The Top Court today held that any society, fund, trust or organisation claiming to have been kept up for the "charitable purpose of education" should be "completely" concerned with education to claim exemption under Section 10 (23C) of the Income Tax Act.
Capital minded organisations can’t claim exemption, a 3 judge Bench of CJI Uday Umesh Lalit, Justices S. Ravindra Bhat and P.S. Narasimha noted.
"In a knowledge-based, information-driven society, true wealth is education – and access to it. Every social order accommodates, and even cherishes, charitable endeavour, since it is impelled by the desire to give back what one has taken or benefited from society. Our Constitution reflects a value which equates education with charity," Justice Ravindra Bhat, who authored the judgement, wrote.
Education or related activities should not be treated as business, trade, nor commerce. Justice Bhat pointed out that this principle was declared by one of the most authoritative pronouncements of the court in T.M.A Pai Foundation case judgment.
Justice Bhat mentioned "The interpretation of education being the ‘sole’ object of every trust or organisation which seeks to propagate it, through this decision, accords with the constitutional understanding and, what is more, maintains its pristine and unsullied nature".
The verdict veers away from the previous verdict of the court which had interpreted the term 'completely' in Section 10(23C) as "dominant".
The bench noted the verdict would take effect prospectively.