TMI Blog2005 (5) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... see had shown investments of Rs. 43,72,188 (at cost), in the shares of various companies, viz., BST Manufacturing Ltd., Apollo Tyres/Tubes Ltd., Apollo Tubes Ltd., etc. The Assessing Officer further noted that Mr. Raunaq Singh, Chairman of the assessee society, was also Chairman of Apollo Tyres Ltd., and his son, Mr. O.S. Kanwar, a member of the respondent society was also Vice-Chairman and Managing Director of Apollo Tyres Ltd. In view of the above facts, the Assessing Officer held that the society s funds were invested in companies in which the chairman and the members of the society or their relatives had personal interest. The Assessing Officer further noted that the assessee-society had earned income from dividend of Rs. 7,49,430, interest of Rs. 10,01,360, Misc. receipt of Rs. 2,34,431 and receipt against Raunaq Loan Scholarship Scheme of Rs. 41,800, totalling to Rs. 20,27,021, which approximately constituted 50 per cent of total receipts of the society. In view of the above, the Assessing Officer concluded that income from dividend, interest and other receipts do not qualify for exemption as these are not incidental to running of educational school, hence, exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. It has also been stressed before me that the facts and circumstances of the case in the instant assessment year 1996-97 were the same as in the past, when benefit of section 10( 22 ) was allowed to the appellant. Whereas, admittedly, there is no res judicata in income-tax proceedings, but I find merit in the ld. AR s assertion that to vary the decisions taken by his predecessor in the past two decades, the Assessing Officer had to bring on record fresh or new facts, which has not been done by the Assessing Officer in the instant case. It is to be noted that the appellant s income has not been proved to have been used for purposes other than for educational purposes. In view of these case laws cited by the ld. ARs, there seems to be merit in the submissions of the ld. ARs quoted extensively as above. Further, a copy of Board s Circular No. 712 dated 25th July, 1995 filed by the AR on the subject, reads as under : "14. The above circular throws adequate light in which the Assessing Officer had to view the facts and circumstances of the instant case. In view of the submissions made by the ld. ARs, the facts and circumstances of the case discussed as above, the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hostels, boarding houses, staff quarters, hospitals, dispensaries and other conveniences for the benefit of the students, staff and other employees of the Society and other associations or institutions established and/or managed by the Society." 8. A perusal of the aforesaid would reveal that the objects of the Society is solely for advancement of educational activities. It is, therefore, not clear why the claim of exemption under section 10( 22 ) has been denied to the assessee for the first time in this year. It is undeniable that the exemption has been allowed to the assessee since inception for almost two decades. The ld. DR submitted that the assessee has made investments in the manner noted by us in the earlier part of our order and that the surplus was from non-student related activities. It is vehemently canvassed by the ld. DR that almost 50 per cent of the receipts have been earned by the assessee from non-school related activity and, thus, such income is not exempt under section 10( 22 ). On this issue, we do not find any force in the stand of the revenue inasmuch as it is abundantly clear from the reading of section 10( 22 ) itself that the exemption is available w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee is that it has been granted exemption under section 10( 22 ) in the past and there is no change in the facts leading to the claim of exemption in this year. We find ample force in the above plea of the assessee that there is no change in the facts in the year under consideration which is also apparent from balance sheet and profit loss account, which is placed on record. In fact, the investments which have been frowned upon by the Assessing Officer have indeed been made in the earlier assessment years. The only new investment made during the year is a sum of Rs. 5 lakh in the bonds of ICICI. The investment stands at Rs. 97,72,188 as at the closing of the previous year relevant to the assessment year under consideration and it stood at Rs. 88,72,188 at the beginning of the year. It is noteworthy that the investment in the bonds of ICICI Ltd. has not been frowned upon by the Assessing Officer. There is also no change in the activities relating to the running of school. Ostensibly, the assessee continues to run during the year consideration a secondary school at Ganaur, Haryana which is affiliated to CBSE, New Delhi. Thus, insofar as the activities of the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance Sheet and Income Expenditure account of the assessee for the year under consideration, which is placed at pages 16 to 20 of the paper book. The arising of surplus is not important, what is important is to find out where such surplus is being used - whether the same is being used in the furtherance of the objects of the society or not? In the instant case, it can be factually deduced that the surplus available in the balance sheet is being used in the furtherance of the objects of the society and there is no element of private gain. In any case, we find that the surplus or the assets of the society cannot be paid or distributed amongst the members of the society but can be solely applied towards the promotion of its objects. Clauses 16 and 17 of the Memorandum of Association of the society placed at pages 6-13 of the paper book are relevant in this regard. 13. In view of the aforesaid discussion and also noticing that the CIT(A) has, in an apt manner, met the objections raised by the Assessing Officer, we are of the view that the assessee-society satisfies all the conditions for the claim of exemption under section 10( 22 ) and, accordingly, we affirm the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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