Short Overview: Since funds of the educational institution were not to be utilized by assessee-trust, owning and managing it, for any other object/purpose and the funds were used by person in receipt thereof for any other purpose, even if charitable, it could not be said that the said educational institution existed solely for education, therefore, there was no valid reason to grant approval to assessee trust under section 10(23C)(vi).

Assessee was running educational institutions and applied for grant of exemption under section 10(23C)(vi). Revenue called for certain details for considering application for grant of exemption, which were furnished by assessee. Revenue had passed order stating that neither the condition of ‘existing solely for the purposes of education’ nor’ for the purposes of profit’ of the said provision stand satisfied, even as non-fulfillment of either would make assessee ineligible for approval under section 10(23C)(vi). Therefore, application made by assessee-trust was found not eligible for granting approval under section 10(23C)(vi).

It is held that The funds of the educational institution were not to be utilized by assessee-trust, owning and managing it, for any other object/purpose. That is as where the funds of an educational institution were used by the person in receipt thereof for any other purpose, even if charitable, it could not be said that the said educational institution exists solely for education. The same also contravened the third proviso to section 10(23C)(vi). There was no valid reason to grant approval to assessee trust under section 10(23C)(vi), an educational institution existing solely for the purposes of education and not for the purposes of profit.

Decision: Against the assessee.