2018 (5) TMI 1770 - AT - Income Tax

Eligibility for approval u/s. 10(23C)(vi) - assessee as educational institution existing solely for the purposes of education OR for the purposes of profit - Held that:- The funds (or income) of the educational institution are (or, is) not to be utilized by the assessee-trust, owning and managing it, for any other (non-educational) object/purpose, which, as aforenoted, there are several (also refer para 2 of the impugned order/cl. 3 of the trust deed). That is as where the funds of an educational institution are used by the person in receipt thereof for any other purpose, even if charitable, it cannot be said that the said educational institution exists solely for (the purpose of) education. The same also contravenes the third proviso to section 10(23C)(vi). As perused the balance-sheets as at 31. 3. 2015 to 31. 03. 2017 to find no such diversion. The same being in the nature of a continuing condition could be stipulated by the competent authority while granting the approval. Subject to this, we find no valid reason not to grant approval to the assessee trust qua the Sutlej Public Senior Secondary School at Village Hawas, District Ludhiana.

We, vacating the findings by the CIT(E), direct the grant of approval under section 10(23C)(vi) to the assessee trust qua SPSSS, an educational institution existing solely for the purposes of education and not for the purposes of profit. This, of course, would be subject to the capital/funds of the school being not used for any other (non-educational) activity (object) by the assessee-trust, or any other condition deemed fit and proper, viz. as to maintenance and audit of school accounts separately, etc. , in accordance with and as contemplated by law, that the competent authority may impose while granting the said approval.