The Madras High Court on Monday ordered notice to the State government and the Director General of Income Tax (Investigation) on a PIL petition seeking to revoke income tax exemption granted to educational institutions that are flouting the statutory rules and regulations.
The First Bench of Chief Justice S.K. Kaul and Justice R. Mahadevan passed the direction on a PIL moved by Jawaharlal Shanmugam. “The only aspect of concern is whether the benefit of tax exemption provided to charitable educational institutions should continue if the institutions are found to be flouting rules,” the Bench said. Relying on the recent observations made by the apex court on the issue of black money swindled by private educational institutions, the petitioner said, “A majority of the self-financed educational institutions offering medical and engineering education are classified as charitable organisations, managed by charitable trusts. They misuse the provisions of the Income Tax Act by claiming tax exemption and other benefits.”
He alleged that many charitable trusts managing professional educational institutions do not reveal all the income earned by them to various regulatory authorities including the Medical Council of India, and the University Grants Commission. Pointing out a representation he made to the Director General of Income Tax (Investigation) in May 2015, he said so far the department has not made any response to the representation. The petitioner also sought for a direction to all charitable educational institutions including deemed universities to furnish the complete details of their financial statements in their official websites, and their annual report in public domain. Recording the submissions, the Bench ordered notice returnable by four weeks and posted the PIL to August 22 for further hearing.
