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TMI Blog1981 (8) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement of certain shares by late Karumutu Thiagaraja Chettiar on himself and his two sons as the trustees. The objects of the trust, according to clause 11 of the trust deed, are reproduced below : 1. To establish, run and maintain educational, technical or technological institutions of all kinds in India for the benefit of the public. 2. To establish rural or urban university or universities, college or colleges, school or schools in India for imparting education of any kind, technical or non-technical or both, such as engineering, medical or other sciences and arts. 3. To make gifts, subscriptions and payments to any educational, technical or technological institution, university, college or school now existing, or that here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The assessee, while objecting to the computation of the income, which had not been applied for charitable purposes during the year, also took the stand by way of an additional ground that the assessee was eligible for total exemption under section 10(22). The Commissioner (Appeals) admitted this additional ground, but held against the assessee on the ground that the three educational institutions, for whose benefit the assessee had been applying its income in the past and during the year have separate identities different from the assessee. This, according to the first appellate authority, made all the difference. According to him, the trust was merely a financing institution and not an educational institution by itself. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oundation [IT Appeal No. 4204 (Bom.) of 1973-74] has thrown new light on the issue and in the light of the past deficits in application, no part of the alleged excess income over expenditure could be treated as accumulated income. It was claimed that the decision of the Bombay Bench was available to the assessee subsequent to the filing of the appeal before us. The learned counsel for the assessee repeated the stand before the authorities below. He contended that the assessee being an educational society running three colleges would easily qualify for treatment as other educational institution within the meaning of section 10(22). He has also heavily relied upon the decision of the Madras High Court in Addl. CIT v. Aditanar Educational In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to admit this additional ground for more than one reason. 4. As for the assessee s claim for general exemption under section 10(22), we find that the said sub-section exempts any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit . A careful reading of the four objects reproduced in paragraph 2 (supra) would clearly show that all the four objects are educational in character and do not indicate any purposes of profit. The objects show that the trust can either establish, run and maintain an educational institution itself or make grants to other running institutions or provide scholarships for poor students. It is also a matter of record that the two polytechn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on section 10(22) of the Act and the interpretation placed by him is manifestly erroneous. The above view of the Allahabad High Court has been approved by the Madras High Court in Addl. CIT v. Aditanar Educational Institution (supra) in the following words: This point as to whether a society could be running an institution could claim exemption under section 10(22) has been considered by the Allahabad High Court in Katra Education Society v. ITO [1978] 111 ITR 420 . It has been held therein that an educational society could be regarded as an educational institution if the society was running an educational institution. It is true there is no further discussion. But the point appears to need no further discussion. We agree with this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns aided by it or elsewhere cannot cease to be an educational institution, if it is otherwise one. Even if we had any lingering doubt on this matter, it is set at rest by the Board s Instruction No. 1112 [F. No. 194/16/77-IT(A-1)] dated 29-10-1977, which, while dealing with the case of a university or other educational institution within the meaning of section 10(22) or a hospital or other institution under section 10(22A), states as under : The question for consideration is whether an educational institution existing solely for educational purposes but which shows some surplus at the end of the year is eligible for this exemption. If the profit of the educational institution can be diverted for the personal use of the proprietor thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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