ITAT grants registration to society under Income Tax Act, emphasizing genuineness of educational activities

The ITAT allowed the appeal, directing the grant of registration to the assessee society under section 10(23C)(vi) of the Income Tax Act, 1961. The denial of approval based solely on non-compliance with the RTE Act was deemed erroneous, emphasizing that compliance with external statutes should not be the determining factor for approval. The ITAT held that the genuineness of educational activities should be the primary consideration for approval, not adherence to other Acts.

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Issues:
1. Denial of approval under section 10(23C)(vi) of the Income Tax Act, 1961 based on non-compliance with the Right of Children to Free And Compulsory Education Act, 2009 (RTE Act).

Analysis:
The appeal was filed against the order of the Principal Chief Commissioner of Income Tax rejecting the assessee's application for approval under section 10(23C)(vi) of the Income Tax Act, 1961. The Principal Chief Commissioner based the rejection on the assessee's alleged non-compliance with the RTE Act, specifically regarding the enrollment of students from economically weaker sections. The assessee argued that the RTE Act provisions did not apply to their society as they were not imparting education from class 1 to class 8, which is the scope of elementary education under the RTE Act. The assessee contended that since their school did not fall under the RTE Act's definition of a school, the denial of approval was unjustified.

The assessee further cited a previous decision by the Chandigarh Bench of the ITAT in a similar case, where it was held that non-compliance with the RTE Act cannot be the sole basis for denying approval under section 10(23C)(vi) of the Act. The ITAT emphasized that the Income Tax Act is self-contained and does not mandate compliance with other Acts for granting approval. The ITAT also highlighted that the genuineness of educational activities should be the determining factor for approval, not compliance with external statutes.

Upon review, the ITAT found that the assessee society was not covered under the RTE Act as they were not imparting elementary education falling within the Act's purview. The ITAT reiterated that the denial of approval solely based on RTE Act compliance was erroneous. Relying on the precedent and the lack of doubt regarding the genuineness of the society's activities, the ITAT directed the Principal Chief Commissioner to grant registration to the assessee society under section 10(23C)(vi).

In conclusion, the ITAT allowed the appeal, setting aside the Principal Chief Commissioner's order and directing the grant of registration to the assessee society under section 10(23C)(vi) of the Income Tax Act, 1961.

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