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TMI Blog1988 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the main objects of the assessee and held that it did not exist solely for the purpose of education and it was, therefore, not entitled to benefit under section 10(22) of the Income-tax Act. The Income-tax Officer, however, held that the objects of the trust were charitable and, he, therefore, computed the income by applying the provisions of section 11 of the Income-tax Act. The net income of the assessee was determined at Rs. 7,560 which was below the taxable limit. As no demand was raised the assessee did not appeal against this assessment order though the finding of the Income-tax Officer regarding inapplicability of section 10(22) had gone against the assessee. 2. The Commissioner of Income-tax was, however, of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake prayer in their old age. These were also claimed to be donation towards corpus, but this plea was also not accepted by the Commissioner. The Commissioner directed the Income-tax Officer to recompute the income of the society after including the above amounts as income of the society and then finalise its assessment. 3. It has been submitted before us by the learned counsel for the assessee that the case of the assessee from the beginning had been that it should get exemption under section 10(22) of the Income-tax Act. He submitted that though the Income-tax Officer had rejected this plea of the assessee, the assessee had not filed any appeal in view of the fact that there was no tax demand against the assessee. He pointed out that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner would become meaningless if the basic plea of the assessee was accepted. 4. Making the plea for being considered under section 10(22) of the Income-tax Act it was submitted that the only activity which was subject-matter of consideration was the running of the school known as Fr. Agnel. It was pointed out that there was no other activity of the assessee and the school which is run by the Agnel Charities fulfills all the conditions which are given in section 10(22). In this connection, he referred to the registration of the school by the Registrar of Societies of the Delhi Administration. It was further submitted that though in the Memorandum there are other objects mentioned but the question of income-tax assessment has arisen onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, it was contribution towards corpus. Regarding the coats funds it was submitted that the receipt was towards the ancillary purpose and the assessee could not have utilised it for any other purpose. The departmental representative relied on the order of the Commissioner and submitted that there was nothing to show that these donations were towards corpus. Regarding the claim under section 10(22) it was submitted that the assessee could have filed an appeal when the Income-tax Officer had rejected its plea. It was submitted that the Commissioner could not consider this plea of the assessee in proceedings under section 263. 6. We have considered the facts of the case and the rival submissions. We are of the view that while considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the accounts it appears that there was no other activity and even if it was there it was negligible. It is nobody's case that any activity was an activity for profit. It was submitted before us that under similar circumstances the Calcutta High Court had hold in the case of Birla Vidhya Vihar Trust v. CIT [1982] 136 ITR 445 that the institution must be held to be solely for educational purposes. If an institution is run by a trust, there cannot be any difficulty in recognising that trust as an institution under section 10(22). In that case also it was held that the application of income from the school for non-education purpose in a prior year was not very material and the fact that the assessee does have objects other than educationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a part of the fees was a donation as it is a compulsory payment by all the students, As regards the receipts towards coat funds the plea of the learned Counsel for the assessee that this was not a receipt having the nature of income as from the beginning it was intended to be used for a specific purpose is acceptable and this small amount, therefore, can be left out of consideration in computing the assessee's income. 8. Subject to the above clarification, we modify the order of the Commissioner and direct the Income-tax Officer to consider the above observations and consider the assessee's plea under section 10(22) as well as the other aspects arising in the assessment of the assessee. 9. The appeal is allowed in part. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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