Dr. B.P. Saraf, J.
1. By this reference under s. 256(1) of the IT Act, 1961 made at the instance of the Revenue, the Tribunal, Bombay Bench, Bombay has referred the following question of law to this Court for opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Oxford University Press, Bombay, which is part of Oxford University, is exempt under s. 10(22) of the IT Act, 1961 ?'
2. The assesses is Oxford University Press, Bombay ('Press'). This reference pertains to asst. yr. 1976-77. The assesses filed its return under the IT Act, 1961 ('Act') for the said assessment year showing an income of Rs. 19.94 lakhs. As in the past, the above return was signed by the General Manager of the Indian Branch of the assesses-Press. It was, however, later revised and a fresh return signed by the 'Delegate and Chairman of the Finance Committee of the Oxford University Press' was filed. In the past, at the assesses's own request, it had been assessed to income-tax in respect of its income in the status of a company as per the notification issued by the Central Board of Revenue. However, in course of the hearing for assessment before the ITO, for the above assessment year the authorised representative of the assesses-Press claimed that the Press was a branch of the Oxford University and hence, its income would be exempt from income-tax by virtue of s. 10(22) of the Act. The ITO rejected the above contention. While doing so, the ITO took note of the fact that the assesses was being assessed to income-tax under the IT Act right from the asst. yr. 1952-53 as a company. He also noted the submission made on behalf of the assesses, the Oxford University Press, that it was a branch of the Oxford University, London, constituted under a charter of the British Government and that there was a stipulation in its constitution that the earnings from its activities would be used wholly and solely for the educational purposes. The ITO, however, found that the assesses-Press was not only distributing the books published by it but it was also carrying on the business of selling books of other publishers e.g., Faber & Faber Ltd., George G. Harrap & Co. Ltd., and Ginn & Co. Ltd. This was evident from the catalogue of the books sold by it. He, therefore, held that the assesses was not entitled to exemption under s. 10(22) of the Act. Against the above order of the ITO, the assesses appealed to the CIT(A). Before the CIT(A), the claim for exemption under s. 10(22) was reiterated by the assesses mainly on the ground that though the assesses was a press and acted as such in India, being a part of the Oxford University, it was a university for the purposes of exemption of its income under s. 10(22) of the Act. This contention of the assesses found favour with the CIT(A). He held that the assesses-Press was a part of the Oxford University and hence, entitled to exemption in respect of its income under s. 10(22) of the Act. The CIT(A), therefore, held that the income of the assesses-Press in the year under consideration was exempt under s. 10(22) of the Act and it was not liable to pay any income-tax in respect thereof. He did not attribute any relevance to the fact that in the past the assesses had itself offered its income from the business of printing, publishing and selling books in India to be assessed in the status of a company. According to the CIT(A), it was not a material consideration in deciding the question whether the assesses-Press, known as the 'Oxford University Press', could be treated as a university for the purposes of exemption of its income under cl. (22) of s. 10 of the Act.
3. Aggrieved by the above order of the CIT(A), the Revenue appealed to the Tribunal. On behalf of the Revenue it was contended before the Tribunal, inter alia, that the assesses-Press was not a university within the meaning of s. 10(22) of the Act. The Tribunal did not accept the above contention of the Revenue and held that the assesses 'Oxford University Press' was a part of the Oxford University and hence, it had to be regarded as a university. In this connection, the Tribunal referred to the provisions of s. 10(22) of the Act and observed that the exemption granted thereunder in respect of the income of a university or other educational institution was subject only to the condition that such university or educational institution existed solely for educational purposes and not for purposes of profit. The Tribunal observed that the above two conditions were fulfilled in the case of the assesses-Press because it was a part of the Oxford University, which existed solely for the purpose of education and not for purposes of profit. According to the Tribunal, the fact that the assesses was printing and publishing books in India and/or making considerable money as profit by selling books, was not relevant for the purpose of deciding the claim of the assesses for exemption under s. 10(22) of the Act. The Tribunal also turned down the submission of the Revenue that the university referred to in s. 10(22) of the Act must be an Indian university on the ground that s. 10(22) did not contain any such restriction. In view of its above opinion, the Tribunal held that the assesses Oxford University Press was entitled to exemption under s. 10(22) of the Act in respect of its income from the business of publishing and selling books in India. Hence, this reference at the instance of the Revenue.
