Scholars Education Trust of India Vs CIT (Exemption) (ITAT Jaipur)
ITAT Jaipur held that withdrawing approval under section 10(23C)(vi) of the Income Tax Act not justified in absence of any corroborative evidence of personal benefit of trustees and misuse of funds. Accordingly, appeal allowed and registration u/s. 10(23C)(vi) restored.
Facts- The assessee is an educational society running schools across Rajasthan, Delhi and Uttar Pradesh by the name of “Central Academy”. The assessee was granted approval u/s 10(23C)(vi) for AY 2011-12 and onwards. Subsequently, during the assessment for AY 2013-14, the Assessing officer vide letter dated 28.03.2016 proposed withdrawal of exemption u/s. 10(23C)(vi) of the IT Act. After review, the CIT (Exemptions), Jaipur passed the order dated 03.01.2017 withdrawing approval granted u/s 10(23C)(vi) of the Act, from AY 2013-14 onwards citing violation of prescribed conditions under the said provision. This is an appeal filed by the assessee against the order of Ld. CIT (Exemption), Jaipur dated 02.09.2025 withdrawing approval granted u/s 10(23C)(vi)of the Income Tax Act, 1961.
Conclusion- Held that therefore, without considering the overall activities of the Assessee Society, the Department cannot cherry pick expenses/investments incurred in due course of charitable activities and proceed to cancel the registration of the Assessee on said basis under Section 10(23C)(vi) of the Act; it stands established that the Assessee has not provided any benefit to the trustee nor the funds of the Assessee, been diverted for personal benefit of trustees or any third person and all investments made by the Assessee satisfy the modes specified u/s. 11(5) of the Act.
