Law:

Section:

Section 10(22) of the income-tax act, 1961-Exemption-Income of an educational institution-Whether where an assessee-society running an educational institution, undertakes allied activities on commercial basis, to make itself self-supporting and not for purposes of profits, it is entitled to exemption under section 10(22)-Held, yes Facts The assessee-society was running an educational institution. Its objects were to provide high quality education and promotion of greater educational opportunities. One of the objects of the assessee-society was to run other allied or auxiliary institutions such as automobile workshop, driving school, printing press, etc., on a commercial basis in order to make it self-supporting. The Tribunal upheld the assessee's claim for exemption under section 10(22). On reference, the revenue contended, inter alia, that the aforesaid object of the assessee enabled it to carry on a commercial activity for profit and that, therefore, the assessee should be taken to exist not only for educational purposes but also for purposes of carrying on the various commercial activities. Held Though, no doubt, the assessee-society could run an automobile workshop, driving school and printing press, if need be, on commercial basis, but this was subject to the expression 'in order to make them self-supporting' as given under the clauses of memorandum of association of the assessee-society. Thus, the intention to run the institution on a commercial basis was only to make them self-supporting and not to earn profits. Therefore, the assessee was entitled to exemption under section 10(22). Case review Addl. CIT v. Aditanar Educational Institution [1979] 118 ITR 235 (Mad.) followed. Cases referred to Addl. CIT v. Aditanar Educational Institution [1979] 118 ITR 235 (Mad.), Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 (SC), Dharmaposhanam Co. v. CIT [1978] 114 ITR 463 (SC) and Rex v. Special CIT [1922] 8 TC 286 (CA). JUDGMENT RAMANUJAM, J. - Since all these tax cases are inter-connected, they are dealt with together. As the decision in TC Nos. 405 to 407 of 1978 will mainly depend upon the decision we render in TC Nos. 595 and 596 of 1978,…

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