TaxTMI 
TaxTMI 
2011 (10) TMI 171
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....he action of the AO in not allowing exemption u/s 10(23C) of the Income-tax Act,1961 thereby disallowing exemption of income of Rs.1,16,920/- claimed under the above section. 2. That the worthy CIT(A), Patiala has erred to consider that the assessee fulfils all the conditions pertaining to the exemption u/s 10(23C) of the Act and exemption u/s 10(23C) was rightly allowed by the AO vide its earlier order passed u/s 143(3) on 29.08.2005 accepting 'nil' returned income after allowing exemption of income of Rs. 1,16,920/- u/s 10(23C) of the Income-tax Act. 3. That the action of the CIT(A) Patiala in confirming the action of the AO in not allowing exemption u/s 10(23C) is against the facts and circumstances of the case and by not consideri....
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....). It was argued by the ld. 'AR' that the receipts of the school are less than Rs.1 crore and consequently income of the educational institution is exempt from tax. The school is affiliated to the Central Board of School Education and all the objectives of the institution are within the meaning of Section 10(23C) of the Act. It was further contended that the trust was formed as per Trust Deed which was duly registered. It is not incumbent upon the assessee to obtain registration u/s 12A of the Act having regard to the provisions of Section 10(23C) of the Act as the receipts are less than Rs.1 crore. It was further argued that the earlier AO, as per order dated 03.03.2008 clearly mentioned as under : "The assessee is an educational instit....
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....ectives. It was, further, alleged by that trustee that no accounts have been audited and the assets of the institution are used for personal benefit. Inspired by these allegations, the AO concluded that the trust exists solely for profit purpose and has lost sight-of its aims and objectives for which it was created. The relevant part of the findings of the AO is reproduced hereunder : "5. From the above facts, it is clear that the trust exists solely for profit purposes and has thus lost sight of its aims and objectives for which it was created. The trust does not enjoy exemption u/s 11 of the Income-tax Act,1961. Moreover, registration u/s 12A applied by the trust was not granted by the department. The trust deed does not have the disso....
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....al institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed." 9. The expression "solely for educational purpose and not for purpose of profit" has been used in Section 10(23C) of the Act, in a number of clauses. Therefore, it is imperative to understand the meanings assigned to such expression in the light of the context it is used. The expression stands judicially defined by the Hon'ble Supreme Court in the case of Aditanar Educational Institution v. Addl.CIT [1997] 224 ITR 310 as that if after meeting expenditure, any surplus results incidently from activity lawfully ....
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....se of profit, if the aggregate annual receipts of such university or educational institution don't exceed Rs. One Crore, the prescribed limit vide Rule 2BC. The assessee trust is an educational institution existing solely for the educational purpose and its aggregate annual receipts don't exceed Rs. One Crore. The assessee trust discharged its onus by bringing evidences to support its claim of exemption u/s 10(23C) of the Act. The AO cannot rebut such claim of the assessee trust by way of mere assertion not supported by any tangible material. 12. It is pertinent to indicate that Section 10(23C) has been substantially amended/enlarged, vide the Finance (No.2) Act,1998, w.e.f. 1.4.1999, in order to provide exemption to any income of a Univ....