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Issues:
Assessment of exemption under section 10(22) for educational institution. Permission for accumulation of surplus income. Interpretation of 'educational institution' under section 10(22). Analysis: The case involved three appeals by an assessee society registered under the Societies Registration Act, 1860, seeking exemption under section 10(22) for the assessment years 1975-76, 1976-77, and 1977-78. The society's constitution aimed to start schools, colleges, and provide freeships and scholarships for deserving students. The Commissioner allowed exemption initially, but later, the exemption was withdrawn for the assessment year 1974-75. The Tribunal restored the exemption, leading to the subsequent appeals for the mentioned assessment years. The primary issue was whether the assessee qualified as an educational institution under section 10(22) for exemption purposes. The Commissioner (Appeals) denied the exemption, citing reasons including the delay in filing notice under section 11(2) for accumulation of surplus income. However, the Tribunal disagreed, emphasizing that the society's activities focused on granting scholarships and freeships to assist students in their studies, which constituted educational activities. The Tribunal highlighted that the society's aim to start schools and colleges further supported its classification as an educational institution. The Tribunal's decision was supported by various precedents, including cases where institutions not directly imparting education were still considered educational institutions under section 10(22). The Tribunal differentiated cases where the primary object was deemed as general public utility rather than education, emphasizing the specific educational focus of the present society. The Tribunal also noted the principle favoring the assessee when interpreting taxing statutes and the absence of any subsequent decisions challenging the initial exemption granted to the assessee. Ultimately, the Tribunal allowed the appeals, affirming the assessee's status as an educational institution eligible for exemption under section 10(22). The decision highlighted the educational nature of the society's activities, despite not directly running schools or colleges at the time, and upheld the importance of the society's aim to provide educational support to deserving students.
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