Eligibility of Educational Institutions to Claim Exemption under Section 10(23C) of the Income-Tax Act – Part II

INTRODUCTION

4.1    As mentioned in paras 1.2 and 1.3 of Part I of this write-up (BCAJ January 2023), section 10(22) of the Income-tax Act, 1961 (‘the Act’) provided an exemption for any income of a university or other educational institution existing ‘solely’ for educational purposes and not for profit [hereinafter referred to as Educational Institution]. The Finance (No. 2) Act, 1998 while omitting section 10(22) of the Act, inter alia introduced clauses(iiiab), (iiiad), and (vi) in section 10(23C) of the Act providing similar exemptions for Educational Institutions and also introduced various provisos providing requirements for approval, prescribing the procedure for dealing with application for such an approval [Basic Conditions] and making other provisions such as application of income, accumulation of income, investment of funds, etc. [Monitoring Conditions] which are mainly applicable to Educational Institutions covered by only section 10(23)(vi) with which we are concerned in this write-up as mentioned in paras 1.3 and 1.4 of Part 1 . The interpretation of these provisions and the term ‘solely’ had given rise to considerable litigation and was a subject matter of dispute before different authorities/ courts.

4.2    As mentioned in Part I (paras 1.5 to 1.9), the Supreme Court in its several decisions has from time to time