COMMISSIONER OF INCOME TAX Vs. RAM EDUCATION FOUNDATION

JUDGEMENT

(1.) AT the instance of Revenue, the Income -tax Appellate Tribunal, Delhi Bench -E (in short "the Tribunal"), has referred the following question under S. 256(1) of the INCOME TAX ACT, 1961 (in short 'the Act'), for the opinion of this Court :

(2.) FACTUAL position in a nutshell is as follows : The assessee is a society registered under the Societies Registration Act, 1860. The object for which the Foundation was established was, inter alia, to furnish theoretical and practical education of business and science. In furtherance of the aforesaid objects, it was provided that the Foundation may open schools, colleges and other educational institutions, open industrial and commercial undertakings as means of training men or in support of the institution solely or in partnership with others. In 1950, an institution known as Lala Madan Mohan Lal Mahila Shilp Vidyalaya transferred all its assets and liabilities to the Foundation on the condition that it shall apply the assets for the object of Lala Madan Mohan Lall Mahila Shilp Vidyalaya Society. In furtherance of the objects of that society, for the purpose of which assets were placed on trust with the Foundation, it was running a vocational training centre in the name of 'Jugnu' which trains women in the art of stitching and embroidery. Sale of the products of the said Jugnu resulted in some surplus. During the relevant assessment year the assessee disclosed a sum of Rs. 39,392 to have been derived from Jugnu activity. Exemption was claimed in respect of this income under s. 11 of the Act. The ITO was of the view that the activity run by the Foundation has resulted in surplus which is taxable. The assessee carried the matter in appeal before the Appellate Assistant Commissioner (in short 'the AAC') who upheld the conclusions of the ITO. The matter was carried in further appeal before the Tribunal. It was contended that the primary object and purpose for which Jugnu activity was carried on was plainly an object of general public utility and it did not involve the carrying on of any activity for profit. The Tribunal accepted this stand holding, inter alia, as under :

(3.) IN view of the factual conclusion arrived at, as noted above in the quoted portion, the Tribunal has rightly held that the income was exempted under S. 11. The guidelines to be applied in such cases have been indicated by the apex Court in Addl. CIT vs. Surat Art. Silk Cloth Mfrs. Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) : TC 23R.195. That being the position, our answer to the question referred is in the affirmative in favour of the assessee and against the Revenue. The reference stands disposed of. *****