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Only because the trust deed indicates that the source of funds was only from school fees the Madras High Court in 426ITR539 construed that the trust was for the purpose of profit. What is further noticed by the Court, in this case, was that there was no clause providing for free education for underprivileged children.

In another instance, in 427ITR74 the Madras High Court desired upon revenue to establish that the activities carried out and the expenditure incurred by the assessee is not related to educational activities to deny the exemption. The Court defied the narrow view taken in this case when the AO declined exemption on the ground that certain expenditure such as for awareness of agriculture, medical camps, eye camps, etc. was not related directly to educational activities.


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