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TMI Blog1987 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to exemption under section 10(22). 3. The assessee appealed to the Commissioner of Income-tax (Appeals) who has mentioned in his impugned order that besides running a school in the name of Apeejay School at Calcutta, the assessee-trust has some other activities also in respect of which separate income and expenditure account has been drawn up. The Commissioner of Income-tax (Appeals) accepted the assessee's contention that exemption under section 10(22) cannot be denied to the assessee-trust simply because the school run by it is not recognised by the Board of Secondary Education. While accepting this contention, the Commissioner of Income-tax (Appeals) referred to the decisions of the Calcutta High Court in Birla Vidhya Vihar Trust v. CIT [1982] 136 ITR 445 and CIT v. Doon Foundation [1985] 154 ITR 208. The Commissioner of Income-tax (Appeals) then referred to sub-clause (c) of clause 6 of the trust deed which is as follows : "to grant scholarship and stipend to the students belonging to the institution or any school or college for prosecution of their studies within India or outside India." 4. According to the Commissioner of Income-tax (Appeals) the aforesaid sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Apeejay School run by the assessee-trust existed solely for educational purposes and not for the purpose of earning profit. Reliance was placed on the objects of the trust as enumerated in clause 6 of the trust deed in support of the contention that the assessee-trust existed closely for education purpose and that it was entitled to exemption in respect of the income of the school run by it under section 10(22). Reliance has been placed on the decision of the Calcutta High Court in the cases of Birla Vidhya Vihar Trust and Doon Foundation. It was further submitted that the decision of the Karnataka High Court in the case of Saraswath Poor Students Fund relied upon by the Commissioner of Income-tax (Appeals) was clearly distinguishable on facts. 6. The Learned Departmental Representative has, on the other hand, fully supported the impugned order of the Commissioner of Income-tax (Appeals). The fact that in the accounting year relevant to the assessment year 1980-81 a sum of Rs. 3,35,000 was advanced by the assessee-trust to the Apeejay School (Faridabad) was highlighted on behalf of the department in support of the contention that the assessee-trust did not exist solely for edu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c or otherwise, to purchase of otherwise acquire lands or plots or erect buildings on any land so purchased for the purpose of locating educational institutions and to grant scholarships and stipends to students belonging to the institutions or any school or college for prosecution of their studies within India or outside India, etc. Under clause 7, the trust is, interalia, authorised to borrow or lend or otherwise deal with moneys or properties belonging to the trust and to give security in connection with the said dealings or acts for the purpose connected.with or conducive to the promotion of the objects of the Trust. As has been pointed out above during the relevant accounting year a sum of Rs. 3,35,000 was advanced as loan by the assessee-trust to Apeejay School (Faridabad). Though it could not be shown by the assessee that Apeejay School (Faridabad) was exempt under section 10(22), yet it cannot be disputed that the loan was advanced to an educational institution, i.e., Apeejay School (Faribabad). So, even the advancement of loan by the assessee-trust was connected with the objects of the trust or at least was conducive to the promotion of the objects of the trust. 9. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the source generating the income in respect of which exemption under section 10(22) has been claimed namely, Apeejay School at Calcutta, exists solely for the purpose of education. The objects of the trust authorised the assessee to establish and run educational institutions. The decision of the Andhra Pradesh High Court in the case of Governing Body of Rangaraya Medical College supports the view that the fact that certain surplus arose from the activities of the trust cannot lead to the conclusion that the educational institution was run for the purpose of profit. There is nothing in the Trust Deed to show that any person or individual was entitled to any portion of the income of the education institution. 12. While negativing the assessee's claim, the Commissioner of Income-tax (Appeals) placed reliance on the decision of the Karnataka High Court in the case of Saraswath Poor Students Fund. That case is clearly distinguishable on facts. In that case, the main object of the assessee-society was to extend financial assistance to the poor and deserving students belonging to the Saraswat Community by way of loans, scholarship and grant for purchase of books or other educat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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