Supreme Court: Profit-oriented Educational Institutions not entitled to tax emption under Section 10(23C) of the Income Tax Act, 1961

 86. The conclusions of this court are summarized as follows:

a. It is held that the requirement of the charitable institution, society or trust etc., to ‘solely’ engage itself in education or educational activities, and not engage in any activity of profit, means that such institutions cannot have objects which are unrelated to education. In other words, all objects of the society, trust etc., must relate to imparting education or be in relation to educational activities.

b. Where the objective of the institution appears to be profit-oriented, such institutions would not be entitled to approval under Section 10(23C) of the IT Act. At the same time, where surplus accrues in a given year or set of years per se, it is not a bar, provided such surplus is generated in the course of providing education or educational activities.

c. The seventh proviso to Section 10(23C), as well as Section 11(4A) refer to profits which may be ‘incidentally’ generated or earned by the charitable institution. In the present case, the same is applicable only to those institutions which impart education or are engaged in activities connected to education.

d. The reference to ‘business’ and ‘profits’ in the seventh proviso to Section 10(23C) and Section 11(4A) merely means that the profits of business which is ‘incidental’ to educational activity - as explained in the earlier part of the judgment i.e., relating to education such as sale of text books, providing school bus facilities, hostel facilities, etc.

e. The reasoning and conclusions in American Hotel (supra) and Queen's Education Society (supra) so far as they pertain to the interpretation of expression ‘solely’ are hereby disapproved. The judgments are accordingly overruled to that extent.

f. While considering applications for approval under Section 10(23C), the Commissioner or the concerned authority as the case may be under the second proviso is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, trust or institution genuinely seeks to achieve the objects which it professes. The observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, trusts etc. the proviso under Section 10(23C) is not confined to newly set up trusts - it also applies to existing ones. The Commissioner or other authority is not in any manner constrained from examining accounts and other related documents to see the pattern of income and expenditure.

g. It is held that wherever registration of trust or charities is obligatory under state or local laws, the concerned trust, society, other institution etc. seeking approval under Section 10(23C) should also comply with provisions of such state laws. This would enable the Commissioner or concerned authority to ascertain the genuineness of the trust, society etc. This reasoning is reinforced by the recent insertion of another proviso of Section 10(23C) with effect from 01.04.2021.

In the Supreme Court of India

(Before Uday U. Lalit, C.J. and S. Ravindra Bhat and P.S. Narasimha, JJ.)

Civil Appeal No. 3795 of 2014

New Noble Educational Society Vs Chief Commissioner of Income Tax 1

Decided on October 19, 2022

2022 SCC OnLine SC 1458

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Whether daughters can claim exorbitant amount from their father towards marriage and educational expenses?

The first petitioner had claimed marriage expenses.
She claimed `15 lakhs on that count. Evidence adduced in the
case would indicate that she married a person of her own choice
and it was a registered marriage. Expenses for marriage can be
claimed only in instances where any expense has been incurred
for the marriage. Of course, even before marriage, a claim can be
made taking into account the probable marriage expenditure. The
expenditure to be incurred for such marriages depends upon the
facts and circumstance of each case. At any rate, exorbitant
amounts cannot be claimed towards marriage expenses.
Marriages can be conducted in a simple form and one can even
conduct a luxurious marriage. But while claiming marriage
expenses, one can expect only the minimum amount required for
conducting a simple marriage function. We are of the view that

the amount claimed was unreasonable. That apart, while
conducting a registered marriage, it is clear that the first
petitioner should not have incurred any major expenditure as she
had married a person of her own choice. Under such
circumstances, the Family Court was justified in rejecting the said
claim.
9. Second petitioner claimed `20,000/- per month for
educational expenses and `7,50,000/- for her studies. The claim
was later amended claiming `10,46,200/- as educational
expenses. The Family Court found that the second respondent is
also a person who is having sufficient source of income and she is
more financially affluent than the 1st respondent. She too have
the liability to meet the expenses of the petitioners. The present
claim is made alleging that she has joined a course for which
huge amounts are required. The first respondent took up a
contention that he had no capacity to expend such a huge
amount. He produced Ext.B3 salary certificate to prove that his
income was 1,500 UAE Dirhams. Though the petitioners
contended that the 1st respondent is a millionaire, no such
material had been produced to prove the said fact. Therefore,

