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TMI Blog2005 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is a society registered with the Registrar of Societies, Karnataka and is running Educational Institutions Like Dental College, Nursing Schools, Hotel Management College, etc. The Assessing Officer noted that amount was given to the Managing Trustees of the society viz., Shri R. Venkatesh and his wife Smt. Geetha Devi. The Assessing Officer considered this as violation of provisions of section 13(1) of the Act. He also noted that a further sum of Rs. 4.20 lakhs was advanced to Shri R. Venkatesh, Secretary and the same was outstanding during the relevant financial year. This was also considered as violation of provisions of section 11 by application of section 13(2)( a ) of the Income-tax Act. Thus such institution is held not eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He thereafter concluded that when there is misuse of fund of assessee trust benefiting the promoter, the assessee trust cannot be considered as existing solely for educational purposes . Hence exemption under section 10(22) is not available. The assessee is in further appeal before us. 3. Learned counsel for assessee Shri Krishnaswamy submitted that if there is violation of section 13(1), the assessee may lose exemption under sections 11 and 12 of the Act. However section 10(22) is on a different footing. For claiming exemption under section 10(22) what is to be seen is whether the assessee is an educational institution existing solely for educational purposes and not for purpose of profit. Since the assessee trust is fulfilling the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit. In the context of exemption under section 10(22), the conditions as stipulated in either section 11 or 13 of the Act are irrelevant. Strictly speaking, res judicata does not apply to Income-tax proceedings. Against, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f those assessment years. The claim to depreciation in respect of certain assets of the assessee did not per se show the business/profit motive of the assessee, disentitling it to exemption under section 10(22). The Assessing Officer was not justified in taking a different view only in respect of the assessment year 1993-94 when from the assessment year 1970-71, exemption under the said provision was being allowed to the assessee consistently. The assessee was entitled to exemption under section 10(22) in the assessment year 1993-94." He, also submitted that the amount was given to the secretary for acquiring certain land. Since the deal was not forthcoming, the amount advanced was refunded by the trustee thereafter. The assessee is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption under section 10(22). In our opinion, the answer is no. The assessee trust is existing and running various educational institutions, the fact of which is not denied. As per section 10(22) any income of the educational institution is exempt from tax if ( i ) it is existing solely for educational purposes and ( ii ) it is not existing for the purpose of profit. No conditions are attached as to how funds of the institution should be invested. By advancing the sum to the trustee, the object of educational purpose is not defeated. The assessee trust was treated as eligible for exemption under section 10(22) even in earlier years. Thus, by advancing the sum to the trustees it cannot be said that the trust is not existing solely for educatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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