Law:

Section:

Section 10(22) of the Income-tax Act, 1961 - Educational institutions - Assessment years 1983-84 to 1985-86 - Assessee-trust ran an educational institution in 'Gurukul' style to provide value based education to children - Trust owned 647 acres of land in addition to other properties - After death of founder of trust, his erstwhile associates continued to run educational institution - Since income derived from 647 acres of land was meagre, and insufficient to achieve objects of trust, trustees sold away said land to third parties and out of amount received on said sale it gave loan on interest to a firm in which president of trust was interested - It also gave loan to founder's widow who was also one of trustees of trust - Assessee received certain sum by way of interest - Assessing authority assessed said interest as income from other sources rejecting assessee's claim for exemption under section 10(22) - It was found from records that object of trust included establishing of small scale industries of all kinds including soap manufacturing, oil manufacturing, match industry, spinning and weaving, blacksmithy, carpentry, etc., and to aid and assist poor, grief sticken, destitute and persons and animals suffering from calamities - Whether since objects of trust were alien to educational purposes, benefit of section 10(22) would not be available to assessee - Held, yes [In favour of revenue] Section 11, read with section 13, of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment years 1983-84 to 1985-86 - Whether in view of facts stated under heading 'Educational institutions' since assessee had advanced loan on interest to a firm in which president of trust was interested, and also gave loan to founder's widow who was also one of trustees of assessee, amount so advanced would not fall within any of forms or modes of investment or deposit of money as referred to in section 11(5) and such loans also fall foul of section 13(1)(c) - Held, yes - Whether, therefore, assessee would not be entitled to exemption - Held, yes [In favour of revenue] FACTS The assessee-trust, ran an educational institution in…

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