OXFORD UNIVERSITY PRESS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These appeals by special leave are filed by the assessee. They impugn the correctness of the judgment and order of the High Court at Bombay dated 21st December, 1995 (reported in 1996 Tax LR 666) in respect of the Assessment Year 1976-77 and subsequent orders of the High Court following the aforestated judgment for the Assessment Years 1972-73, 1973-74, 1974-75, 1977-78, 1979-80 and 1983-84. The question that arose for consideration in references to the High Court under Section 256(1) of the Income-tax Act, 1961 read :

(2.) The assessee is a branch of the Oxford University Press, which, as the question itself notes, is a part of the University of Oxford in the United Kingdom. The assessee publishes books and carries on similar business in India. It was treated as a non resident company under the terms of a Notification issued by the Central Board of Revenue on 31st July, 1954 at its request from the Assessment Year 1952-53 onwards. For the Assessment Year 1976-77 the assessee returned an income of Rs. 19.94 lakhs, but, in the course of the assessment proceedings before the Income-tax Officer, it claimed that, as it was a branch of the University of Oxford, the same was exempt from the payment of income tax by virtue of the provisions of Section 10, clause (22) of the Income-tax Act, 1961. The Income-tax Officer rejected the contention and brought the income to tax. The Commissioner (Appeals), in the appeal filed by the assessee, overturned the assessment by the Income-tax Officer. Aggrieved by the order of the Commissioner (Appeals), the Revenue approached the Income-tax Appellate Tribunal. The Tribunal dismissed the appeal. Arising out of the judgment and order of the Tribunal, the question aforestated was referred to the High Court.

(3.) The High Court stated in the judgment and order under challenge that, admittedly, the assessee was the Oxford University Press and not the University of Oxford, but there was a finding of the Tribunal to the effect that the assessee was a part of the University of Oxford. In its view, what was necessary for availing the benefit of the exemption under Section 10 (22) was that the income should be the income of an University or an educational institution existing solely for educational purposes and not for the purposes of profit. In the context and setting of clause (22), the word "existing" in the expression "existing solely for educational purposes and not for the purposes of profit" meant and referred to the existence of such University or institution solely for educational purposes in India. In other words, a University or an educational institution, whether established in India or abroad, had to retain the character of a University or an educational institution in India, and the income in respect of which the exemption was claimed had to be income derived by it in its capacity as a University or an educational institution. If it did not carry on its activities as a University or educational institution in India, it could not be regarded as a University or educational institution existing solely for educational purposes and, hence, the income derived by it from any other activities would not qualify for exemption under Section 10 (22). The assessee was the Oxford University Press and not the University of Oxford. The University of Oxford did not exist in India nor did it carry on the activities of a University in India. What existed in India was the Oxford University Press. The only activity carried on by the Press, which was the assessee, in India was the activity of printing and publishing books and selling them as well as publications of other publishers to earn profit. This activity amounted to carrying on the business of selling or supplying books for profit. Income made therefrom could not be regarded as the income of a University existing solely for educational purposes merely because the assessee claimed to be a part of the University of Oxford, which did not exist in India. The High Court added, "If it does not exist as a University or an edudcational institution solely for such purposes and does not carry on the primary activities of a University or educational institution but merely runs the business of press in India for printing and publishing books and selling and supplying the same as well as books published by other publishers for the purpose of profit, it cannot be held to be a "University" within the meaning of Section 10 (22) of the Act merely by reason of the fact that it is run by a University existing outside India for educational purposes or that it is a part of such University. . . . . . . If the case of the assessee is that in the true sense of the term it is a part and parcel of of the Oxford University and has no independent existence of its own and all its income is the income of the said University, the "assessee" for the purpose of the Income-tax Act would have been the "Oxford University" and not the "Press". The Press, as an assessee might have been entitled to claim exemption in respect of its income under Section 10(22) of the Act if it could establish that the income is the income of the Oxford University which existed solely for educational purposes." On this basis, the High Court held against the assessee.