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Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in upholding the order of the Chief Commissioner of Income Tax, rejecting the application of the assessee for grant of approval for exemption under section 10(23C) in respect of income its School?

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Section 10(23C) of the Income-tax Act, 1961—Charitable Purpose— Exemption - Burden lies upon Revenue to bring on record the evidence to rebut claim of assessee trust and to establish that activities carried out and the expenditure incurred by assessee trust could not be related to the educational activities of assessee trust by any stretch of imagination.

Facts: Whether Tribunal was right in upholding the order of Chief Commissioner of Income Tax, rejecting the application of the assessee for grant of approval for exemption under section 10(23C) in respect of income its School?and Whether Tribunal was right in holding that assessee is not existing solely for the purpose of education but also other activities and therefore the Respondent was right in rejecting the application for grant of approval under section 10(23C) in respect of income of the School run by it? (iii) Whether based on material and evidences before it, Tribunal could have come to the conclusion that assessee is not existing solely for the purpose of education but also other activities and therefore the Respondent was right in rejecting the application for grant of approval under section 10(23C)?"

Held, that burden lies upon Revenue to bring on record the evidence to rebut the claim of the assessee trust and to establish that activities carried out and the expenditure incurred by assessee trust could not be related to the educational activities of assessee trust by any stretch of imagination. No such exercise of either bringing the evidence on record or controverting or rebutting the evidence produced by the Assessee before the Chief Commissioner appears to have been undertaken by the learned Chief Commissioner. A mere reference to the expenditure incurred and the Head of expenditure in question while rejecting the Application under section 10(23C)(vi) is not enough to reject the Application under the provisions of the Act. The very purpose of educational activities and charitable activities for which the said provision intends to extend the benefit of exemption and for educational activities in particular, Section 10(23C)(vi) is likely to be defeated if such pedantic and narrow approach on the part of the revenue Authorities is allowed. In these circumstances, we are not inclined to uphold the order passed by Tribunal dated 27-11-2015 which upholds the order dated 10-8-2015 passed by the learned Chief Commissioner. In these circumstances, we hope and expect that the learned Chief Commissioner would pass fresh orders on the said Application of assessee dated 29-9-2014 after giving due opportunity of hearing to assessee and considering the evidence in detail and also the details of the expenditure incurred, by assigning proper reasons for either accepting the said Application or rejecting the same. However, we would expect detail reasoning on the part of the learned Chief Commissioner while passing fresh orders upon such remand. - KAMARAJ EDUCATIONAL TRUST V/s CHIEF CIT - [2020] 28 ITCD Online 009 (MAD)