Section 10(23C)(vi) of the Income Tax Act
Income-tax Act, 2025: s.11
Section 10(23C)(vi) falls under section 10 of the Income-tax Act, 1961, which corresponds to section 11 (Incomes not included in total income) of the Income-tax Act, 2025.
Read section 11 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 10(23C)(vi) is CIT v. Rajasthan & Gujarati Charitable Foundation Poona (402 ITR 441), cited in 187 of the 517 judgments on BharatTax that turn on this section.
Leading authorities on Section 10(23C)(vi)
Depreciation is allowable as a deduction even if the expenditure for acquiring the capital asset was treated as application of income for charitable purposes. This does not constitute a double benefit.
An educational institution qualifies for exemption under Section 10(23C)(vi) if its predominant object is solely education and not to earn profit. The mere generation of a surplus or profit from imparting education does not, by itself, disentitle it from the exemption, provided the income is applied for its educational objects.
When an assessee society runs multiple educational institutions, the exemption under Section 10(23C)(iiiad) applies to each institution individually, meaning the specified monetary limit is considered per institution and not for the aggregate annual receipts of the entire society.
The Commissioner of Income Tax (CIT) has no power to cancel registration granted under Section 12A of the Income Tax Act retrospectively, especially when there is no express provision in the Act for such cancellation and the order is quasi-judicial in nature.
The burden of proof lies on the Assessing Officer (AO) to establish that a trust or charitable institution is hit by the provisions of Section 13. General allegations or mere transactions with interested persons are insufficient unless concrete benefit is proven.
Sanction for prosecution under Section 197 of the Code of Criminal Procedure is required for public servants who were or are in service, distinguishing it from Section 19 of the Prevention of Corruption Act, which does not require sanction for those who have ceased to be public servants.
The proviso to Section 2(15) of the Income Tax Act cannot be invoked against city improvement trusts if their activities are not in the nature of trade, commerce, or business, even if they generate surplus or sell developed plots.
The scope and amplitude of Section 10(23C)(vi) of the Income-tax Act and its applicable provisos, rules, and forms are the subject of examination in relation to applications for approval.
Expenditure incurred includes depreciation claims. Necessary provisions required by statute, such as for gratuity and leave encashment, can be considered as applied for the objects of a trust.
In Andhra Pradesh, only societies, associations, or trusts can establish educational institutions, as individuals are prohibited from doing so under Section 20A of the AP Education Act.
