TaxTMI 
TaxTMI 
2004 (6) TMI 283
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....are common, we find it convenient to dispose of both the appeals together by this combined order. The main grievance of the Department in both the appeals is against allowing the benefit of s. 10(22) of the IT Act, 1961 (the Act), to the assessee. 2. The assessee is a trust and had declared nil income in both the years under consideration. It is registered society engaged in the running of residential school by the name G.D. Birla Memorial School at Ranikhet. As per its income and expenditure account, the assessee had a total income of Rs. 1,99,64,443. As against this, it had debited expenses amounting to Rs. 1,47,04,829. On perusal of the income and expenditure account, it was seen by the AO that besides having income by way of tuition ....
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....ar were the facts in asst. yr. 1996-97 and the benefit of s. 10(22) was denied for that year as well. For both the years under appeal, the total income of the assessee was assessed at Rs. 88,59,610 and Rs. 1,17,43,470 respectively. 3. The CIT(A) observed in his order for asst. yr. 1995-96 that the assessee had not done any business but had made investment in shares for fruitful returns to be utilised for educational purposes only. He also found that the surplus which accrued to the school had been utilised only for educational purposes. Similar were the observations in the order for asst. yr. 1996-97 also. Hence, in both the years the CIT(A) directed the AO to allow exemption under s. 10(22) of the Act to the assessee. 4. The learned ....
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....rly, in asst. yr. 1996-97, after ignoring dividend and interest income, the assessee was left with a meagre surplus of Rs. 5,51,298. The point the learned counsel was trying to make was that it was a myth on the part of the Revenue authorities to conclude that the assessee was generating huge surplus out of its total income. According to him, the dividend and interest income were incidental incomes only and no adverse inference could have been drawn therefrom. It was contended that most of the shares were received as corpus many years back and thereafter based on the original share holding, the assessee had acquired more shares by way of rights, bonus, etc. With regard to the purposes of making investment in shares it was contended that the....
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....ety (2000) 243 ITR 229 (Mad) and Thiagarajar Charities vs. Addl. CIT & Anr. (1997) 140 CTR (SC) 295 : (1997) 225 ITR 1010 (SC). 6. We have considered the rival contentions and the material on record. There is no dispute with regard to the facts narrated above. The only question before us is whether the assessee is existing solely for educational purposes and not for purposes of profit. There cannot be any quarrel over the proposition that the availability of exemption under s. 10(22) of the Act has to be evaluated from year to year as was contended by the learned Departmental Representative and as has been held by the Supreme Court in the case of Aditanar Educational Tuition. However, in the same decision it has been held by the Supreme ....
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....extent of Rs. 1,47,04,829 towards the running of the educational institution. Thus, it is not realistic to say that the assessee had invested its entire surplus for the purchase of shares. At this juncture, it has to be mentioned that one cannot lose sight of the legislative intent that in order to claim exemption under s. 10(22) of the Act, the predominant object has to be kept in view. If the predominant object of the institution is that of educational purposes, then, in the process if the institution earns some surplus in the carrying out of its predominant activity, it will not lose its original character of being in existence for educational purposes. Further, if the assessee has invested its funds to get better returns which in turn a....