1980 (9) TMI 113 - AT - Income Tax

Summary

Issues:
1. Exemption under sections 10(16), 10(22), and 11 for the assessee society.
2. Interpretation of the term "education" and "educational institution" under the Income Tax Act.
3. Application of exemption under section 11 and the time limit for filing the application.

Analysis:
1. The appeal pertains to the assessment year 1975-76 of a society registered under the Societies' Registration Act of 1860 claiming income exemption under sections 10(16), 10(22), and 11. The Income Tax Officer (ITO) disallowed the exemptions, resulting in a total income tax liability of Rs. 28,720. The Appellate Assistant Commissioner (AAC) partially allowed the appeal, granting relief under section 11 but denying accumulated income exemption due to a delayed application filing. The assessee, in the second appeal, argued for exemption under section 10(22) based on the institution's educational objectives.

2. The debate centered on whether the society qualified as an "educational institution" under section 10(22) of the Income Tax Act. The AAC acknowledged the society as an institution but questioned its direct promotion of education. However, the Tribunal found no such restriction in the law and relied on the definition of "education" in section 2(15) to support the society's activities, such as granting scholarships and financial assistance to students, as educational in nature. Citing precedents and analogies, the Tribunal concluded that the society qualified as an educational institution entitled to exemption under section 10(22).

3. Additionally, the Tribunal addressed the issue of exemption under section 11, despite a delayed application filing. Relying on legal interpretations from previous cases, including Smt. Godavari Devi Saraf and M.CT. Trust, the Tribunal held that the time element in the application process should not be a barrier to granting exemptions. Drawing parallels with a Supreme Court decision on the phrase "in the prescribed manner," the Tribunal directed the Income Tax Officer to accept and process the delayed application under section 11. Consequently, the appeal was allowed in favor of the assessee society.