TMI Blog1982 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee filed its return of income for the assessment year 1971-72, claiming that its income was exempt from payment of income-tax under s. 10(22) of the Act. The ITO, however, rejected the claim of the assessee and proceeded to compute the total income of the assessee for the assessment year 1971-72, in the light of the provisions of s. 1 l(1) of the Act. He held that the assessee-trust's income to the extent of Rs. 8,400 which was not applied for the purpose of the, trust was liable to be taxed. Feeling aggrieved by the assessment framed by the ITO, the assessee carried the matter in appeal before the AAC. The AAC reversed the finding recorded by the ITO holding that the income derived by the assessee-trust was exempt under s. 10(22) of the Act. In his view the assessee-trust was an organisation existing for promotion of education and, therefore, it was an educational institution, whose income is exempt under s. 10(22) of the Act. The Revenue carried the matter in appeal before the Income-tax Appellate Tribunal (hereinafter referred to as the " Tribunal). " After enumerating the objects of the assessee-trust, adverted to above, the Tribunal held that the assessee-trust was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sind Hindu High School and any other educational institution that may be started hereafter in any part of the Bombay State It can hardly be disputed that the objects for which the assessee-trust is established are educational. Mr. S. N. Shelat, learned counsel for the Revenue, also did not dispute that the assessee-trust was an educational trust. The stand which the Revenue has taken is that though the assessee-trust is an educational trust, it is not an educational institution. It is the income of an educational institution which is exempt and not the income of an educational trust. What was sought to be argued was that the trust is not an institution. According to Mr. Shelat, any institution must have a physical form or existence. To clarify his argument, he gave the example of a school and submitted that a school is an institution. trust which is not a juridical person has no physical existence and consequently it cannot be termed as an institution. Mr. Shelat did not dispute that the assessee-trust runs primary and secondary schools which are institutions but his contention was that the trust itself is not an institution, which would attract the application of s. 10(22). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple." We are unable to see how the above observations help the Revenue in placing a narrow construction on the word " institution " as canvassed by Mr. Shelat. Mayor of Manchester was a case where exemption from income-tax was claimed in respect of buildings owned by the Municipal Borough of Manchester on the ground that the buildings were being used as public libraries. Under the I.T. Act (of the UK), exemption was available in respect of the property owned by literary or scientific institution used solely for the purposes of such institution and, in which, no payment is made or demanded for any instruction there afforded by lectures or otherwise. The House of Lords by a majority held that undoubtedly a public free library is a literary institution, its object being the spread of knowledge and love of literature among the people. The difficulty was, however, experienced because the law further required that such a building must be " the property " of a literary institution. The court took the view that for satisfying the requirements of law, one must first ascertain who is the owner of the building in respect of which the exemption is claimed and that only if the owner of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the society was awaiting the orders of the Government on the exemption claimed by the society from registration charges and stamp duty. As the transfer was not complete in accordance with law, the construction of the building had to be undertaken in the name of the society. The society was collecting a compulsory contribution of Rs. 12,000 per seat and the bank accounts and deposits were maintained in the name of the society itself and not in the name of the college. The society claimed exemption in respect of its income under s. 10(22) of the Act. The ITO, however, rejected the claim. On a writ petition filed by the society, the Division Bench of the Andhra Pradesh High Court held that the society was not different from the medical college. It was only because of the pendency of the petition claiming exemption from stamp duty and registration fees, which was pending with the Government, that the construction of the building had to be undertaken in the name of the Medical Education Society. Further, there was no distinction between the petitioner-society and the college and the society was an educational institution with no motive of private or personal profit. Merely because c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption under s. 10(22) as the exemption under that provision would apply only to the educational institution as such and not to anyone else who might be financing the running of the institution. The Tribunal, however, held that the assessee was an educational institution existing for educational purposes and not for purposes of earning any profit and hence the assessee itself could be termed as an educational institution so as to come within the ambit of s. 10(22). On a reference to the High Court two questions arose, namely, (i) whether any educational institution would fall within the scope of s. 10(22) even though it may have or may not have anything to do with a University; and (ii) whether the assessee does not come within the expression "other educational institution " in s. 10(22). The first question which arose before the Madras High Court does not arise before us. So far as the second question is concerned, the Madras High Court held that the sole purpose for which the assessee had come into existence was education at the level of college and school and hence it cannot be said that the assessee was only a financing body and did not come within the expression " other e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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