Supreme Court Lays Down Important Interpretational Principles In Relation To Charitable Educational Institutions

Introduction

In the case of New Noble Educational Society v. CCIT and Another, 2022 SCC OnLine SC 1458, a three-judge bench of the Hon'ble Supreme Court of India (SC) inter alia (a) laid down important interpretational principles in relation to the scope of exemption provided to charitable educational institutions under Section 10(23C) of the Income-tax Act, 1961 (IT Act), and (b) made certain important observations as to what can be regarded as an 'incidental' activity in relation to education.

Background – law and facts

Under the IT Act, educational institutions are eligible for tax exemption (subject to satisfaction of specified conditions) under two separate sets of provisions i.e. (a) Section 10(23C) (Section 10 exemption) and (b) Section 11 (Section 11 exemption). While the scope of Section 11 exemption is wider in nature and available to an institution undertaking any 'charitable purpose' (ie relief to poor, education, medical relief, advancement of any