4. Mr. T. U. Khatri, learned counsel for the Revenue, submits that the assesses Oxford University Press is neither a 'university' nor an 'educational institution' within the meaning of s. 10(22) of the Act. Our attention was drawn by Mr. Khatri to the fact that the assesses in this case is 'Oxford University Press' and not the Oxford University. It was pointed out that the assesses-Press cannot, by any stretch of imagination, justifiably claim itself to be a university for the purposes of s. 10(22) of the Act. It was submitted by the learned counsel that if the assesses-Press claims itself to be Oxford University, as a part of it, in that event, the assesses should have been the 'Oxford University' and not the 'Oxford University Press'. According to the learned counsel, even if the assesses-Press is a part of the Oxford University it being engaged in carrying on the business of printing, publishing and selling books and in no other activity, its income from such business cannot be regarded as the income of a university existing in India within the meaning of s. 10(22) of the Act. In other words, the submission of the learned counsel is that, in any event, in order to get exemption under s. 10(22) the assesses has to establish that the income claimed to be exempt from income-tax bears the character of the income of a university which the assesses has miserably failed to do in the instant case. Counsel for the Revenue further submits that the Oxford University does not exist in India as a university solely for educational purposes. What is existing in India is the Oxford University Press which, even if held to be a part of the said university, cannot be regarded as a university or an educational institution existing solely for the educational purposes and not for purposes of profit and hence, its income cannot qualify for exemption under s. 10(22) of the Act. In support of this contention, reliance is placed on the decision of the Gujarat High Court in CIT vs . Sorabji Nusserwanji Parekh : [1993]201ITR939(Guj) and the decision of the Supreme Court in Sole Trustee, Loka Shikshana Trust vs . CIT : [1975]101ITR234(SC) .
5. In reply, Mr. Soli Dastur, learned counsel for the assesses, submits that the fact that the assesses 'Oxford University Press' is a part of the Oxford University cannot be disputed by the Revenue in this reference at this stage in view of the categorical finding of the Tribunal to that effect. Mr. Dastur further submits that s. 10(22) does not envisage the existence of a university or an educational institution in India. According to him, even if a university or an educational institution exists outside India, any income of such university or educational institution from any source in India will be exempt under s. 10(22) of the Act. The source of income, according to the learned counsel for the assesses, is immaterial for deciding the claim for the exemption under s. 10(22) of the Act. What is material, according to him, is the description of the assesses. Counsel submits that once the assesses falls within the description of a person specified in s. 10(22) of the Act, all income derived by it from any source or any activity would be exempt from tax. Reliance is placed in support of this submission on the decisions of Andhra Pradesh High Court in Governing Body of Rangaraya Medical College vs . ITO : [1979]117ITR284(AP) , Karnataka High Court in CIT vs . Academy of General Education : [1984]150ITR135(KAR) , Gujarat High Court in Gujarat State Co-operative Union vs . CIT : [1992]195ITR279(Guj) , Kerala High Court in CIT vs. Sree Narayana Chandrika Trust (1995) 212 ITR 456 and the Orissa High Court in Secondary Board of Education vs . ITO : [1972]86ITR408(Orissa) .
6. We have carefully considered the rival submissions of the learned counsel of both the parties. The controversy in this case is in a narrow compass and the determination thereof depends upon the true and correct interpretation of s. 10(22) of the Act. Admittedly, the assesses before us is 'Oxford University Press' and not the 'Oxford University'. There is, however, a finding of the Tribunal to the effect that the assesses-Press is a part of the Oxford University. The income which is the subject-matter of controversy in this case is the income of the assesses-Press in India derived from printing and publishing books and selling the same as well as of books of other publishers. The bone of contention of the assesses is that the assesses, being a part of the Oxford University has to be regarded as a university and, in that view of the matter, its income would be exempt under s. 10(22) of the Act. The case of the Revenue, on the other hand, is that the assesses is not a university within the meaning of s. 10(22) of the Act, and hence, its income cannot be regarded as the income of a university which is exempt from income-tax under s. 10(22) of the Act.
7. Sec. 10 of the Act specifies various incomes which are not included in the total income of a person. We are concerned in this case with the income specified in cl. (22) thereof. Sec. 10 of the Act, so far as relevant for determination of the controversy in this case, reads :
'10. Incomes not included in total income. - In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included -........
