Taxability of education society

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2015 Hello,

FACT:

1. a Society register under MP society act and running school having gross receipt of Rs.55 lac with a profit of Rs. 22 lac.

2. Society not registers under Sec. 12AA of income tax.

Q. 1 - Is society eligible for exemption under Sec. 10(23C),if Yes than please suggest any case laws.

Q. 2 - Is profit percentage of society become huddle for exemption under Sec. 10(23C).

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 June 2015 1 Eligible for exemption.
Where the educational institution is not financed by the Government and the aggregate annual receipt of the university or educational institution does not exceed Rs.100 lakhs, then any income of such educational institution or university is also exempt, subject to the condition that it exists solely for educational purposes and not for purposes of profit [S. 10(23C) (iiiad)].
2 The Apex Court, in Aditanar Educational Institution v. Addl. CIT, (1997) 224 ITR 310 (SC), has held that the availability of exemption must be evaluated by finding out whether the educational institution existed during the relevant year solely for educational purposes and not for purposes of profit. If the institution, after meeting the expenditure, makes surplus incidentally from the activity lawfully carried out, then such surplus is also exempt from tax.

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