Case Law Details
CIT Vs MAC Public Charitable Trust (Madras High Court)
Conclusion: The Hon’ble Madras High Court observed that Juxtaposing the provisions of both the Acts viz., Income Tax Act, 1961 and the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, with each other, it is explicit that collection of any amount in excess of what has been prescribed as fee or in the nature of donation or voluntary contribution either directly or indirectly to the institution or through some other person or institution or trust, as quid pro quo for the seat in any educational institution, would render the activity of both the entities ungenuine. Such actions would render the object of “charity” a farce and the transaction will have to be treated as a commercial activity, depriving the assessees of the benefits of Sections 11 and 12 of the Act.
Facts: In present facts of the case, two main issues were taken into consideration which were as follows:
(1) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the Assessees are eligible for exemption under Section 11 of the Income Tax Act without taking cognizance of the fact that quid-pro-quo element was involved in the trust accepting donations from donors?
(2) Whether on the facts and in the circumstances of the case, the ITAT was legally ‘justified’ in deciding the case on the ground that the AO has not enquired into the source of the donors without appreciating that the jurisdictional High Court in the case of CIT vs. Taj Borewells (291 ITR 232) and the Honourable Supreme Court in the case of CIT vs. Hariprasad & Sons (99 ITR 118) have held that the source of source cannot be enquired into?
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