Tribunal directs approval for tax exemption under sec 10(23C)(vi) for educational trust

The Tribunal allowed the appeal, directing the CIT (E) to grant approval for exemption under section 10(23C)(vi) of the Income Tax Act, 1961. The Tribunal found the trust existed solely for educational purposes based on its activities and financial records, reversing the CIT (E)'s rejection. The order was pronounced on 22/08/2022, in favor of the assessee.

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Issues Involved:
1. Delay in filing the appeal.
2. Rejection of the application for exemption under section 10(23C)(vi) of the Income Tax Act, 1961.
3. Determination of whether the trust exists solely for educational purposes and not for profit.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 81 days. The delay was attributed to the extension of the limitation period by the Hon'ble Supreme Court due to the COVID-19 pandemic. The Tribunal acknowledged the sufficient cause for the delay and condoned it, allowing the appeal to proceed.

2. Rejection of the Application for Exemption:
The CIT (Exemption) rejected the trust's application for exemption under section 10(23C)(vi) on the grounds that the trust did not exist solely for educational purposes but also had other non-educational objects. The CIT (E) argued that the trust's funds were being utilized for purposes other than education, which disqualified it from the exemption.

3. Determination of Solely Educational Purpose:
The Tribunal analyzed the objects and activities of the trust. It was noted that the trust's activities were confined to running educational institutions, and no other activities mentioned in the trust's objects were pursued. The Tribunal referred to the case of 'CIT vs. Geetha Bhawan Trust', which emphasized that the existence of non-educational objects in the trust's deed does not disqualify it if no activities are carried out in pursuance of those objects.

The Tribunal found that the CIT (E) did not provide evidence of the trust engaging in non-educational activities. The trust's income and expenditure details showed that all income was derived from educational activities, and there was no diversion of funds to non-educational purposes. Thus, the trust met the criteria of existing solely for educational purposes and not for profit.

Conclusion:
The Tribunal concluded that the CIT (E) erred in rejecting the trust's application for exemption under section 10(23C)(vi). The order of the CIT (E) was reversed, and the CIT (E) was directed to grant the requisite approval for exemption to the trust. The appeal was allowed in favor of the assessee.

Final Order:
The appeal of the assessee was allowed, and the CIT (E) was directed to grant approval for exemption under section 10(23C)(vi) of the Income Tax Act, 1961. The order was pronounced in the open Court on 22/08/2022.

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