INCOME TAX ACT, 1961

Section 10(23C)

Exemption under section 10(23C) - Allowability - Medicine distribution, cloth distribution, etc. by assessee alleged to be charitable in nature but having no connection with education -

Pursuant to search action, AO found that assessee trust was running two educational institutions. Trust was not granted registration under section 12AA, thus, AO disallowed exemption under section 10(23C) holding that trust was not established solely for educational purposes. CIT(A) confirmed addition holding that in income and expenditure account, assessee claimed expenditure under heads medicine distribution, cloth distribution, etc. It was held that said activities may be charitable in nature but they did not have any direct or incidental connection with education. Held: Expenditure involved in conduct of camps and distribution of medicines, food and cloth, formed an integral part of conducting of field camps by assessee trust in imparting education. They were directly and also integrally connected with type of education imparted by assessee trust. Further, annual receipt of education institute was less than Rs. 1 crore, and education institute was solely involved in educational activity. Since objects clause of trust was to carry educational activities and keeping in view that no other material contra was brought by revenue, assessee was eligible for deduction under section 10(23C).

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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