1990 (6) TMI 94 - AT - Income Tax

Central Government Discretionary Trust His Net Wealth Registered Valuer Tax Liability Valuation Report

Summary

Issues Involved:
1. Assessee's claim for exemption under Section 10(22) of the Income Tax Act.
2. Treatment of donations received from Life/Founder Members.

Detailed Analysis:

1. Assessee's Claim for Exemption under Section 10(22) of the Income Tax Act:
The primary issue in this appeal concerns the assessee's claim for exemption under Section 10(22) of the Income Tax Act. The assessee, assessed as an Association of Persons (AOP) for the assessment year 1985-86, was incorporated under the Societies Registration Act, 1960, and its objectives include promoting education, training, research, and professionalism in the construction and allied industries. The assessee argued that it existed solely for educational purposes and not for profit, thus qualifying for exemption under Section 10(22).

The Income Tax Officer (ITO) initially declined the exemption, treating the contributions from members as business income. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the exemption under Section 11 but rejected the claim under Section 10(22), stating that the assessee did not meet the requirements of being a "university or any other educational institution."

Upon appeal to the Tribunal, the assessee's counsel argued that the assessee conducted educational courses, imparted education, held examinations, and granted diplomas in Construction Management, making it an educational institution under Section 10(22). The Tribunal agreed with the assessee, noting that the education provided was of a post-graduate level and involved systematic instruction, thus qualifying as an educational institution. The Tribunal directed the ITO to accept the assessee's claim for exemption under Section 10(22).

2. Treatment of Donations Received from Life/Founder Members:
The second issue pertains to the treatment of donations received from Life/Founder Members. The CIT(A) had treated these donations as income, although exempt under Section 11. The assessee contended that these donations should not be treated as income, citing the Bombay High Court's decision in the case of CIT v. Film Federation of India.

Given the Tribunal's decision to grant exemption under Section 10(22), it found it unnecessary to discuss the treatment of these donations at length. However, it acknowledged that the assessee's stand was supported by the cited Bombay High Court decision, reinforcing the argument that these donations should not be treated as income.

Conclusion:
The Tribunal concluded that the assessee qualifies as an educational institution under Section 10(22) of the Income Tax Act and directed the ITO to grant the exemption accordingly. Consequently, the appeal was allowed, and the treatment of donations from Life/Founder Members as income was deemed unnecessary to address in detail.