Rajah Sir Annamalai Vs CCIT (Madras High Court)
The fact that Clause 10 of the Trust Deed states that the fees and charges shall be fixed taking into account the cost of running including future development thereof though without an element of profit motive indicates that the actual intention of the trust is only to generate income by charging fees while admitting children’s to their Schools.
The Deed of Trust has also not declared the source of fund for achieving the purpose. It merely stipulates the Trustees are authorised to borrow monies for the purposes of the trust with or without security from banks, financial institutions or otherwise and also have the power to offer a security of any immovable or movable property or other security.
The fact that there is no clause for providing free education for children coming from different social and educational backgrounds and the scholarship to under privileged children shows that there is only profit motive and the institutions are to be run only out of fees collected by admitting children’s to their schools.
The Trust Deed also seems to indicate that the source of funds of the petitioner’s trust is only from the school fees to be collected during these financial years. Therefore, it cannot be construed that the petitioner’s Trust’s Schools were not for the purpose of profit.
Since the schools run by the petitioner were directed to be closed, pursuant to the above directions I do not find any merits in W.P.No.1739 of 2015. Presence of educational institution is sine qua non for grant of approval under Section 10 (23C) (vi) of the Income Tax Act, The impugned order passed by the 1st respondent is therefore sustainable. Accordingly, W.P.No.1739 of 2015 is dismissed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
By this common order, all the three writ petitions are being disposed.
2. The petitioner has challenged the following three impugned orders passed by the 1st respondent namely the Chief Commissioner of Income Tax Chennai-III.
