2023 (9) TMI 897 - HC - Income Tax

Grant registration / certificate to the assessee trust u/s 10(23C)(vi) Erroneously mentioned as u/s. 10(23C)(vii) - CIT(E) found that it cannot be said that the trust was predominantly engaged in carrying educational activities - tribunal granted registration - HELD THAT - As on reproduction of the trust deed, it found that the trust carried out all activities so as to spread and impart education among people and to comment and develop institutions, hostels, kindergarten, aanganwadi etc. As far as the other purposes of the trust in running other activities is concerned, it was found that though it was the sole object of the institution to provide education, the ancillary activities such as promotion of cultural and social activities were co-related to the main activity of education. Perusal of the order of the Tribunal would indicate that the Tribunal found that the fees received from the students and transportation etc. were for reimbursing expenses for such purposes. The Profit and Loss account of the trust also clearly established that the trust is engaged in the educational activities and the nominal profit that it earned was not a ground on which the CIT(E) would have disregarded the application. Having perused the order of the Tribunal, we find no reason to interfere. No substantial question of law is involved.

Summary

Issues involved:
Challenge to the order passed by the Income Tax Appellate Tribunal regarding the grant of registration to the assessee trust under Section 10(23C)(vi) of the Income Tax Act.

Summary:

Issue 1: Challenge to ITAT order
The appeal challenged the order of the Income Tax Appellate Tribunal (ITAT) directing the CIT (Exemption) to grant registration to the assessee trust under Section 10(23C)(vi) of the Income Tax Act.

Issue 2: Application for approval
The assessee trust made an application seeking approval under Section 10(23C)(vi) of the Act, accompanied by relevant documents such as the trust deed, Certificate of Charity Commissioner, and Audit Reports for specified financial years.

Issue 3: CIT(E) rejection
The CIT(E) rejected the application of the assessee trust after examining records, trust deed, objects of the society, and financial documents, stating that the trust was not predominantly engaged in educational activities.

Issue 4: Tribunal's observations
The Tribunal noted that the object clause of the trust deed clearly indicated the trust's sole objective of providing education to students, with ancillary activities like cultural and social promotion being related to the main educational activity. The Tribunal found that the trust was solely engaged in educational activities based on submitted documents and evidence.

Issue 5: Trust's activities
The Tribunal observed that the trust's activities, as reflected in the Profit and Loss account, were primarily educational, with any nominal profits earned being utilized for charitable activities. The Tribunal concluded that the CIT(E)'s rejection of the application was misconceived.

Issue 6: Court's decision
Upon reviewing the Tribunal's order, the Court found no substantial question of law to interfere, as the Tribunal correctly determined that the trust was engaged in educational activities and the CIT(E)'s rejection was unjustified. Therefore, the appeal was dismissed.