Holding of classes not mandatory to qualify as educational institution

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HIGH COURT OF DELHI

Date of Decision: 20th March, 2012

W.P.(C) 47 16/2010

Council for The Indian School Certificate Examinations

Versus

Director General of Income Tax

Assessee has filed writ petition against order passed by the Director General of Income Tax (Exemptions), for denying them exemption under Section 10(23C)(vi) of the Income Tax Act, 196, on the ground that the aforesaid institute was not directly imparting education and had not employed teachers who were teaching or giving lectures to the students.

Recently, the Madhya Pradesh High Court in CIT v. M.P. Rajya Pathya Pustak Nigam, (2009) 226 CTR (MP) 497 examined a similar question and after referring to several decisions has held that the term educational purpose was not restricted merely to holding of teaching class or lectures but educational purpose was equally served when educational text books were published. It is, therefore, clear that courts have laid emphasis on the activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient. Decided in favor of the assessee.