TaxTMI 
TaxTMI 
2010 (10) TMI 347
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....issued under section 148 of the Act, it filed nil returns claiming that its income was exempt from tax under section 10(22) of the Act. The Assessing Officer rejected the assessee's claim, for the assessment years 1983-84 to 1985-86, and completed the assessments. On appeals being filed, the Commissioner of Income-tax (Appeals), (CIT(A)), allowed the assessee's claim for exemption under section 10(22) of the Act for all the three assessment years. Aggrieved thereby, the Revenue carried the matter in appeal to the Tribunal. 3. The Tribunal, in its order dated August 11, 1995, noted that the primary and dominant object of the trust was to run educational institutions in "Gurukul" style to provide value based education to children in these parts; the trust owned acres 647 of land in addition to other properties ; a Gurukul type of school was established and run at Anantagiri, Rambagh, Hyderabad ; a few years thereafter the trust shifted the Gurukul to a place near Ghatkesar ; the said school was imparting education to students and was functioning as a regular educational institution ; after the death of the founder on September 2, 1956, his erstwhile associates continued to ....
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....cational institution by the assessee-trust ; section 10(22) did not prohibit investment with private individuals ; it was not a case where the assessee had diverted its surplus into the pockets of the trustees ; it was only the corpus of the trust which was diverted from one specie viz., land into another specie i.e., cash and invested ; the assessee was an educational institution existing solely for educational purposes, and not for the purpose of profit ; and, hence, the income of the assessee-trust was exempt under section 10(22) of the Act. Consequent thereto, the questions aforementioned have been referred to us for our opinion. Question No. 1 5. Under section 10(22) of the Income-tax Act, any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit, is required not to be included in the total income of the assessee. An educational society, or a trust, or other similar body running an educational institution, solely for educational purposes, and not for the purpose of profit, can be regarded as "other educational institution" coming within section 10(22) of the Act. The purpose for] whi....
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....n) defines "exist" to mean : to have been ; being in any specified condition or place or with respect to any understood limitation ; to continue to be ; maintain being. Chambers Dictionary defines "exist" to mean to have actual being ; to live ; to occur, and "existence" to mean the state of existing. Actual existence of the educational institution is a pre-condition for submitting an application for grant of initial approval under section 10(22) of the Act. The test is regarding the character of the recipient of the income. Under section 10(22), the prescribed authority is required to examine the nature, activities and genuineness of the institution ; its objects ; its source of income and its utilisation. Even if one of the objects enables the institution to undertake commercial activity, the institution would not be entitled to approval under section 10(22) of the Act. (American Hotel and Lodging Association Educational Institute v. CBDT [2008] 301 ITR 86 (SC) ; [2008] 10 SCC 509) 8. It is only if the objects of the trust reveal that the very being of the assessee-trust, as an educational institution, is exclusively for educational purposes, and not for profit that the....
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....tes, and persons and animals suffering from calamities. These objects are alien to educational purposes and, since the exemption under section 10(22) is available only if the assessee-trust is an educational institution existing solely for educational purposes and not for purposes of profit, and as the existence of the assessee-trust is not solely for educational purposes, the benefit of section 10(22) of the Act would not be available to them. 10. The first question must, therefore, be answered in the negative, against the assessee-trust, and in favour of the Revenue. Question No. 2 11. On the second question, section 11 relates to income from property held for charitable or religious purposes and, under sub-section (1) thereof, subject to the provisions of section 60 to section 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income : "(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated or set apart for application....
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....tion 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government ; (ii) deposit in any account with the Post Office Savings Bank ; (iii) deposit in any account with a scheduled bank or a cooperative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank). Explanation.-In this clause, `scheduled bank' means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) ; (iv) investment in units of the Unit Trust of India established under the Unit Trust of....
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....upply, sanitation and sewerage, drainage, solid waste management, roads, bridges and flyovers for urban transport ; (x) investment in immovable property :Explanation.-'Immovable property' does not include any machinery or plant (other than machinery or plant installed in a building for the convenient occupation of the building) even though attached to, or permanently fastened to, anything attached to the earth ; (xi) deposits with the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964) ; (xii) any other form or mode of investment or deposit as may be prescribed." 13. Section 13 stipulates that section 11 shall not apply in certain cases. Under section 13(1)(c)(ii), nothing contained in section 11 shall operate so as to exclude from the total income of the previous year of the person, in the case of a trust for charitable purposes, if any part of such income or any property of the trust or the institution is, during the previous year, used or applied directly or indirectly for the benefit of any person referred to in sub-section (3). Under section 13(3) (a) and (cc) the persons....