9911796707
TMI Blog1972 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... the opposite party on several days to explain the position. Without being satisfied with the explanation the opposite party issued the notice (annexure D) under section 143(2) of the Income-tax Act. The writ application has been filed under articles 226 and 227 of the Constitution for issue of an appropriate writ for quashing the aforesaid notices and the proceeding under the Income-tax Act initiated against the petitioner. The sole question for consideration is whether the income of the petitioner is exempt from income-tax. The exemption is claimed under section 10(22) of the Income-tax Act, which runs thus : "10. Incomes not included in total income.- In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-.... (22) any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit." The Board of Secondary Education is not a University but it is undisputedly an educational institution. The expression "existing solely for educational purposes and not for purposes of profit" qualifies the words "a University or other educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The preamble of the Act runs thus : "Whereas it is, expedient to establish a Board to regulate, control and develop secondary education in the State of Orissa by providing varied courses with a view to equipping pupils for different occupations, for education in the University and for other cultural purposes, and to examine those who have completed a prescribed course of study and to award certificates to successful candidates and doing all other thing, incidental thereto It is hereby enacted as follows : ......." Section 11 of the Act deals with the powers and functions of the Board which have been enumerated in clauses (a) to (z-i). These clauses may be extracted as they lead to the unequivocal conclusion that the Board exists solely for educational purposes : "(a) to prescribe courses of instruction for recognised institutions in such branches of secondary education as it may think fit ; (b) to take steps to co-ordinate secondary education with University education on the one side and primary or basic education on the other ; (c) to make regulations for the purpose of prescribing and recommending any book as a text book or a handbook and to undertake compilation and publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and parties, farms, departments, institutes or institutions concerned subject to the approval of the State Government ; (o) to frame regulations regarding the management of secondary schools such as constitution or reconstitution of managing committees, dissolution thereof when and where necessary, to take over the management under its direct control of such school other than Government secondary schools for such period is may be considered necessary, to assume the ownership of properties of such institutions which would be under its direct control ; (p) to call for reports from the Department of Public Instruction on the conditions of recognised institutions or of institutions applying for recognition and to direct inspection of such institutions ; (q) to recognise institutions for the purposes of admitting them to the privileges of the Board including examinations conducted by it ; (r) to adopt measures to promote the intellectual, physical, moral and social welfare of the students in recognised institutions and to supervise and control the conditions of their residence, health and discipline ; (s) to organise and provide for lectures, demonstrations, educational exhibitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources. Section 13 deals with custody and investment of Board fund. All moneys at the credit of the Board fund shall be kept in the Government treasury or at any bank as the Board may with the previous approval of the State Government determine ; provided that nothing in the section shall be deemed to preclude the Board from investing with the previous sanction of the State Government, any such moneys as are not required for immediate expenditure in any of the securities described in section 20 of the Indian Trusts Act, 1882, or placing them in fixed deposit in a bank approved by the State Government. Section 14 prescribes as to how the Board fund shall be applied. Subject to the provisions of the Act the Board fund shall be applicable only to the payment of the charges; and expenses incidental to the several matters specified in the Act and to any other purposes for which by or under the Act powers are conferred or duties imposed upon the Board. Section 27 dealing with annual report and budget estimate runs thus : "27. (1) Except in the year in which the Board is constituted the President shall present to the annual meeting of the Board a report on the working of the Board d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1922, gives some useful guide. The facts involved in the Privy Council case were as follows : The dominant object and purpose of the All India Spinners Association, an unregistered and unincorporated association of individuals, was the development of spinning and khaddar. Though it was established with the consent of the All India Congress Committee as an integral part of the Congress organisation it had independent existence and powers unaffected and uncontrolled by politics. Out of the funds in its hands which were mostly contributed by donations from the public and subscriptions from the members of the association, the association bought charkhas and handlooms and supplied them to the poor people free of charge. It further bought raw cotton and gave the same to the said persons for spinning yarn out of it which yarn was then given out to the other poor people for hand-weaving into cloth. The wages paid to the spinners and weavers were not based on current wages prevailing for similar work but were fixed on the basis of giving to the said persons as far as possible an income sufficient to enable them to support their families. The cloth so woven was sold in the khaddar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to act as an agency on behalf of the Congress to receive self-spun yarn as subscription to the Congress was a separate and independent matter apart from the general object of the association and did not affect its freedom from political purposes. If an association is set on foot by a political organisation and is connected with it but still has for its real object the relief of poverty, its connection with the political organisation does not make its real object any the less charitable. Coming to the point in issue the position of law can be put thus : Under the Act the Board has a fund. There are various sources of income constituting the fund. One of the sources of income is earning profits by compilation, publication, printing and sale of text books. The profits so earned enter into the Board fund. The income and expenditure of the Board is controlled and the entire expenditure is to be directed towards development and expansion of educational purposes. Even if there is some surplus it is not appropriated by others but remains as a part of the sinking fund to be devoted to the cause of education as and when necessary. This being the objective and there being various ways of co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
