TMI Blog1983 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e not in dispute. They are found correctly stated in the statement of the case and may briefly be stated thus: The Academy of General Education, Manipal (the " Academy ") is the assessee in these cases. It is a society registered under the Societies Registration Act, 1860. The objects for which the academy was established are stated in the memorandum of association and they are : " (a) To make available technical and commercial education in as many as 47 subjects; (b) to devise ways and means and accord facilities for candidates to specialise in all or any of the above courses; (c) to give training in technical, commercial or any other form of education, as may be adopted by the Academy from time to time in such way as to enable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Up to and including the assessment year 1970-71, the income of the academy has been treated as exempt. For the assessment year 1971-72, the academy filed a voluntary return showing " nil " income and claimed that its income was exempt under s. 10(22) of the I.T. Act, 1961. Alternatively, it claimed exemption under s.11 to the extent admissible. The ITO disallowed the claim under s. 10(22), but accepted the claim under s. 11, since the objects of the academy were found to be charitable in nature and the academy did not infringe the provisions of s. 13(1)(c). Aggrieved by the order of the ITO, the academy appealed to the AAC before whom detailed evidence was produced to show that the academy is an educational institution. The AAC agreed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r educational institutions which exist solely for educational purposes. The academy is admittedly not a university. The question then is whether it falls under the category of " other educational institution ". Mr. Srinivasan, learned counsel for the Revenue, submitted that the academy in order to claim the benefit of s. 10(22) should itself be an educational institution and it is not enough if it runs some schools or colleges. In such cases, according to the counsel, the academy is only entitled to the benefit of s.11, as rightly held by the assessing authority. He also urged that the educational institutions established by the trusts, although founded by the academy, are entitled to be assessees in their own right and the academy cannot c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds in any manner, but the income generated therefrom must be utilised exclusively for educational activities. If these requirements are complied with, the assessee's income shall be exempt under s. 10(22) of the Act. The academy is a registered society and it carries on organised activities as per the objects set out in the memorandum of association. Its primary object is to establish, support, manage or conduct schools, colleges and such other educational institutions. It has got income of its own. In its balance-sheet the incomes of the twenty-two colleges or institutions established under separate trusts have not been included. Nor do we find therein the income of the nine schools which are run directly by the academy. It appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution or institutions." In Addl. CIT v. Aditanar Educational Institution [1978] 118 ITR 235, the Madras High Court has followed the principle stated in Katra Education Society's case [1978] 111 ITR 420 (All). The assessee in that case was also a society registered under the Societies Registration Act, 1860. Its objects were to establish, run, manage or assist colleges, schools and other educational organisations for educational purposes. The assessee started a college and utilised the donations received for it for the purpose of education in that college and it claimed exemption of that income under s. 10(22). The Commissioner held that the assessee was not eligible for exemption under s. 10(22) on the ground that the exemption und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of profit so long as no person or individual was entitled to any portion of the said profit and so long as that profit was not utilised for any purpose other than the promotion of the objects of the society. In Secondary Board of Education v. ITO [1972] 86 ITR 408, the Orissa High Court has upheld the plea of the Secondary Board of Education for claiming exemption of its income from income-tax under s. 10(22) on the ground that the income and expenditure of the Board were controlled and the entire expenditure was directed towards development and expansion of educational purposes. It was also observed that even if there was some surplus earned by its incidental activities, that surplus, so long as it remains as part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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