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2011 (10) TMI 171 - AT - Income TaxExemption under 10(23)(C)- Assessee is an educational institutions receipts do not exceed Rs. One Crore. AO proceeded that the institution is not run for the achievement of specified aims and objectives - No accounts have been audited and the assets of the institution are used for personal benefit. AO concluded that the trust exists solely for profit purpose and has lost sight-of its aims and objectives for which it was created. Moreover, registration u/s 12A applied by the trust was not granted by the department. - Held That:- The expression "solely for educational purpose and not for purpose of profit" has been used in Section 10(23C) of the Act, in a number of clauses. Therefore, it is imperative to understand the meanings assigned to such expression in the light of the context it is used. The expression stands judicially defined in the case of Aditanar Educational Institution v. Addl.CIT (1997 -TMI - 5552 - SUPREME Court) as that if after meeting expenditure, any surplus results incidently from activity lawfully carried on by an educational institution, it will not cease to be one existing solely for educational purpose. The AO had not found any irregularity in the accounts of the trust. There was no document to show that the trust was being run for any purpose of profit except for educational purposes. The assessee was entitled to exemption u/s 10(22) of the Act. Further it is not statutorily incumbent upon the assessee to obtain registration u/s 12A of the Act, to enable it for exemption u/s 10(23C) of the Act. As is evident that registration is not relevant u/s 12A of the Act, having regard to the fact-situation of the case, as its receipts, don't exceed Rs. One Crore and the assessee trust exists solely for the educational purpose and not for the purpose of profit. Thus appeal of assessee is allowed.
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