2019 (1) TMI 1005 - AT - Income Tax

School under society qualifies for tax exemption as educational institution under Income Tax Act

M/s Ram Lal Bhasin Public School Versus The CIT (Exemptions), Chandigarh

The Tribunal allowed the appeal of the assessee, a school under a society, against the Commissioner's decision denying exemption u/s 10(23C)(vi) of the ... Qualification for exemption u/s 10(23C) - assessee is a school of “Sanatam Dharma Paracharak Sabha” a society registered in the office of Registrar of Joint Stock Companies under Societies Registration Act on 5.2.1914 - no evidence of the assessee claiming exemption u/s 10(23C) (iiiad) of the Act in the past - assessee furnished its application in form No. 56D - Held that:- For claiming exemption u/s 10(23C)(iiiad) of the Act, the entity must be an University or other educational institute existing solely for educational purpose and not of the purposes of profit. In the present case it is not in dispute that the assessee is a school which is affiliated to the ‘Council for the India School Certificate of Examination’ (ISCE), copy of which is placed on the record. It is also not the case of the Department that the assessee school was existing for the purpose of the profit. See CIT and Another Vs Children Education Society [2013 (7) TMI 519 - KARNATAKA HIGH COURT] Thus when the assessee was running a school for educational purposes and not for earning profit, then it was entitled to the exemption u/s 10(23C)(vi) of the Act. - Decided in favour of assessee. Issues:1. Appeal against order of Commissioner of Income Tax (Exemptions) Chandigarh regarding exemption u/s 10(23C)(vi) of the Income Tax Act, 1961.Analysis:The appeal was made by the assessee against the order of the Commissioner of Income Tax (Exemptions) Chandigarh regarding the exemption u/s 10(23C)(vi) of the Income Tax Act, 1961. The Commissioner observed that the assessee, a school under a society, did not qualify for the exemption as it did not meet the conditions of existing solely for education and not for profits. The Commissioner noted the lack of evidence of past exemption claims and the absence of a separate entity with a PAN number. The Commissioner rejected the application moved by the assessee based on these grounds.The assessee contended that the exemption u/s 10(23C)(vi) is applicable to educational institutions like universities and schools, and not just to trusts or societies. The assessee, running an educational institution, had previously claimed exemption u/s 10(23C)(iiiad) till the Assessment Year 2015-16. The assessee filed an application for exemption in the current year under consideration. The assessee argued that no PAN was required for claiming the exemption u/s 10(23C)(iv) of the Act and cited a judgment of the Karnataka High Court in support.The Tribunal considered the provisions of Section 10(23C)(vi) of the Act, which require an entity to exist solely for educational purposes and not for profit to claim exemption. The Tribunal noted that the assessee, a school affiliated with a recognized board, was not operating for profit. Referring to a judgment of the Karnataka High Court, the Tribunal emphasized that educational institutions are separate entities and income from such institutions should be excluded while computing the total income of the assessee. The Tribunal concluded that the assessee, running a school for educational purposes and not for profit, was entitled to the exemption u/s 10(23C)(vi) of the Act. Consequently, the impugned order was set aside, and the Commissioner was directed to allow the exemption claimed by the assessee u/s 10(23C)(vi) of the Act. The appeal of the assessee was allowed.