Charitable purpose — Running schools by collecting huge amounts of fees with five star facilities cannot be treated as a charitable activity only on the ground that the business carried on by such institutions is the business of education, as held by ChenTrib in Rajah Sir Annamalai Chettiar Foundation v DIT — In favour of: The revenue; ITA No 1817/Mds/2010.
The principle that the institutions run by the charitable societies may collect fees and service charges does not mean that the institutions can charge fees, etc, at commercial rates from all the people without giving any element of charity to needy people.
Fees collected by the trust running educational institution with the object of establishing a number of educational institutions within a brand name and running the same on commercial lines include a profit motive. Thus, the assessee was rightly denied registration under s 12AA.
Decided on: 20 June 2011.
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