1988 (2) TMI 108

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....the appeals. 3.The assessee is a society registered under the Society Registration Act, 1860 on 20th March,1905 (sic). It has been assessed in the status of Association of Persons for the asst. yrs. 1981-82 and 1982-83 with which we are concerned in these two appeal: 4.It appears that the assessee was treated as an educational institution solely existing for the purpose of education and not for profit right from the beginning. In the two years under consideration, the ITO denied exemption under s. 10(22) of the IT Act, 1961 to the assessee on the ground that its Memorandum of Association contains objects other than advancement of education. He did not give any specific instance of such object. His orders do not also record any instanc....

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....s not been taken into consideration, In particular, he referred to cls. 7,13,17,18 and 19 of the Memorandum of Association of the assessee to show that the objects stated therein were not for educational purposes. He also urged that the two decisions relied on by the AAC in support of his decision were not to the point as they were concerned with some other issues. On the other hand, he relied on the decision in the case of CIT vs. Doon Foundation (1985) 154 ITR 208 (Cal) for the proposition that unless an institution exists solely for educational purposes, it is not entitled to the exemption under s. 10(22) of the Act. 7. Dr. D. Pal, the learned representative for the assessee, on the other hand, supported the order of the AAC. He took ....

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....n-educational purposes of having an ancillary object of doing philanthropic activity will not exclude an educational institution from the relief contemplated in s. 10(22) of the Act. It is enough if the primary object is for educational purpose and not for profit. So long as the primary object remains the same, a minor deviation on a solitary occasion would not be material. He strongly relied on this case in his favour. 8. Shri M.K. Bose replied that the assessee had invested huge funds in buildings and diverted the surplus out of its income to reserves. Hence, he urged that the assessee could not be said to be engaged in educational purposes. Dr. Pal replied that the buildings were used for schools and colleges and the surplus was kept ....