January 2019

Section 10(23C)(iiiad) Educational institution Exemption u/s. 10(23C)(iiiad) Assessee-trust was established predominantly with an object of providing education to all sections of society Mere fact that it spent a meagre amount of its total income on some allied charitable activities such as providing food and clothing to relatives of poor students, would not stand in way of AO to deny benefit to it u/s. 10(23C)(iiiad)

K. B. Bhujle
Advocate

34.  Sri Sai Educational Trust vs. CIT; [2018] 100 taxmann.com 50 (Mad): Date of order: 10th October, 2018 A. Y. 2014-15

 

Section 10(23C)(iiiad) Educational institution Exemption u/s. 10(23C)(iiiad) Assessee-trust was established predominantly with an object of providing education to all sections of society Mere fact that it spent a meagre amount of its total income on some allied charitable activities such as providing food and clothing to relatives of poor students, would not stand in way of AO to deny benefit to it u/s. 10(23C)(iiiad)

 

The assessee trust was established predominantly with an object of providing school education to all sections of society. The only activity of the assessee-trust was running of an educational institution. The assessee-trust was granted registration u/s. 12A on 30/05/2016. The assessee filed its return for relevant year i.e. A. Y. 2014-15 claiming exemption of income. The assessee's claim was based on plea that in view of the registration granted u/s. 12AA of the Act, with effect from 01/04/2015 and in view of the first proviso to section 12A(2), effect of such registration had to be applied retrospectively in respect of the subject year i.e. A. Y. 2014-15 also and consequently, the Assessing Officer ought not to have assessed the income to tax. The assessee's alternative plea was that if the exemption was not allowed with retrospective application of the registration as contemplated u/s. 12A(2), it should have been granted the benefit of exemption by applying section 10(23C)(iiiad). The Assessing Officer rejected assessee's claim of granting benefit of section 12A with retrospective effect. He further held that since assessee was not existing solely for educational purpose as it was carrying on some other charitable activities also, exemption u/s. 10(23C)(iiiad) was also not allowable.

 

The assesee filed a writ petition and challenged the order of the Assessing Officer. The Madras High Court upheld the order of the Assessing Officer as regards section 12A. The High Court allowed the writ petition and held that the assessee is entitled to exemption u/s. 10(23C)(iiiad) and held as under:

 

i)    Perusal of the provi

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