Judgment:
ORDER
S. Ananda reddy, j
1. The following questions are referred by the Income Tax Appellate Tribunal at the instance of the Department under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to 'the Act'):
(1) 'Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in upholding the decision of the CIT(A) who held that the assessee Trust is entitled for exemption under Section 10(22) in spite of the fact that the income of the assessee trust can be used for non-educational purposes such as general utility or medical assistance etc ?'
(2) 'Whether on the facts and, in the circumstances of the case, the Appellate Tribunal is right in law in holding that the order of the CIT(A) in the instant case, is quite legal and justifiable and that there is no case for interference?'
(3) 'Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in coming to the conclusion that in the assessee's case, there is no question of getting any profit by undertaking other charitable purposes contemplated under clause (e) of the Trust Deed, even on the assumption that clause (e) spells out independent objects, unconnected with the objects, enumerated in the trust deed?'
2. The assessee - Sri Mullapudi Venkatarayudu Memorial Educational Trust, Tanuku is a public charitable trust. The Income Tax Officer while framing the assessment for the year 1982-83 declined to grant complete exemption to the income earned by the trust under Section 10(22) of the Act holding that the objects specified in the trust deed does not fall under the category of educational purposes, since it speaks of advancement of other charitable purposes of general utility and medical health etc. The Income Tax Officer also noticed that during the previous year relevant to the assessment year 1982-83, the assessee trust ran a polytechnic also by making use of its funds. According to the Income Tax Officer, in accordance with the CBCT Circular No.F No.l94/16/IT-2(Al), dated 29-7-1977, the assessee is not entitled for exemption under Section 10(22) and computed the income of the assessee at loss of Rs.1,85,256/-. The said order of assessment was assailed before the first appellate authority. The first appellate authority, following the judgment of the Madras High Court in the case of Commissioner of Income Tax, Tamilnadu v. Bimetal Bearings Limited and others, : [1985]152ITR85(Mad) held that the assessee trust is entitled for exemption under Section 10(22) since it is sufficient if the society is an educational institution and nothing else. The matter was carried in further appeal to the Tribunal by the Department, unsuccessfully. Therefore, the reference at the instance of the Department.
3. The learned Standing Counsel contended that as the trust was not running an educational institution on its own, as its objects are not exclusively for the educational purpose, the assessing officer was justified in deviating the earlier practice of allowing complete exemption to the income of the trust and computing the same holding that the assessee is not entitled for exemption under Section 10(22).
4. It is not in dispute from the facts that the trust funds were utilised for any purpose other than educational purpose. There is no finding or contention of the Department to that effect. It would be appropriate to refer to the relevant provision Section 10(22) for convenience:-
'Section (22): Any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit'.
Though the said provision was omitted by the Finance Act, 1998 with effect from 1-4-1999, as on the relevant date the said provision was on the statute. A perusal of the said provision shows that any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit is exempt. Almost an identical issue was considered by the Supreme Court in the case of Aditanar Educational Institution v. Additional Commissioner of Income Tax, : [1997]224ITR310(SC) . In the said case the Apex Court held that the trust, which was not only running and maintaining educational institutions but also trust assisting the educational institutions, is entitled for exemption under Section 10(22) of the Act. It was held that the educational society or trust or other similar body running an educational institution solely for educational purposes and not for the purposes of profit could be regarded as 'other educational institution' coming within Section 10(22) of the Act.
5. There is no finding by the Assessing Officer that the trust in question is existed for the purpose of profit. The only objections of the Assessing Officer was that the objects includes certain other charitable purposes and the trust in question also ran a polytechnic institution during the relevant previous year. The said polytechnic institution is only for the purpose of providing education and nothing else. Therefore, there is absolutely no justification for the Assessing Officer to deviate and take a different view than that of the view taken in the earlier years and not granting exemption for the relevant assessment year in question. The Commissioner of Appeals as well as the Tribunal had taken the correct view and the trust in question existed only for the purpose of running educational institutions and not for the purpose of profit.
6. Accordingly, we answer the questions in the affirmative, against the revenue and in favour of the assessee.