2001 (2) TMI 1027

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....study of the theory of banking and for that purpose to institute a scheme of examinations and to give certificates, scholarships and prizes.  (ii)To promote information on banking and kindred subjects by lectures, discussions, books, correspondence with public bodies and individuals, or otherwise.  (iii)To collect and circulate statistics, and other information, relating to the business of banking in India.  (iv)To acquire by purchase, donation or otherwise and to maintain, extend and improve a library consisting of works on banking, commerce, finance, political economy, and kindred subjects. Clause (4) of the memorandum says that the income of the assessee shall not be distributed by way of dividend to its members and clause (8) says that in case of winding up, the assets shall not be distributed to the members but shall be handed over to another institution which has similar objects. 3. It appears that from the inception (1928) the income of the assessee has been exempt under the IT Act in its assessments and the position continued till the assessment year just prior of the assessment year now in appeal. For the year under appeal, the Assessing Offic....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... activities. Conducting examinations is only the logical culmination of the pursuit of education. We have gone through the mass of material contained in the paper book filed by the assessee. The objects are implemented by conducting coaching classes and by supplying study material. There are also continuous educational programmes. The syllabus to which our attention has been drawn on behalf of the assessee, contains subject which are connected to the banking business and are similar to the syllabi for any professional course. Various subjects and taught-rural economics, banking law and practice, principles of economics, Indian economic problems, and so on and so forth. The fees charged for tutorial classes are low, only Rs. 50 per subject and appeal to be heavily subsidised. The fees for correspondence course is Rs. 150 per subject and is subsidised. The examination fees are also low (Rs. 100 for six subjects) and also appear to be subsidised. It is no doubt true that there is no formal school or college in the sense in which we understand modern schools or colleges-fixed hours of study, lunch recess, principal, staff, playground, rules for discipline and the like-but that is no gr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ing examinations in addition to imparting education through schools and colleges over which it had administrative and supervisory control. The exemption under section 10(22) claimed by the Board was upheld by the Orissa High Court and this judgment has also been impliedly approved by the Supreme Court in the case of Aditinar Educational Institution v. CIT [1997] 139 CTR (SC) 7 : [1997] 224 ITR 310 (SC). In this judgment, the Supreme Court accepted the proposition that education could be imparted through the medium of colleges and schools and also through other media. It is, therefore, not necessary that an assessee in order to claim exemption of its income under section 10(22) should necessarily impart education through the medium of schools and colleges. In Gujarat State Cooperative Union v. CIT [1992] 103 CTR (Guj.) 206 : [1992] 195 ITR 279 (Guj.) the Gujarat High Court held that advancement of knowledge in the context of section 10(22) includes suitable methods of dissemination and though the primary method of sitting in a classroom may remain an ideal format of the initial education, it may become necessary to have a different outlook for further education. It was held further ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....85,769 8,32,173 Surplus 16,69,118 35,958 12,57,959   53,02,315 3,79,89,843 3,09,85,144   He cited Lok Sikshana Trust (supra) again to contend that it was not sufficient that the document contained a prescription against distribution of profits but it was absolutely necessary that the institution claiming exemption should not make profits. It is difficult to appreciate how an assessee can so mange it affairs that it just breaks even and no surplus or deficit is made. This would be an impossible task to achieve, nor is it necessary to do so, as the later decision of the Supreme Court in Addl. CIT v. Surat Art Silk Mfrs. Association [1979] 13 CTR (SC) 378 : [1980] 121 ITR 1 (SC) would show. Observations to the contrary contained in Lok Sikshana (supra) which were cited by the learned Departmental Representative before us were disapproved by the larger Bench in Surat (supra). Further, if that were to be so simple of achievement, there is perhaps no need for a provision granting exemption to the income; unless there are profits/surplus, the question of granting exemption just does not arise, as held by the Madras High Court in CIT v. Madras Sto....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....not proof per se of a profit-motive. 13. The next point made by the learned Departmental Representative was that the assessee is a body which exists merely to conduct CAIIB examinations and that does not qualify as an educational activity. He relied on the order of the Tribunal in the case of Institute of Banking Personnel Selection (IT Appeal Nos. 5474/Bom/1994, 2966/Bom/1997 and 6742/Bom/1997, dated 24-12-1997), a copy of which was filed before us. But then that assessee was a body whose functions it was to merely advise the banks as to the selection procedure to be followed and the personnel to be selected out of the applicants for banking posts, a specialist job-more in the nature of the consultancy-made necessary in view of the heavy recruitment by the nationalised banks. They found it difficult to manage the job of selecting proper personnel for the vacancies and a specialised body was established to help them. In the course of the selection process, examinations were conducted and the results were made known to the banks. The income of the assessee was claimed to be exempt under section 10(22) but it was negatived by the Tribunal on the ground that it was a purely examina....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....contended that this issue is now fully concluded by the judgment of the Supreme Court in Orissa State Warehousing Corporation v. CIT [1999] 153 CTR (SC) 177 : [1999] 237 ITR 589 (SC) and the following observations at pp. 595 and 596 (of 237 ITR) are relied upon : "Needless to say that the word "any income" as appearing in the body of the statute is restrictive in its application by reason of the user of the expressions "derived from". In the event, the intent of the legislature was otherwise, there was no embargo or restraint to use and express in clear and unequivocal language as has been so expressed in section 10(20A) or 10(21) or 10(22B) or 10(20BB) (sic) or 10(27). These statutory provisions go to show that wherever as a matter of fact the legislature wanted an unrestrictive exemption, the same has used "any income" without any restriction so as to make it explicit that the entire income of the assessee would be exempt." 16. We are of the view of the contention is well-founded. The issue is also fully concluded by the aforesaid decisions of the Supreme Court as the quoted observations show. We therefore, accept the claim and direct the Assessing Officer to grant ex....