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Issues: Whether the respondent was entitled to exemption under Section 10(22) of the Income-tax Act, 1961 for the relevant assessment year on the basis that it existed solely for educational purposes and not for profit, and whether the earlier grant of exemption and unchanged objects of the society required consistency in the treatment of the claim.
Analysis: The exemption under Section 10(22) depends on whether the institution exists solely for educational purposes and not for profit. The collection of admission fee, corpus fund and loans from parents was found to be linked to educational activity and the creation of infrastructure, with no material showing diversion of funds for non-educational purposes or personal gain. Mere accumulation of surplus did not establish a profit motive where the surplus was applied to educational objects. The reliance on the Delhi School Education Act, 1973 was misplaced because the provisions invoked applied only to aided institutions, whereas the respondent was unaided. The unchanged memorandum of association, prior grant of exemption, and continued educational objects also supported the application of consistency.
Conclusion: The respondent was entitled to exemption under Section 10(22) of the Income-tax Act, 1961 and the claim was allowable.
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