CIT Vs Deccan Education Society (Supreme Court of India)
Summary: The Supreme Court dismissed the Revenue’s Special Leave Petition against the Bombay High Court’s decision in favour of Deccan Education Society concerning exemption under Section 10(23C)(iiiab) of the Income-tax Act, 1961. After condoning the delay and considering the submissions and materials on record, the Supreme Court found no good ground to interfere with the High Court’s order. The Supreme Court’s brief order contains no independent examination of the statutory exemption or the underlying factual dispute.
The underlying proceedings concerned Assessment Year 2009-10. The Revenue had challenged the Pune Income Tax Appellate Tribunal’s order dated 19 March 2018, which allowed the Society’s claim for exemption. The Department alleged that donations received by educational institutions were effectively consideration for securing admissions, rather than voluntary contributions or corpus donations. It further contended that the institutions operated commercially, that unaided institutions could not qualify under Section 10(23C)(iiiab), and that separate approval under Section 10(23C)(vi) was required for certain institutions with receipts exceeding ₹1 crore.
The Bombay High Court noted that the Tribunal had followed its earlier decision in the Society’s own case for AY 2008-09, and the Revenue had identified no distinguishing facts or subsequent reversal of that decision. The High Court had already dismissed the Revenue’s appeal concerning AY 2008-09 on 26 November 2018. In that earlier decision, it held that generating a reasonable surplus did not necessarily defeat an institution’s educational character. It also rejected the Revenue’s argument that exemption should be examined separately for each institution operated under the Society, rather than with reference to the Society as a whole.
Following its earlier ruling, the Bombay High Court held that no substantial question of law arose for AY 2009-10 and dismissed the Revenue’s appeal. The Supreme Court subsequently declined to interfere, leaving that decision undisturbed. The dismissal of the Special Leave Petition was a non-speaking order and should not be treated as a separately reasoned Supreme Court declaration on the interpretation of Section 10(23C)(iiiab).
Related Bombay High Court Judgment: The underlying Bombay High Court judgment examined the eligibility of Deccan Education Society for exemption under Section 10(23C)(iiiab), including the Revenue’s objections concerning unaided institutions, donations and institution-wise eligibility. Read: Section 10(23C)(iiiab) Exemption Applies to Educational Society: Bombay HC.
Cases Discussed
- Commissioner of Income Tax (Exemptions), Pune v. Deccan Education Society, Income Tax Appeal No. 400 of 2016, Bombay High Court, decided on 26 November 2018 — The earlier High Court decision concerning AY 2008-09, expressly followed in the supplied Bombay High Court order for AY 2009-10. The Court rejected the Revenue’s institution-wise approach to exemption under Section 10(23C)(iiiab).
- Aditanar Educational Institution v. Additional Commissioner of Income Tax, (1997) 3 SCC 346 (Supreme Court) — Cited in the earlier Bombay High Court decision concerning the educational character of an institution and the treatment of surplus incidental to educational activities.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2.Having heard the learned counsel appearing for the petitioner(s) and having gone through the materials on record, we find no good ground to interfere with the impugned order passed by the High Court.
3. The Special Leave Petition(s) is, accordingly, dismissed.
4. Pending application(s), if any, stands disposed of.
