Section 10(23C)(iv)

Section 10(23C)(iv) — the law in short

What the courts have decided on section 10(23C)(iv), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• India Trade Promotion Organisation v DGIT (Exemptions) High CourtHelps taxpayerValidity unconfirmed
  My institution advances an object of general public utility but charges fees and ends up with a surplus — does the proviso to section 2(15) knock out my exemption?
  Not by itself. The Delhi High Court upheld the constitutional validity of the first proviso to section 2(15) but read it down: it bites only where the dominant and prime objective of the institution is profit making, whether directly through trade, commerce or business or indirectly through rendering services in relation to them. Charging a fee, or generating a surplus, does not by itself make an institution non-charitable. Because the India Trade Promotion Organisation's driving force was promoting the nation's trade rather than earning profit, its exemption under section 10(23C)(iv) was restored and a mandamus issued to grant approval within six weeks.
• Institute of Chartered Accountants of India v DGIT (Exemptions) High CourtHelps taxpayerValidity unconfirmed
  My institution is a statutory regulator that charges fees for coaching and placement and ends up with a surplus — does that make it a trade or business under the proviso to section 2(15)?
  No. The Delhi High Court held that a body incorporated to regulate a profession, which imparts education and training as part of that statutory function, is not carrying on trade, commerce or business merely because it charges fees and generates a surplus. Coaching classes and campus placement interviews were held to be activities in furtherance of the Institute's main object, so they are neither business nor services rendered in relation to any trade, commerce or business. The orders refusing exemption were set aside and the Director General was directed to recognise the Institute under section 10(23C)(iv) for assessment years 2006-07 to 2011-12.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.