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SC: Tax Exemptions cannot be Claimed by Educational Trusts for Profit

Tax Exemptions for Educational Trusts

Apex court, under the income tax act, if the educational trusts or societies make a profit then the same shall not be entitled to claim for the exemption.

The bench of Chief Justice of India UU Lalit, Justices S Ravindra Bhat, and PS Narasimha mentioned that these educational trusts or societies must only be related to education or the activities concerned with the education under Section 10(23C) of the Income Tax Act.

Under the section, any university or other educational institution that is concerned with educational purposes only but does not have any purpose to make a profit i.e wholly or substantially financed via the Government shall be entitled to tax exemption under the mentioned section.

“Our Constitution reflects a value which equates education with charity. That it is to be treated as neither business, trade, nor commerce, has been declared by the pronouncement of this very court,” the court articulated.

This order gets arrived post to the educational trusts approach Apex court against the Andhra Pradesh High court order.

Read Also: 12 Eligible Expenditures for Assessee’s Tax Exemption List

The High court order mentioned that the trusts that were in question does not mean to be created only for education and were not qualified to claim exemption beneath the act.

The court concluded that:

The above order shall be applied prospectively, the court articulated.

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