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TMI Blog2008 (2) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12A(a) of the Income Tax Act, 1961 ("the Act") since 1985. Upto and including the Assessment Year 1996-97, the assessee was allowed exemption under Section 10(22) of the Act but for the Assessment Year 1997-98, the Assessing Officer departed from the past stand despite the contention of the assessee that there was no change in its activities, mode of investment or functioning. 3. The Assessing Officer took three factors into consideration for deciding against the assessee, namely:- (i) The assessee had let out a property owned by it on rent. According to the assessee, it owned House No.55 at Palam Vihar, Gurgaon and one of the rooms therein was given to an employee of Dapel Investment for security purposes of the building and rent of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had diverted funds for non-educational activities. 4. The assessee contested this view of the Assessing Officer and the Commissioner of Income Tax (Appeals) [CIT (A)] accepted the contention of the assessee and came to the conclusion that there was no material to suggest that the assessee had invested the funds with a profit motive. 5. The Revenue had challenged the view of CIT (A) but that was rejected by the Tribunal and that is how the Revenue is before us in this regard. Apart from the fact that there is a concurrent finding against the Revenue, we find that even otherwise no case has been made out for interference by the Revenue. 6. In Commissioner of Income Tax v. Delhi Kannada Education Society, [2000] 246 ITR 731(De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being run for the purpose of profit so long as no person or individual is entitled to any portion of the said profit and the said profit is used for the purposes and for the promotion of the objects of the institution." 8. As observed by the Supreme Court in Aditanar Educational Institution v. Additional Commissioner of Income Tax, [1997] 224 ITR 310 at 318, the decisive or acid test is whether on an overall view of the matter, the object of the trust is to make a profit. 9. Applying the principles laid down by this Court, the Andhra Pradesh High Court and, of course, the Supreme Court, it cannot be said that the object of the assessee was to make a profit by investing its funds in a non-governmental organization. The fact of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to invest their funds in the modes specified under section 11(5) of the Income-tax Act. This clarification will not apply to the institutions seeking exemption under section 11 of the Act. Sd-/………….. H.K. Choudhary Under Secretary to the Government of India. [F.No.165/3/95-ITA.I]" 11. A perusal of the above would show that there is no restriction regarding the mode of investment of funds by an educational institution. There is no obligation that an educational institution must invest its funds in the modes specified in Section 11(5) of the Act. 12. In so far as the present case is concerned, the assessee invested its funds and the intention was to use the funds and any interest earned thereon for educational purposes. At least ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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