Facts of the Case

The assessee, Hindi Sahitya Sammelan, is an institution engaged in educational activities related to Hindi language and literature. It applied for approval under Section 10(23C)(vi) of the Income-tax Act to claim exemption as an educational institution existing solely for educational purposes.The Chief Commissioner of Income Tax rejected the application on the ground that the assessee did not qualify for recognition as a charitable educational institution entitled to exemption.The assessee had historically been granted exemption under Section 10(22), which was replaced by Section 10(23C)(vi).

Issues Involved

Whether the assessee institution was entitled to approval under Section 10(23C)(vi) as an educational institution existing solely for educational purposes and not for profit.

Whether the rejection order passed by the CCIT was legally valid despite alleged lack of comprehensive analysis.

 Petitioner’s (Assessee’s) Arguments

  • The institution conducts structured educational courses such as Prathama, Madhyama, and Uttama.
  • These courses are recognized by various universities and boards.
  • The institution imparts education in Hindi language and literature.
  • It had previously enjoyed exemption under Section 10(22), indicating continuity of educational character.
  • The functions and objectives are aligned with statutory provisions governing the institution.

Respondent’s (Revenue’s) Arguments

  • The assessee allegedly failed to satisfy the conditions necessary for approval under Section 10(23C)(vi).
  • It was contended that the activities did not conclusively demonstrate existence solely for educational purposes.
  • Therefore, approval for exemption was denied.

Court Findings / ITAT Order

  • The rejection order did not comprehensively evaluate all relevant aspects of the institution’s activities.
  • A proper inquiry into the nature of activities and educational character was necessary.
  • The authority failed to provide a detailed and reasoned analysis before rejecting the application.

Important Clarification by ITAT

Authorities must conduct a detailed and objective assessment before denying approval under Section 10(23C)(vi). Mechanical rejection without examining educational activities and objects is unsustainable in law.

Link to download the order - https://itat.gov.in/public/files/upload/1665481236-Hindi%20Sahitya%20Sammela%20PDF.pdf

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