taking into account the income of the 1st respondent, the Family
Court rejected the claim for payment of such huge amount
towards educational expenses and also on a finding that the
mother has sufficient wealth.
10. It is also curious to note that the 2nd respondent did
not enter the box. First respondent has a specific case that the 2nd
respondent has sufficient income. In so far as she did not enter
the box to explain why such a huge claim is being made and that
she is not in a position to expend such amount, Family Court was
justified in rejecting the said claims. Even if educational
expenditure are to be met, only reasonable amounts can be
sought. If a person decides to go abroad and continue his/her
studies, is it that the parents should be mulcted with such a huge
liability? The award of maintenance shall be in accordance with
the financial and social status of the persons involved. The
income derived by the parent is of primary importance. It is
curious to note that the 2nd respondent did not file any objection
which clearly indicates that she is supporting the claim. If the
mother is also an earning member, the liability to maintain the
children rests with both the parties. What would be the quantum

of maintenance always depends upon the facts and
circumstances arising in the case. 

IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
 MR.JUSTICE A.M.SHAFFIQUE
&
 MR. JUSTICE A.M.BABU
THURSDAY ,THE 24TH DAY OF JANUARY 2019
Mat.Appeal.No. 322 of 2010

 BIBITHA FELIX,  Vs   FELIX MIRANDA,

Shaffique, J.

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Whether daughter can file domestic violence Act proceeding against father for seeking money for educational purpose?

For the purpose of present controversy between the parties
"economic abuse" is relevant and is required to be seen and considered.
According to sub-clause (a) of clause (iv) to explanation-I appended to
Section 3 of the Act, deprivation of all or any economic or financial
resources to which the aggrieved person is entitled under any law or
custom whether payable under an order of a court or otherwise or which
the aggrieved person requires out of necessity and also maintenance.
The question in the present case is whether refusal by the
respondent to incur living expenses of his daughter can be said to be
commision of economic abuse. No law or custom has been shown by the
petitioner under which a well educated daughter of the age of more than
30 years can claim her living expenses to the tune of 700 pound per
month for pursuing her further higher studies from a foreign University.
According to this provision deprivation of economic or financial resources
which the the aggrieved person requires out of necessity also amount to
economic abuse. For the applicability of this part of the provision,
requirement of the aggrieved person must be out of necessity. In my
opinion each and every expenses incurred or to be incurred by the
aggrieved person for her study cannot be termed to be a requirement out
of necessity. Expenses incurred or to be incurred by daughter of a person
for her reasonable studies can be said to be a requirement out of necessity
but living expenses incurred or to be incurred by a daughter for pursuing
her further higher studies from a foreign University and more particularly
in view of the fact that she has already obtained a post graduate degree
from a reputed University in India and has already taken further studies
from a foreign University and who is capable of earning her own income
by joining a job and who has joined her further studies without the
consent of his father rather against his wishes cannot be said to be a
requirement out of necessity and even if father has refused to bear such
expenses, it cannot be said that the daughter has been subjected to
economic abuse within the meaning of the Act. Although, the Act has been
enacted to provide more effective protection of the rights of women but
that does not mean that a woman can claim any expenses as monetary
relief from the respondent. Unless the act of the respondent comes within
the purview of the domestic violence as specified under Section 3 of the
Act and unless the petitioner is an aggrieved person, no relief can be
granted to her. In the facts and circumstances of the case it cannot be
said that Miss. Geetanjali has been subjected to economic abuse within the
meaning of the Act.
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR
BENCH JAIPUR

S.B.Criminal Revision Petition No.670/2016
Geeta Singh 
V
 State of Rajasthan 
Shri Omprakash Meena
Date of Order: 17.11.2016
HON'BLE MR. JUSTICE PRASHANT KUMAR AGARWAL

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