“Education and Medical Relief” is one of the limbs of the definition of “Charitable Purpose” as per the Income Tax Act, 1961. First, we will discuss “education” as a charitable purpose under the provisions of the Income Tax Act.
The expression ‘education’ has not been defined under the provisions of the Income Tax Act. Education may be direct or indirect. In case of direct education, formal schooling exists, whereas in indirect education, the process of education is done indirectly either through correspondence or electronic media like conducting classes through zoom. Thus, the manner of delivery of education might be different but the ultimate goal is same in both the cases.
The expression ‘education’ should be considered in the broadest sense. This is due to recent changes and advancement happening in science and technology which have an impact on education.
D.V. Arur vs. CIT (1944) 13 ITR 465 (Bom)
The essential condition to be satisfied to fall within the limb of charity is that education must benefit to the public. If the benefit of education is directed towards the family members or few members of an individual, it is not for public.
Municipal Corporation of Delhi vs. Children Book Trust (1992) 63 Taxman 385 (SC)
The Supreme Court while considering section 115(4) of the Delhi Municipal Corporation Act, 1957 held that the imparting of education must involve public benefit as to fall within the meaning of charitable object.
Therefore, education to fall within the limb of “charitable purpose” under section 2(15) should be for advancement of public and not merely for few specific persons.
Gujarat Safety Council vs. ITO (2020) 180 ITD 0711
It was observed that: “multifaceted activities in the form of handbook/ literature published together with stated activities like holding conferences on industrial safety programmes, public talks, seminars, workshops etc. on ongoing basis to inculcate safety measures would also be bracketed in the league of ‘educational activities’.
R K Educational Trust vs. Director of Income Tax (Exemptions) (2017) 153 TR (A) 70 (Del-Trib)
The objects of the assessee trust include establishment, maintenance, supporting and running schools, colleges, social service centres, industrial training centres, skill development centres and other institutions of education. These objects were clearly in the nature of education. Though the courses run by the assessee trust were neither recognised nor a part of regular curriculum of any university, it was not a valid ground of rejection. Therefore, the trust was to be granted registration under section 12AA/12A.
CIT vs. Shri Thyaga Brahma Gana Sabha (1991) 188 ITR 0160 (Mad)
It was held that providing education in fine arts primarily for the advancement of music and to conduct musical entertainments, dramas, kalakshepams, dance recitals, bhajans etc., through the medium of school held as an educational activity. The only object of the sabha was to impart education in fine arts which falls within the meaning of education under section 2(15). Therefore, the letting out of hall at meager rates is only incidental to the activity of education. Thus, the assessee is entitled to the exemption under section 11 read with section 2(15) of the Act in respect of the rental income derived from letting out the hall.
CIT vs. Jyoti Prabha Society (2009) 310 ITR 162 (Uttarakhand)
It was held that the school building was let out to another educational institution. The income derived from such property was used for educational purposes, maintenance of building, construction of building etc. Therefore, it was held charitable.
Thus, in view of the above two judgements, it can be inferred that an institution with education as a primary object, if lets out a property for rent to an educational institution and if such income derived is applied for education, it amounts to education and thus qualify as charitable purpose.
CIT vs. Saraswath Poor Students Fund (1984) 150 ITR 142 Kar)
Where the primary purpose is running schools and providing hostels to students or the members of the staff who were imparting education, as a furtherance of its activities is only an incidental activity, it can then be a charitable purpose.
Daya Nand Pushpa Devi Charitable Trust vs. Additional CIT (2021) 436 ITR 406 (All)
Maintenance of hostel in accordance with statutory requirement did not amount as business and is entitled to exemption.
DIT (E) vs. Lala Lajpatrai Memorial Trust (2016) 383 ITR 345 (Bom)
When the educational trust let out its buildings as and when it was vacant and not used to outsiders, these activities were called incidental to attain main objectives of the trust.
CIT vs. Sangit Kala Mandir Trust (1987) 166 ITR 217 (Cal)
The primary object of promotion of science, literature, arts, conducting debates, seminar, and conferences for the benefit of public was held as charitable purpose.
CIT vs. Bar Council, Madras (1943) 11 ITR 1 (Mad)
It was held that the creation of facility for legal education falls in the ambit of educational purpose.
CIT vs. Secretary, Regional Committee, National Sports Club of Assam (1989) 180 ITR 648 (Gau)
It was held that physical education and training amounts to education, within the meaning of section 2(15). It is common in schooling; a period of class is earmarked for physical education and training.
Gujarat State Co-operative Union vs. CIT (1992) 195 ITR 279 (Guj)
Where the assessee was conducting short-term orientation courses such as land development banking, co-op. credit and banking etc. The object of the assessee was mainly on imparting education and relating to education. Considering all these facts, the High Court held that the programmes run by the assessee were deemed as educational activity.
CIT vs. Estate of B.P. Kayan Trust (1985) 155 ITR 60 (Cal)
Imparting education has no linguistic barriers. The ancient language Sanskrit has a predominant influence on other different languages too. The object of propagating the Sanskrit language and providing scholarship to the student to pursue this language and providing hostel or lodging and boarding expenses is held as charitable objects.
Printing and publication of books
It was held in various instances that mere printing and publication of books in India will not amount to education. Refer:
- ACIT vs. Rajasthan State Text Book Board (2000) ITR 667 (Raj.)
- Oxford University Press vs. CIT (2001) 247 ITR 658 (SC)
- Saurashtra Education Foundation vs. CIT (2005) 273 ITR 139 (Guj)
Sole Trustee, Loka Shikshana Trust vs. CIT (1975) 101 ITR 234 (SC)
Newspapers have an educative value but result only indirectly towards advancement of education. Therefore, the same will not come under the head education.
Regional Computer Centre vs. CIT (2009) 311 ITR 182 (P&H)
Simply because the users of the educational consultancy services rendered by the assessee were colleges, universities, Government departments etc. would not necessarily lead to the conclusion that the assessee was an educational institution existing solely for educational purposes.
Indo-American Society vs. Asstt. DIT (Exemption) (2005) 96 ITD 61 (Mum-Trib)
In this case, the assessee was conducting educational courses in a professional manner with high charges at five-star hotels, which only elite class could attend. The assessing officer denied exemption under section 11. However, the tribunal held that there was no intention to earn profit and the society charged fees to meet the cost of educational programmes.
Dy. Director of IT vs. Kuttukaran Foundation (2012) 51 SOT 175 (Coch-Trib.)
It was observed that the assessee was conducting coaching classes for students for various courses appearing for Open University/ distance education. The court held that mere conducting of coaching classes for preparing students to attend examination conducted by the Open University or distance education cannot be construed as a charitable activity within the meaning of section 2(15). In this case, it was emphasized that regular school/ college through which students are imparted education are entitled to claim exemption.
Jaycees Public School vs. ITO (2018) 159 TR (A) 146 (Del-Trib)
Merely by charging fee from students of society trust, it cannot be said that assessee trust was running on commercial basis.
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