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Issues involved:
The judgment involves determining whether the income of the assessee-trust is exempt under section 10(22) of the Income-tax Act as an educational institution and whether the assessee-trust is entitled to exemption under section 11. Exemption under Section 10(22): The assessee, a registered society, claimed exemption under section 10(22) for the assessment years 1977-78 to 1979-80. The Income Tax Officer (ITO) granted relief under section 11 while computing the income of the assessee. The Appellate Tribunal accepted the claim under section 10(22) for the assessment year 1975-76 and allowed deductions under section 11. The Tribunal rejected the Revenue's objection to the benefit of section 11, as the ITO had followed the earlier order granting such benefit. The Tribunal's decision led to the questions raised in the case. Scope of Enquiry: The court clarified that if the assessee is entitled to exemption under section 10(22), the question of exemption under section 11 becomes unnecessary. The assessee, involved in educational and allied purposes for the Saraswath Community, was deemed eligible for exemption under section 11. Interpretation of Section 10(22): The court analyzed the definition of "educational institution" under section 10(22) and emphasized that the institution need not necessarily impart education directly. Citing precedents, the court highlighted that the income would be exempt under section 10(22) if the institution primarily engages in educational activities, even if it does not directly teach students. Decision: The court concluded that the assessee, primarily providing financial assistance to students, did not qualify as an educational institution under section 10(22) but fell under section 11. Therefore, the first question was answered in the negative in favor of the Revenue, while the second question was answered in the affirmative against the Revenue.
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