Educational exemption upheld where school property belonged to the society and no diversion of funds was proved.

Educational institution's exemption under Section 11 and Section 10(23C)(vi) was upheld because the school property was acquired from the society's funds and used for its educational objects. The director's name in the sale deed was treated as a representative entry, not proof of personal ownership, and the defect was later corrected by a civil court order. The property was also mortgaged with court approval for a loan taken by the society. As no substantiated personal benefit, diversion of funds, or breach of exemption conditions was shown, denial of exemption was not justified.

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Issues: Whether the assessee was entitled to exemption under Section 11 and Section 10(23C)(vi) of the Income-tax Act, 1961 and whether the exemption could be denied on the ground that property used for the school was recorded in the name of a director and that there was alleged diversion or misutilisation of funds.

Analysis: The assessee ran an educational institution and the materials on record showed that the property was acquired from the society's funds for school purposes. The entry of the director's name in the sale deed was treated as a matter of representation and not as personal ownership, and the defect was later corrected by a civil court order. The property was used for the society's educational objects, was mortgaged with court approval for a loan taken by the society, and no substantiated instance of personal benefit, diversion of funds, or breach of the exemption conditions was established.

Conclusion: The assessee was entitled to the exemption, and the alleged violation of the conditions for exemption was not proved.

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