2018 (4) TMI 133 - HC - Income Tax

Tribunal Upholds Approval for Tax Exemption Under Section 10 (23C)

The Tribunal's decision to grant approval for exemption under Section 10 (23C) (vi) of the Income Tax Act was upheld. The Tribunal correctly interpreted ... Application u/s 10 (23C)(vi) - rejection of application on the ground that the assessee had not been complying with the provisions of RTE Act - whether the provisions of the RTE Act would apply to the school being run by the assessee-society, which imparts education from Class Play to Class K.G only? - Held that:- It is not disputed that the school in question is only upto K.G class. No doubt has been raised with regard to the genuineness of the activities of the society. There was no challenge with regard to genuineness of the activities of the society either before the Tribunal or before this court. The Tribunal, after considering Sections 2 (f), (n) and 12 of the RTE Act, came to the conclusion that these provisions are applicable to the schools imparting education from Ist Class to 8th Class, and hence the school of the respondent – assessee will not be governed by the RTE Act. Learned counsel for the appellant – revenue has not been able to show that the provisions of the RTE Act are applicable in the present case. He has further not been able to show that the findings recorded by the Tribunal are in any way illegal or perverse warranting interference by this Court. Consequently, no substantial question of law arises Issues involved:1. Interpretation of Section 10 (23C) (vi) of the Income Tax Act, 1961 regarding exemption for educational institutions.2. Applicability of the Right of Children to Free and Compulsory Education Act, 2009 to a school running from Class Play to Class K.G.3. Validity of the Tribunal's decision to grant approval for exemption under Section 10 (23C) (vi) based on the genuineness of activities and non-applicability of RTE Act.4. Whether the Tribunal erred in not reverting the approval decision back for re-examination.Analysis:1. The appellant-revenue challenged the Tribunal's order directing the Principal Chief Commissioner of Income Tax to grant approval under Section 10 (23C) (vi) of the Act. The Tribunal held that the RTE Act does not apply to the school running from Class Play to Class K.G. The Tribunal's decision was based on the interpretation of statutory provisions and the school's educational scope.2. The respondent-assessee applied for exemption under Section 10 (23C) (vi) for its school running from Class Play to Class K.G. The Principal Chief Commissioner of Income Tax initially rejected the application citing non-compliance with the RTE Act. The Tribunal overturned this decision, emphasizing that the RTE Act provisions apply to schools imparting education from Class 1 to Class 8, not to the respondent's school.3. The Tribunal's order was based on a detailed analysis of the RTE Act provisions, specifically Sections 2 (f), (n), and 12. It concluded that since the respondent's school did not fall within the ambit of imparting education from Class 1 to Class 8, the RTE Act did not apply. The Tribunal's decision was upheld as it correctly interpreted the statutory provisions and found no illegality or perversity in its findings.4. The Tribunal's decision to grant approval for exemption under Section 10 (23C) (vi) was deemed appropriate as it was based on a valid interpretation of the law. The appellant-revenue failed to establish the applicability of the RTE Act to the respondent's school or show any legal flaws in the Tribunal's reasoning. Therefore, the appeal was dismissed, affirming the Tribunal's decision to grant approval for exemption without reverting it back for re-examination.