COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. BEAWAR BAL VIKAS SAMITTEE C/O MANISH VYAS AND ASSOCIATES

Facts

The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) which granted the assessee, Beawar Bal Vikas Samittee, the benefit of Section 10(23C) of the Income Tax Act. The Revenue's contention is that the ITAT erred in granting relief from the year for which it was sought, arguing that certain activities of the assessee did not qualify as being for a charitable purpose. The assessee had claimed exemption under Section 10(23C) read with Section 2(15) of the Act. The ITAT had previously granted the benefit of Section 10(23C) to the assessee. The High Court noted that incidental or supporting activities to the primary educational purpose should not per se exclude the grant of benefit.

Held

The High Court held that no substantial question of law arises from the ITAT's order. The Court reasoned that if the primary activity of the assessee is education, then the mere inclusion of incidental or supporting activities cannot, per se, exclude the grant of benefit under Section 10(23C) of the Act. The Court referred to the predominant objective test articulated in the Supreme Court judgment of Additional Commissioner of Income Tax Vs. Surat Art Silk Cloth (1980 121 ITR 1) and the Delhi High Court's decision in Director of Income Tax (Exemption) Vs. Delhi Public School Society (2018 (15) G.S.T.L. 502). The appeal filed by the Revenue was accordingly dismissed.

Key Issues

1. Whether the Income Tax Appellate Tribunal erred in granting the benefit of Section 10(23C) of the Income Tax Act from the year for which it was sought, given that certain activities of the assessee may not have been for a charitable purpose? (Question of law and fact, relating to Section 10(23C) and Section 2(15) of the Income Tax Act). Assessee's Contention: The assessee claimed exemption under Section 10(23C) read with Section 2(15) of the Act. The ITAT had granted the benefit. The High Court noted that activities incidental or supporting the main charitable activity, such as education, should not per se exclude the grant of benefit. Revenue's Contention: The Revenue argued that the ITAT erred in granting relief from the year for which the benefit was sought, as certain activities performed by the assessee could not be considered for a charitable purpose.