2019 (5) TMI 779 - AT - Income Tax

Grant of exemption/approval u/s 10(23C)(vi) denied - mentioning some other aims and objects other than pursuance to aims and objects of assessee society - assessee society is running only educational institution and established only for educational purposes - HELD THAT - It is not in dispute that the aims and objects of the assessee are to promote education and assessee in pursuance of aims and objects only carried out the educational activities. The assessee did not do any other activity, therefore, merely mentioning some other aims and objects would not disentitle the assessee for claiming exemption/approval under section 10(223)(vi) CCIT did not bring any material on record as to how assessee was doing any other activity in pursuance to aims and objects of assessee society. Merely because the assessee printed certain aims and objects as per the requirement of Registrar of Societies would not make out a case for rejection of the application of assessee for approval under the above provision. The material on record clearly suggest that assessee solely exist for educational purposes only. Merely because some other aims and objects have been mentioned other than education, which have also not been verified at this stage would clearly show that assessee is entitled for exemption / approval 10(23C)(vi) of the I.T. Act. The issue is covered in favour of the assessee by the case of Harf Charitable Trust (Regd.) Malerkotla vs. Chief Commissioner of Income Tax And Another 2015 (8) TMI 848 - PUNJAB HARYANA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Grant of exemption under section 10(23C)(vi) of the I.T. Act, 1961 based on the aims and objects of the assessee society.

Issue 1: Aims and Objects Analysis
The assessee applied for exemption under section 10(23C)(vi) of the I.T. Act, 1961, stating its aims and objects primarily focused on promoting education. However, the Learned CCIT found that only certain aims and objects catered to educational purposes, while others indicated different motives. The assessee provided an undertaking that it was solely engaged in educational activities, running schools and colleges, with no other non-educational work undertaken. The Hon'ble Punjab & Haryana High Court's judgment in a similar case emphasized the application of a predominant object test, stating that the existence of a clause allowing other activities does not disqualify an entity from educational exemption if the primary focus remains on education. The Board Circular No.14 of 2015 highlighted the requirement for educational institutions to exist solely for educational purposes, not for profit. The tribunal concluded that the assessee's activities aligned with its stated aims and objects of promoting education, and the presence of other objectives did not disqualify it from exemption under section 10(23C)(vi) of the I.T. Act.

Issue 2: Legal Precedent and Interpretation
The Learned Counsel for the Assessee cited the judgment of the Hon'ble Punjab & Haryana High Court in a specific case to support the contention that the assessee society, primarily engaged in educational activities, should be granted exemption under section 10(23C)(vi) of the I.T. Act. The tribunal analyzed the legal precedent and held that the presence of additional aims and objects, not verified for profit-seeking activities, did not negate the assessee's eligibility for exemption. The tribunal emphasized the importance of the predominant object test and the absence of evidence showing the assessee engaging in non-educational activities. The judgment highlighted that the mere inclusion of other objectives in the society's documents, as required by authorities, did not disqualify the assessee from claiming exemption under the relevant provision. Relying on legal interpretations and precedents, the tribunal set aside the order of the Ld. CCIT and directed the grant of approval/exemption to the assessee society under section 10(23C)(vi) of the I.T. Act.

Conclusion
The tribunal, after considering submissions and legal precedents, ruled in favor of the assessee society, emphasizing its primary focus on educational activities as per the stated aims and objects. The judgment highlighted the significance of the predominant object test and the lack of evidence supporting the contention that the assessee engaged in non-educational profit-seeking activities. By aligning the assessee's activities with its charitable objectives of promoting education, the tribunal overturned the Ld. CCIT's decision and directed the grant of approval/exemption under section 10(23C)(vi) of the I.T. Act.