The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has ruled that the unregistered Association of Persons formed by agreement merging two charitable Trusts eligible for exemption under Income Tax.
The appellant Sharda Mandir High School which is an Association of person (AOP), against order passed by The Commissioner Of Income Tax (Exemption), Mumbai for assessment year 2018 – 19 u/s 10 (23C) (vi) of The Income Tax Acton 30 September 2019. Per that order, application made by the assessee on 22/9/2018 seeking exemption under that Section was rejected.
The assessee, Sharda Mandir High School, filed an application on 30/9/2018 seeking approval for claiming exemption u/s 10 (23C) (vi) of The Act for assessment year 2018 – 19. It was formed as an Association of persons by way of an agreement dated 23/11/2016 comprising two members namely (1) Sharda Sikhshna Seva Samiti and (2) Lodha Charitable Trust.
Sharda Shikshan Seva Samiti was running a Marathi medium school and a junior college in the name of Sharda Mandir high school for 36 years in Mumbai. It had a piece of land admeasuring 1294 m2 at Girgaon division Mumbai As the need of an English medium school was found, it entered into a management agreement on 12 August 2014 with Lodha Charitable Trust for an initial period of 20 years to set up an English medium school on the premises owned by Sharda Shikshan Seva Samiti.
The division bench of Prashant Maharishi and Kuldip Singh has held that if any of the conditions are violated
based on which the exemption is granted to the assessee, the provisions of the law itself gives authority to prescribed authority to withdraw the exemption already granted. This is also mandated and explained in detail in the circular issued by the central board of direct taxes. So far this year is concerned, there is no violation of any of the conditions prescribed u/s 10(23C) by the assessee. None is shown to us by the revenue authorities. It is also not shown that even for any of the subsequent years; there is any violation of the conditions. In view of this, we are of the opinion that, the assessee is an educational Institute running solely for the purpose of education and not existing for the purposes of the profit. It satisfies all the conditions mentioned u/s 10(23C) (vi) of the act.
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