Under Section 37(1) of the Income Tax Act, expenditure, including depreciation is allowed only to the extent they are meant for business purposes and not for personal purposes. If the assessee is subject to tax audit u/s 44AB, the auditor is bound to report if the expenditure debited to Profit and Loss includes any personal expenses. Hence, by law personal expenditure is not allowed, but in practice there may be aberrations and personal expenses may have been claimed without getting detected. As regards your query on educational institutions, the simple answer may be "ask the legislators whom elected". Even when educational institutions are meant to be for public service, the schools and colleges are, as you rightly observed, mushrooming with sole intention of making profit. If we allow commercialization of educational institutions, then profit motive may be more dominant than service motive. Though these educational institutions are run as charitable trusts, they are still called as corporates. I also feel that education should be allowed to be imparted by corporates also, which will have more disclosure norms to be complied with.