2009 (12) TMI 613 - HC - Income Tax

Exemption u/s 10(22) - Educational institution - Held that - The revenue is not contending before us that the income derived by the respondent assessee from other source is not utilized the educational purpose. - Decided against revenue.

Summary

Issues:
1. Interpretation of Section 10(22) of the Income Tax Act.
2. Entitlement of an educational institution to exemption under Section 10(22) for income utilized for educational purposes.

Analysis:
1. The appeal raised a substantial question of law regarding the correctness of the order passed by the Commissioner of Income Tax (Appeals) and confirmed by the Income Tax Appellate Tribunal. The main issue was whether the Appellate Authorities correctly held that the assessee is entitled to exemption under section 10(22) of the Income Tax Act without independently examining the reasons for rejecting the claim by the Assessing Officer during the current Assessment Year.

2. The respondent, an educational institution, earned rental income from letting out buildings, which was utilized for educational purposes. The Commissioner of Income Tax (Appeals) granted exemption considering Section 10(22) of the Income Tax Act, which pertains to income of a University or other Educational institution existing solely for educational purposes and not for profit. The Tribunal upheld this decision, leading to the appeal challenging these findings.

3. The High Court, after hearing the counsel for the revenue and examining Section 10(22) of the Income Tax Act, noted that the revenue did not dispute that the income derived by the respondent from other sources was used for educational purposes. Therefore, the Court found that both the Tribunal and the Commissioner of Income Tax (Appeals) were justified in granting relief to the assessee. Additionally, the Court observed that the revenue had accepted the returns filed by the assessee for earlier assessment years, further supporting the decision to grant relief.

4. Ultimately, the Court concluded that there were no merits in the appeal and rejected it. The judgment highlighted the importance of an educational institution's income being utilized solely for educational purposes to qualify for exemption under Section 10(22) of the Income Tax Act. The decision reaffirmed the consistent approach taken in previous assessment years and upheld the relief granted to the respondent educational institution.