THE INCOME-TAX ACT ALLOWS AN EXEMPTION FOR CHARITABLE TRUSTS THAT ARE WHOLLY DEDICATED TO EDUCATIONAL PURPOSES

The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has upheld that a charitable trust engaged solely in educational purposes is eligible for an exemption under section 10(23C)(vi) of the Income Tax Act, 1961, and has overruled the Commissioner of Income Tax (Exemption order )’s of 07-03-2018.The appellant is a charitable trust that has been registered with the Assistant Charity Commissioner in Rajkot under section 12A of the Act. The Commissioner of Income Tax (Exemptions) observed that the assessee trust exists for purposes other than education, as revealed by the trust deed’s objects, and held that the provisions of section 10(23C)(vi) are not relevant.┬áThe trust had gained registration under section 12A of the Act, according to the appellant, and had submitted audit reports. Despite the fact that the trust deed’s object clause covers activities other than educational activities, the reports said that they had not engaged in any other activity.Nothing in the record indicates that the appellant has engaged in activities other than educational activities, and the revenue claimed that they had no doubts about the appellant’s trust’s functions. The only reason for denial of exemption under section 10(23C)(vi) of the Act is that the trust deed’s objects clause covers things other than educational activity. As the disputed section only exempts universities and other educational institutions that exist only for educational purposes, the application for exemption under section 10(23C)(vi) of the Act was denied. The Coram found that the Commissioner of Income Tax (Exemptions) misled in granting the exemption u/s 10(23C)(vi) and granted the appeal based on the judicial precedence.

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