2020 (5) TMI 532 - AT - Income Tax

Exemption u/s 10(23C)(vi) denied - assessee trust is running two educational institutions namely, Umalok Paramedical College and Umalok Nursing School and trust has not been granted registration u/s 12AA - HELD THAT - Expenditure involved in conduct of the camps and distribution of medicines, food and cloth forms and an integral part of conducting of field camps by the assessee trust in imparting the education. They are directly and also integrally connected with the type of education imparted by the assessee trust. We are unable to accept with the finding of the ld. CIT (A). We have also gone through the observation of the ld. CIT (A) that the assessee trust has given various interest free advances to the trustees and find that the assessee has given only an indemnity bond but not any loans to the trustees as per the record before us. Hence, it can be held that the assessee is found to be solely in the activity of education and no other activities have been undertaken by the assessee during the year. The prescribed limit for Section 10(23)(iiiad) is less than ₹ 1 crore. Hence, keeping in view that the annual receipt of the education institute is less than ₹ 1 crore, the education institute is solely involved in the educational activity and since the objects clause of the trust during the year under consideration is to carry the educational activities and keeping in view that no other material contra has been brought by the revenue. We hereby hold that the assessee is eligible for deduction u/s 10(23C) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Dismissal of appeal by CIT(A)
2. Exemption claim under section 10(23C)(vi)
3. Observations and inferences made by CIT(A)
4. Acceptance of additional grounds by the assessee
5. Eligibility for exemption under section 10(23C)

1. Dismissal of Appeal by CIT(A):
The appeal was filed against the orders of the ld. CIT(A) who dismissed the appeal. The grounds raised by the assessee included the contention that the dismissal was unjustified.

2. Exemption Claim under Section 10(23C)(vi):
The assessee trust claimed exemption under section 10(23C) on the basis of running educational institutions with total receipts below ?1 crore. The AO initiated assessment proceedings questioning the eligibility of the trust for this exemption. The trust argued that its main object was educational and not for profit, with receipts under the prescribed limit.

3. Observations and Inferences by CIT(A):
The CIT(A) confirmed the addition, noting that certain expenditures claimed by the assessee were not directly related to educational activities. Additionally, interest-free advances to trustees were highlighted as questionable activities.

4. Acceptance of Additional Grounds by the Assessee:
The additional grounds taken by the assessee were not pressed, indicating a strategic decision during the proceedings.

5. Eligibility for Exemption under Section 10(23C):
The ITAT Delhi found that the assessee was duly registered with relevant councils and permitted to conduct educational activities. The tribunal observed that conducting field exposure camps and related activities were integral to educational training. The tribunal disagreed with the CIT(A)'s findings and held that the trust was solely engaged in educational activities, making it eligible for the deduction under section 10(23C).

In conclusion, the ITAT Delhi allowed the appeal, emphasizing that the trust's activities were primarily educational, meeting the conditions for exemption under section 10(23C).