TaxTMI 
TaxTMI 
2001 (2) TMI 55
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment proceedings for levy of tax on the income of the assessee which is claimed to be exempted from payment of tax under section 10(22) of the Income-tax Act, 1961, as an educational institution solely existing for the educational purpose not for the purpose of profit and two appeals for the assessment years 1985-86 and 1987-88 arising out of penalty appeals under section 221(1) of the Act. "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the income of the assessee was exempt under section 10(22) of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in cancelling the penalty....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... belonging to SC/ST community. The said project of stone crushing lasted for two years for the year ended on March 31, 1986 and March 31, 1987. The Assessing Officer was of the view that had all steel furniture prepared by the students under the SKY was sold directly to the other institutions, the school would have earned profit but the same has been sold to one Atex Industries which was owned by the son of Z. H. Iraqi, Trustee Secretary, and also the society was running a stationery shop under the name of Jodhana Suppliers in the premises of the society. The books and other stationery items were supplied to the students and thus another son of the said Mr. Z. H. Iraqi was deriving income from his dealings in the society premises. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee-society was formed by a group of individuals of whom Shri Z. H. Iraqi and his wife, Smt. Zefrinissa, were the founder members. Lal Bahadur Shastri Middle School was established on July 1, 1966, as a primary school and other institutions were also established in due course of time. Shri Iraqi and other members of his family property for running the school. The Tribunal pointed out that taking into account the past history of the society as also its activities and contribution in educational field the learned Commissioner of Income-tax (Appeals) had himself admitted the position that the assessee-society was established with the sole aim of promotion of education and in that process the society had opened as many as six schools all ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iety instead they had helped it from time to time by advancing loans in the hours of need. Finally, the Tribunal summed up its findings and conclusions in para. 28 of its order in the following manner: 'To sum up, the above discussion leads us to conclude that looking to the past history of the assessee in obtaining the various objects in the field of education and its running several educational institutions it cannot be said that the society had changed its character from an educational institution to that of a profit-making institution. The SKY was carried on by it in the direction of educating the students in making certain items used in the educational institutions. The stone crushing unit was also not established for the purposes o....