Charitable Trust engaged solely in Educational Purposes can avail Exemption under Income Tax Act: ITAT [Read Order]

The Rajkot Bench of Income Tax Appellate Tribunal (ITAT) has held that a Charitable trust engaged solely in educational purposes can avail exemption under section 10(23C)(vi) of the Income Tax Act, 1961 and set aside the order of the Commissioner of Income Tax (Exemption) passed on 07-03-2018.

The appellant is a charitable trust registered with Assistant Charity Commissioner, Rajkot and registered under section 12A of the Act. Commissioner of Income Tax (Exemptions) observed that assessee trust is not existing solely for educational purposes but also for purposes other than education as evident from the objects of the trust deed and held the provisions of section 10(23C)(vi) are not applicable.

The appellant contended that the trust had obtained registration under section 12A of the Actand submitted the audit reports.Though the object clause of the trust deed mentions activities other than educational activities, the reports assessstated that they had not engaged in any activity apart from educational activities.

It was observed that nothing demonstrates that the appellant has engaged in activities other than educational activities and the revenue also stated that they did not doubt the genuineness of the activities of the appellant’s trust. Further observed that the sole ground for denial of exemption under section 10(23C)(vi) of the Act is that the objects clause in the trust deed mentions objects other than educational activities.The impugned section only gives exemption to any university or other educational institution existing solely for educational purposes and thereby the application for exemption under section 10(23C)(vi) of the Act was denied.

In light of the judicial precedents, the Coram consists of Shri Waseem Ahmed, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member, held that the Commissioner of Income Tax (Exemptions), has erred in denying the exemption u/s 10(23C)(vi) and allowed the appeal. Shri Chetan Agarwal appeared on behalf of the assessee and Shri Rajesh Kumar appeared on behalf of the respondent.

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