The Tax Publishers2020 TaxPub(DT) 1709 (Mad-HC) : (2020) 271 TAXMAN 0084

INCOME TAX ACT, 1961

Section 10(23C)

Since there was no clause in trust deed for providing free education for children coming from different social and educational background and for providing scholarship to underprivileged children and trust deed only indicated that actual interest of assessee was to generate income by charging fees while admitting children to their schools; thus, it could be construed that schools of assessee-trust were established for profit purpose.

Charitable trusts - Exemption under section 10(23C) - No clause in trust deed for providing free education for children coming from different social and educational background -

Assessee-trust was running schools having its objective to provide an organisation that supported cause of education. Revenue denied benefit of exemption under section 10(23C) alleging that assessee was merely established for profit purpose. Held: Trustees were empowered to collect fees and charges from students after taking into account running cost including future development cost. Trust deed had not declared any other source of fund for achieving its purpose; it merely stipulated that trustees were authorised to borrow monies with or without security from banks, financial institutions or otherwise. There was no clause for providing free education for children coming from different social and educational background and for providing scholarship to underprivileged children. Trust deed indicated that actual interest of assessee-trust was to generate income by charging fees while admitting children to their schools; thus, it could be construed that schools of assessee-trust were established for profit purpose.

REFERRED : Aditanar Educational Institution v. Addl. CIT (1997) 224 ITR 310 (SC) : 1997 TaxPub(DT) 1051 (SC); American Hotel & Lodging Association Education Institute v. CBDTs (2008) 301 ITR 86 (SC) : 2008 TaxPub(DT) 2007 (SC); St. Lawrence Educational Society (Regd.) v. CIT (2013) 353 ITR 320 (Delhi) : 2011 TaxPub(DT) 0903 (Del-HC); Digember Jain Society For Child Welfare v. Director General of Income Tax (Exemptions) (2010) 329 ITR 459 (Delhi) : 2010 TaxPub(DT) 0867 (Del-HC); Vanita Vishram Trust v. Chief CIT (2010) 327 ITR 121 (Bom.) : 2010 TaxPub(DT) 1914 (Bom-HC); City Montessori School v. Union of India (2009) 315 ITR 48 (All.) : 2009 TaxPub(DT) 1770 (All-HC); Maa Sarawati Educational Trust v. Union of India (2013) 353 ITR 312 (HP.) : 2010 TaxPub(DT) 1677 (HP-HC); Pinegrove International Charitable Trust v. Union of India (2010) 327 ITR 73 (Punj. & Har.) : 2010 TaxPub(DT) 1405 (P&H-HC); All India Personality Enhancement & Cultural Centre for Scholars v. Dy. CIT (2004) 91 ITD 240 (Delhi) : 2004 TaxPub(DT) 1734 (Del-Trib); Asstt. CIT v. Bal Bharti Nursery School (2002) 82 ITD 71 (All.) : 2002 TaxPub(DT) 0851 (Ahd-Trib); Vodithala Education Society v. Asstt. Director of Income Tax (Exemptions) (2008) 20 SOT 353 (Hyd.) : 2008 TaxPub(DT) 1209 (Hyd-Trib); Queen's Educational Society v. CIT (2015) 372 ITR 699 (SC) : 2015 TaxPub(DT) 1436 (SC)

FAVOUR : Against the assessee

A.Y. :

IN THE MADRAS HIGH COURT

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