(22) any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit. .........'
Sec. 10(22) thus provides that in computing the income of a previous year of any person, any income of a university or other educational institution, shall not be included, if such university or educational institution exists solely for educational purposes and not for purposes of profit. It is clear from the above provision that for exemption under this provision, it is not necessary that the assesses itself should be a university or an educational institution. The character of the assesses is not material. He may be 'any person' including a person engaged in business or profession. Even then, he would be entitled to exemption under s. 10(22) of the Act in respect of any income falling within cl. (22) of s. 10 of the Act. In other words, what is exempt is 'the income of a university or an educational institution existing solely for educational purposes and not for the purpose of profit'. It is not necessary for the purpose of s. 10(22) that the university or educational institution itself is an assesses. Nor such university or educational institution need be established or constituted in India. What is necessary for availing the benefit of exemption under s. 10(22) of the Act is that the income is the income of university or an educational institution existing solely for educational purposes and not for purposes of profit. The expression 'existing solely for educational purposes and not for the purpose of profit' appearing in s. 10(22) of the Act is thus a condition precedent for exemption under s. 10(22) of the Act. In the context and setting of this clause, the expression 'existing' obviously means and refers to the existence of such university or institution solely for educational purposes in India. If a university or an educational institution, though existing outside India as a university or an educational institution for educational purposes, does not so exist in India, it would not be entitled to claim exemption of its income from other activity carried on by it in India by virtue of s. 10(22) of the Act. In other words, a university or an educational institution, whether established in India or abroad, must retain its character of a university or an educational institution in India and the income in respect of which exemption is claimed under s. 10(22) of the Act must be the income derived by it in its capacity as a university or an educational institution. If it does not carry on its activities as a university or educational institution in India, it cannot be regarded as a university or educational institution existing solely for educational purposes and, hence, the income derived by it from any other activities would not qualify for exemption under s. 10(22) of the Act.
8. We may now examine the claim of the assesses in the instant case for exemption of its income under s. 10(22) of the Act in the light of the legal position set out above. Admittedly, the assesses is Oxford University Press and not the Oxford University. The Oxford University does not exist in India nor does it carry on any of the activities of a university in India. What exists in India is the Oxford University Press. The only activity carried on by the press, which is the assesses in this case, in India is the activity of printing and publishing books and selling the same as well as publications of other publishers and to earn profit. This activity, in effect, tantamounts to carrying on the business of selling or supplying books for profit. On its own showing, even in the year under consideration, the assesses-Press made a net profit of about Rs. 20 lacs. Such income cannot be regarded as income of a university existing solely for educational purposes merely because the assesses-Press claims to be a part of the Oxford University which does not exist at all in India - not to speak of solely for educational purposes. If the Oxford University had existed in India solely for educational purposes, the position would have been different and it might have been possible for it at least to contend that the income of the assesses-Press is ancilliary to its activities as a university and hence, it should be regarded as the income of the Oxford University. But when the Oxford University itself does not exist in India, the income of the Press in India cannot be held to be the income of a university for the purposes of s. 10(22) of the Act merely because the press is held to be a part of the university.
9. We have also taken note of the fact that the assesses in the instant case had given an undertaking before the ITO that 60% of its income would be applied for educational purposes in India and the balance only will be remitted to United Kingdom. Such undertaking, in our view, does not in any way advance the case of the assesses for exemption under s. 10(22) of the Act. On the other hand, in our opinion, it clearly goes to show that even the assesses-Press does not exist solely for educational purposes but exists merely for purposes of profit. Obviously, the benefit of exemption under s. 10(22) of the Act would not be available in such a case.
10. Our attention was also drawn by the learned counsel for the assesses to the provisions of cls. (20A) and (23) of s. 10 of the Act to show that wherever the legislature intended to restrict the exemption to the income of any authority or institution constituted in India or established in India, it has specifically said so. We have perused the above clauses. Clause (20A) refers to the income of an authority constituted in India by or under any law enacted either for the purposes of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages, etc. Clause (23) exempts the income of an association or institution established in India having as its object control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, etc., provided it fulfils the conditions specified therein. These two clauses, in our opinion, do not assist the assesses in any way. On the other hand, on a comparison of the language used in these two clauses with that of cl. (22), it becomes abundantly clear that to get the exemption of its income from income-tax under the Act the university or educational institution must 'exist solely for educational purposes'.
