The Supreme Court today dismissed a plea filed by educational trusts seeking exemptions under the IT Act. The court said that educational trust or societies, which seek exemption under income tax act, should solely be concerned with education or related activities.
So far, the predominant rule essentially was that for an educational trust to seek exemption under IT Act, they will be required to show that they have ‘predominantly’ engaged in the activities of education. That has been the understanding so far as of this morning.
The Supreme Court gave its judgment and clarified that the 'predominant' threshold is no longer sufficient. It said that for educational trusts to secure IT exemption under the Income Tax Act, they have to demonstrate that they are ‘solely’ dedicated and committed to activities of education.
Supreme Court has further clarified that the profit motive cannot be the main motivating factor or the driving objective behind the education trust they would be ineligible in such a scenario.
Watch the accompanying video of CNBC-TV18’s Ashmit Kumar for more details