M/S NEW NOBLE EDUCATIONAL SOCIETY versus THE CHIEF COMMISSIONER OF INCOME TAX 1 AND ANR.

Citation: [2022] 18 S.C.R. 1082 · Decided: 19-10-2022 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Dismissed

Cited by 1 judgment(s) · cites 12 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 18 S.C.R.
   [2022] 18 S.C.R. 1082
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M/S NEW NOBLE EDUCATIONAL SOCIETY
v.
THE CHIEF COMMISSIONER OF INCOME TAX 1 AND ANR.
(Civil Appeal No. 3795 of 2014)
OCTOBER 19, 2022
[UDAY UMESH LALIT, CJI, S. RAVINDRA BHAT AND
PAMIDIGHANTAM SRI NARASIMHA, JJ.]
Income Tax Act, 1961 – s.10(23C)(vi) –”solely” –
s.10(23C)(vi) exempts income of “university or other educational
institution existing solely for educational purposes and not for purposes
of profit” – Meaning of “solely” – Held: The requirement of the
charitable institution, society or trust etc., to ‘solely’ engage itself
in education or educational activities, and not engage in any activity
of profit, means that such institutions cannot have objects which
are unrelated to education – Thus, all objects of the society, trust
etc., must relate to imparting education or be in relation to
educational activities– Where the objective of the institution appears
to be profit-oriented, such institutions would not be entitled to
approval u/s.10(23C) – At the same time, where surplus accrues in
a given year or set of years per se, it is not a bar, provided such
surplus is generated in the course of providing education or
educational activities – The reference to ‘business’ and ‘profits’ in
the seventh proviso to s.10(23C) and s.11(4A) merely means the
profits of business which is ‘incidental’ to educational activity i.e.,
relating to education such as sale of text books, providing school
bus facilities, hostel facilities, etc.–Reasoning and conclusions in
American Hotel and Queen’s Education Society case so far as they
pertain to the interpretation of expression ‘solely’ are disapproved
andthe judgments are overruled to that extent–The law declared in
the present judgment shall operate prospectively– Andhra Pradesh
Charitable and Hindu Religious Institutions and Endowments Act,
1987.
Income Tax Act, 1961 – s.10(23C) – Held: While considering
applications for approval u/s.10(23C), the Commissioner or the
concerned authority as the case may be under the second proviso
is not bound to examine only the objects of the institution – To
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ascertain the genuineness of the institution and the manner of its
functioning, the Commissioner or other authority is free to call for
the audited accounts or other such documents for recording
satisfaction where the society, trust or institution genuinely seeks to
achieve the objects which it professes – The Commissioner or other
authority is not in any manner constrained from examining accounts
and other related documents to see the pattern of income and
expenditure.
Income Tax Act, 1961 – s.10(23C)– Andhra Pradesh
Charitable and Hindu Religious Institutions and Endowments Act,
1987 – Held:Wherever registration of trust or charities is obligatory
under state or local laws, the concerned trust, society, other
institution etc. seeking approval u/s.10(23C) should also comply
with provisions of such state laws – This would enable the
Commissioner or concerned authority to ascertain the genuineness
of the trust, society etc.
Interpretation of Statutes – Proviso – Scope and object of –
Discussed.
Words & Phrases–”solely” – Discussed.
Dismissing the appeals, the Court
HELD : 1.This court has spelt out the following to be
considered by the revenue, when trusts or societies apply for
registration or approval on the ground that they are engaged in
or involved in education: (i) The society or trust may not directly
run the school imparting education. Instead, it may be
instrumental in setting up schools or colleges imparting
education. As long as the sole object of the society or trust is to
impart education, the fact that it does not do so itself, but its
colleges or schools do so, does not result in rejection of its claim.
(ii) To determine whether an institution is engaging in education
or not, the court has to consider its objects. (iii) The applicant
institution should be engaged in imparting education, if it claims
to be part of an entity or university engaged in education. This
condition was propounded in Oxford University where the
applicant was a publisher, part of the Oxford University established
in the U.K. The assessee did not engage in imparting education,
but only in publishing books, periodicals, etc. for profit. Therefore,
M/S NEW NOBLE EDUCATIONAL SOCIETY v. THE CHIEF
COMMISSIONER OF INCOME TAX 1
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SUPREME COURT REPORTS
[2022] 18 S.C.R.
the court by its m

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