TMI Blog2004 (6) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee is a trust and had declared nil income in both the years under consideration. It is registered society engaged in the running of residential school by the name G.D. Birla Memorial School at Ranikhet. As per its income and expenditure account, the assessee had a total income of Rs. 1,99,64,443. As against this, it had debited expenses amounting to Rs. 1,47,04,829. On perusal of the income and expenditure account, it was seen by the AO that besides having income by way of tuition and board fees, the assessee also had a dividend income of Rs. 56,00,000 and interest income of Rs. 4,37,046. On perusal of the details of investment, it was found by the AO that substantial portion of the assessee s liquid funds were invested in equit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved in his order for asst. yr. 1995-96 that the assessee had not done any business but had made investment in shares for fruitful returns to be utilised for educational purposes only. He also found that the surplus which accrued to the school had been utilised only for educational purposes. Similar were the observations in the order for asst. yr. 1996-97 also. Hence, in both the years the CIT(A) directed the AO to allow exemption under s. 10(22) of the Act to the assessee. 4. The learned Departmental Representative referred to the facts mentioned by the AO in his order and our particular attention was drawn to the fact that out of the various sources of income which the assessee had, huge surplus had been generated and the same had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was generating huge surplus out of its total income. According to him, the dividend and interest income were incidental incomes only and no adverse inference could have been drawn therefrom. It was contended that most of the shares were received as corpus many years back and thereafter based on the original share holding, the assessee had acquired more shares by way of rights, bonus, etc. With regard to the purposes of making investment in shares it was contended that the returns therefrom were utilised for educational purposes only. It was further contended that restriction as regards investment in specified securities which were imposed by ss. 11 and 12 of the Act, did not apply to the provisions of s. 10(22) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. The only question before us is whether the assessee is existing solely for educational purposes and not for purposes of profit. There cannot be any quarrel over the proposition that the availability of exemption under s. 10(22) of the Act has to be evaluated from year to year as was contended by the learned Departmental Representative and as has been held by the Supreme Court in the case of Aditanar Educational Tuition. However, in the same decision it has been held by the Supreme Court that while evaluating the eligibility for exemption under s. 10(22), one should not be unrealistic and hyper-technical. In that case, the voluntary contributions received by the assessee were not offered for taxation. The CIT(A) invoking the revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legislative intent that in order to claim exemption under s. 10(22) of the Act, the predominant object has to be kept in view. If the predominant object of the institution is that of educational purposes, then, in the process if the institution earns some surplus in the carrying out of its predominant activity, it will not lose its original character of being in existence for educational purposes. Further, if the assessee has invested its funds to get better returns which in turn are to be utilised for educational purposes then exemption under s. 10(22) of the Act cannot be denied. It was so held by the Madras High Court in the case of CIT vs. Kshatriya Girls School. In the present case, there is no allegation that the assessee-soci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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