11. Though we are in agreement with the contention of the learned counsel for the assesses that in order to be eligible to exemption under s. 10(22) of the Act it is not necessary that the university or the educational institution should be constituted in India or established in India or under the laws of India, we find it difficult to accept his contention that in the instant case, the income of the assesses. Press in India would be exempt merely because it happens to be a part of a university in the United Kingdom which admittedly does not exist in India as a university. In our opinion, for exemption under s. 10(22) of the Act, the university or the educational institution must exist as a university or an educational institution solely for educational purposes in India. In other words, in our opinion, the recipient of the income must have the character of a university or an educational institution in India. Its character outside India or it being a part of a university existing outside India, in our view, is not relevant for deciding whether its income would be exempt under s. 10(22) of the Act.
12. We are supported in our above conclusion by the decision of the Gujarat High Court in CIT vs. Sorabji Nusserwanji Patel (supra). In the above case, dealing with the claim of the assesses for exemption under s. 10(22) of the Act, it was observed :
'.... in order to earn total exemption under s. 10(22) of the Act, an assesses should be an educational institution or an establishment which primarily engages itself in educational activities. Though the words 'educational activities' are words of very wide amplitude, we would like to add that the element of imparting education to students or the element of normal schooling where there are teachers and taught must be present so as to fall within the sweep of s. 10(22) of the Act. We would, at the same time, like to add that such an institution may, incidentally, take other activities for the benefit of students or in furtherance of their education. It may invest its funds in any manner, it likes or it may provide scholarships or other financial assistance which may be helpful to the students in pursuing their studies. However, such incidental activities alone, in the absence of actual activity of imparting education by normal schooling or normal conducting of classes would not be sufficient for the purpose of qualifying the institution to earn the benefit of s. 10(22) of the said Act.'
13. It may be expedient at this stage to refer to an unreported decision of this Court in the case of the assesses relied upon by the learned counsel for the assesses, where for the purpose of exemption under s. 35(5)(b) of the Bonus Act, it was held to be a part of the university and hence, educational institution. We have carefully perused the same. The ratio of the above decision, in our opinion, cannot be applied in construing s. 10(22) of the Act, which deals with exemption of the income of a university or an educational institution existing solely for educational purposes and not for purposes of profit. In our opinion, cl. (22) of the Act has to be construed in the light of the scheme of the IT Act and the object of s. 10, in particular cl. (22) thereof, and on such a construction, we are of the clear opinion that even if the Oxford University Press is a part of the Oxford University and is being run as such in India in the absence of the existence of the Oxford University in India, the assesses. Press cannot be held to be a university existing for educational purposes within the meaning of s. 10(22) of the Act and its income cannot be regarded as the income of a university.
14. Our attention was also drawn by the learned counsel of the assesses to s. 11 of the Act which grants exemption in respect of income derived from the property held for charitable or religious purposes. It was pointed out that in the said section, the legislature has specifically provided that the exemption would be restricted only to that part of such income which is applied to such purposes in India or accumulated or set apart for such purposes. We do not find any relevance of s. 11 in construing s. 10(22) of the Act. We have nowhere said that in the foregoing discussion, how the income of the university should be used in order to get exemption under s. 10(22) of the Act. What we have said is that the university or the educational institution itself must exist in India solely for educational purposes and if it so exists, then only its income would be exempt under s. 10(22) of the Act. If it does not exist as a university or an educational institution solely for such purposes and does not carry on the primary activities of a university or educational institution, but merely runs the business of press in India for printing and publishing books and selling and supplying the same as well as books published by other publishers for the purpose of profit, it cannot be held to be a 'university' within the meaning of s. 10(22) of the Act merely by reason of the fact that it is run by a university existing outside India for educational purposes or that it is a part of such university.
