COMMISSIONER OF INCOME TAX Vs. DOON FOUNDATION

JUDGEMENT

(1.) The question in this reference under Section 256(1) of the I.T. Act, 1961, is whether the assessee is an educational institution and entitled to exemption under Section 10(22) of the I.T. Act, 1961, The assessee is a society registered under the West Bengal Societies Registration Act, 1961. The society has been established as an educational society and had been granted registration under Section 12A of the I.T. Act, 1961. In the assessment for the assessment years 1973-74 and 1974-75, the ITO did not allow the exemption claimed by the assessee under Section 10(22) as he found that the assessee had other charitable objects within education and the benefit of Section 80G had also been granted to the assessee as also the exemption under Section 11 was allowed to it. The assessee appealed to the AAC. Before the AAC, it was contended that the assessee trust was created for educational purposes and it has also been affiliated as an eductional institution. The AAC examined the relevant clauses of the trust deed and came to the finding that the assessee was entitled to the exemption under Section 10(22) of the Act. The AAC held as follows :

(2.) The Revenue preferred an appeal before the Tribunal. It was contended on behalf of the Revenue that since the assessee was not a recognised educational institution like a university, the ITO was justified in rejecting the assessee's claim for exemption under Section 10(22). It was pointed out that the assessee had other charitable objects within education for which benefit under Section 80G had already been granted. It was, therefore, submitted that the assessee was not entitled to exemption under Section 10(22). It was, however, contended on behalf of the assessee that in view of the various judicial pronouncements on the point at issue, the AAC was justified in allowing the assessee's claim for exemption under Section 10(22). The Tribunal considered the objects of the assessee trust and held that the AAC was justified in allowing the assessee's claim for exemption under Section 10(22). The Tribunal was of the opinion that the objects for which the trust was established were purely for educational purposes. The Tribunal also found that Clause 7 of the trust deed provided that if any activity or object of the trust is found to be outside the scope of solely educational purpose, it should be deemed as non est and shall be deemed to be excluded from the objects of the foundation. The Tribunal, therefore, took the view that the mere fact that the assessee trust had other charitable objects within the educational purpose cannot disentitle the assessee from the benefit of Section 10(22).

(3.) On the aforesaid facts, the following question was referred to this court under Section 256(1) of the I.T. Act, 1961 :