The Supreme Court on Wednesday held that any society, fund, trust or institution claiming to have been set up for the “charitable purpose of education” should be “solely” concerned with education to claim exemption under Section 10 (23C) of Income Tax Act.

Profit-minded institutions cannot claim exemption, a three-judge Bench of Chief Justice of India Uday Umesh Lalit, Justices S. Ravindra Bhat and P.S. Narasimha observed.

“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 benefitted from society. Our Constitution reflects a value which equates education with charity,” Justice Ravindra Bhat, who authored the verdict, wrote.

Education or related activities should not be treated as business, trade, or 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.

“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,” Justice Bhat observed.

The judgment veers away from earlier judgments of the court which had interpreted the term ‘solely’ in Section 10(23C) as “dominant”. The court said the judgment would take effect prospectively.

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