TMI Blog1985 (1) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... filiated as an educational institution. The AAC examined the relevant clauses of the trust deed and came to the finding that the assessee was entitled to the exemption under s. 10(22) of the Act. The AAC held as follows: " It is seen that the assessee is a society which was formed as an educational institution and existing solely for educational purposes. Some funds have been raised and some donations had also been received by the society for this purpose. The assessee had invested the fund available in some investments as indicated in the balance-sheet. It has earned income from dividend and interest during the year under consideration. It appears that these assets are assets of the educational institution. The assessee had just begun its activity and during the year under consideration had started preparation of regular classes for teaching of Hindi and purchased some books and periodicals for library." The Revenue preferred an appeal before the Tribunal. It was contended on behalf of the Revenue that since the assessee was not a recognised educational institution like a university, the ITO was justified in rejecting the assessee's claim for exemption under s. 10(22). It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also contended that the entire income of the trust was not spent wholly for educational purposes and the Tribunal was, therefore, not right in allowing exemption to the assessee under section 10(22) of the Act. Mr. R. N. Bajoria, learned advocate for the assessee, has submitted that the assessee is an educational institution which exists solely for educational purposes. For obtaining the benefit under s. 10(22), an educational institution is not required to be affiliated to any university nor is it necessary for it to spend the entire income for educational purposes. It is his contention that so long as the institution exists not for the purposes of any profit and such institution is an educational institution, the assessee is entitled to relief under s. 10(22). Learned advocates appearing for the parties have relied on several decisions in support of their respective contentions. The first decision which has been relied on is the case of Addl. CIT v. Aditanar Educational Institution [1979] 118 ITR 235 (Mad). In that case, the assessee, a society registered under the Societies Registration Act, 1860, had for its objects to establish, run, manage, or assist colleges, schools ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There the court held that the terms " institution " and " educational institution " have not been defined under the Act. In the Oxford English Dictionary, the word " institution " is defined to mean " an establishment", organisation or association instituted for the promotion of some object, especially one of public or general utility, religious, charitable, educational etc. It cannot be he held that since the word " trust " is not used in s. 10(22) of the I.T. Act, 1961, that provision has no application to a trust. A trust is an association of persons the trustees. It can also be described as a body of individuals, namely, trustees. It is a body which carries on organised activities enumerated in the trust deed which creates it. In that sense, it can also be described as an organisation. Where a trust which exists solely for educational purposes runs a primary and secondary school, such school is part of the assessee-trust. The court held that the assessee came within the expression " other educational institution." in s. 10(22) and was entitled to exemption under that provision. Mr. Bajoria has heavily relied on the decision of this court in the case of Birla Vidhya Vihar Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o establish and conduct schools and colleges. The assessee derived income from securities, properties and from other sources like dividends, refund of scholarship and donations etc. No amount of the income was spent for any purpose unconnected with education. It was held that the assessee was an educational institution existing solely for the purpose of education and not for profit. There fore, the assessee was an educational institution, the income of which was exempt under s. 10(22) of the Act. The last decision cited is in the case of CIT v. Saraswath Poor Students Fund [1984] 150 ITR 142 (Kar). In that case, the assessee was a society registered under the Societies Registration Act, 1860. The primary object of the assessee was to extend financial help to the students and not to establish any educational institution to impart education to students. It was, therefore, held that the assessee was not an educational institution and was not entitled to exemption under s. 10(22). The assessee in our case is a society registered under the West Bengal Societies Registration Act, 1961. The objects for which the assessee, Doon Foundation, is established as contained in clause 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The contention of Mr. Maitra that the assessee-society is neither a university nor an educational institution and, therefore, cannot get any exemption under s. 10(22) cannot be accepted. Section 10 provides that in computing the total income of a previous year of any person, any income falling within any of the clauses of s. 10 shall not be included. Sub-s. (22) of s. 10 provides that any income of a university or other educational institution existing solely for educational purposes and not for purposes of profit will not be included in the total income. The assessee runs an educational institution. If the educational institution run by the assessee exists solely for educational purposes, in that event, income of such institution cannot be included in the total income of the assessee-society. If the educational institution exists solely for educational purposes and not for purposes of profit, in that event the fact that the recipient or owner of the income is a person other than the educational institution or university, would not affect the position. The word "institution" has not been defined in the Act. A society registered under the Societies Registration Act whose prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under s. 10(22) in respect of only the income derived from the educational institution. The further contention of Mr. Maitra is that in this case, the assessee has not yet set up the educational institution and cannot, therefore, get the exemption. According to Mr. Maitra, the assessee has only taken some steps for holding regular classes for teaching Hindi and purchased some books and periodicals for a library and it cannot be said that during the relevant previous year, the assessee was running any educational institution. The condition precedent for claiming exemption under s. 10(22) is, whether the educational institution exists solely for educational purposes and not for purposes of profit. There is no dispute nor can it be disputed that the assessee-society exists solely for educational purposes. The assessee has commenced activities connected with the imparting of education. For the purpose of holding regular classes for teaching of Hindi, the assessee has taken all preliminary steps including purchase of books and periodicals. Such activities are the steps towards running of full-fledged teaching course. We are, therefore, unable to accept the contention of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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