9911796707
TMI Blog1972 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... J.- The petitioner is the Board of Secondary Education, Orissa. For the accounting year 1967-68 the budget estimate of the Board was Rs. 43,15,61 and the revised estimate was Rs. 32,99,694. Annexure A is a print of the revised estimate for the year 1967-68 and budget estimate for the year 1968-69. Annexure B is the notice under sections 139(2) and 133 of the Income-tax Act, 1961, issued by the Income-tax Officer, Ward "G", Cuttack, to the petitioner asking it to file the return of income for the assessment year 1968-69. In compliance to the said notice the petitioner filed a return in the prescribed form showing its total income as nil. In Part IV of the said return receipts at Rs. 32,99,694 were shown ; but in the explanatory note (annexure C) the said receipts were claimed as being exempt from income-tax under section 10(22) of the Income-tax Act. The petitioner appeared before the opposite party on several days to explain the position. Without being satisfied with the explanation the opposite party issued the notice (annexure D) under section 143(2) of the Income-tax Act. The writ application has been filed under articles 226 and 227 of the Constitution for issue of an appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income those institutions may take recourse to some profit earning business. The profit would go to the general fund and would be appropriated towards expansion and development of educational schemes taken up by those institutions. In such a case, though incidentally profit is earned to meet the growing needs, all the same the institution exists solely for educational purposes and not for purposes of profit. Thus a distinction is to be kept in mind by looking into the dominant object of the institution. It is on the basis of these tests that this case is to be examined. We would, therefore, examine the scheme and object of the Orissa Secondary Education Act, 1953 (Orissa Act X of 1953) (hereinafter to be referred as "the Act"). The short title of the Act is "An act to provide for the establishment of a Board to regulate, control and develop secondary education in the State of Orissa." The preamble of the Act runs thus : "Whereas it is, expedient to establish a Board to regulate, control and develop secondary education in the State of Orissa by providing varied courses with a view to equipping pupils for different occupations, for education in the University and for other cul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about practical co-ordination between State-owned industrial institutes, factories or workshops or vocational institutes and the secondary schools, and also between industrial establishments and secondary or technical institutions by way of providing systematic practical training which will be complementary to the theoretical instructions at the schools or institutions ; (m) to bring about practical co-ordination between the State agricultural farms, either model or experimental, or laboratories, sylviculture, farms or nurseries or State animal husbandry centres, poultry farms, dairy farms or laboratories or fish culture institutes or laboratories and the secondary schools or institutions either general, industrial, vocational or technical ; (n) to provide for the use of land, buildings, implements, instruments, tools and plants, etc., on such terms and conditions as may be agreed upon between the Board and parties, farms, departments, institutes or institutions concerned subject to the approval of the State Government ; (o) to frame regulations regarding the management of secondary schools such as constitution or reconstitution of managing committees, dissolution thereof whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late and supervise secondary education. Section 11(c) authorises the Board to make regulations for the purpose of prescribing and recommending any book as a text book or a handbook and to undertake compilation and publication of such books. Regulation 32(o) in Chapter VII of the Regulations prescribes that subject to the control of the Board, the executive committee shall have the power to undertake the printing of text books as and when necessary on the recommendation of the syllabus committees. Thus compilation, publication and printing of text books are prescribed by the Act and the regulations. Section 12 deals with the Board fund. The Board shall have a fund called the Board fund to which shall be credited-- (i) its income from fees, endowments, donations and grants, if any ; (ii) contributions which may be made by the State Government under such conditions as they may impose ; and (iii) receipts from other sources. Section 13 deals with custody and investment of Board fund. All moneys at the credit of the Board fund shall be kept in the Government treasury or at any bank as the Board may with the previous approval of the State Government determine ; provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11(c) and Regulation 32(o) in Chapter VII of the Regulations. The entire profit would, however, be credited to the Board fund and the said fund can be utilised or spent only for the purposes of the Act which are the spread and development of education as mentioned in the preamble and section 11 of the Act. Thus, some of the receipts of the Board partake the character of profits but those profits are incidentally made as a result of an activity in furtherance of the object of the Board of Secondary Education. The object does not involve the carrying on of the activity for the purpose of profit. The object is to carry on the activity of advancement of education which incidentally results in profits which in their turn are devoted to the cause of education. No direct decision on the point has been brought to our notice. All India Spinners' Association v. Commissioner of Income-tax, dealing with a different provision of the Income-tax Act, 1922, gives some useful guide. The facts involved in the Privy Council case were as follows : The dominant object and purpose of the All India Spinners Association, an unregistered and unincorporated association of individuals, was the devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers. Every person wishing to join the association must sign an application to be enrolled stating that he had read the rules and forwarding his subscription. On the aforesaid facts their Lordships held that on a fair construction of the constitution of the association it could not be said that no trust or legal obligation was created binding the association or its trustees or council to devote the property of the association from which the income was derived to the purposes for which the association was formed. The constitution was a written instrument, the terms of which bound not only the trustees and council, but the members who by their application for membership, accepted its rules. It was further held that the purpose of the association was relief of the poor and included the advancement of other purposes of general public utility within the meaning of section 4(3)(i). The special provision enabling the council of association to act as an agency on behalf of the Congress to receive self-spun yarn as subscription to the Congress was a separate and independent matter apart from the general object of the association and did not affect its freedom from political purposes. If ..... X X X X Extracts X X X X X X X X Extracts X X X X
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