2017 (1) TMI 174

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....nd children out of, which nine students were given free exemption and all these children were of staff members. These exemptions have been allowed to the meritorious students only. Total receipts of the school of the society is 1,74,61,091/-, which does not include building fund amount of Rs. 3,16,500/-, out of such huge receipts the surplus generated by the society is Rs. 67,01,868/- after claiming huge expenses. The school is indulging in commercial activities like plying of buses, running hostels and mess, organizing tours etc. No separate books of a/c have been maintained for such activities. The society is not at all bothered to take into a/c its sound financial position and charging fees from the students in mind less gradually increa....

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....ion to any income being profits and gains of business unless the business is incidental to the attainment of the objectives of the Institution and separate books of account are maintained in respect of such business; d) the Institution will regularly file its return of income before the Income Tax authority in accordance with the provisions of the Income tax Act, 1961; e) that in the event of dissolution of the Institution, its surplus and the assets will be given to an organization with similar objectives., f) the institution will continue to be exist solely for educational purpose. g) The institute will get its accounts audited by an accountant as defined in Explanation below sub section (2) of section ....

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....nate from the views expressed by this Court are set out in paragraph 11 in Queen's Educational Society (supra), which are extracted below: 11. Thus, the law common to Section 10(23C)(iiiad) and (iv) may be summed up as follows: "1. Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. 2. The predominant object test must be applied-the purpose of education should not be submerged by a profit making motive. 3. A distinction must be drawn between the making of a surplus and an ....