely for educational purposes and not for profit. The tribunal held that the Ld. CIT(E) should focus on whether the society's objects are charitable and its activities genuine. The tribunal found no basis for the objection, emphasizing that surplus income does not negate the charitable nature if it is used for educational purposes. 4. Aims and Objects Including Non-Educational Purposes The Ld. CIT(E) objected that the society's aims included non-educational purposes like providing financial assistance for marriages and homes for destitute women. The Ld. AR responded that an amended Memorandum of Association had been submitted, focusing solely on educational purposes. The tribunal found that the Ld. CIT(E) had erroneously considered objects from both the original and amended Memorandums. The tribunal confirmed that the amended objects were charitable and educational in nature. Conclusion The tribunal concluded that the objections raised by the Ld. CIT(E) were not sustainable. It directed the Ld. CIT(E) to grant registration to the society under Section 10(23C)(vi) of the Income Tax Act, emphasizing that the society's activities were genuinely educational and not profit-oriented. The appeal filed by the assessee was allowed. Order The tribunal ordered the Ld. CIT(E) to grant exemption under Section 10(23C)(vi) from the date of application, with the decision pronounced in the open court on 05.12.2017.
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