TMI Blog2019 (2) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... ot make the institution a profit making institution. What is relevant is that the purpose of education should not get submerged under the profit making motive. The ultimate test is whether on an overall view of the issue in the assessment year concerned, the object is to make profit as opposed to imparting education. Applying the ratio to the case in hand, even though it is true that the assessee is running an educational institution, it cannot be said that the society exists solely for educational purposes and not for profit. The Tribunal rightly concluded that the acquisition of property in the name of individuals is indicative of the fact that the profits of the institution was being used for self aggrandizement; which is the explicit motive. The explanation that the property was inadvertently purchased in the name of individuals by an innocuous mistake, can only be taken with a pinch of salt. We also find that the assessee is a society, formed with many objectives, one of which is imparting education. Hence, the assessee cannot be found to be an institution established and existing solely for educational purposes. The assessee also has declared income from cultural activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns were being filed regularly and acknowledgment received as per Annexures E and F. 3. The claim of the assessee for exemption under Section 10(22) of the Act was denied by the Assessing Officer (A.O.) for the reason that the school has not got CBSE recognition and that the property purchased in 1997 is in the name of the Secretary and the Manager of the Trust, respectively Satheesh Kumar and his wife, Pushpavally, a teacher in that school. 4. It is pointed out that the CBSE recognition was subsequently obtained and that the document of sale inadvertently mentions the names of Satheesh Kumar and Pushpavally, though the purchase of land was accounted for in the school register and books. 5. The appeal preferred before the C.I.T. (Appeals) was allowed vide Annexure G holding that the onus is on the A.O. to establish the existence of profit motive in the activities of the assessee. 6. The Revenue preferred appeal before the Tribunal, which was allowed vide Annexure I order confirming the finding of the A.O. on the sole ground that the land in question was purchased in the name of the Secretary and Principal of the school. The said order stands impugned. 7. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the trust. But the land was purchased in the individual name of the Manager and Secretary. The A.O clearly found that the funds of the Society were diverted to purchase assets, immovable property in the name of persons managing the society. The clear finding was that it cannot be held that the institution is existing solely for educational purposes and not for profit. 11. American Hotel and Lodging Association Educational Institute (supra), considered the provision brought in, of exemption for income from education in similar cases, under sub-clause (vi) of Section 23C after deleting sub-section (22) from Section 10, with effect from 01.04.1999. The new provision was identical insofar as the conditions of existence solely for educational purposes and not for profit; but with a requirement of approval by the prescribed authority and some conditions for monitoring as stipulated in the provisos, under Section 23C. We are not concerned with the interpretation given to the amended provision under Section 23C(vi) but the Court also looked at Section 10(22) since the appellant therein was already availing exemption under Section 10(22). It was held that once an applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit, could claim benefit of Section 10(22) of the Act. The Hon'ble Supreme Court held that what is relevant is whether there is imparting of education in India. Therefore, the test formulated by the Court to decide the character of the recipient of income under Section 10(22) is whether there is in fact existence of an activity, which is in the nature of imparting of education in India . American Hotel and Lodging Association Educational Institute found that this is how the words in India have come into the judgment in Oxford University Press (supra) and not by incorporation from Section 11(1)(a) of the Act. Oxford University Press carried no educational activity in India and the exemption did not apply to the University. All the learned Judges held in Oxford University Press (supra) that the words in India cannot be read into Section 10(22) resulting in either only Indian Universities or Institutions carrying educational activities solely in India being enabled the exemption under Section 10(22). However, the majority view was that the non-profit motive has to be tested against Indian activities and since the assessee therein was carrying on only commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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