15. Moreover, as indicated earlier, the assesses in this case is Oxford University Press which claims itself to be a part of the Oxford University and claims exemption of its income as income of a university. If the case of the assesses is that in the true sense of the term it is a part and parcel of the Oxford University and has no independent existence of its own, and all its income is the income of the said university, the 'assesses' for the purpose of the IT Act would have been the 'Oxford University' and not the 'Press'. The Press, as an assesses might have been entitled to claim exemption in respect of its income under s. 10(22) of the Act if it could establish that the income is the income of the Oxford University which existed solely for educational purposes. That obviously is not the case of the assesses-Press and, according to us, rightly so. In our opinion, the assesses-Press was correct in law in offering its income for assessment all throughout in the past and there was no plausible reason to change its consistent stand and to claim exemption under s. 10(22) of the Act.
16. We have also given our careful consideration to the decisions referred to by the learned counsel for the assesses. We are, however, of the opinion, that none of those decisions support the claim of the assesses-Press for exemption of its income from income-tax under s. 10(22) of the Act. The controversy in all those cases was totally different and the ratio of the same has no application to the facts of the present case.
17. In CIT vs. Academy of General Education (supra), the controversy before the Andhra Pradesh High Court was whether the Academy of General Education, Manipal, was an educational institution falling under s. 10(22) of the Act. Considering the facts and circumstances of the case, the Court held that it was an educational institution existing purely for educational purposes and its income was exempt under s. 10(22) of the Act. It was observed :
'The academy is a registered society and it carries on organised activities as per the objects set out in the memorandum of association. Its primary object is to establish, support, manage or conduct schools, colleges and such other educational institutions. It has got income of its own. In its balance sheet the incomes of twenty two colleges or institutions established under separate trusts have not been included. Nor do we find therein the income of nine schools which are run directly by the academy. It appears that there was no income in that year from any one of those schools. The academy out of its income has given outright grants to some of those schools. The academy has not spent its income for any purpose unconnected with education. It is, therefore, an educational institution existing purely for educational purposes and not for profit.'
Obviously, the ratio of this decision would not be applicable to the facts of the present case.
18. In Governing Body of Rangaraya Medical College vs. ITO (supra), the controversy was whether the assesses-society was a medical college entitled to exemption from income-tax under s. 10(22) of the Act. Considering the facts and circumstances of the case, the Court came to the conclusion that the assesses-society, whose sole object was managing and maintaining the medical institution, was an educational institution without any profit motive or personal profit for the purposes of s. 10(22) of the Act. The ratio of the above decision cannot be applied to the present case where the object of the assesses-Press was not to manage or maintain the Oxford University or any other educational institution.
19. Equally inapplicable is the ratio of the decision of the Kerala High Court in CIT vs. Sree Narayana Chandrika Trust (supra). In that case, the controversy was whether the assesses-trust, whose sole object was the establishment and running, etc., of hospitals, was entitled to exemption under s. 10(22A) of the Act. The Court decided the controversy in favour of the trust and observed that what is relevant for the purpose of s. 10(22) is that the income should reach the hospital to be applied by it for philanthropic purposes and not for purposes of profit. It was pointed out (at p. 468 of 212 of ITR) :
'.... The stress appears to be on the recipient of the income. If that is the hospital, that is, the trust running it, s. 10(22A) must apply.'
The above observations do not in any way assist the assesses because the assesses-Press is neither a university nor an educational institution.
20. So far as the decision of the Orissa High Court in Secondary Board of Education vs. ITO (supra) and of the Gujarat High Court in Gujarat State Co-operative Union vs. CIT (supra) are concerned, with utmost respect, we find it difficult to accept the same. In the Orissa case, the Board of Secondary Education established under the Orissa Secondary Education Act, 1953 was held to be an educational institution falling under s. 10(22) of the Act. In the Gujarat case, the Gujarat State Co-operative Union was held to be an educational institution for the purposes of s. 10(22) of the Act. In our opinion, the law in this regard is well settled by the decision of the Supreme Court in Sole Trustee, Loka Shikshana Trust vs. CIT (supra), where it was held that the word 'education' connotes the process of training and developing the knowledge, skill, mind and character of students by normal schooling and has not been used in the wide and extensive sense according to which every acquisition of further knowledge constitutes education. The above decisions of the Orissa and Gujarat High Courts, in our opinion, go counter to the ratio of the decision of the Supreme Court in Loka Shikshana Trust (supra).
21. In view of the above, we answer the question referred to us in the negative and in favour of the Revenue.
In the facts and circumstances of the case, there shall be no order as to costs.