Educational institution: Exemption u/s. 10(23C) (vi): CBDT Circular No. 7 of 2010: Approval granted after 13-07-2006 shall continue till it is cancelled: Approval for period upto A. Y. 2007-08 granted on 20-12-2007 operates for subsequent years also: Application for continuation of approval and rejection of the said application has no effect in law:

The assessee society was running educational institutions and was granted approval for exemption u/s. 10(23C) (vi) of the Income-tax Act, 1961 for the period up to A. Y. 2007-08. The last approval for the A. Ys. 2005-06 to 2007-08 was granted by order dated 20-12-2007. On 25- 03-2008 the assessee made an application for extension of approval u/s. 10(23C)(vi) for the A. Ys. 2008-09 to 2010-2011. By his order dated 17-03-2009, the Chief Commissioner rejected the application.

Being aggrieved, the assessee filed writ petition challenging the order. The assessee brought to the notice of the High Court, CBDT Circular No. 7 of 2010 dated 27-10-2010 clarifying that the approval granted after 13-07-2006 shall continue to operate till it is withdrawn and the assessee is not required to file an application for continuation of the approval.

The Allahabad High Court allowed the writ petition and held as under:

“i) The application dated 25-03-2008 filed by the petitioner for extension of the approval u/s. 10(23C) (vi) for the A. Ys. 2008-09 to 2010-11 was a redundant application. There was no requirement to apply for extension of the approval inasmuch as the approval in the case of the petitioner was granted after 01-12- 2006 on 20-12-2007. The approval so granted by the Chief Commissioner, by an order dated 20-12-2007, was a one-time affair, which was to continue till it was withdrawn under the proviso as extracted.

ii) Consequently, the impugned order dated 17-03-2009 was otiose having no effect in law. The impugned order only rejects the application for extension of the approval for the A. Ys. 2008- 09 to 2010-11. The original order of approval dated 20-12-2007 still continues to remain in force inspite of the rejection of the petitioner’s application by the impugned order dated 17-03-2009.

iii) The approval granted by the Chief Commissioner dated 20-12-2007 being a one-time affair continues to remain in force till it is withdrawn.”