Educational exemption under tax law requires real educational activity in India, not merely foreign university affiliation.

Section 10(22) was construed as exempting only a university or educational institution existing solely for educational purposes and not for profit, and the majority held that some educational activity in India was required for the exemption to apply. A branch engaged in printing, publishing and sale of books was treated as a commercial establishment rather than an exempt educational institution, and the source of income was held not to be decisive. On that footing, exemption was denied. The dissent took the view that the provision contained no territorial limitation and that a foreign university branch satisfying the statutory description could qualify.

---

---

Issues: Whether the assessee, being a branch of a foreign university and engaged in printing, publishing and sale of books, was entitled to exemption under section 10(22) of the Income-tax Act, 1961 without carrying on educational activity in India.

Analysis: The majority held that section 10(22) exempts the income of a university or other educational institution existing solely for educational purposes and not for profit, but that the provision must be understood as requiring some educational activity in India for the exemption to operate. The absence of the words "in India" did not justify treating a purely commercial establishment in India as exempt merely because it claimed to be part of a foreign university. The majority also held that the source of income was not decisive, but the statutory object of supporting educational activity was. The dissenting opinion took the view that the provision contained no territorial limitation and that the assessee, as part of a university existing solely for educational purposes, was entitled to exemption.

Conclusion: The assessee was not entitled to exemption under section 10(22), and the appeals failed.

---